As filed with the Securities and Exchange Commission on April 30, 2024
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
(Mark One)
☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report:
For the transition period from to
Commission file number: 001-41858
Okeanis Eco Tankers Corp.
(Exact name of Registrant as specified in its charter)
(Translation of Registrant’s name into English)
Republic of the Marshall Islands
(Jurisdiction of incorporation or organization)
c/o OET Chartering Inc.
Ethnarchou Makariou Ave.,&2 D. Falireos St.
185 47 N. Faliro, Greece
(Address of principal executive offices)
Iraklis Sbarounis
Tel. +30 210 480 4200
Email: ir@okeanisecotankers.com
Ethnarchou Makariou Ave.,&2 D. Falireos St.
185 47 N. Faliro, Greece
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
With copies to:
Steven Hollander, Esq.
Watson Farley & Williams LLP
250 West 55th Street
New York, New York 10019
Tel.: (212) 922-2200
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of exchange on which registered |
Shares of Common Stock, par value $0.001 |
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ECO |
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New York Stock Exchange |
Securities registered or to be registered pursuant to Section 12(g) of the Act:
NONE
(Title of class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
NONE
(Title of class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
As of December 31, 2023, 32,194,108 shares of common stock, par value $0.001 per share, were outstanding.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ☐ Yes ☒ No
Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ |
Accelerated filer ☐ |
Non-accelerated filer ☒ |
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Emerging growth company ☒ |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
† |
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ☐ |
International Financial Reporting Standards as issued by the International Accounting Standards Board ☒ |
Other ☐ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
☐ Item 17 |
☐ Item 18 |
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Yes |
☒ No |
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Not applicable
☐ Yes |
☐ No |
TABLE OF CONTENTS
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MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
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PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
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DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS |
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This annual report on Form 20-F, or the Annual Report, and any other written or oral statements made by us or on our behalf may include forward-looking statements, which reflect our current views with respect to future events and financial performance. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are statements other than statements of historical facts. When used in this Annual Report, statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “anticipate,” “believe,” “expect,” “intend,” “estimate,” “forecast,” “project,” “plan,” “potential,” “continue,” “seeks,” “views,” “possible,” “likely,” “may,” “should,” and similar words, phrases, or expressions identify forward-looking statements, and the negatives of those words, phrases, or expressions, or statements that events, conditions, or results “can,” “will,” “may,” “must,” “would,” “could,” or “should” occur or be achieved and similar expressions in connection with any discussion, expectation, or projection of future operating or financial performance, costs, regulations, events, or trends identify forward-looking statements. The absence of these words does not necessarily mean that a statement is not forward-looking.
The forward-looking statements in this Annual Report are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in our records, and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies that are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs, or projections.
In addition to these assumptions and matters discussed elsewhere herein and, in the documents, incorporated by reference herein, important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the following:
● | our ability to maintain or develop new and existing customer relationships with major crude oil companies and major commodity traders, including our ability to enter into long-term charters for our vessels, and those we may acquire in the future; |
● | our future operating and financial results; |
● | our future vessel acquisitions, sales, our business strategy, and expected and unexpected capital spending or operating expenses, including general and administrative, drydocking, crewing, bunker costs, and insurance costs; |
● | our financial condition and liquidity, including our ability to pay amounts that we owe and to obtain financing in the future to fund capital expenditures, acquisitions, and other general corporate activities; |
● | oil tanker industry trends, including fluctuations in charter rates and vessel values and factors affecting vessel supply and demand; |
● | our ability to take delivery of, integrate into our fleet, and employ any vessels we may acquire in the future, or any newbuildings we may acquire or order in the future and the ability of shipyards to deliver vessels on a timely basis; |
● | our dependence on our technical manager, Kyklades Maritime Corporation, an affiliate of our Chairman, to operate our vessels; |
● | the aging of our vessels, and those we may acquire in the future, and resultant increases in operation and drydocking costs; |
● | the ability of our vessels, and any vessels we may acquire in the future, to pass classification inspections and vetting inspections by oil majors and big chemical corporations, or other authorities; |
● | significant changes in vessel performance, including increased vessel breakdowns; |
● | length and number of off hire days, drydocking requirements, and insurance costs; |
● | availability of key employees and crew; |
● | hazards inherent in the maritime industry causing personal injury or loss of life, severe damage to or destruction of property and equipment, pollution or environmental damage, claims by third parties or customers and suspension of operations; |
● | repudiation, nullification, termination, modification or renegotiation of contracts; |
● | U.S., EU or other foreign monetary policy and foreign currency fluctuations and devaluations; |
● | the creditworthiness of our charterers and the ability of our contract counterparties to fulfill their obligations to us; |
● | our ability to repay outstanding indebtedness, to comply with the covenants contained therein, to obtain additional financing, and to obtain replacement charters for our vessels, and any vessels we may acquire in the future, in each case, at commercially acceptable rates or at all; |
● | changes to governmental rules and regulations or actions taken by regulatory authorities and the expected costs thereof, or changes to tax policies and other government regulations and economic conditions that are beyond our control; |
● | our ability to pay dividends; |
● | our ability to maintain the listing of our common shares on the New York Stock Exchange or the Oslo Børs; |
● | our ability to comply with additional costs and risks related to our environmental, social, and governance policies and regulation; |
● | potential liability from litigation, including purported class-action litigation; |
● | changes in general economic and business conditions; |
● | potential conflicts of interest involving our significant shareholders; |
● | general domestic and international political conditions, international conflict or war (or threatened war), including between Russia and Ukraine and between Israel and Hamas, potential disruption of shipping routes due to accidents, political events, including “trade wars,” piracy, acts by terrorists, or major disease outbreaks such as the recent worldwide outbreak of the novel coronavirus (“COVID-19”); |
● | changes in production of or demand for oil, either globally or in particular regions; |
● | the strength of world economies and currencies, including fluctuations in charterhire rates and vessel values; |
● | potential liability from future litigation and potential costs due to our vessels’ operations, and the operation of any vessels we may acquire in the future, including due to any environmental damage and vessel collisions; |
● | any malfunction or disruption of information technology systems and networks that our operations rely on or any impact of a possible cyber security breach; |
● | the length and severity of public health threats, epidemics and pandemics, including the global outbreak of COVID-19 (and various variants that may emerge), and other disease outbreaks and their impact on the demand for commercial seaborne transportation and the condition of the financial markets; and |
● | other important factors described in “Item 3.D. Risk Factors” and from time to time in the reports filed by us with the U.S. Securities and Exchange Commission (the “Commission” or the “SEC”). |
You should not place undue reliance on forward-looking statements contained in this Annual Report because they are statements about events that are not certain to occur as described or at all. All forward-looking statements in this Annual Report are qualified in their entirety by the cautionary statements contained in this Annual Report.
Any forward-looking statements contained herein are made only as of the date of this Annual Report, and except to the extent required by applicable law or regulation, we undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict all or any of these factors. Further, we cannot assess the impact of each such factor on our business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement.
MARKET AND INDUSTRY DATA
Unless otherwise indicated, information contained in this Annual Report concerning our industry and the markets in which we operate, including our general expectations and market position, market opportunity and market size, is based on industry publications and other published industry sources prepared by third parties, including the International Energy Agency (“IEA”) Global Electric Vehicles (“EV”) Outlook 2023, the IEA Stated Policies Scenario, as well as publicly available information. In some cases, we do not expressly refer to the sources from which this data is derived. In that regard, when we refer to one or more sources of this type of data in any paragraph, you should assume that other data of this type appearing in the same paragraph is derived from the same sources, unless otherwise expressly stated or the context otherwise requires. We believe the data from third party sources to be reliable based on our management’s knowledge of the industry.
TRADEMARKS
This Annual Report may contain trademarks, service marks and trade names of third parties, which are the property of their respective owners. Our use or display of third parties’ trademarks, service marks, trade names or products in this Annual Report is not intended to, and does not, imply a relationship with, or endorsement or sponsorship by, us. Solely for convenience, the trademarks, service marks and trade names presented in this Annual Report may appear without the ®, TM or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks, service marks and trade names.
PART I
Unless the context otherwise requires, as used in this Annual Report, the terms “Company,” “we,” “us,” and “our” refer to Okeanis Eco Tankers Corp. and any or all of its subsidiaries, and “Okeanis Eco Tankers Corp.” refers only to Okeanis Eco Tankers Corp. and not to its subsidiaries. References to our “technical manager,” “Kyklades” or “KMC” are to Kyklades Maritime Corporation, a related party of our Chairman, which performs the technical management of our fleet.
We use the term deadweight tons, or “dwt,” in describing the size of vessels. Dwt, expressed in metric tons, each of which is equivalent to 1,000 kilograms, refers to the maximum weight of cargo and supplies that a vessel can carry. Unless otherwise indicated, all references to “U.S. dollars,” “dollars,” “U.S. $,” and “$” in this Annual Report are to the lawful currency of the United States of America. References to “Norwegian Kroner” and “NOK” are to the lawful currency of Norway. Certain financial information has been rounded, and, as a result, certain totals shown in this Annual Report may not equal the arithmetic sum of the figures that should otherwise aggregate to those totals.
ITEM 1.IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
A. |
[Reserved] |
B. |
Capitalization and Indebtedness |
Not applicable.
C. |
Reasons for the Offer and Use of Proceeds |
Not applicable.
D. |
Risk Factors |
Some of the following risks relate principally to the industry in which we operate, and others relate to our business in general or our common stock. The occurrence of one or more of the following risks could materially and adversely impact our business, financial condition, operating results and cash flows, and the trading price of our common shares could decline.
Summary of Risk Factors
Below is a summary of the principal factors that make an investment in our common stock speculative or risky. This summary does not address all of the risks that we face. Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below under the headings “Risks Relating to Our Industry,” “Risks Relating to Our Business,” “Risks Relating to Our Common Shares,” and “Risks Relating to Our Relationship with Our Technical Manager and its Affiliates” and should be carefully considered, together with other information in this Annual Report on Form 20-F before making an investment decision regarding our common stock.
● | General tanker market conditions, including fluctuations in charter hire rates, vessel values, vessel supply, and need and demand for vessels and for crude oil or refined oil products; |
● | General economic, political and business conditions and disruptions, including sanctions, public health, piracy, terrorist attacks and other measures; |
● | Global economic conditions and disruptions in world financial markets, and the resulting governmental action; |
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● | Compliance with, and our liabilities under, governmental, tax, environmental and safety laws and regulations; |
● | Changes in governmental regulation, tax and trade matters and actions taken by regulatory authorities; |
● | Inherent operational risks, weather damage, inspection procedures, and import and export controls of the tanker industry; |
● | Reliance on information systems and potential security breaches; |
● | Our continued borrowing availability under our credit facilities and compliance with the financial covenants therein, and ability to borrow new funds or refinance existing facilities; |
● | Our use of available funds, and the banks in which such funds are held; |
● | Capital expenditures and other costs necessary to operate and maintain our vessels; |
● | Our dependence on a limited number of customers for a large part of our revenue; |
● | Our dependence on our charterers and other counterparties fulfilling their obligations; |
● | Our ability to attract and retain key management personnel and potentially manage growth and improve our operations and financial systems and staff; |
● | Delays or defaults by the shipyards in the construction of newbuildings, or defaults in construction; |
● | Our ability to successfully and profitably employ our vessels; |
● | Our executive officers not devoting all of their time to our business; |
● | Labor interruptions; |
● | Conducting substantial business in China; |
● | Our revenues being derived substantially from the crude oil tanker segment; |
● | Increases in operating costs, including rising fuel prices; |
● | The aging of our fleet and vessel replacement; |
● | One or more of our vessels becoming unavailable or going off-hire; |
● | Potential increased premium payments from protection and indemnity associations; |
● | Technological innovation and quality and efficiency requirements from our customers; |
● | Fluctuations in foreign currency exchange and interest rates, and risks relating to hedging activities; |
● | Fraud, fraudulent and illegal behavior, including the smuggling of drugs or other contraband onto our vessels; |
● | Arrest or requisition of our vessels; |
● | Effects of U.S. federal tax on us and our shareholders; |
● | Increased cost, time and effort for being listed on the NYSE and the Oslo Børs, including compliance initiatives, internal controls and corporate governance practices and policies; |
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● | Volatility in the price of our common shares and dilution of shareholders; |
● | Our ability to pay dividends; |
● | Compliance with economic substance requirements; |
● | Potential conflicts of interest involving our significant shareholders and involving KMC; |
● | Our dependence on KMC; |
● | Other factors that may affect our financial condition, liquidity, results of operations, and ability to pay dividends; and |
● | Other risk factors discussed under “Item 3.D. Risk Factors.” |
RISKS RELATING TO OUR INDUSTRY
The tanker industry has historically been cyclical and volatile.
The international tanker industry in which we operate is cyclical, with attendant volatility in charter hire rates, vessel values, and industry profitability. For tanker vessels, the degree of charter rate volatility has varied widely. The Baltic Dirty Tanker Index, or the BDTI, a U.S. dollar daily average of charter rates issued by the Baltic Exchange that takes into account input from brokers around the world regarding crude oil fixtures for various routes and oil tanker vessel sizes, has been volatile. For example, in 2023, the BDTI reached a high of 1,648 and a low of 713. Although the BDTI was 1,096 as of April 25, 2024, there can be no assurance that the crude oil charter market will continue to increase, and the market could again decline. Recent heightened volatility in charter prices has resulted primarily from the war in Ukraine and sanctions on Russian exports of crude oil and petroleum products, and there is great uncertainty about the future impact of those events. More recently, the war between Israel and Hamas has resulted in increased tensions in the Middle East region, including missile attacks by the Houthis on vessels in the Red Sea. Such circumstances have had and could in the future result in adverse consequences for the tanker industry. In general, volatility in charter rates depends on, among other factors, (i) supply and demand for tankers, (ii) the demand for crude oil and petroleum products, (iii) the inventories of crude oil and petroleum products in the United States and in other industrialized nations, (iv) oil refining volumes, (v) oil prices, and (vi) any restrictions on crude oil production imposed by the Organization of the Petroleum Exporting Countries, or OPEC, and non-OPEC oil producing countries.
Our ability to re-charter our vessels on the expiration or termination of their current spot and time charters and the charter rates payable under any renewal or replacement charters will depend upon, among other things, economic conditions in the tanker market and we cannot guarantee that any renewal or replacement charters we enter into will be sufficient to allow us to operate our vessels profitably. Our revenues are affected by whether we employ some of our vessels on time charters, which have a fixed income for a pre- set period of time as opposed to trading ships in the spot market where their earnings are heavily impacted by the supply and demand balance. If we are not able to obtain new contracts in direct continuation with existing charters or for newly acquired vessels, or if new contracts are entered into at charter rates substantially below the existing charter rates or on terms otherwise less favorable compared to existing contracts terms, our revenues and profitability could be adversely affected, we may have to record impairment adjustments to the carrying values of our fleet and we may not be able to comply with the financial covenants in our loan agreements.
Fluctuations in charter rates and vessel values result from changes in the supply and demand for vessels and changes in the supply and demand for oil. Factors affecting the supply and demand for our vessel, or vessels we acquire are outside of our control and are unpredictable. The nature, timing, direction and degree of changes in the tanker industry conditions are also unpredictable.
Factors that influence demand for tanker vessel capacity include:
● | supply and demand for oil carried; |
● | changes in oil production; |
● | oil prices; |
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● | the distance required for oil being moved by sea; |
● | any restrictions on crude oil production imposed by OPEC and non-OPEC oil producing countries; |
● | global and regional economic and political conditions, including “trade wars” and developments in international trade, national oil reserves policies, fluctuations in industrial and agricultural production, armed conflicts, and work stoppages; |
● | increases in the production of oil in areas linked by pipelines to consuming areas, the extension of existing or the development of new pipeline systems in markets we may serve, or the conversion of existing non-oil pipelines to oil pipelines in those markets; |
● | worldwide and regional availability of refining capacity and inventories; |
● | environmental and other legal and regulatory developments; |
● | economic slowdowns caused by public health events, such as the COVID-19 pandemic and its variants, or inflationary pressures and related governmental responses thereto; |
● | currency exchange rates; |
● | weather, natural disasters, and other acts of God; |
● | increased use of renewable and alternative sources of energy; |
● | competition from alternative sources of energy, other shipping companies, and other modes of transportation; and |
● | international sanctions, embargoes, import and export restrictions, nationalizations, piracy, and wars or other conflicts, including the war in Ukraine and between Israel and Hamas and the Houthi crisis in and around the Red Sea. |
The factors that influence the supply of tanker capacity include:
● | the number of newbuilding deliveries; |
● | current and expected newbuilding orders for vessels; |
● | the scrapping rate of older vessels; |
● | the availability of financing for new or secondhand tankers; |
● | speed of vessel operation; |
● | vessel freight rates, which are affected by factors that may affect the rate of newbuilding, scrapping and laying up of vessels; |
● | the price of steel and vessel equipment; |
● | technological advances in the design, capacity, propulsion technology, and fuel consumption efficiency of vessels; |
● | potential conversion of vessels for alternative use; |
● | changes in environmental and other regulations that may limit the useful lives of vessels; |
● | port or canal congestion; |
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● | national or international regulations that may effectively cause reductions in the carrying capacity of vessels or early obsolescence of tonnage; |
● | environmental concerns and regulations, including ballast water management, low sulfur fuel consumption regulations, and reductions in CO2 emissions; |
● | the number of vessels that are out of service at a given time, namely those that are laid-up, drydocked, awaiting repairs, or otherwise not available for hire, including those that are in drydock for the purpose of installing exhaust gas cleaning systems, known as scrubbers; and |
● | changes in the global petroleum market. |
The factors affecting the supply and demand for tankers have been volatile and are outside of our control, and the nature, timing, and degree of changes in industry conditions are unpredictable. Market conditions have been volatile in recent years and continued volatility may reduce demand for transportation of oil over longer distances and increase the supply of tankers, which may have a material adverse effect on our business, financial condition, results of operations, cash flows, ability to pay dividends, and existing contractual obligations.
Decreases in shipments of crude oil may occur.
The demand for our oil tankers derives primarily from demand for Arabian Gulf, West African, North Sea, Caribbean, Latin America, Russian, and U.S. shale crude oil, which, in turn, primarily depends on the economies of the world’s industrial countries and competition from alternative energy sources. Any decrease in shipments of crude oil or change in trade patterns from the above-mentioned geographical areas would have a material adverse effect on our financial performance. Among the factors which could lead to such a decrease are:
● | increased crude oil production from other areas; |
● | increased refining capacity in the Arabian Gulf or West Africa; |
● | increased use of existing and future crude oil pipelines in the Arabian Gulf or West Africa; |
● | a decision by oil-producing nations to increase their crude oil prices or to further decrease or limit their crude oil production; |
● | armed conflict between Ukraine and Russia and the resultant sanctions; |
● | armed conflict in the Arabian Gulf and West Africa and political or other factors; and |
● | the development, availability, and the costs of nuclear power, natural gas, coal, renewable, and other alternative sources of energy. |
In addition, volatile economic conditions affecting world economies may result in reduced consumption of oil products and a decreased demand for our vessels and lower charter rates, which could have a material adverse effect on our earnings, our ability to pay dividends, and our existing contractual obligations.
An over-supply of tanker capacity may occur.
The market supply of tankers is affected by a number of factors such as demand for energy resources, crude oil, petroleum products and chemicals, as well as strong overall economic growth of the world economy. In recent years, shipyards have produced a large number of new tankers. If the capacity of new vessels delivered exceeds the capacity of tankers being scrapped and converted to non-trading tankers, tanker capacity will increase. If the supply of tanker capacity increases and the demand for tanker capacity does not increase correspondingly, charter rates could materially decline, resulting in a decrease in the value of our vessels and the charter rates that we can obtain. A reduction in charter rates and the value of our vessels may have a material adverse effect on our results of operations, our ability to pay dividends, and our compliance with current or future covenants with respect to any of our financing arrangements.
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An over-supply of oil tankers as well as the uncertainty surrounding the impact of the sanctions on Russian exports of crude oil and petroleum products has already resulted in an increase in oil tanker charter hire rate volatility. If this volatility persists, we may not be able to find profitable charters for our vessels, or vessels we may acquire, which could have a material adverse effect on our business, results of operations, cash flows, financial condition, our ability to pay dividends and our compliance with current or future covenants with respect to any of our financing arrangements.
Consumer demand may shift away from oil or there may be changes to trade patterns for crude oil or refined oil products.
A significant portion of our earnings are related to the oil industry. A shift in or disruption of consumer demand from oil towards other energy sources such as electricity, natural gas, liquified natural gas, renewable energy, hydrogen, or ammonia will potentially affect the demand for our vessels. A shift from the use of internal combustion engine vehicles may also reduce the demand for oil. These factors could have a material adverse effect on our future performance, results of operations, cash flows, and financial position. The continuing shift in consumer demand from oil towards other energy resources such as wind energy, solar energy, hydrogen energy, or nuclear energy, which shift appears to be accelerating as a result of a shift in government commitments and support for energy transition programs, may have a material adverse effect on our future performance, results of operations, cash flows, and financial position.
Seaborne trading and distribution patterns are primarily influenced by the relative advantage of the various sources of production, locations of consumption, pricing differentials, and seasonality. Changes to the trade patterns of crude oil or refined oil products may have a significant negative or positive impact on the ton-mile and therefore the demand for our tankers and charter rates. This could have a material adverse effect on our future performance, results of operations, cash flows, and financial position.
Increasing growth of electric vehicles and renewable fuels could lead to a decrease in trading and the movement of crude oil and petroleum products worldwide.
The IEA noted in its Global Electric Vehicles (“EV”) Outlook 2023 that a total of 14% of all new cars sold were electric in 2022, up from around 9% in 2021 and less than 5% in 2020. Electric car sales in the first quarter of 2023 were 2.3 million, up 25% from the same quarter of 2022. Under the IEA Stated Policies Scenario (STEPS), the global outlook for the share of electric car sales based on existing policies and firm objectives has increased to 35% in 2030, up from less than 25% in the previous outlook. The IEA has stated that, based on existing policies, oil demand from road transport is projected to peak around 2025 in the STEPS, with the amount of oil displaced by electric vehicles exceeding 5 million barrels per day in 2030. A growth in EVs or a slowdown in imports or exports of crude or petroleum products worldwide may result in decreased demand for our vessels and lower charter rates, which could have a material adverse effect on our business, results of operations, cash flows, financial condition, and ability to make cash distributions.
Our operating results are subject to seasonal fluctuations.
Our vessels operate in markets that have historically exhibited seasonal variations in tanker demand, which may result in variability in our results of operations on a quarter-by-quarter basis. Tanker markets are typically stronger in the winter months due to increased oil consumption in the northern hemisphere, but weaker in the summer months due to lower oil consumption in the northern hemisphere and refinery maintenance. As a result, revenues generated by the tankers in our fleet have historically been weaker during the fiscal quarters ending June 30 and September 30. However, there may be periods in the northern hemisphere when the expected seasonal strength does not materialize to the extent required to support sustainable profitable rates due to tanker overcapacity.
Our financial results may be adversely affected by the outbreak of epidemic and pandemic diseases, including COVID-19, and any relevant governmental responses thereto.
Global public health threats, such as the COVID-19 pandemic, influenza and other highly communicable diseases or viruses, outbreaks which have from time to time occurred in various parts of the world in which we operate, including China, could disrupt global financial markets and economic conditions and adversely impact our operations, the timing of completion of any outstanding or future newbuilding projects, as well as the operations of our charterers and other customers.
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For example, the outbreak of COVID-19 caused severe global disruptions, with governments in affected countries imposing travel bans, quarantines and other emergency public health measures. Companies have also taken precautions, such as requiring employees to work remotely, imposing travel restrictions and temporarily closing businesses. Although the incidence and severity of COVID-19 and its variants have diminished over time, similar restrictions, and future prevention and mitigation measures against outbreaks of epidemic and pandemic diseases, are likely to have an adverse impact on global economic conditions, which could materially and adversely affect our future operations. As a result of such measures, our vessels may not be able to call on, or disembark from, ports located in regions affected by the outbreak. In addition, we may experience severe operational disruptions and delays, unavailability of normal port infrastructure and services including limited access to equipment, critical goods and personnel, disruptions to crew changes, quarantine of ships and/or crew, counterparty solidity, closure of ports and custom offices, as well as disruptions in the supply chain and industrial production, which may lead to reduced cargo demand, among other potential consequences attendant to epidemic and pandemic diseases.
The extent to which our business, operating results, cash flows, financial condition, financings, value of our vessels or vessels we may acquire and ability to pay dividends may be negatively affected by a resurgence of COVID-19 or future pandemics, epidemics or other outbreaks of infectious diseases, which is highly uncertain and will depend on numerous evolving factors that we cannot predict, including, but not limited to (i) the duration and severity of the infectious disease outbreak; (ii) the imposition of restrictive measures to combat the outbreak and slow disease transmission; (iii) the introduction of financial support measures to reduce the impact of the outbreak on the economy; (iv) shortages or reductions in the supply of essential goods, services or labor; and (v) fluctuations in general economic or financial conditions tied to the outbreak, such as a sharp increase in interest rates or reduction in the availability of credit. We cannot predict the effect that an outbreak of a new COVID-19 variant or strain, or any future infectious disease outbreak, pandemic or epidemic may have on our business, operating results, cash flows and financial condition, which could be material and adverse.
The current state of the world financial market and current economic conditions could have a material adverse impact on our results of operations, financial condition and cash flows.
Various macroeconomic factors, including rising inflation, higher interest rates, global supply chain constraints, and the effects of overall economic conditions and uncertainties such as those resulting from the current and future conditions in the global financial markets, could adversely affect our business, results of operations, financial condition and ability to pay dividends. Inflation and rising interest rates may negatively impact us by increasing our operating costs and our cost of borrowing. Interest rates, the liquidity of the credit markets and the volatility of the capital markets could also affect the operation of our business and our ability to raise capital on favorable terms, or at all. Adverse economic conditions also affect demand for goods and oil. Reduced demand for these or other products could result in significant decreases in rates we obtain for chartering our ships. In addition, the cost for crew members, oils and bunkers, and other supplies may increase. In addition, we may experience losses on our holdings of cash and investments due to failures of financial institutions and other parties. Difficult economic conditions may also result in a higher rate of losses on our accounts receivable due to credit defaults. As a result, downturns in the worldwide economy could have a material adverse effect on our business, results of operations, financial condition and ability to pay dividends.
The world economy continues to face a number of actual and potential challenges, including the war between Ukraine and Russia and between Israel and Hamas, tensions in and around the Red Sea and between Russia and NATO, China and Taiwan disputes, United States and China trade relations, instability between Iran and the West, hostilities between the United States and North Korea, political unrest and conflicts in the Middle East, the South China Sea region, and in other geographic countries and areas, terrorist or other attacks (including threats thereof) around the world, war (or threatened war) or international hostilities, and epidemics or pandemics, such as COVID-19 and its variants, and banking crises or failures, such as the recent Silicon Valley Bank, Signature Bank and First Republic Bank failures. For example, due in part to fears associated with the spread of COVID-19 (as more fully described above), global financial markets experienced significant volatility which may continue as the pandemic evolves, resurges, or a new COVID-19 variant emerges. See “— Our financial results may be adversely affected by the outbreak of epidemic and pandemic diseases, including COVID-19, and any relevant governmental responses thereto.” In addition, the continuing conflict in Ukraine, the length and breadth of which remains highly unpredictable, has led to increased economic uncertainty amidst fears of a more generalized military conflict or significant inflationary pressures, due to the increases in fuel and grain prices following the sanctions imposed on Russia. Furthermore, it is difficult to predict the intensity and duration of the war between Israel and Hamas or the Houthi rebel attacks on shipping in and around the Red Sea and their impact on the world economy is uncertain. Whether the present dislocation in the markets and resultant inflationary pressures will transition to a long-term inflationary environment is uncertain, and the effects of such a development on charter rates, vessel demand and operating expenses in the sector in which we operate are uncertain.
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These issues, along with the limited supply of credit to the shipping industry and the re-pricing of credit risk, along with the difficulties currently experienced by financial institutions have made, and will likely continue to make, it difficult to obtain financing. As a result of the disruptions in the credit markets and higher capital requirements, many lenders have increased margins on lending rates, enacted tighter lending standards, required more restrictive terms (including higher collateral ratios for advances, shorter maturities and smaller loan amounts), or refused to refinance existing debt at all or on terms similar to our current debt. Furthermore, certain banks that have historically been significant lenders to the shipping industry have announced an intention to reduce or cease lending activities in the shipping industry. New banking regulations, including larger capital requirements and the resulting policies adopted by lenders, could reduce lending activities. We may experience difficulties obtaining financing commitments in the future if current or future lenders are unwilling to extend financing to us or unable to meet their funding obligations due to their own liquidity, capital or solvency issues. The current state of global financial markets and current economic conditions might adversely impact our ability to issue additional equity at prices that will not be dilutive to our existing shareholders or preclude us from issuing equity at all.
We cannot be certain that financing or refinancing will be available on acceptable terms or at all. If financing or refinancing is not available when needed, or is available only on unfavorable terms, we may be unable to meet our future obligations as they come due. Our failure to obtain such funds could have a material adverse effect on our business, results of operations and financial condition, as well as our cash flows, including cash available for dividends to our shareholders. In the absence of available financing, we also may be unable to take advantage of business opportunities or respond to competitive pressures. Also, as a result of concerns about the stability of financial markets generally, and the solvency of counterparties specifically, the availability and cost of obtaining money from the public and private equity and debt markets has become more difficult.
Further, we may not be able to access our existing cash due to market conditions. For example, on March 10, 2023, the Federal Deposit Insurance Corporation (FDIC) took control and was appointed receiver of Silicon Valley Bank (a bank unrelated to us and our activities), and in April 2023 Credit Suisse was acquired by UBS. If other banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability to access our existing cash may be threatened and could have a material adverse effect on our business and financial condition. In addition, if a bank, or the public, believes that a bank is not stable, the bank may institute procedures or rules to limit withdrawals and access to funds, which, if implemented, would have a material adverse effect on our business and financial condition.
Volatility of SOFR and potential changes of the use of SOFR as a benchmark could affect our profitability, earnings, and cash flow.
The calculation of interest in most financing agreements in our industry has been historically based on the London Interbank Offered Rate (“LIBOR”). LIBOR was the subject of recent national, international, and other regulatory guidance and proposals for reform. In response thereto, the Alternative Reference Rate Committee, a committee convened by the Federal Reserve Board that includes major market participants, proposed the Secured Overnight Financing Rate, or “SOFR,” as an alternative rate to replace U.S. Dollar LIBOR. While our financing arrangements previously used LIBOR, including during the fiscal years ended December 31, 2023 and December 31, 2022, in 2023 we amended those loan agreements to transition from LIBOR to SOFR. As a result, none of our financing arrangements currently utilizes LIBOR, and those that have a reference rate use SOFR, in line with current market practice.
An increase in SOFR, including as a result of the interest rate increases effected by the United States Federal Reserve and the United States Federal Reserve’s recent hike of U.S. interest rates in response to rising inflation, would affect the amount of interest payable under our existing loan agreements, which, in turn, could have an adverse effect on our profitability, earnings, cash flow and ability to pay dividends. Furthermore, as a secured rate backed by government securities, SOFR may be less likely to correlate with the funding costs of financial institutions. As a result, parties may seek to adjust spreads relative to SOFR in underlying contractual arrangements. Therefore, the use of SOFR-based rates may result in interest rates and/or payments that are higher or lower than the rates and payments that were expected when interest was based on LIBOR. If SOFR performs differently than expected or if our lenders insist on a different reference rate to replace SOFR, that could increase our borrowing costs (and administrative costs to reflect the transaction), which would have an adverse effect on our profitability, earnings, and cash flows. Alternative reference rates may behave in a similar manner or have other disadvantages or advantages in relation to our future indebtedness and the transition to SOFR or other alternative reference rates in the future could have a material adverse effect on us.
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In order to manage any future exposure to interest rate fluctuations, we may from time-to-time use interest rate derivatives to effectively fix any floating rate debt obligations, or we may maintain adequate cash balances in Euros. No assurance can, however, be given that the use of these derivative instruments, if any, may effectively protect us from adverse interest rate movements. The use of interest rate derivatives may affect our results through mark to market valuation of these derivatives. Also, adverse movements in interest rate derivatives may require us to post cash as collateral, which may impact our free cash position, and have the potential to cause us to breach covenants in our loan agreements that require maintenance of certain financial positions and ratios. Interest rate derivatives may also be impacted by the transition to SOFR or to other alternative rates.
We are subject to complex laws and regulations, including environmental regulations.
Our operations are subject to numerous laws and regulations in the form of international conventions and treaties, national, state, and local laws and national and international regulations in force in the jurisdictions in which our vessels, or vessels we acquire, will operate or are registered, which can significantly affect the operation of our vessels, or vessels we acquire. These regulations include, but are not limited to, the International Convention for the Prevention of Pollution from Ships of 1973, as amended from time to time and generally referred to as MARPOL, including the designation of Emission Control Areas, or ECAs, thereunder, the International Convention on Load Lines of 1966, the International Convention on Civil Liability for Oil Pollution Damage of 1969, generally referred to as CLC, the International Convention on Civil Liability for Bunker Oil Pollution Damage, or Bunker Convention, the International Convention for the Safety of Life at Sea of 1974, or SOLAS, the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention, or ISM Code, the International Convention for the Control and Management of Ships’ Ballast Water and Sediments, or the BWM Convention, the U.S. Oil Pollution Act of 1990, or OPA, the Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, the U.S. Clean Water Act, the U.S. Clean Air Act, the U.S. Outer Continental Shelf Lands Act, the U.S. Maritime Transportation Security Act of 2002, or the MTSA, and European Union regulations. Compliance with such laws, regulations, and standards, where applicable, may require installation of costly equipment or operational changes and may affect the resale value or useful lives of our vessels, or vessels we acquire, or resale prices or useful lives of our vessels or require reductions in capacity, vessel modifications, or operational changes or restrictions. We may also incur additional costs in order to comply with other existing and future regulatory obligations, including, but not limited to, costs relating to air emissions, the management of ballast waters, maintenance and inspection, development and implementation of emergency procedures, and insurance coverage or other financial assurance of our ability to address pollution incidents. These costs could have a material adverse effect on our business, results of operations, cash flows, and financial condition. A failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions, or the suspension or termination of our operations. Failure to comply with these requirements could lead to decreased availability of or more costly insurance coverage for environmental matters or result in the denial of access to certain jurisdictional waters or ports, or detention in certain ports. Under local, national, and foreign laws, as well as international treaties and conventions, we could incur material liabilities, including cleanup obligations and claims for impairment of the environment, personal injury, and property damages in the event that there is a release of petroleum or other hazardous materials from our vessels or otherwise in connection with our operations. Violations of, or liabilities under, environmental regulations can result in substantial penalties, fines, and other sanctions, including, in certain instances, seizure or detention of our vessels. Events of this nature would have a material adverse effect on our business, financial condition, and results of operations.
Environmental laws often impose strict liability for remediation of spills and releases of oil and hazardous substances, which could subject us to liability without regard to whether we were negligent or at fault. Under OPA, for example, owners, operators, and bareboat charterers are jointly and severally strictly liable for the discharge of oil within the 200-mile exclusive economic zone around the United States. Events such as the 2010 explosion of the Deepwater Horizon and the subsequent release of oil into the Gulf of Mexico, or other events, may result in further regulation of the shipping industry and modifications to statutory liability schemes, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows. An oil spill could result in significant liability, including fines, penalties, and criminal liability and remediation costs for natural resource damages under other federal, state, and local laws, as well as third-party damages. We are required to satisfy insurance and financial responsibility requirements for potential oil (including marine fuel) spills and other pollution incidents. Although insurance covers certain environmental risks, there can be no assurance that such insurance will be sufficient to cover all such risks or that any claims will not have a material adverse effect on our business, results of operations, cash flows, and financial condition and our ability to pay dividends, if any, in the future.
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We are subject to international safety regulations and requirements imposed by classification societies.
The operation of our vessels, or vessels we acquire, is affected by the requirements set forth in the United Nations’ International Maritime Organization’s International Management Code for the Safe Operation of Ships and Pollution Prevention, or ISM Code. The ISM Code requires ship owners, ship managers, and bareboat charterers to develop and maintain an extensive “Safety Management System” that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. We expect that any vessels that we acquire in the future will be ISM Code-certified when delivered to us. The failure of a shipowner or bareboat charterer to comply with the ISM Code may subject it to increased liability, invalidate existing insurance, or decrease available insurance coverage for the affected vessels (and any available insurance coverage may be a higher cost) and may result in a denial of access to, or detention in, certain ports, including United States and European Union ports.
In addition, the hull and machinery of every commercial vessel must be classed by a classification society authorized by its country of registry. The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and the International Convention for Safety of Life at Sea. If a vessel does not maintain its class and/or fails any annual survey, intermediate survey, or special survey, the vessel will be unable to trade between ports and will be unemployable, which will negatively impact our revenues and results from operations and may breach one or more covenants in our loan agreements.
Climate change and greenhouse gas restrictions may adversely impact our operations and markets.
Due to concern over the risk of climate change, a number of countries and the International Maritime Organization, or IMO, have adopted, or are considering the adoption of, regulatory frameworks to reduce greenhouse gas emissions. These regulatory measures may include, among others, adoption of cap and trade regimes, carbon taxes, increased efficiency standards, and incentives or mandates for renewable energy. Since January 1, 2020, IMO regulations have required vessels to comply with a global cap on the sulfur in fuel oil used on board of 0.5%, down from the previous cap of 3.5%. Additionally, at MEPC 80 in July 2023, the IMO adopted the 2023 IMO Strategy on Reduction of GHG Emissions from Ships, which identifies a number of levels of ambition, including (1) decreasing the carbon intensity from ships through implementation of further phases of energy efficiency for new ships; (2) reducing carbon dioxide emissions per transport work, as an average across international shipping, by at least 40% by 2030; and (3) pursuing net-zero GHG emissions by or around 2050.
Since January 1, 2020, ships must either remove sulfur from emissions or buy fuel with low sulfur content, which may lead to increased costs and supplementary investments for ship owners. The interpretation of “fuel oil used on board” includes use in main engine, auxiliary engines, and boilers. Shipowners may comply with this regulation by (i) using 0.5% sulfur fuels on board, which are available around the world but at a higher cost; (ii) installing scrubbers for cleaning of the exhaust gas; or (iii) retrofitting vessels to be powered by liquefied natural gas, which may not be a viable option due to the lack of supply network and high costs involved in this process. While currently all our vessels have scrubbers installed, costs of compliance with these regulatory changes for any non-scrubber vessels we may acquire may be significant and may have a material adverse effect on our future performance, results of operations, cash flows, and financial position.
Additional greenhouse regulations may result in increased implementation and compliance costs and expenses, such as:
● | IMO Data Collection System (DCS): in October 2016, at MEPC 70, the IMO adopted a mandatory data collection system, or the IMO DCS, which requires vessels above 5,000 gross tons to report consumption data for fuel oil, hours under way and distance travelled. This IMO DCS covers any maritime activity carried out by ships, including dredging, pipeline laying, and offshore installations. Data is reported annually to the flag state which issues to the vessel a statement of compliance. |
● | Amendments to MARPOL Annex VI: MEPC 79 adopted amendments to MARPOL, Annex VI regarding reporting requirements in connection with the implementation of the Energy Efficiency Existing Ship Index, or EEXI, and carbon intensity indicator, or CII, framework, which amendments are expected to become effective on May 1, 2024. Beginning in January 2023, Annex VI requires EEXI and CII certification. The first annual reporting was to be completed in 2023, with initial ratings given in 2024. |
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● | Net zero greenhouse emissions in the EU by 2050: in 2021, the EU adopted a European Climate Law (Regulation (EU) 2021/1119), establishing the aim of reaching net zero greenhouse gas emissions in the EU by 2050, with an intermediate target of reducing greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels. In July 2021, the European Commission launched the “Fit for 55” to support the climate policy agenda. As of January 2019, large ships calling at EU ports have been required to collect and publish data on carbon dioxide emissions and other information. |
Furthermore, on January 1, 2024, the EU Emissions Trading Scheme, or the ETS, for ships sailing into and out of EU ports came into effect, and the FuelEU Maritime Regulation is expected to come into effect on January 1, 2025. The ETS is to apply gradually over the period from 2024 to 2026. 40% of allowances would have to be surrendered in 2025 for the year 2024; 70% of allowances would have to be surrendered in 2026 for the year 2025; and 100% of allowances would have to be surrendered in 2027 for the year 2026. Compliance is to be on a companywide (rather than per ship) basis and “shipping company” is defined widely to capture both the ship owner and any contractually appointed commercial operator/ship manager/bareboat charterer who not only assume full compliance for ETS but also under the ISM Code. If the latter contractual arrangement is entered into this needs to be reflected in a certified mandate signed by both parties and presented to the administrator of the scheme. The cap under the ETS would be set by taking into account EU MRV system emissions data for the years 2018 and 2019, adjusted, from year 2021 and is to capture 100% of the emissions from intra-EU maritime voyages; 100% of emissions from ships at berth in EU ports and 50% of emissions from voyages which start or end at EU ports (but the other destination is outside the EU). Furthermore, the newly passed EU Emissions Trading Directive 2023/959/EC makes clear that all maritime allowances would be auctioned and there will be no free allocation. 78.4 million emissions allowances are to be allocated specifically to maritime. If we do not have allowances, we will be forced to purchase allowances from the market, which can be costly, especially if other shipping companies are similarly looking to do the same. New systems, personnel, data management systems, costs recovery mechanisms, revised service agreement terms and emissions reporting procedures will have to be put in place, at significant cost, to prepare for and manage the administrative aspect of ETS compliance. The cost of compliance, and of our future EU emissions and costs to purchase an allowance for emissions (if we must purchase in order to comply) are unknown and difficult to predict, and are based on a number of factors, including the size of our fleet, our trips within and to and from the EU, and the prevailing cost of allowances.
In addition, although the emissions of greenhouse gases from international shipping currently are not currently subject to the Kyoto Protocol to the United Nations Framework Convention on Climate Change, which required adopting countries to implement national programs to reduce emissions of certain gases, or the Paris Agreement (discussed further below), a new treaty may be adopted in the future that includes restrictions on shipping emissions. Compliance with changes in laws, regulations, and obligations relating to climate change affects the propulsion options in subsequent vessel designs and could increase our costs related to acquiring new vessels and operating and maintaining our existing vessels, and require us to install new emission controls, acquire allowances or pay taxes related to our greenhouse gas emissions, or administer and manage a greenhouse gas emissions program. Revenue generation and strategic growth opportunities may also be adversely affected. If not in compliance with certain key indicators, then we also face the risk of losing the ability to obtaining financing or re-financing with “green” or “sustainability” loans.
Adverse effects upon the oil and gas industry relating to climate change, including growing public concern about the environmental impact of climate change, may also adversely affect demand for our services. For example, increased regulation of greenhouse gases or other concerns relating to climate change may reduce the demand for oil and gas in the future or create greater incentives for use of alternative energy sources. In addition, the physical effects of climate change, including changes in weather patterns, extreme weather events, rising sea levels, and scarcity of water resources, may negatively impact our operations. Any long-term material adverse effect on the oil and gas industry could have a significant financial and operational adverse impact on our business that we cannot predict at this time.
Our operations may be adversely impacted by severe weather, including as a result of climate change.
Tropical storms, hurricanes, typhoons and other severe maritime weather events could result in the suspension of operations at the planned ports of call for our vessels and require significant deviations from our vessels’ routes. In addition, climate change could result in an increase in the frequency and severity of these extreme weather events. The closure of ports, rerouting of vessels, damage of production facilities, as well as other delays caused by increasing frequency of severe weather, could stop operations or shipments for indeterminate periods and have a material adverse effect on our business, results of operations and financial condition.
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Our vessels, or vessels we may acquire, may suffer damage due to the inherent operational risks of the tanker industry and we may experience unexpected drydocking costs.
The operation of an ocean-going vessel carries inherent risks. Our vessels, or vessels we may acquire, and their cargoes are at risk of being damaged or lost because of events such as marine disasters, bad weather and other acts of God, business interruptions caused by mechanical failures, grounding, fire, explosions and collisions, human error, war, terrorism, piracy, diseases (such as the outbreak of COVID-19), quarantine, and other circumstances or events. These hazards may result in death or injury to persons, loss of revenues or property, the payment of ransoms, environmental damage, higher insurance rates, damage to our customer relationships, or delay or re-routing, which may also subject us to litigation. In addition, the operation of tankers has unique operational risks associated with the transportation of oil. An oil spill may cause significant environmental damage, and the costs associated with a catastrophic spill could exceed the insurance coverage available to us. Compared to other types of vessels, tankers are exposed to a higher risk of damage and loss by fire, whether ignited by a terrorist attack, collision, or other cause, due to the high flammability and high volume of the oil transported in such tankers.
If our vessels, or vessels we may acquire, suffer damage, they may need to be repaired at a drydocking facility. The costs of drydock repairs are unpredictable and may be substantial. We may have to pay drydocking costs that our insurance does not cover in full. The loss of earnings while these vessels are being repaired and repositioned, the actual cost of these repairs, as well as repositioning costs, would decrease our earnings. In addition, space at drydocking facilities is sometimes limited and not all drydocking facilities are conveniently located. We may be unable to find space at a suitable drydocking facility or our vessels, or vessels we may acquire, may be forced to travel to a drydocking facility that is not conveniently located to our vessels’ positions. The loss of earnings while these vessels are forced to wait for space or to travel to more distant drydocking facilities, or both, would decrease our earnings.
The market value of our vessels, and those we may acquire in the future, may fluctuate significantly.
The fair market value of our vessels, or vessels we may acquire, may increase and decrease depending on the following factors:
● | general economic and market conditions affecting the shipping industry; |
● | prevailing level of charter rates; |
● | competition from other shipping companies; |
● | types, sizes, and ages of vessels; |
● | the availability of other modes of transportation; |
● | supply and demand for vessels; |
● | shipyard capacity and slot availability; |
● | cost of newbuildings; |
● | price of steel; |
● | exchange rates levels; |
● | number of tankers scrapped; |
● | governmental or other regulations; and |
● | technological advances and the development, availability, and cost of nuclear power, natural gas, coal, renewable energy, and other alternative sources of energy. |
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Dislocations in the supply of and demand for tankers as a result of the ongoing war in Ukraine and sanctions on Russian exports have resulted in greatly increased volatility in tanker asset prices. Furthermore, the ongoing war between Israel and Hamas and the Houthi rebel attacks on shipping in the Red Sea have an uncertain impact on the supply and demand for tankers. If we sell any of our vessels, or any vessel we may acquire, at a time when vessel prices have fallen, the sale price may be less than the vessel’s carrying amount in our financial statements, in which case we will realize a loss. Vessel prices can fluctuate significantly, and in the case where the market value falls below the carrying amount, we will evaluate the vessel for a potential impairment adjustment. If the estimate of undiscounted cash flows, excluding interest charges, expected to be generated by the use of the vessel is less than its carrying amount, we may be required to write down the carrying amount of the vessel to its fair value less costs to sell, in our financial statements and incur a loss and a reduction in earnings even if we do not immediately sell the vessel.
In addition, our financing arrangements require us to maintain specified collateral coverage ratios and to satisfy financial covenants, including requirements based on the market value of our vessels and our liquidity. Declines of market values of our vessels may affect our ability to comply with various covenants and could also limit the amount of funds we are permitted to borrow under our current or future loan arrangements. If we breach the financial and other covenants under any of our loan arrangements, our lenders could accelerate our indebtedness and foreclose on vessels in our fleet, which would significantly impair our ability to continue to conduct our business. If our indebtedness were accelerated in full or in part, it may be very difficult for us to refinance our debt or obtain additional financing and we could lose our vessels if our lenders foreclose upon their liens, which would adversely affect our business, financial condition, and ability to continue our business and pay dividends.
We could face penalties under European Union, United States, or other economic sanctions authorities and our vessels, or vessels we may acquire, may call on ports located in countries or territories that are the subject of sanctions or embargoes imposed by the U.S. government or other governmental authorities.
Our business could be adversely impacted if we are found to have violated economic sanctions under the applicable laws of the European Union, the United States or another applicable jurisdiction against countries such as Iran, Syria, North Korea, and Cuba. U.S. economic sanctions, for example, prohibit a wide scope of conduct, target numerous countries and individuals, and are frequently updated or changed.
Many economic sanctions relate to our business, including prohibitions on certain kinds of trade with countries, such as exportation or re-exportation of commodities, or prohibitions against certain transactions with designated nationals who may be operating under aliases or through non-designated companies.
Additionally, the U.S. Iran Threat Reduction Act amended the Securities Exchange Act of 1934, as amended, or the Exchange Act, to require issuers that file annual or quarterly reports under Section 13(a) of the Exchange Act to include disclosure in their annual and quarterly reports as to whether the issuer or its affiliates have knowingly engaged in certain activities prohibited by sanctions against Iran or transactions or dealings with certain identified persons. We are subject to this disclosure requirement.
While our vessels have not called on ports located in countries or territories that are the subject of country-wide or territory-wide sanctions or embargoes imposed by the U.S. government or other governmental authorities (“Sanctioned Jurisdictions”) in violation of applicable sanctions or embargo laws in 2023, it is possible that, in the future, our vessels may call on ports in Sanctioned Jurisdictions in violation of applicable sanctions or embargo laws on charterers’ instructions and without our consent. If such activities result in a violation of sanctions or embargo laws, we could be subject to monetary fines, penalties, or other sanctions, and our reputation and the market for our common shares could be adversely affected.
The U.S. sanctions and embargo laws and regulations vary in their application, as they do not all apply to the same covered persons or proscribe the same activities, and such sanctions and embargo laws and regulations may be amended or expanded over time.
In particular, the ongoing war in Ukraine could result in the imposition of further economic sanctions by the United States, the European Union, and other government authorities, against Russia. Certain of our charterers or other parties with whom we have entered into contracts regarding our vessels may be affiliated with persons or entities that are the subject of sanctions imposed by the U.S. government, the European Union, and/or other international bodies relating to the annexation of Crimea by Russia in 2014 and the current conflict in Ukraine. If we determine that such sanctions require us to terminate existing or future contracts to which we, or our subsidiaries, are party or if we are found to be in violation of such applicable sanctions, our results of operations may be adversely affected or we may suffer reputational harm.
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Although we believe that we have been in compliance with all applicable sanctions and embargo laws and regulations, any such violation could result in fines, penalties, or other sanctions that could severely impact our ability to access capital markets and conduct our business, and could result in some investors deciding, or being required, to divest their interest, or not to invest, in us. In addition, certain institutional investors may have investment policies or restrictions that prevent them from holding securities of companies that have contracts with countries identified by the U.S. government as state sponsors of terrorism. The determination by these investors not to invest in, or to divest from, our common shares may adversely affect the price at which our common shares trade. Moreover, our charterers may violate applicable sanctions and embargo laws and regulations as a result of actions that do not involve us or our vessels, and those violations could in turn negatively affect our reputation. Investor perception of the value of our common shares may also be adversely affected by the consequences of war, effects of terrorism, civil unrest, and governmental actions in countries or territories in which we operate.
Political instability, terrorist or other attacks, war, international hostilities, and public health threats can affect the tanker industry.
We conduct most of our operations outside of the United States, and our business, results of operations, cash flows, financial condition, and available cash may be adversely affected by changing economic, political, and governmental conditions in the countries and regions where our vessels, or vessels we may acquire, are employed or registered. Moreover, we operate in a sector of the economy that is likely to be adversely impacted by the effects of political uncertainty and armed conflicts, including the war between Ukraine and Russia and between Israel and Hamas, Russia and NATO tensions, China and Taiwan disputes, United States and China trade relations, instability between Iran and the West, hostilities between the United States and North Korea, political unrest and conflicts in the Middle East, the South China Sea region, the Red Sea region (including missile attacks controlled by the Houthis on vessels transiting the Red Sea or Gulf of Aden), and other countries and geographic areas, geopolitical events, such as the withdrawal of the U.K. from the European Union, or “Brexit”, or another withdrawal from the European Union, terrorist or other attacks (or threats thereof) around the world, and war (or threatened war) or international hostilities. Such events may contribute to further economic instability in the global financial markets and international commerce, and could also adversely affect our ability to obtain additional financing on terms acceptable to us or at all.
The war between Russia and Ukraine may lead to further regional and international conflicts or armed action. This war has disrupted supply chains and caused instability in the energy markets and the global economy, with effects on the tanker market, which has experienced volatility. The United States, the United Kingdom, and the European Union, among other countries, have announced unprecedented economic sanctions and other penalties against certain persons, entities, and activities connected to Russia, including removing Russian-based financial institutions from the Society for Worldwide Interbank Financial Telecommunication payment system and imposing a prohibition on the import of oil from Russia to the United States and the European Union’s and G7 countries’ price cap regime for seaborne Russian oil and petroleum products. These sanctions have caused supply disruptions in the oil and gas markets and could continue to cause significant volatility in energy prices, which could result in increased inflation and may trigger a recession in the U.S. and China, among other regions. Moreover, we will be subject to additional insurance premiums in case we transit through or call to any port or area designated as listed areas by the Joint War Committee or other organizations. These factors may also result in the weakening of the financial condition of our charterers, suppliers, counterparties, and other agents in the shipping industry. As a result, our business, results of operation, cash flows, and financial condition may be negatively affected since our operations are dependent on the success and economic viability of our counterparties.
The ongoing war between Russia and Ukraine could result in the imposition of further economic sanctions by the United States, the United Kingdom, the European Union, or other countries against Russia, trade tariffs, or embargoes with uncertain impacts on the tanker market. In addition, the U.S. and certain other North Atlantic Treaty Organization (NATO) countries have been supplying Ukraine with military aid. U.S. officials have also warned of the increased possibility of Russian cyberattacks, which could disrupt the operations of businesses involved in the shipping industry, including ours, and could create economic uncertainty, particularly if such attacks spread to a broad array of countries and networks. Although Ukraine and Russia reached an agreement to extend an arrangement allowing shipment of grains from Ukrainian ports through a humanitarian corridor in the Black Sea in November 2022, Russia terminated this agreement in July 2023. While much uncertainty remains regarding the global impact of the war in Ukraine, it is possible that such tensions could adversely affect our business, financial condition, results of operation, and cash flows. Furthermore, it is possible that third parties with whom we have charter contracts or banking relationships may be impacted by events in Russia and Ukraine, which could adversely affect our operations.
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Furthermore, the intensity and duration the recently declared war between Israel and Hamas is difficult to predict and its impact on the world economy and our industry is uncertain. Beginning in late 2023, vessels in the Red Sea and Gulf of Aden have increasingly been subject to attempted hijackings and attacks by drones and projectiles characterized by Houthi groups in Yemen as a response to the war between Israel and Hamas. An increasing number of companies have rerouted their vessels to avoid transiting the Red Sea, incurring greater shipping costs and delays. For vessels transiting the region, war risk premium has increased substantially, and should these attacks continue, we could similarly experience a significant increase in our insurance costs and we may not be adequately insured to cover losses from these incidents. While much uncertainty remains regarding the global impact the war between Israel and Hamas, it is possible that such tensions could result in the eruption of further hostilities in other regions, including in and around the Red Sea, and could adversely affect our business, financial condition, results of operation, and cash flows.
Terrorist attacks such as those in Paris on November 13, 2015, Manchester on May 22, 2017, and the frequent incidents of terrorism in the Middle East, and the continuing response of the United States and others to these attacks, as well as the threat of future terrorist attacks around the world, continues to cause uncertainty in the world’s financial markets and may affect our business, operating results, and financial condition. Continuing conflicts and recent developments in the Middle East, including increased tensions between the U.S. and Iran, as well as the presence of U.S. or other armed forces in Iraq, Syria, Ukraine and various other regions, may lead to additional acts of terrorism and armed conflict around the world, which may contribute to further economic instability in the global financial markets. As a result of the above, insurers have increased premiums and reduced or restricted coverage for losses caused by terrorist acts generally. These uncertainties could also adversely affect our ability to obtain additional financing on terms acceptable to us or at all. Any of these occurrences could have a material adverse impact on our operating results, revenues, and costs. Additionally, Brexit, or similar events in other jurisdictions, could impact global markets, including foreign exchange and securities markets; any resulting changes in currency exchange rates, tariffs, treaties, and other regulatory matters could in turn adversely impact our business and operations.
Further, governments may turn to trade barriers to protect their domestic industries against foreign imports, thereby depressing shipping demand. In particular, leaders in the United States have indicated that the United States may seek to implement more protective trade measures. There is significant uncertainty about the future relationship between the United States, China, and other exporting countries, including with respect to trade policies, treaties, government regulations, and tariffs. Protectionist developments, or the perception that they may occur, may have a material adverse effect on global economic conditions and may significantly reduce global trade. Moreover, increasing trade protectionism may cause an increase in (a) the cost of goods exported from regions globally, (b) the length of time required to transport goods, and (c) the risks associated with exporting goods. Such increases may significantly affect the quantity of goods to be shipped, shipping time schedules, voyage costs, and other associated costs, which could have an adverse impact on the shipping industry, and thereby on our charterers and their business, operating results, and financial condition and could thereby affect their ability to make timely charter hire payments to us and to renew and increase the number of their time charters with us. If sanctions are imposed on China (relating to the tensions with Taiwan) then a rerouting of cargos will take place and the long ton-mile voyages from the Arab gulf to China may be lost. This could have a material adverse effect on our business, results of operations, financial condition, and ability to pay any cash dividends to our shareholders.
Beginning in February of 2022, President Biden and several European leaders also announced various economic sanctions against Russia in connection with the aforementioned conflicts in the Ukraine region, which have continued to expand over the past year and which may adversely impact our business. The Russian Foreign Harmful Activities Sanctions program includes prohibitions on the import of certain Russian energy products into the United States, including crude oil, petroleum, petroleum fuels, oils, liquefied natural gas and coal, as well as prohibitions on all new investments in Russia by U.S. persons, among other restrictions. Furthermore, the United States, the EU and other countries has also prohibited a variety of specified services related to the maritime transport of Russian Federation origin crude oil and petroleum products, including trading/commodities brokering, financing, shipping, insurance (including reinsurance and protection and indemnity), flagging, and customs brokering. These prohibitions took effect on December 5, 2022, with respect to the maritime transport of crude oil and took effect on February 5, 2023, with respect to the maritime transport of other petroleum products. An exception exists to permit such services when the price of the seaborne Russian oil into non-EU countries does not exceed the relevant price cap; but implementation of this price exception relies on a recordkeeping and attestation process that allows each party in the supply chain of seaborne Russian oil to demonstrate or confirm that oil has been purchased at or below the price cap. Violations of the price cap policy or the risk that information, documentation, or attestations provided by parties in the supply chain are later determined to be false may pose additional risks adversely affecting our business.
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Potential conflict between the U.S. and its allies and Iran could result in retaliation from Iran that could potentially affect the shipping industry, through increased attacks on vessels in the Strait of Hormuz (which already experienced an increased number of attacks on and seizures of vessels lately), or by potentially closing off or limiting access to the Strait of Hormuz, where a significant portion of the world’s oil supply passes through, or any blocking of the Turkish Straits if vessels carry cargos that exceed the price cap imposed on Russian oil. For example, in January 2020, in response to certain perceived terrorist activity, the United States launched an airstrike in Baghdad that killed a high-ranking Iranian general. Although spillover effects relating to the incident were contained, similar actions and responses increase the risk or conflict in the Strait of Hormuz. Any restriction on access to the Strait of Hormuz, or increased attacks on vessels in the area, could negatively impact our earnings, cash flow, and results of operations.
In the past, other political conflicts have also resulted in attacks on vessels, mining of waterways, and other efforts to disrupt international shipping, particularly in the Arabian Gulf region. The ongoing war in Ukraine has previously resulted in missile attacks on commercial vessels in the Black Sea. The recent outbreak of conflict in and around the Red Sea has also resulted in missile attacks on vessels. Acts of terrorism and piracy have also affected vessels trading in regions such as the Gulf of Guinea, the Red Sea, the Gulf of Aden off the coast of Somalia, and the Indian Ocean. Any of these occurrences could have a material adverse impact on our future performance, results of operations, cash flows, and financial position.
The U.K.’s withdrawal from the European Union may have a negative effect on global economic conditions, financial markets, and our business.
Following a national referendum and enactment of legislation by the U.K. government, the U.K. formally withdrew from the European Union on January 31, 2020 (“Brexit”), and following a transition period, the U.K. and the European Union entered into a U.K.-EU Trade and Cooperation Agreement (the “Withdrawal Agreement”) on December 30, 2020, to govern their future relationship. Significant political and economic uncertainty remains concerning the implementation of the Withdrawal Agreement, and this may have a significant adverse effect on global economic conditions and the stability of global financial markets. These developments and uncertainties have had and may continue to have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global market liquidity and restrict the ability of key market participants to operate in certain financial markets. Any of these factors could depress economic activity and restrict our access to capital, which could have a material adverse effect on our business and on our consolidated financial position, results of operations and our ability to pay distributions. Additionally, Brexit or similar events in other jurisdictions, could impact global markets, including foreign exchange and securities markets; any resulting changes in currency exchange rates, tariffs, treaties and other regulatory matters could in turn adversely impact our business and operations. Furthermore, asset valuations and credit ratings may be particularly subject to increased market volatility. Any of these factors could have a significant adverse effect on our business, financial condition, results of operations, and prospects.
Brexit contributes to considerable uncertainty concerning the current and future economic environment. Brexit could, therefore, adversely affect European or worldwide political, regulatory, economic or market conditions and could contribute to instability in global political institutions, regulatory agencies and financial markets.
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Acts of piracy on ocean-going vessels could adversely affect our business.
Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the Red Sea, the Gulf of Aden off the coast of Somalia, the Indian Ocean, and the Gulf of Guinea region off the coast of Nigeria, which has experienced increased incidents of piracy in recent years. Sea piracy incidents continue to occur, particularly in the South China Sea, the Indian Ocean, the Gulf of Guinea, and the Strait of Malacca, and there has been a recent resurgence of such incidents in the Gulf of Aden. Acts of piracy could result in harm or danger to the crews that man our vessels, or vessels we may acquire, and puts our cargo and vessels at risk of damage or spills. Additionally, if piracy attacks result in regions in which our vessels, or vessels we may acquire, are deployed being characterized as “war risk” zones by insurers or if our vessels, or vessels we may acquire, are deployed in Joint War Committee “war and strikes” listed areas, premiums payable for insurance coverage could increase significantly and such insurance coverage may be more difficult to obtain, if available at all. In addition, crew and security equipment costs and other operating expenses, including costs that may be incurred to employ onboard security and armed guards, could increase in such circumstances. Furthermore, while we believe the charterer remains liable for charter payments when a vessel is seized by pirates, the charterer may dispute this and withhold charter hire until the vessel is released. A charterer may also claim that a vessel seized by pirates was not “on-hire” for a certain number of days and is, therefore, entitled to cancel the charterparty, a claim that we would dispute. We may not be adequately insured to cover losses from these incidents, which could have a material adverse effect on us. In addition, any detention hijacking as a result of an act of piracy against our vessels, or vessels we may acquire, or an increase in cost or unavailability of insurance for our vessels, or vessels we may acquire, could have a material adverse impact on our business, results of operations, cash flows, financial condition, and ability to pay dividends and may result in loss of revenues, increased costs, and decreased cash flows to our customers, which could impair their ability to make payments to us under our charters.
An economic slowdown or changes in the economic and political environment in the Asia Pacific region could occur.
We anticipate a significant number of the port calls made by our vessels, or vessels we may acquire, will continue to involve the loading or discharging of cargoes in ports in the Asia Pacific region. As a result, any negative changes in economic conditions in any Asia Pacific country, particularly in China, may have a material adverse effect on our business, financial condition, and results of operations, as well as our future prospects. These negative changes in economic conditions may also have a material adverse effects on our cash flow and financial condition, which would affect our ability to meet our current leaseback obligations. If we fail to meet our current leaseback obligations, then the owners of any leased vessels may choose to repossess vessels in our fleet as a result of a default under any sale and leaseback arrangement. In addition, Chinese counterparties to our leaseback obligations may not be willing to adhere to the commercial terms in our contracts if they were to go against a new policy in China. Before the global economic financial crisis that began in 2008, China had one of the world’s fastest growing economies in terms of gross domestic product, or GDP, which had a significant impact on shipping demand. Generally, the average GDP growth rate of China over the last ten years remains below pre-2008 levels. Furthermore, there is a rising threat of a Chinese financial crisis resulting from massive personal and corporate indebtedness and “trade wars.” Although the United States and China signed a trade agreement in early 2020, there is no assurance that the Chinese economy will not experience a significant contraction in the future.
Although state-owned enterprises still account for a substantial portion of the Chinese industrial output, in general, the Chinese government is reducing the level of direct control that it exercises over the economy through state plans and other measures. There is an increasing level of freedom and autonomy in areas such as allocation of resources, production, pricing, and management and a gradual shift in emphasis to a “market economy” and enterprise reform. Limited price reforms were undertaken with the result that prices for certain refined petroleum products are principally determined by market forces. Many of the reforms are unprecedented or experimental and may be subject to revision, change, or abolition based upon the outcome of such experiments. If the Chinese government does not continue to pursue a policy of economic reform, the level of imports to and exports from China could be adversely affected by changes to these economic reforms by the Chinese government, as well as by changes in political, economic, and social conditions or other relevant policies of the Chinese government, such as changes in laws, regulations, or export and import restrictions. Notwithstanding economic reform, the Chinese government may adopt policies that favor domestic shipping and tanker companies and may hinder our ability to compete with them effectively. China has also promoted the construction of railway and highway transportation corridors in Asia, which could reduce the amount of goods transported by sea. For example, China imposes a tax for non- resident international transportation enterprises engaged in the provision of services of passengers or cargo, among other items, in and out of China using their own, chartered, or leased vessels. The regulation may subject international transportation companies to Chinese enterprise income tax on profits generated from international transportation services passing through Chinese ports. This could have an adverse impact on our charterers’ business, operating results, and financial condition and could thereby affect their ability to make timely charter hire payments to us and to renew and increase the number of their time charters with us. Moreover, an economic slowdown in the economies of the European Union and other Asian countries may further adversely affect economic growth in China and elsewhere.
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In addition, although largely alleviated, concerns regarding the possibility of sovereign debt defaults by European Union member countries, including Greece, have in the past disrupted financial markets throughout the world, and may lead to weaker consumer demand in the European Union, the United States, and other parts of the world. The possibility of sovereign debt defaults by European Union member countries, including Greece, and the possibility of market reforms to float the Chinese renminbi, either of which development could weaken the Euro against the Chinese renminbi, could adversely affect consumer demand in the European Union. Moreover, the revaluation of the renminbi may negatively impact the United States’ demand for imported goods, many of which are shipped from China. In addition, China is currently seeking repayment of loans from African and Asian developing countries that may not be able to repay those loans. Future weak economic conditions could have a material adverse effect on our business, results of operations, financial condition, and ability to pay dividends to our shareholders. Our business, financial condition, results of operations, and future prospects will likely be materially and adversely affected by another economic downturn in any of the aforementioned countries and regions.
We may be subject to increased inspection procedures and tighter import and export controls.
International shipping is subject to various security and customs inspection and related procedures in countries of origin and destination. Inspection procedures can result in the seizure, delay in the loading and off- loading, or delivery of the contents of our vessels, or vessels we may acquire, or the levying of customs duties, fines, or other penalties against us. It is possible that changes to inspection procedures could impose additional financial and legal obligations on us. Furthermore, changes to inspection procedures could also impose additional costs and obligations on us and our customers and may, in certain cases, render the shipment of certain types of cargo uneconomical or impractical. Any such changes or developments may have a material adverse effect on our business, financial condition, and results of operations.
Our information systems may fail or may be subject to security breaches.
The efficient operation of our business is dependent on computer hardware and software systems both onboard our vessels, or vessels we may build or acquire, and at our onshore offices. Information systems are vulnerable to security breaches by computer hackers and cyber terrorists. We rely on industry-accepted security measures and technology to securely maintain confidential and proprietary information kept on our information systems. However, these measures and technology may not adequately prevent cybersecurity breaches, the access, capture, or alteration of information by criminals, the exposure or exploitation of potential security vulnerabilities, the installation of malware or ransomware, acts of vandalism, computer viruses, and misplaced data or data loss. In addition, the unavailability of the information systems or the failure of these systems to perform as anticipated for any reason could disrupt our business and could result in decreased performance and increased operating costs, causing our business and results of operations to suffer. Any significant interruption or failure of our information systems or any significant breach of security could adversely affect our business, results of operations, and financial condition, as well as our cash flows, including cash available for dividends to our shareholders.
Additionally, any changes in the nature of cyber threats might require us to adopt additional procedures for monitoring cybersecurity, which could require additional expenses and/or capital expenditures. Most recently, the war between Russia and Ukraine has been accompanied by cyber-attacks against the Ukrainian government and other countries in the region. It is possible that these attacks could have collateral effects on additional critical infrastructure and financial institutions globally, which could adversely affect our operations. It is difficult to assess the likelihood of such threat and any potential impact at this time.
In July 2023, the SEC adopted rules requiring the mandatory disclosure of material cybersecurity incidents, as well as cybersecurity governance and risk management practices. A failure to disclosure could result in the imposition of injunctions, fines and other penalties by the SEC. Complying with these obligations could cause us to incur substantial costs and could increase negative publicity surrounding any cybersecurity incident.
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RISKS RELATING TO OUR BUSINESS
Our loan agreements and other financing arrangements contain, and we expect that other future loan agreements and financing arrangements will contain, restrictive covenants that may limit our liquidity and corporate activities.
Our loan agreements and financing arrangements contain, and we expect that other future loan agreements and financing arrangements will contain, customary covenants and event of default clauses, financial covenants, change of control clauses, restrictive covenants, sustainability-linked pricing adjustments and performance requirements, which may affect operational and financial flexibility. Such restrictions could affect and, in many respects, limit or prohibit, among other things, our ability to pay dividends, incur additional indebtedness, create liens, sell assets, or engage in mergers or acquisitions. These restrictions could limit our ability to plan for or react to market conditions or meet extraordinary capital needs or otherwise restrict corporate activities. There can be no assurance that such restrictions will not adversely affect our ability to finance our future operations or capital needs.
As a result of these restrictions, we may need to seek permission from our lenders and other financing counterparties in order to engage in some corporate actions. Our lenders’ and other financing counterparties’ interests may differ from ours and we may not be able to obtain their permission when needed. This may prevent us from taking actions that we believe are in our best interests, which may adversely impact our revenues, results of operations, and financial condition.
A failure by us to meet our payment and other obligations, including our financial covenants and any security coverage requirements, could lead to defaults under our financing arrangements. Likewise, a decrease in vessel values or adverse market conditions could cause us to breach our financial covenants or security requirements (the market values of tanker vessels have generally experienced high volatility). In the event of a default that we cannot remedy, our lenders and other financing counterparties could then accelerate their indebtedness and foreclose on the respective initial vessels comprising our fleet and other vessels we may acquire. The loss of any of our vessels and other vessels we may acquire could have a material adverse effect on our business, results of operations, and financial condition.
Any loan agreements and financing arrangements we may enter into in the future are expected to contain cross-default provisions, pursuant to which a default by us under a loan and the refusal of any one lender or financing counterparty to grant or extend a waiver could result in the acceleration of our indebtedness under any other loans and financing agreements to which we are party.
There can be no assurance that we will obtain waivers, deferrals, and amendments of certain financial covenants, payment obligations, and events of default under our loan facilities with our lenders in the future, if needed.
Servicing current and future debt will limit funds available for other purposes and impair our ability to react to changes in our business.
We must dedicate a portion of our cash flow from operations to pay the principal and interest on our indebtedness. These payments limit funds otherwise available for working capital, capital expenditures, and other purposes. As of December 31, 2023 and 2022, we had a total indebtedness of $698.5 million and $744.8 million, respectively, excluding deferred finance fees. Our current or future debt could have other significant consequences on our operations. For example, it could:
● | increase our vulnerability to general economic downturns and adverse competitive and industry conditions; |
● | require us to dedicate a substantial portion, if not all, of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, and other general corporate purposes; |
● | limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; |
● | place us at a competitive disadvantage compared to competitors that have less debt or better access to capital; |
● | limit our ability to raise additional financing on satisfactory terms or at all; and |
● | adversely impact our ability to comply with the financial and other restrictive covenants of our current or future financing arrangements, which could result in an event of default under such agreements. |
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Furthermore, our current or future interest expense could increase if interest rates increase. If we do not have sufficient earnings, we may be required to refinance all or part of our current or future debt, sell assets, borrow more money, or sell more securities, and we cannot guarantee that the resulting proceeds therefrom, if any, will be sufficient to meet our ongoing capital and operating needs. Because interest paid on loans is generally a margin plus a reference rate, such as SOFR, that is subject to change, our actual interest costs would increase as the reference rate increases. During an inflationary period, such as one we are currently experiencing, SOFR or a similar reference rate will generally be increased, thus costing us more money to service our debt obligations and reducing our net revenues. Any event of default under a loan agreement pursuant to which we have granted security could permit the relevant lender to exercise its rights as a secured lender and take the relevant collateral, which may include our vessels.
In April 2022, we entered into an unsecured loan facility with Okeanis Marine Holdings S.A., an entity controlled by Mr. Ioannis Alafouzos relating to the acquisition of the VLCC vessels Nissos Kea and Nissos Nikouria. Mr. Ioannis Alafouzos, as the chairman of our board of directors, may be incentivized to take actions to ensure that this loan is repaid, even if it may not be in the best interests of all our shareholders. In addition, even though this loan is unsecured, it still ranks ahead of equity and repaying such loan will reduce potentially available amounts for dividends.
Worldwide inflationary pressures could negatively impact our results of operations and cash flows.
Inflation could have an adverse impact on our business, financial condition and results of operations, both directly through the increase of the operating costs of our vessels and indirectly through its adverse impact on the world economy in terms of increasing interest rates and slowdown of global growth. Worldwide economies have in the recent past experienced inflationary pressures, with price increases seen across many sectors globally. In response to such inflationary pressures, central banks made steep increases in interest rates, which results in increases to the interest rates available to us on any potential new debt financing or refinancing. If central banks continue to increase interest rates, or interest rates otherwise increase significantly, the resulting increase to the interest rates available to us on new debt financings or refinancings we may pursue could adversely affect our ability to complete vessel acquisitions, take advantage of business opportunities or respond to competitive pressures. Furthermore, if inflationary pressures intensify further, we may be unable to raise our charter rates enough to offset the increasing costs of our operations, which would decrease our profit margins and result in deterioration of our financial condition.
Whether the present inflationary pressures will transition to a long-term inflationary environment and the effects of such a development on charter rates, vessel demand and operating expenses in the sector in which we operate are uncertain. Additionally, the monetary tightening implemented by a series of central banks around the world in order to curb inflationary pressures has also significantly increased the probability of an economic recession in the short- to medium-term future.
We expect that a limited number of financial institutions will hold our cash including financial institutions that may be located in Greece, the Netherlands, France and Switzerland.
We expect that a limited number of financial institutions will hold all of our cash, including some institutions located in Greece, the Netherlands, France and Switzerland. Of the financial institutions located in Greece, none are subsidiaries of international banks. Depending on our cash balance in any our accounts at any given point in time, our balances may not be covered by government-backed deposit insurance programs in the event of default by these financial institutions.
For example, a substantial amount of our cash is currently held in EU banking institutions. While the EU Deposit Guarantee Directive Scheme provides for deposit insurance of up to €100,000 per depositor, per insured bank, the amounts that we have in EU banks far exceed that insurance amount, and therefore unless legislative measures are imposed at EU level or by the Dutch, French or Greek governments to protect depositors, in the event the bank in which our funds are located fails, we may lose all or a substantial portion of our deposits. Our bank accounts held in Swiss banking institutions are used for daily commercial transactions. Esisuisse, a self-regulatory organization for banks in Switzerland, guarantees that it will cover protected deposits as part of the self-regulation of Swiss banks and securities firms which provides deposit insurance against loss up to the amount of CHF 100,000. The deposits we have in Swiss banks exceeds that insurance amount and therefore if the Swiss government does not impose measures to protect depositors, in the event the bank in which our funds are located fails, we may lose all or a substantial portion of our deposits. In addition, in the event any of our banks do not allow us to withdraw funds in the time and amounts that we want, we may not timely comply with contractual provisions in any of our contracts or our salary obligations, among other things.
The occurrence of any default of any of our banks could have a material adverse effect on our business, financial condition, results of operations, and cash flows, and we may lose part or all of our cash that we deposit with such banks.
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Capital expenditures and other costs necessary to operate and maintain our vessels may increase.
Changes in safety or other equipment standards, as well as compliance with standards imposed by maritime self-regulatory organizations and customer requirements or competition, may require us to make additional expenditures. In order to satisfy these requirements, we may, from time to time, be required to take our vessels out of service for extended periods of time, with corresponding losses of revenues. In the future, market conditions may not justify these expenditures or enable us to operate some or all of our vessels profitably during the remainder of their economic lives.
We may not be able to refinance our existing indebtedness or obtain additional financing.
We may finance future fleet expansion with additional secured indebtedness. Our ability to obtain bank financing or to access the capital markets for future offerings may be limited by our financial condition at the time of any such financing or offering, including the actual or perceived credit quality of our charterers and the market value of our fleet, as well as by adverse market conditions resulting from, among other things, general economic conditions, weakness in the financial markets, and contingencies and uncertainties that are beyond our control. Significant contraction, de-leveraging, and reduced liquidity in credit markets worldwide is reducing the availability and increasing the cost of credit. If we are not able to obtain new debt financing on terms acceptable to us or refinance our existing debt, we will have to dedicate a portion of our cash flow from operations to pay the principal and interest of this indebtedness. If we are not able to satisfy these obligations, we may have to undertake alternative financing plans. In addition, debt service payments under our current or future financing arrangements or alternative financing may limit funds otherwise available for working capital, capital expenditures, the payment of dividends, and other purposes. Our inability to obtain additional or replacement financing at anticipated costs or at all may materially affect our results of operation, our ability to implement our business strategy, our payment of dividends, and our ability to continue as a going concern.
We are dependent on a limited number of customers for a large part of our revenues, and failure of such counterparties to meet their obligations could cause us to suffer losses or negatively impact our results of operations and cash flows.
During 2023, 80% of our revenues were derived from 17 customers. Such agreements subject us to counterparty risks. The ability of such charterers to perform their obligations under a contract with us will depend on a number of factors that are beyond our control and may include, among other things, general economic conditions, the condition of the maritime industry, the overall financial condition of the counterparty, charter rates received for specific types of vessels, work stoppages or other labor disturbances, including as a result of the COVID-19 pandemic, and various expenses. The combination of a reduction of cash flow resulting from declines in world trade, a reduction in borrowing bases under reserve-based credit facilities, and the lack of availability of debt or equity financing may result in a significant reduction in the ability of charterers to make charter payments to us. In addition, in depressed market conditions, charterers and customers may no longer need a vessel that is then under charter or contract or may be able to obtain a comparable vessel at lower rates. As a result, charterers and customers may seek to renegotiate the terms of their existing charter agreements or avoid their obligations under those contracts. Should one of our counterparties fail to honor its obligations under agreements with us, we could sustain significant losses that could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
We are dependent on our charterers and other counterparties fulfilling their obligations under agreements with us.
Payments to us by our charterers under voyage and time charters are and will be our main source of operating cash flow. Weaknesses in demand for shipping services, increased operating costs due to changes in environmental or other regulations, the oversupply of large vessels, and the oversupply of smaller size vessels due to a cascading effect could place certain of our customers under financial pressure. Any declines in demand could result in worsening financial challenges to our customers and may increase the likelihood of one or more of our customers being unable or unwilling to pay us contracted charter rates or going bankrupt.
If we lose a vessel employment contract because the counterparty is unable to pay us or for any other reason, we may be unable to re-deploy the related vessel on similarly favorable terms or at all. Also, we will not receive any revenues from such a vessel while it is not chartered, but we will be required to pay expenses necessary to maintain and insure the vessel and service any indebtedness on it.
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The combination of any surplus of tanker vessel capacity, the expected entry into service of new technologically advanced ships, and the expected increase in the size of the world tanker fleet over the next few years may make it difficult to secure substitute employment for any of our vessels if our counterparties fail to perform their obligations under the currently arranged voyage or time charters, and any new charter arrangements we are able to secure may be at lower rates. Furthermore, the surplus of tanker vessels available at lower charter rates could negatively affect our charterers’ willingness to perform their obligations under our time charters, particularly if the charter rates in such time charters are significantly above the prevailing market rates. Accordingly, we may have to grant concessions to our charterers in the form of lower charter rates for the remaining duration of the relevant charter or part thereof, or to agree to re-charter vessels coming off charter at reduced rates compared to the charter then ended. Because we enter into short-term and medium-term time charters from time to time, we may need to re-charter vessels coming off charter more frequently than some of our competitors, which may have a material adverse effect on our business, results of operations, and financial condition, as well as our cash flows, including cash available for distributions to our shareholders.
The loss of any of our charterers, voyage or time charters, or vessels, or a decline in payments under our voyage or time charters, could have a material adverse effect on our business, results of operations, and financial condition, as well as our cash flows, including cash available for distributions to our shareholders.
In addition to charter parties, we may, among other things, enter into contracts for the sale or purchase of secondhand tanker vessels or shipbuilding contracts for newbuildings, provide performance guarantees relating to shipbuilding contracts to sale and purchase contracts or to charters, enter into credit facilities or other financing arrangements, accept commitment letters or refund guarantees from banks and other financial institutions, enter into insurance contracts and interest or exchange rate swaps, or enter into joint ventures. Such agreements expose us to counterparty credit risk. The ability and willingness of each of our counterparties to perform its obligations under a contract with us will depend upon a number of factors that are beyond our control and may include, among other things, general economic conditions, the state of the capital markets, the condition of the ocean-going tanker shipping industry, and charter hire rates. Should a counterparty fail to honor its obligations under agreements with us, we could sustain significant losses, which, in turn, could have a material adverse effect on our business, results of operations, and financial condition, as well as our cash flows, including cash available for distributions to our shareholders.
We may fail to manage our growth properly.
We may continue to grow our fleet in the future in line with our strategy. Our future growth will primarily depend on our ability to:
● | generate excess cash flow for investment without jeopardizing our ability to cover current and foreseeable working capital needs (including debt service); |
● | raise equity and obtain required financing for our existing and new operations on acceptable terms; |
● | locate and acquire suitable vessels; |
● | identify and consummate acquisitions or joint ventures; |
● | integrate any acquired business successfully with our existing operations; |
● | including our commercial and technical managers’ ability, to hire, train, and retain qualified personnel and crew to manage and operate our growing business and fleet; |
● | enhance our customer base; and |
● | manage expansion. |
Growing any business by acquisition presents numerous risks such as undisclosed liabilities and obligations, difficulty in obtaining additional qualified personnel, managing relationships with customers and suppliers, and integrating newly acquired operations into existing infrastructures. We may not be successful in executing our growth plans and we may incur significant additional expenses and losses in connection therewith.
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There could be delays or defaults by the shipyards in the construction of newbuildings.
As of the date of this Annual Report, we do not have any contracts for newbuilding vessels. We may enter into contracts for newbuilding vessels in the future. Vessel construction projects are generally subject to risks of delay that are inherent in any large construction project, which may be caused by numerous factors, including shortages or delays of equipment, materials, or skilled labor, unscheduled delays in the delivery of ordered materials and equipment or shipyard construction, failure of equipment to meet quality and/or performance standards, financial or operating difficulties experienced by equipment vendors or the shipyard, unanticipated actual or purported change orders, inability to obtain required permits or approvals, a backlog of orders at the shipyard, design or engineering changes, work stoppages and other labor disputes, adverse weather conditions, or any other events of force majeure. Significant delays could adversely affect our financial position, results of operations, and cash flows. If we already committed to a third party the use of the vessel upon construction completion, then we may breach such commitment and be subject to pay related damages, such as any increased costs the counterparty pays to secure an alternate vessel to use. Additionally, failure to complete a project on time may result in the delay of revenue from that vessel, and we may continue to incur costs and expenses related to delayed vessels, such as supervision expenses.
Our ability to obtain additional debt financing may be dependent on our ability to charter our vessels, or vessels we may build or acquire, the performance of our charters, and the creditworthiness of our charterers.
Our inability to re-charter our vessels, or vessels we may build or acquire, and the actual or perceived credit quality of our charterers, and any defaults by them, may materially affect our ability to obtain any additional capital resources that we may require to purchase additional vessels or maintain our existing fleet or may significantly increase our costs of obtaining such capital. Our inability to obtain financing, or receiving financing at a higher than anticipated cost, may materially affect our results of operation and our ability to implement our business strategy.
The employment of our vessels could be adversely affected by an inability to clear the Oil Majors’ vetting process, and we could be in breach of our charter agreements.
The shipping industry is heavily regulated by international conventions, local laws and regulations, and industry-driven standards. This is particularly so with respect to the shipment of crude oil, refined petroleum products (clean and dirty), and bulk liquid chemicals. Compliance with industry-driven standards imposed upon tanker vessel owners and operators by the so-called “Oil Majors,” such as Exxon Mobil, BP p.l.c., Royal Dutch Shell p.l.c., Chevron, ConocoPhillips and Total S.A., together with a number of commodities traders are critical to the tanker industry. The Oil Majors represent a significant percentage of the production, trading, and shipping logistics (terminals) of crude oil and refined products worldwide and they have developed and implemented a strict, ongoing due diligence process for selecting commercial partners, referred to as “vetting.”
The vetting process is a sophisticated and comprehensive risk assessment of both vessels and vessel operators, including physical ship inspections, questionnaires completed and evaluated by accredited inspectors, and the production of risk assessment reports determining the suitability of vessels and vessel operators, as well as crewmembers, for hire by the Oil Majors.
While numerous factors are considered and evaluated prior to a vetting decision, the Oil Majors, through their association, Oil Companies International Marine Forum (“OCIMF”), have developed two basic tools for vetting: the Ship Inspection Report Programme (“SIRE”), and the Tanker Management and Self-Assessment (TMSA) programme. The former is a physical ship inspection based upon a thorough vessel inspection questionnaire and performed by accredited OCIMF inspectors, resulting in a report being logged on SIRE, while the latter is a more recent addition to the risk assessment tools used by the Oil Majors.
Based upon commercial risk, there are three levels of assessment used by Oil Majors:
● | terminal use, which clears a vessel to call at one of the Oil Major’s terminals; |
● | voyage charter, which clears the vessel for a single voyage; and |
● | period charter (or time charter), which clears the vessel for use for an extended period of time. |
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The depth and complexity of each of these levels of assessment varies. Our charter agreements require that the applicable vessel have a valid SIRE report (less than six months old) in the OCIMF website as recommended by OCIMF. In addition, under the terms of many such charter agreements, the charterers require that such vessels and their technical managers be vetted and approved to transport crude oil or refined petroleum products (as applicable). The technical manager is responsible for obtaining and maintaining the vetting approvals required to successfully charter such vessels.
In the case of term charter relationships, additional factors are considered when awarding such contracts, including:
● | office assessments and audits of the vessel operator; |
● | the vessel operator’s environmental, health, and safety record; |
● | compliance with the standards of the IMO; |
● | compliance with Oil Majors’ codes of conduct, policies, and guidelines, including policies relating to transparency, anti-bribery and ethical conduct requirements, and relationships with third parties; |
● | compliance with heightened industry standards set by the Oil Majors; |
● | results of Port State Control inspections (see below); |
● | shipping industry relationships, reputation for customer services, and technical and operating expertise; and |
● | shipping experience and quality of ship operations, including cost-effectiveness and technical capability and experience of crewmembers. |
Under the terms of our charter agreements, both the vessels and the technical managers are vetted and approved to transport petroleum products by multiple Oil Majors. Any failure to maintain our tanker vessels to the standards required by the Oil Majors could put us in breach of our charter agreement and lead to termination of such agreement and, potentially, could give rise to impairment in the value of our tanker vessels. Should we not be able to successfully clear the vetting process in such circumstances on an ongoing basis, the future employment of our vessels, as well as our ability to obtain charters, whether medium- or long-term, could be adversely affected. Such a situation may lead to the Oil Majors’ terminating any existing charters and refusing to use our vessels in the future, which, in turn, would adversely affect our results of operations and cash flows.
The industry for the operation of tanker vessels and the transportation of oil is highly competitive and we may not be able to compete for charters with new entrants or established companies with greater resources.
We will employ our tankers and any additional vessels we may acquire in a highly competitive market that is capital intensive and highly fragmented. The operation of tanker vessels and the transportation of cargoes shipped in these vessels, as well as the shipping industry in general, is extremely competitive. Competition arises primarily from other vessel owners, including major oil companies as well as independent tanker shipping companies, some of whom have substantially greater resources than we do. Competition for the transportation of oil can be intense and depends on price, location, size, age, condition, and the acceptability of the vessel and its operators to the charterers. Due in part to the highly fragmented market, competitors with greater resources could enter and operate larger fleets through consolidations or acquisitions that may be able to offer better prices and fleets than us.
We and KMC may be unable to attract and retain key management personnel in the shipping industry, which may negatively impact the effectiveness of our management and our results of operation.
Our success depends to a significant extent upon the abilities and efforts of our senior executives and our Chairman for the management of our activities and strategic guidance, including our ability to retain our management team and the ability of our management to recruit and hire suitable employees. While we believe that we have an experienced management team, the loss or unavailability of one or more of our senior executives or our Chairman or any other key employees for any extended period of time, or KMC’s inability to attract and retain its key personnel or employees, could have an adverse effect on our business and results of operations.
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Our executive officers do not devote all of their time to our business, which may hinder our ability to operate successfully.
Certain of our executive officers are not required to work full-time on our affairs and are involved in business activities not related to us or that compete with us, which may result in their spending less time than is appropriate or necessary to manage our business successfully. While we estimate that certain of our executive officers may at times spend a substantial portion of their monthly business time on business activities not related to our business, the actual allocation of time could vary significantly from time-to-time depending on various circumstances and needs of the other businesses, such as the relative levels of strategic activities of such businesses. As a result, there could be material competition for the time and effort of our officers who also provide services to other businesses, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. Furthermore, such other business activities may create conflicts of interest in matters involving or affecting us, our customers, and our business, and it is not certain that any of these conflicts of interest will be resolved in our favor, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
If labor interruptions are not resolved in a timely manner, they could have a material adverse effect on our business, results of operations, cash flows, financial condition, and available cash.
KMC is responsible for recruiting our vessels’ senior officers and, mainly through a crewing agent, all other crew members for our vessels and all other vessels we may acquire. If not resolved in a timely and cost-effective manner, industrial action or other labor unrest could prevent or hinder our operations from being carried out as we expect and could have a material adverse effect on our business, results of operations, cash flows, financial condition, and available cash.
If we expand our business, we will need to improve or increase our operational capabilities, financial systems and staff.
Our current operating and financial systems may not be adequate if we implement a plan to expand the size of our fleet, and our attempts to improve those systems may be ineffective. We, KMC, or our crewing agents may need to recruit suitable additional seafarers and shore-based administrative and management personnel. We cannot guarantee that we or our crewing agents will be able to hire suitable employees or a sufficient number of employees if we expand our fleet. If we are unable to operate our financial and operations systems effectively or to recruit suitable employees as we expand our fleet, our performance may be adversely affected.
We may acquire additional vessels in the future and if those vessels are not delivered on time or are delivered with significant defects, our earnings and financial condition could suffer.
We may acquire additional vessels in the future. A delay in the delivery of any vessels to us, the failure of the contract counterparty to deliver a vessel at all, or us not taking delivery of a vessel could cause us to breach our obligations under a related time charter or could otherwise adversely affect our financial condition and results of operations. In addition, the delivery of any vessel with substantial defects could have similar consequences.
We may conduct a substantial amount of business in China, whose legal system has inherent uncertainties.
Many of our vessels call to ports in China and we have entered into and may further enter in the future into sale and leaseback transactions with Chinese financial institutions. We do not have any on-shore presence in mainland China or Hong Kong, port calls in mainland China and Hong Kong in the aggregate represented 4% and 7% of our worldwide port calls in 2023 and 2022, respectively. We did not generate revenues from mainland Chinese and Hong Kong charterers in 2023, as compared to 19% of revenue generated from mainland Chinese and Hong Kong Charterers in 2022. As of December 31, 2023 and 2022, the aggregate amount of our loans from Chinese lenders, as a percentage of amounts borrowed from all lenders, amounted to 19%. Although our charters and sale and leaseback agreements are governed by English law, we may have difficulties enforcing a judgment rendered by an English court (or other non-Chinese court) in China, and our legal protections available to us in China may be more limited. Charters and any other agreements that we enter into with Chinese counterparties, may be subject to new regulations in China that may require us to incur new or additional compliance or other administrative costs and pay new taxes or other fees to the Chinese government. Changes in laws and regulations, including with regards to tax matters, and their implementation by local authorities could affect our vessels chartered to Chinese customers as well as our vessels calling to Chinese ports and could have a material adverse effect on our business, results of operations, and financial condition, as well as our cash flows, including cash available for distributions to our shareholders.
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Our revenues are derived substantially from a single segment, the crude oil tanker segment, which exposes us to adverse developments in the crude oil tanker market and which may adversely affect our future performance, results of operations, cash flows and financial position.
Substantially all of our revenues are derived from a single market, the crude oil tanker segment, and therefore, our financial results depend on the development and growth in this segment. External factors that affect the crude oil tanker market will have a significant impact on our business. Freight rates and asset prices have been volatile. Any adverse development in the crude oil tanker segment would have a material adverse impact on our future performance, results of operations, cash flows and financial position. Further, our lack of diversification makes us increasingly vulnerable to adverse developments in the international crude oil tanker market, and this could have a greater material adverse impact on our future performance, results of operations, cash flows and financial position than it would if we maintained more diverse lines of business.
A drop in spot charter rates may provide an incentive for some charterers to default on their charters.
When we enter into a time charter or bareboat charter, rates under that charter are fixed throughout the term of the charter. If the spot charter rates in the tanker shipping industry become significantly lower than the time charter equivalent rates that some of our charterers are obligated to pay us under our then- existing charters, the charterers may have an incentive to default under that charter or attempt to renegotiate the charter. If our charterers fail to pay their obligations, we would have to attempt to re-charter our vessels, or vessels we may acquire at lower charter rates, and as a result we could sustain significant losses which could have a material adverse effect on our cash flow and financial condition, which would affect our ability to meet our current or future loans or current leaseback obligations. If our current or future lenders choose to accelerate our indebtedness and foreclose their liens, or if the owners of any leased vessels we may acquire choose to repossess vessels in our fleet as a result of a default under any sale and leaseback arrangement, our ability to continue to conduct our business would be impaired.
An increase in operating costs could decrease earnings and available cash.
Vessel operating costs include the costs of crew, provisions, deck and engine stores, insurance, and maintenance and repairs, which depend on a variety of factors, many of which are beyond our control. Some of these costs, including relating to insurance and enhanced security measures, have been increasing. If any of our vessels, or vessels we may acquire, suffer damage, they may need to be repaired at a drydocking facility. The costs of drydocking repairs are unpredictable and can be substantial. Increases in any of these expenses could decrease our earnings and available cash.
Rising fuel prices may adversely affect our profits.
Fuel is a significant, expense if vessels are under voyage charter or if consumed during ballast days. Moreover, the cost of fuel will affect the profit we can earn on the short-term or spot market. Upon redelivery of vessels at the end of a time charter, we may be obliged to repurchase the fuel on board at prevailing market prices, which could be materially higher than fuel prices at the inception of the time charter period. As a result, an increase in the price of fuel may adversely affect our profitability. The price and supply of fuel is unpredictable and fluctuates based on events outside our control, including geopolitical events, supply and demand for oil and gas, actions by OPEC and other oil and gas producers, war and unrest in oil producing countries and regions, regional production patterns, and environmental concerns. Further, fuel may become much more expensive in the future, which may reduce the profitability and competitiveness of our business versus other forms of transportation, such as truck or rail.
The aging of our fleet may result in increased operating and capital costs in the future, which could adversely affect our earnings.
In general, the cost of maintaining a vessel in good operating condition increases with the age of the vessel. As our fleet ages, operating and other costs will increase. In the case of bareboat charters, operating costs are borne by the bareboat charterer. Cargo insurance rates also increase with the age of a vessel, making older vessels less desirable to charterers. Governmental regulations, including environmental regulations, and safety or other equipment standards related to the age of vessels may require expenditures for alterations or the addition of new equipment to our vessels, or vessels we may acquire, and may restrict the type of activities in which our vessels, or vessels we may acquire, may engage. As our fleet ages, market conditions might not justify those expenditures or enable us to operate our vessels, or vessels we may acquire, profitably during the remainder of their useful lives.
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Unless we set aside reserves or are able to borrow funds for vessel replacement, our revenue will decline at the end of a vessel’s useful life.
Unless we maintain reserves or are able to borrow or raise funds for vessel replacement, we will be unable to replace the vessels in our fleet upon the expiration of their remaining useful lives. We estimate that our vessels have a useful life of up to 25 years from the date of their initial delivery from the shipyard. In case we acquire secondhand vessels, they are depreciated from the date of their acquisition through their remaining estimated useful life. Our cash flows and income are dependent on the revenues earned by the chartering of our vessels, or vessels we may acquire, to customers. If we are unable to replace the vessels in our fleet upon the expiration of their useful lives, our business, results of operations, and financial condition will be materially and adversely affected. Any reserves set aside for vessel replacement may not be available for dividends.
Purchasing and operating secondhand vessels may result in increased operating costs and vessels off-hire.
We may expand our fleet through the acquisition of secondhand vessels. While we inspect previously owned or secondhand vessels prior to purchase, this does not normally provide us with the same knowledge about their condition and cost of any required (or anticipated) repairs that we would have had if these vessels had been built for and operated exclusively by us. Accordingly, we may not discover defects or other problems with such vessels prior to purchase. Any such hidden defects or problems, when detected, may be expensive to repair, and if not detected, may result in accidents or other incidents for which we may become liable to third parties. Also, when purchasing previously owned vessels, we do not typically receive the benefit of warranties from the builders if the vessels we buy are older than one year. In general, the costs to maintain a vessel in good operating condition increase with the age and type of the vessel. In the case of chartered-in vessels, we run similar risks.
Governmental regulations and safety or other equipment standards related to the age of vessels may require expenditures for alterations, or the addition of new equipment, to our vessels, or vessels we may acquire, and may restrict the type of activities in which the vessels may engage. As our vessels, or vessels we may acquire, age, market conditions may not justify those expenditures or enable us to operate our vessels profitably during the remainder of their useful lives.
We may not have adequate insurance to compensate us if we lose any vessels that we acquire or to cover our losses that may result from our operations.
There are a number of risks associated with the operation of ocean-going vessels, including mechanical failure, collision, fire, human error, war, terrorism, piracy, loss of life, contact with floating objects, property loss, cargo loss or damage and business interruption due to political circumstances in foreign countries, hostilities and labor strikes. Any of these events may result in loss of revenues, increased costs and decreased cash flows. In addition, the operation of any vessel is subject to the inherent possibility of marine disaster, including oil spills and other environmental mishaps.
We carry insurance for all vessels we acquire against those types of risks commonly insured against by vessel owners and operators. These insurances include hull and machinery insurance, protection, and indemnity insurance (which includes environmental damage and pollution insurance coverage), freight demurrage and defense insurance, and war risk insurance. Reasonable insurance rates can best be obtained when the size and the age/trading profile of the fleet is attractive. As a result, rates become less competitive as a fleet downsizes.
We do not currently maintain strike or off-hire insurance, which would cover the loss of revenue during extended vessel off-hire periods, such as those that occur during an unscheduled drydocking due to damage to the vessel from accidents except in cases of loss of hire up to a limited number of days due to war or a piracy event. Other events that may lead to off-hire periods include natural or man-made disasters that result in the closure of certain waterways and prevent vessels from entering or leaving certain ports. Accordingly, any extended vessel off-hire, due to an accident or otherwise, could have a material adverse effect on our business and our results of operations and operating cash flow.
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Additionally, our charterers may in the future engage in legally permitted trading in locations or with persons which may still be subject to restrictions due to sanctions. Our insurers may be contractually or by operation of law prohibited from honoring our insurance contract for such trading on such locations or countries or trading with such persons, which could result in reduced insurance coverage for losses incurred by the related vessels. Changes in the insurance markets attributable to the risk of terrorism in certain locations around the world could make it difficult for us to obtain certain types of coverage. In addition, the insurance that may be available to us may be significantly more expensive than our existing coverage. Furthermore, our insurers and we may be prohibited from posting or otherwise be unable to post security in respect of any incident in such locations or countries or as a result of trading with such persons, resulting in the loss of use of the relevant vessel and negative publicity for our Company which could negatively impact our business, results of operations, cash flows and stock price.
We may not be adequately insured to cover losses against all risks, which could have a material adverse effect on us. Additionally, our insurers may refuse to pay particular claims and our insurance may be voidable by the insurers if we take, or fail to take, certain action, such as failing to maintain certification of our vessels with applicable maritime regulatory organizations. Any significant uninsured or underinsured loss or liability could have a material adverse effect on our business, results of operations, cash flows, financial condition, and ability to pay dividends. It may also result in protracted legal litigation.
In the future, we may not be able to obtain adequate insurance coverage at reasonable rates for the vessels we acquire. The insurers may not pay particular claims. Our insurance policies also contain deductibles for which we will be responsible as well as limitations and exclusions that may increase our costs or lower our revenue.
We may be subject to increased premium payments, or calls, as we obtain some of our insurance through protection and indemnity associations.
We may be subject to increased premium payments, or calls, in amounts based on our claim records and the claim records of KMC, as well as the claim records of other members of the protection and indemnity associations through which we receive insurance coverage for third party liability, including pollution- related liability. In addition, our protection and indemnity associations may not have enough resources to cover claims made against them. Our payment of these calls could result in significant expense to us, which could have a material adverse effect on our business, results of operations, and financial condition.
Increasing regulation as well as scrutiny and changing expectations from investors, lenders, and other market participants with respect to our Environmental, Social, and Governance, or ESG, policies may impose additional costs on us or expose us to additional risks.
Companies across all industries are facing increasing scrutiny relating to their ESG policies. Investor advocacy groups, certain institutional investors, investment funds, lenders, and other market participants are increasingly focused on ESG practices and, in recent years, have placed increasing importance on the implications and social cost of their investments. The increased focus and activism related to ESG and similar matters may hinder access to capital, as investors and lenders may decide to reallocate capital or to not commit capital as a result of their assessment of a company’s ESG practices. Companies which do not adapt to or comply with investor, lender, or other industry shareholder expectations and standards, which are evolving, or which are perceived to have not responded appropriately to the growing concern for ESG issues, regardless of whether there is a legal requirement to do so, may suffer from reputational damage and the business, financial condition, and/or stock price of such a company could be materially and adversely affected.
We may face increasing pressures from investors, lenders, and other market participants, who are increasingly focused on climate change, to prioritize sustainable energy practices, reduce our carbon footprint and promote sustainability. As a result, we may be required to implement more stringent ESG procedures or standards so that our existing and future investors and lenders remain invested in us and make further investments in us. If we do not meet these standards, our business and/or our ability to access capital could be harmed.
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On March 6, 2024, the SEC adopted final rules to enhance and standardize climate-related disclosures by public companies and in public offerings. The final rules will become effective 60 days following publication of the adopting release in the Federal Register. As a non-accelerated filer, we will be required to provide the enhanced climate-related disclosures in our annual reports for the year ending December 31, 2027. On March 15, 2024, the Fifth Circuit Court of Appeals stayed application of these rules pending further judicial review, but on March 25, 2024 the Fifth Circuit Court of Appeals ordered the transfer of the petition to the Eighth Circuit Court of Appeals and the dissolution of the administrative stay. On April 4, 2024, the SEC issued a stay of the climate-related disclosure rules pending the completion of judicial review of the consolidated Eighth Circuit petitions. The impact of the ongoing litigation with respect to the content of these rules or the timing of their effectiveness is uncertain. Costs of compliance with these new rules may be significant and may have a material adverse effect on our future performance, results of operations, cash flows and financial position.
Additionally, certain investors and lenders may exclude shipping companies, such as us, from their investing portfolios altogether due to environmental, social, and governance factors. These limitations in both the debt and equity capital markets may affect our ability to develop as our plans for growth may include accessing the equity and debt capital markets. If those markets are unavailable, or if we are unable to access alternative means of financing on acceptable terms, or at all, we may be unable to implement our business strategy, which would have a material adverse effect on our financial condition and results of operations and impair our ability to service our indebtedness. Further, it is likely that we will incur additional costs and require additional resources to monitor, report, and comply with wide ranging ESG requirements. The occurrence of any of the foregoing could have a material adverse effect on our business and financial condition.
Technological innovation and quality and efficiency requirements from our customers could reduce our charter hire income and the value of our vessels, or vessels we may acquire.
Our customers, in particular those in the oil industry, have a high and increasing focus on quality and compliance standards with their suppliers across the entire supply chain, including the shipping and transportation segment. Our continued compliance with these standards and quality requirements is vital for our operations. Charter hire rates and the value and operational life of a vessel are determined by a number of factors including the vessel’s efficiency, operational flexibility, and physical life. Efficiency includes speed, fuel economy, and the ability to load and discharge cargo quickly. Flexibility includes the ability to enter harbors, utilize related docking facilities and pass through canals and straits. The length of a vessel’s physical life is related to its original design and construction, its maintenance, and the impact of the stress of operations. If new vessels are built that are more efficient or more flexible or have longer physical lives than our vessels, or vessels we may acquire, competition from these more technologically advanced vessels could adversely affect the amount of charter hire payments we receive for our vessels, or vessels we may acquire, and the resale value of our vessels, or vessels we may acquire, could significantly decrease, which may have a material adverse effect on our future performance, results of operations, cash flows, and financial position.
We generate revenues from the trading of our vessels in U.S. dollars, but incur a portion of our expenses in other currencies.
We generate substantially all of our revenues from the trading of our vessels in U.S. dollars, but certain of our vessel operating expenses and administrative expenses are generated in currencies other than the U.S. dollar. This difference could lead to fluctuations in net profit due to changes in the value of the U.S. dollar relative to the other currencies. Expenses incurred in foreign currencies against which the U.S. dollar falls in value can increase, thereby decreasing our revenues. We currently have only partially hedged our currency exposure, and, as a result, our results of operations and financial condition, denominated in U.S. dollars, and our ability to pay dividends could suffer.
We are considerably dependent on European seafarers, who are paid in Euros, to fill key positions on board our vessels and our officers and administrative staff are paid in Euros. Consequently, our Euro- denominated crew and employee expense forms a significant percentage of our operating expenses. Furthermore, we have significant exposure to the Euro in our general and administrative expenses. As such our exposure to Euro-U.S. dollar exchange rate fluctuations may have a significant impact on our expenses, business and future cash flows.
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Trading and complementary hedging activities in freight, tonnage, and Forward Freight Agreements subject us to trading risks, and we may suffer trading losses, which could adversely affect our financial condition and results of operations.
The tanker shipping industry is cyclical with high volatility in charter rates and profitability. The Company currently charters its vessels principally in the spot or short-term time charter market, being exposed to various unpredictable factors, such as supply and demand of energy resources, global economic and political conditions, natural or other disasters, disruptions in international trade, COVID-19’s resurgence or other pandemic outbreak, environmental and other legal regulatory developments, among others. A long-term contract to charter a vessel might lock us into a profitable or unprofitable situation depending on the direction of freight rates over the term of the contract. During 2021, the Company entered into forward freight agreements in order to partially hedge its exposure to spot charter rate fluctuations and mitigate any adverse effect this may have in our operating cash flows and dividend policy.
We are exposed to market risk in relation to our forward freight agreements and could suffer substantial losses from these activities in the event that our expectations are incorrect. We trade forward freight agreements with an objective of both economically hedging the risk on the fleet, specific vessels, or freight commitments and taking advantage of short-term fluctuations in market prices. There can be no assurance that we will always be able to successfully protect ourselves from volatility in the shipping market. We may not successfully mitigate our risks, leaving us exposed to unprofitable contracts, and may suffer trading losses resulting from these hedging activities.
In our hedging and trading activities, we focus on short-term trading opportunities in which there is adequate liquidity in order to limit the risk we are taking. There can be no assurance we will be successful in limiting our risk, that significant price spikes will not result in significant losses, even on short-term trades, that liquidity will be available for our positions, or that all trades will be done within our risk management policies. Any such risk could be significant. In addition, the performance of our trading activities can significantly increase the variability of our operating performance in any given period and could materially adversely affect our financial condition. The forward freight agreement market has experienced significant volatility in the past few years and, accordingly, recognition of the changes in the fair value of forward freight agreements has caused and could in the future cause significant volatility in earnings.
We may be exposed to fraudulent behavior, which may have a material adverse effect on our future performance, results of operations, cash flows and financial position.
The risk of fraud is inherent in all industries and is not specific to the shipping industry. However, historically, the shipping industry has involved an increased risk of fraud and fraudulent behavior. We have established a system of internal controls to prevent fraud and fraudulent behavior. However, we cannot be certain that we will not be exposed to fraud or fraudulent behavior, and any such behavior can have a material adverse effect on our future performance, results of operations, cash flows and financial position.
We depend on short-term or spot charters in volatile shipping markets.
We currently charter all vessels in our fleet on the spot or short-term charter market. The short-term or spot charter market is highly competitive and short-term or spot charter rates may fluctuate significantly based upon available charters and the supply of and demand for seaborne tanker capacity. While our focus on the short-term or spot market may enable us to benefit if industry conditions strengthen, we must consistently procure short-term or spot charter business. Conversely, such dependence makes us vulnerable to declining market rates for short-term or spot charters and to the off-hire periods including ballast passages. Rates within the short-term or spot charter market are subject to volatile fluctuations while longer-term time charters provide income at pre-determined rates over more extended periods of time. There can be no assurance that we will be successful in keeping our vessels fully employed in these short-term markets or that future short-term or spot rates will be sufficient to enable the vessels to be operated profitably. A significant decrease in charter rates would affect value and further adversely affect our profitability, cash flows, and ability to pay dividends. We cannot give assurances that future available charter rates will enable us to operate our vessels profitably. If our vessels were committed to long-term charters, they may not be available for re-chartering or for short-term or spot market voyages when such employment would allow us to realize the benefits of comparably more favorable charter rates.
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Any limitation in the availability or operation of one or more of our vessels could have a material adverse effect on our business, results of operations and financial condition.
Our current fleet consists of 14 vessels. We depend on these vessels for all of our revenue. If one or more of our vessels is unable to generate revenues as a result of off-hire time, early termination of the applicable time charter or otherwise, our business, results of operations, financial condition and ability to pay dividends could be materially adversely affected. Unless we identify and acquire additional vessels, we will rely upon all 14 of these vessels for all of our revenue and ability to pay dividends.
The smuggling of drugs or other contraband onto our vessels, or vessels we may acquire, may lead to governmental claims against us.
Our vessels, or vessels we may acquire, may call in ports where smugglers may attempt to hide drugs and other contraband on vessels, with or without the knowledge of crew members. To the extent our vessels, or vessels we may acquire, are found with contraband, whether inside or attached to the hull of our vessels and whether with or without the knowledge of any of our crew, we may face governmental or other regulatory claims that could have an adverse effect on our business, results of operations, cash flows, financial condition, and ability to pay dividends. Under some jurisdictions, vessels used for the conveyance of illegal drugs could be subject to forfeiture, resulting in forfeiture of the vessel to the government of such jurisdiction.
Maritime claimants could arrest our vessels or vessels we acquire.
Crew members, suppliers of goods and services to a vessel, shippers of cargo, and other parties may be entitled to a maritime lien against that vessel for unsatisfied debts, claims, or damages. In many jurisdictions, a maritime lienholder may enforce its lien by “arresting” or “attaching” a vessel through foreclosure proceedings. The arrest or attachment of one or more of our vessels, or vessels we may acquire, could result in a significant loss of earnings for the related off-hire period. In addition, in jurisdictions where the “sister ship” theory of liability applies, a claimant may arrest the vessel which is subject to the claimant’s maritime lien and any “associated” vessel, which is any vessel owned or controlled by the same owner. In countries with “sister ship” liability laws, claims might be asserted against us or any of our vessels for liabilities of any other vessels we may own (which may also include vessels managed by KMC or owned by one of our major shareholders). Any of those events could have an adverse effect on our business, results of operations, cash flows, financial condition, and ability to pay dividends.
Governments could requisition our vessels, or vessels we may acquire, during a period of war or emergency.
A government could requisition vessels for title or hire. Requisition for title occurs when a government takes control of a vessel and becomes the owner. Requisition for hire occurs when a government takes control of a vessel and effectively becomes the charterer at dictated charter rates. Generally, requisitions occur during a period of war or emergency. Although we would be entitled to compensation in the event of a requisition, the amount and timing of payment of such compensation is uncertain. Government requisition of any of our vessels, or vessels we may acquire, could negatively impact our revenues should we not receive adequate compensation. Any of those events could have an adverse effect on our business, results of operations, cash flows, financial condition, and ability to pay dividends.
Failure to comply with the U.S. Foreign Corrupt Practices Act of 1977, or FCPA, could result in fines, criminal penalties, and an adverse effect on our business.
We operate throughout the world, including countries with a reputation for corruption. We are committed to doing business in accordance with applicable anti-corruption laws and have adopted a code of business conduct and ethics which is consistent and in full compliance with the FCPA. We are subject, however, to the risk that we, our affiliated entities or our or their respective officers, directors, employees and agents may take action determined to be in violation of such anti-corruption laws, including the FCPA. Any such violation could result in substantial fines, sanctions, civil and/or criminal penalties, and curtailment of operations in certain jurisdictions, and might adversely affect our business, results of operations or financial condition. In addition, actual or alleged violations could damage our reputation and ability to do business. Furthermore, detecting, investigating, and resolving actual or alleged violations is expensive and can consume significant time and attention of our senior management.
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A change in tax laws in any country in which we operate could adversely affect us.
Tax laws and regulations are highly complex and subject to interpretation. Consequently, we and our subsidiaries are subject to changing tax laws, treaties and regulations in and between countries in which we operate. Our income tax expense is based on our interpretation of the tax laws in effect at the time the expense was incurred. A change in tax laws, treaties or regulations, or in the interpretation thereof, could result in a materially higher tax expense or a higher effective tax rate on our earnings. Such changes may include measures enacted in response to the ongoing initiatives in relation to fiscal legislation at an international level, such as the Action Plan on Base Erosion and Profit Shifting of the Organization for Economic Co-operation and Development, or OECD. Numerous countries are considering implementation of the OECD’s 15% global minimum tax, which, if applicable to us (the current draft of the rules provided that a global minimum tax could apply companies with more than €750 million in revenues), may materially impact us.
U.S. federal tax authorities could treat us as a “passive foreign investment company,” which could have adverse U.S. federal income tax consequences to U.S. shareholders.
A foreign corporation will be treated as a “passive foreign investment company,” or PFIC, for U.S. federal income tax purposes if either (1) at least 75% of its gross income for any taxable year consists of certain types of “passive income” or (2) at least 50% of the average value of the corporation’s assets produce or are held for the production of those types of “passive income.” For purposes of these tests, “passive income” includes dividends, interest, gains from the sale or exchange of investment property and rents and royalties other than rents and royalties which are received from unrelated parties in connection with the active conduct of a trade or business. Income derived from the performance of services does not constitute “passive income” for this purpose. U.S. shareholders of a PFIC are subject to a disadvantageous U.S. federal income tax regime with respect to the income derived by the PFIC, the distributions they receive from the PFIC, and the gain, if any, they derive from the sale or other disposition of their shares in the PFIC.
In general, income derived from the bareboat charter of a vessel should be treated as “passive income” for purposes of determining whether a foreign corporation is a PFIC, and such vessel should be treated as an asset that produces or is held for the production of “passive income.” On the other hand, income derived from the time charter of a vessel should not be treated as “passive income” for such purpose, but rather should be treated as services income. Likewise, a time-chartered vessel should generally not be treated as an asset that produces or is held for the production of “passive income.”
We believe that we were not a PFIC for our 2023 taxable year and we do not expect to be treated as a PFIC in the current or subsequent taxable years. In this regard, we intend to treat the gross income we derive or are deemed to derive from our time chartering activities as services income, rather than rental income. Accordingly, we believe that our income from our time chartering activities does not constitute “passive income,” and the assets that we own and operate in connection with the production of that income do not constitute passive assets.
There is, however, no direct legal authority under the PFIC rules addressing our proposed method of operation. Accordingly, no assurance can be given that the United States Internal Revenue Service, or IRS, or a court of law will accept our position, and there is a risk that the IRS or a court of law could determine that we are a PFIC. Moreover, no assurance can be given that we would not constitute a PFIC for any future taxable year if there were to be changes in the nature and extent of our operations.
Our U.S. shareholders may face adverse U.S. federal income tax consequences and certain information reporting obligations as a result of us being treated as a PFIC. Under the PFIC rules, unless those shareholders make an election available under the Code (which election could itself have adverse consequences for such shareholders, as discussed below under “Item 10.E.Taxation — U.S. Federal Income Taxation of U.S. Holders”), such shareholders would be liable to pay U.S. federal income tax at the then-prevailing income tax rates on ordinary income plus interest upon excess distributions and upon any gain from the disposition of their common shares, as if the excess distribution or gain had been recognized ratably over the shareholder’s holding period of the common shares. See “Item 10.E. Taxation — U.S. Federal Income Taxation of U.S. Holders” for a more comprehensive discussion of the U.S. federal income tax consequences to U.S. shareholders if we were treated as a PFIC.
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We may be subject to U.S. federal income tax on our U.S. source income, which would reduce our earnings.
Under the U.S. Internal Revenue Code of 1986, as amended, or the Code, 50% of the gross shipping income of a vessel owning or chartering corporation, such as ourselves and our subsidiaries, that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States is characterized as U.S. source shipping income and such income is subject to a 4% U.S. federal income tax without allowance for deduction, unless that corporation qualifies for exemption from tax under Section 883 of the Code.
We believe that we and our subsidiaries qualified for the tax exemption under Section 883 of the Code for our 2023 taxable year. However, there are factual circumstances beyond our control that could cause us to lose the benefit of the exemption and thereby become subject to U.S. federal income tax on our U.S. source shipping income. Due to the factual nature of the issues involved, we may not qualify for exemption under Section 883 of the Code for any future taxable year.
We are a “foreign private issuer,” which could make our common shares less attractive to some investors or otherwise harm our stock price.
We are a “foreign private issuer,” as such term is defined in Rule 405 under the Securities Act of 1933, as amended, or the Securities Act. As a “foreign private issuer,” the rules governing the information that we disclose differ from those governing U.S. corporations pursuant to the Exchange Act. We are not required to file quarterly reports on Form 10-Q or provide current reports on Form 8-K disclosing significant events within four days of their occurrence, and we are not required to comply with Regulation FD, which restricts the selective disclosure of material nonpublic information. In addition, our officers and directors are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and related rules with respect to their purchase and sale of our securities. Our exemption from the rules of Section 16 of the Exchange Act regarding sales of common shares by insiders means that you will have less data in this regard than shareholders of U.S. companies that are subject to the Exchange Act. Moreover, we are exempt from the proxy rules, and proxy statements that we distribute will not be subject to review by the Commission. Additionally, we will be permitted to disclose compensation information for our executive officers on an aggregate, rather than an individual, basis because individual disclosure is not required under Marshall Islands law. Accordingly, there may be less publicly available information concerning us than there is for other U.S. public companies. We can also issue any number of shares of any class or series without shareholder consent. As a foreign private issuer, however, we are permitted to, and we may, follow home country practice in lieu of certain NYSE requirements. See “Item 6.C. Board Practices.” These exemptions and scaled disclosure requirements are not related to our status as an emerging growth company, and will continue to be available to us even if we no longer qualify as an emerging growth company, but remain a foreign private issuer. These factors could make our common shares less attractive to some investors or otherwise harm our stock price.
We could lose our foreign private issuer status under U.S. securities laws. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly higher. We would then also be required to file periodic reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive than the forms available to a foreign private issuer. We may then also be required to modify certain of our policies to comply with good or required governance practices associated with U.S. domestic issuers. Such conversion and modifications will likely involve additional costs. In addition, we would then lose our ability to rely upon exemptions from certain corporate governance requirements on NYSE that are available to foreign private issuers.
Changing laws and evolving reporting requirements could have an adverse effect on our business.
Changing laws, regulations and standards relating to reporting requirements, including the European Union General Data Protection Regulation, or GDPR, may create additional compliance requirements for us. To maintain high standards of corporate governance and public disclosure, we have invested in, and continue to invest in, reasonably necessary resources to comply with evolving standards.
GDPR broadens the scope of personal privacy laws to protect the rights of European Union citizens and requires organizations to report on data breaches within 72 hours and be bound by more stringent rules for obtaining the consent of individuals on how their data can be used. Non-compliance with GDPR may expose entities to significant fines or other regulatory claims which could have an adverse effect on our business, and results of operations.
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RISKS RELATING TO OUR COMMON SHARES
An active trading market for our common shares listed in the United States may not develop and you may not be able to resell your common shares at or above the price you pay for them, if at all.
Our common shares are currently traded on Oslo Børs and the NYSE. Although we recently listed our common shares on the NYSE, there can be no assurance that an active trading market for our common shares will develop or be sustained in the United States or Norway. The lack of an active trading market may also reduce the fair market value of our common shares. We cannot predict the extent to which an active market for our common shares will develop or be sustained following our NYSE listing, or how the development of such a market might affect the market price for our common shares on the Oslo Børs. The price at which our common shares trade on the NYSE may or may not be correlated to the price at which our common shares trade on the Oslo Børs. Our share price may be highly volatile and future sales of our common shares could cause the market price of our common shares to decline.
The NYSE may delist our securities from quotation on its exchange, which could limit the ability of our security holders to trade our securities and subject us to additional trading restrictions.
Our securities are listed on the NYSE, a national securities exchange. The NYSE minimum listing standards require that we meet certain requirements relating to stockholders’ equity, number of round-lot holders, market capitalization, aggregate market value of publicly held shares and distribution requirements. The average closing price of our common shares over a consecutive 30 trading- day period must be no less than $1.00 per common share. We cannot assure you that our securities will continue to be listed on the NYSE in the future. If the NYSE delists our securities from trading on its exchange, we could face significant material adverse consequences, including:
● | a limited availability of market quotations for our securities; |
● | a limited amount of news and analyst coverage for us; |
● | a decreased ability for us to issue additional securities or obtain additional financing in the future; |
● | limited liquidity for our shareholders due to thin trading; and |
● | potential breaches of financing arrangements. |
The dual listing of common shares is costly to maintain and may adversely affect the liquidity and value of our common shares.
Our common shares trade on Oslo Børs and on the NYSE. We plan for the foreseeable future to maintain a dual listing, which will generate additional costs, including increased legal, accounting, investor relations, and other expenses that we did not incur prior to the listing of our common shares on the NYSE, in addition to the costs associated with the additional reporting requirements described elsewhere in this Annual Report. We cannot predict the effect of this dual listing on the value of our common shares. However, the dual listing of common shares may dilute the liquidity of these securities in one or both markets and may adversely affect the development of an active trading market for our common shares on the NYSE. The price of our common shares listed on the NYSE could also be adversely affected by trading in common shares on the Oslo Børs, and vice versa. In addition, starting in May 2024 the NYSE will settle on a T+1 basis, while settlement on the Oslo Børs will remain on a T+2 basis. This has the potential to create arbitrage opportunities with respect to our common shares, which could affect our stock price.
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We will incur increased costs as a result of operating as a company that is both publicly listed on Oslo Børs in Norway and in the United States, and our senior management will be required to devote substantial time to new compliance initiatives and corporate governance practices.
As a company publicly listed in the United States, and particularly after we no longer qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, we will incur significant legal, accounting, and other expenses that we did not incur previously. The Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the NYSE and other applicable securities rules and regulations impose various requirements on non-U.S. reporting public companies, including the establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our senior management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time- consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance, which in turn could make it more difficult for us to attract and retain qualified senior management personnel or members for our board of directors.
However, these rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, we will be required to furnish a report by our senior management on our internal control over financial reporting commencing for the year ending December 31, 2024. However, while we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To prepare for eventual compliance with Section 404, once we no longer qualify as an emerging growth company, we may be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants, adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented, and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe or at all, that our internal control over financial reporting is effective as required by Section 404. If we identify one or more material weaknesses, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.
Additionally, the SEC recently proposed new rules relating to the climate and ESG-related disclosures in companies’ annual reports and registration statements. The proposed rules would add extensive and prescriptive disclosure items requiring companies, including foreign private issuers, to disclose climate- related risks and certain emissions. In addition, the proposed rules would require the inclusion of certain climate-related financial metrics in a note to companies’ audited financial statements. We are currently assessing this rule but at this time we cannot predict the costs of implementation or any potential adverse impacts resulting from the rule. To the extent this rule is finalized as proposed, we could incur increased costs related to the assessment and disclosure of climate-related risks. In addition, enhanced climate disclosure requirements could accelerate the trend of certain stakeholders and lenders restricting or seeking more stringent conditions with respect to their investments in certain carbon intensive sectors.
Further, being both a U.S. and Norwegian-listed company with common shares admitted to trading on Oslo Børs and the NYSE impacts the disclosure of information and requires compliance with two sets of applicable rules. From time to time, this may result in uncertainty regarding compliance matters and result in higher costs necessitated by legal analysis of dual legal regimes, ongoing revisions to disclosure, and adherence to heightened governance practices. As a result of the enhanced disclosure requirements of the U.S. securities laws, business and financial information that we report is broadly disseminated and highly visible to investors, which we believe may increase the likelihood of threatened or actual litigation, including by competitors and other third parties, which could, even if unsuccessful, divert financial resources and the attention of our management from our operations.
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We are obligated to develop and maintain proper and effective internal controls over financial reporting and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value of our common shares.
We will be required, pursuant to Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting commencing for the year ending December 31, 2024. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. Our independent registered public accounting firm will not be potentially required to attest to the effectiveness of our internal control over financial reporting until our first annual report required to be filed with the Commission following the date we are no longer an “emerging growth company,” as defined in the Securities Act.
If we identify future material weaknesses in our internal control over financial reporting or fail to meet our obligations as a public company, including the requirements of Section 404, we may be unable to accurately report our financial results, or report them within the timeframes required by law or stock exchange regulations, and we could lose investor confidence in the accuracy and completeness of our financial reports, which would cause the price of our common shares to decline. Under Section 404, we are required to evaluate and determine the effectiveness of our internal control over financial reporting and provide a management report as to internal control over financial reporting. Failure to maintain effective internal control over financial reporting also could potentially subject us to sanctions or investigations by the SEC, the NYSE, or other regulatory authorities, or shareholder lawsuits, which could require additional financial and management resources. We cannot assure you that additional material weaknesses will not occur in the future, which could materially adversely affect our business, operating results, and financial condition.
We may be subject to litigation that, if not resolved in our favor and not sufficiently insured against, could have a material adverse effect on us.
We may be, from time to time, involved in various litigation matters. These matters may include, among other things, contract disputes, shareholder litigation, personal injury claims, environmental claims or proceedings, asbestos and other toxic tort claims, property casualty claims, employment matters, governmental claims for taxes or duties, and other litigation that arises in the ordinary course of our business. Although we intend to defend these matters vigorously, we cannot predict with certainty the outcome or effect of any claim or other litigation matter, and the ultimate outcome of any litigation or the potential costs to resolve them may have a material adverse effect on us. Insurance may not be applicable or sufficient in all cases and/or insurers may not remain solvent which may have a material adverse effect on our financial condition.
Furthermore, plaintiffs may in certain of these litigation matters seek class action status with potential class sizes that vary from case to case. Class action lawsuits can be costly to defend, and if we were to lose any certified class action suit, it could result in substantial liability for us. Certain litigation or the resolution thereof may affect the availability or cost of some of our insurance coverage, which could materially and adversely impact us, expose us to increased risks that would be uninsured, and materially and adversely impact our ability to attract directors and officers.
Fluctuations in the exchange rate between the U.S. dollar and the Norwegian krone may increase the risk of holding common shares.
The share price of our common shares is quoted on Oslo Børs in Norwegian krone, while it is quoted on the NYSE in U.S. dollars. Fluctuations in the exchange rate between the U.S. dollar and the Norwegian krone may result in differences between the value of our common shares listed on the respective exchanges and the value of our common shares, which may result in heavy trading by investors seeking to exploit such differences.
The market price of our common shares may in the future be subject to significant fluctuations. Further, there is no guarantee of a continuing public market to resell our common shares.
The market price of our common shares may in the future be subject to significant fluctuations as a result of many factors, some of which are beyond our control. Among the factors that could in the future affect our stock price are:
● | quarterly variations in our results of operations and those of other public companies in our industry; |
● | our ability to successfully employ our vessels at favorable rates; |
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● | changes in market valuations of similar companies and stock market price and volume fluctuations generally; |
● | changes in earnings estimates or the publication of research reports by analysts, or shortfalls in our operating results from levels forecast by securities analysts; |
● | speculation in the press or investment community about us, our business or the shipping industry generally; |
● | strategic actions by us or our competitors such as mergers, acquisitions, or restructurings; |
● | the thin trading market for our common shares, which makes it somewhat illiquid; |
● | regulatory developments; |
● | additions or departures of key personnel; |
● | announcements concerning us or our competitors; |
● | terrorist attacks, acts of god, or other force majeure events; |
● | changes in market interest rates; |
● | actions by our shareholders or key stakeholders; |
● | trading volume of our common shares; |
● | litigation, threatened or filed, against us; |
● | public reaction to our press releases, our other public announcements, and our filings; |
● | general market conditions; and |
● | domestic and international economic, market, and currency factors unrelated to our performance. |
The stock markets in general, and the markets for shipping and shipping stocks in particular, have experienced extreme volatility that has sometimes been unrelated to the operating performance of individual companies. These broad market fluctuations may adversely affect the trading price of our common stock.
Additionally, there is no guarantee of a continuing public market to resell our common shares. We cannot assure you that an active and liquid public market for our common shares will continue.
Furthermore, as of the date of this Annual Report, Mr. Ioannis Alafouzos, the chairman of our board of directors, and Mr. Themistoklis Alafouzos, the brother of Mr. Ioannis Alafouzos, together beneficially own a majority of our outstanding common shares. For further information, see “Item 7.A. Major Shareholders.” Where a substantial percentage of the shares of publicly traded companies are held by a small number of shareholders, the shares may have a lower trading volume than similarly sized publicly traded companies. Until such time that we issue additional securities or members of the Alafouzos family sells all or a portion of their common shares, we may have a lower trading volume than similarly sized companies, which means shareholders who buy or sell relatively small amounts of our common shares could have a disproportionately large impact on our share price, either positively or negatively, and could thus make our share price more volatile than it otherwise would be. In addition, large blocks of sales by a shareholder, such as Mr. Ioannis Alafouzos or Mr. Themistoklis Alafouzos, may have a negative impact on the trading price of our common shares, especially if there is a lower trading volume of our common shares.
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Increases in interest rates may cause the market price of our shares to decline.
An increase in interest rates may cause a corresponding decline in demand for equity investments in general. Any such increase in interest rates or reduction in demand for our shares resulting from other relatively more attractive investment opportunities may cause the trading price of our shares to decline. An increase in SOFR (or any other successor or alternative rate utilized in our financing arrangements), including as a result of the interest rate increases effected by the United States Federal Reserve and the United States Federal Reserve’s recently hike of U.S. interest rates in response to ongoing inflationary pressures and fluctuations, would affect the amount of interest payable under our existing loan agreements, which, in turn, could have an adverse effect on our profitability, earnings, cash flow and ability to pay dividends.
We may rely in part on equity issuances, which will not require shareholder approval, to fund our growth, and such equity issuances could dilute your ownership interests and may depress the market price of our common shares.
We may issue additional common shares or other equity securities of equal or senior rank in the future in connection with, among other things, future vessel acquisitions or repayment of outstanding indebtedness, without shareholder approval, in a number of circumstances.
As part of our business strategy, we may rely in part on issuances of equity or preferred securities, which may carry voting rights and may be convertible into common shares, to fund the growth of our fleet. We may issue such securities in private placements, including to related parties, or in registered offerings.
Our issuance of additional common shares, including upon conversion of convertible securities, or other equity securities of equal or senior rank, or with voting rights, may have the following effects:
● | our existing common shareholders’ proportionate ownership interest in us will decrease; |
● | the amount of cash available for dividends payable per common share may decrease; |
● | the relative voting strength of each previously outstanding common share may be diminished; and/or |
● | the market price of our common shares may decline. |
If the need for capital arises because of significant losses, the occurrence of these losses may make it more difficult for us to raise the necessary capital. If we cannot raise funds on acceptable terms if and when needed, we may not be able to take advantage of future opportunities, grow our business or respond to competitive pressures or unanticipated requirements, or could have a material adverse effect on our business, results of operations, and financial condition, as well as our cash flows, including cash available for distribution to our shareholders.
A possible “short squeeze” due to a sudden increase in demand of our common stock that largely exceeds supply may lead to further price volatility in our common shares.
Investors may purchase our common shares to hedge existing exposure in our common shares or to speculate on the price of our common shares. Speculation on the price of our common shares may involve long and short exposures. To the extent aggregate short exposure exceeds the number of common shares available for purchase in the open market, investors with short exposure may have to pay a premium to repurchase our common shares for delivery to lenders of our common shares. Those repurchases may, in turn, dramatically increase the price of our common shares until investors with short exposure are able to purchase additional common shares to cover their short position. This is often referred to as a “short squeeze.” Following such a short squeeze, once investors purchase the shares necessary to cover their short position, the price of our common shares may rapidly decline. A short squeeze could lead to volatile price movements in our shares that are not directly correlated to the performance or prospects of our company.
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Our Chairman and his family have significant influence over us, and control the outcome of many matters on which our shareholders are entitled to vote.
Our Chairman and his brother, Mr. Themistoklis Alafouzos, collectively hold a majority stake in the Company, resulting in them holding a majority of our total voting power, and if the two of them vote in the same manner they can control the outcome of many matters on which our shareholders are entitled to vote, including the election of all of our directors and other significant corporate actions, such as mergers, even if they are opposed by our other shareholders. Such concentration of ownership and our corporate governance mechanisms may discourage, delay, or prevent a change in control of our company, which could deprive our shareholders of a premium for their shares and may reduce the price of our common shares. The interests of Mr. Ioannis Alafouzos, Mr. Themistoklis Alafouzos and the Alafouzos family may differ from your interests, and, therefore, they may vote differently from how other shareholders vote and by virtue of their ownership interest be able to approve matters on behalf of us and our shareholders without the consent of other shareholders. In addition, our amended and restated articles of incorporation permit the holders of a majority of our shares to act by written consent without a meeting and, therefore, the Alafouzos family, if they vote together, will be able to approve matters on behalf of all of our shareholders without the consent of any other persons or shareholders, or the need to call a shareholders’ meeting.
Anti-takeover provisions in our amended and restated articles of incorporation and amended and restated bylaws could make it difficult for our shareholders to replace or remove our current board of directors or could have the effect of discouraging, delaying, or preventing a merger or acquisition, which could adversely affect the market price of our common shares.
Several provisions of our Second Amended and Restated Articles of Incorporation and our Third Amended and Restated Bylaws contain anti-takeover provisions. These provisions are intended to avoid costly takeover battles, lessen our vulnerability to a hostile change of control, and enhance the ability of our board of directors to maximize shareholder value in connection with any unsolicited offer to acquire our company. However, these anti- takeover provisions could make it difficult for our shareholders to change the composition of our board of directors in any one year, thereby preventing them from changing the composition of our management. In addition, the same provisions may discourage, delay, or prevent a merger or acquisition that some shareholders may consider favorable.
These provisions:
● | authorize our board of directors to issue “blank check” preferred stock without shareholder approval, including preferred shares with superior voting rights; |
● | limit the persons who may call special meetings of shareholders; and |
● | establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted on by shareholders at meetings of shareholders. |
These anti-takeover provisions could substantially impede the ability of our shareholders to impose a change in control and, as a result, may adversely affect the market price of our common shares and your ability to realize any potential change of control premium.
Separately, provisions in our credit arrangements prohibit certain changes of control, and such would breach those facilities. A number of our financing agreements require that the Alafouzos family maintain a minimum 35% ownership interest in us, and some of our financing agreements provide that a breach of the financing will occur if Mr. Ioannis Alafouzos and Mr. Themistoklis Alafouzos cease to control us and, in one instance, if Mr. Ioannis Alafouzos ceases to be our chairman. In addition, one of our loan agreements provides that the acquisition by a person or group of persons acting in concert (directly or indirectly) of more than 34.9% of the ultimate legal or beneficial ownership is a breach of that loan agreement, and certain of our guarantees on our bareboat charters provide that we may not permit certain changes in corporate or ownership structure or permit a new party or parties acting in concert to become owners of, or control, more than 51% of our shares and/or voting rights. These provisions may make it difficult for or prevent any one of more investors from purchasing our shares, which may cause our share price to decline and make resales of shares more difficult.
39
We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common shares less attractive to investors.
We are an “emerging growth company” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. While we have elected to take advantage of some of the reduced reporting obligations, we are choosing to “opt-out” of the extended transition period relating to the exemption from new or revised financial accounting standards. We cannot predict if investors will find our common shares less attractive because we may rely on these exemptions. If some investors find our common shares less attractive as a result, there may be a less active trading market for our common shares and our share price may be more volatile.
In addition, under the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley, for so long as we are an emerging growth company. For as long as we take advantage of the reduced reporting obligations, the information that we provide to shareholders may be different from information provided by other public companies.
We are incorporated in the Republic of the Marshall Islands, which does not have a well-developed body of corporate law, and, as a result, shareholders may have fewer rights and protections under Marshall Islands law than under a typical jurisdiction in the United States.
Our corporate affairs are governed by our Articles of Incorporation, as amended and restated, our Bylaws, as amended and restated, and by the Marshall Islands Business Corporations Act, or the BCA. The provisions of the BCA resemble provisions of the corporation laws of a number of states in the United States. However, there have been few judicial cases in the Republic of the Marshall Islands interpreting the BCA. The rights and fiduciary responsibilities of directors under the law of the Republic of the Marshall Islands are not as clearly established as the rights and fiduciary responsibilities of directors under statutes or judicial precedent in existence in certain United States jurisdictions. Shareholder rights may differ as well. While the BCA does specifically incorporate the non-statutory law, or judicial case law, of the State of Delaware and other states with substantially similar legislative provisions, our public shareholders may have more difficulty in protecting their interests in the face of actions by management, directors, or controlling shareholders than would shareholders of a corporation incorporated in a United States jurisdiction.
Our ability to declare and pay dividends to holders of our common shares will depend on a number of factors and will always be subject to the discretion of our board of directors.
If we are not in compliance with our loan covenants and receive a notice of default that we are unable to cure under the terms of our loan covenants, we may be forbidden from issuing dividends. There can be no assurance that dividends will be paid to holders of our shares in any anticipated amounts and frequency or at all. We may incur other expenses or liabilities that would reduce or eliminate the cash available for distribution as dividends, including as a result of the other risks described in “Item 3.D. Risk Factors.”
We may also enter into new financing or other agreements that may restrict our ability to pay dividends even without an event of default, or make it less desirable for us to do so. In addition, we may pay dividends to the holders of our preferred shares prior to the holders of our common shares, depending on the terms of the preferred shares.
The declaration and payment of dividends to holders of our shares will be subject at all times to the discretion of our board of directors. We can provide no assurance that dividends will be paid in the future.
There may be a high degree of variability from period to period in the amount of cash, if any, that is available for the payment of dividends based upon, among other things:
● | the rates we obtain from our charters as well as the rates obtained upon the expiration of our existing charters; |
● | the level of our operating costs; |
● | the number of unscheduled off-hire days and the timing of, and number of days required for, scheduled drydocking of our vessels; |
● | vessel acquisitions and related financings; |
40
● | restrictions in our current and future debt arrangements; |
● | our ability to obtain debt and equity financing on acceptable terms as contemplated by our growth strategy; |
● | prevailing global and regional economic and political conditions; |
● | market interest rates; |
● | the effect of governmental regulations and maritime self-regulatory organization standards on the conduct of our business; |
● | our overall financial condition; |
● | our cash requirements and availability; |
● | the amount of cash reserves established by our board of directors; and |
● | restrictions under Marshall Islands law. |
Marshall Islands law generally prohibits the payment of dividends other than from surplus or certain net profits, or while a company is insolvent or would be rendered insolvent by the payment of such a dividend. We may not have sufficient funds, surplus, or net profits to make distributions.
We may incur expenses or liabilities or be subject to other circumstances in the future that reduce or eliminate the amount of cash that we have available for distribution as dividends, if any. Our growth strategy contemplates that we might finance any future acquisition of newbuildings or selective acquisitions of vessels through a combination of our operating cash flow and debt financing through our subsidiaries or equity financing. If financing is not available to us on acceptable terms, our board of directors may decide to finance or refinance acquisitions with a greater percentage of cash from operations to the extent available, which would reduce or even eliminate the amount of cash available for the payment of dividends. We may also enter into other agreements that will restrict our ability to pay dividends or make it less desirable for us to do so.
The amount of cash we generate from our operations may differ materially from our net income or loss for the period, which will be affected by non-cash items. We may incur other expenses or liabilities that could reduce or eliminate the cash available for distribution as dividends. As a result of these and other factors such as those mentioned above, we may pay dividends during periods when we record losses and may not pay dividends during periods when we record net income, if we pay dividends at all.
We are a holding company, and we will depend on the ability of our subsidiaries to distribute funds to us in order to satisfy our financial obligations or to make dividend payments.
We are a holding company and our subsidiaries will conduct all of our operations and own (or charter in) all of our operating assets. Okeanis Eco Tankers Corp. has no significant assets other than the equity interests in wholly owned subsidiaries. As a result, our ability to make dividend payments depends on our subsidiaries and their ability to distribute funds to us. If we are unable to obtain funds from our subsidiaries, our board of directors may exercise its discretion not to declare or pay dividends. In addition, our subsidiaries are subject to limitations on the payment of dividends under Marshall Islands and Liberian law.
It may not be possible for investors to serve process on or enforce U.S. judgments against us.
We and our subsidiaries are incorporated in jurisdictions outside the U.S. and substantially all of our assets and those of our subsidiaries are located outside the U.S. In addition, a number of our directors and officers are non-residents of the U.S., and all or a substantial portion of the assets of these non-residents are located outside the U.S. As a result, it may be difficult or impossible for U.S. investors to serve process within the U.S. upon us, our subsidiaries or certain of our directors and officers or to enforce a judgment against us for civil liabilities in U.S. courts. In addition, you should not assume that courts in the countries in which we or our subsidiaries are incorporated or where our assets or the assets of our subsidiaries are located (1) would enforce judgments of U.S. courts obtained in actions against us or our subsidiaries based upon the civil liability provisions of applicable U.S. federal and state securities laws or (2) would enforce, in original actions, liabilities against us or our subsidiaries based on those laws.
41
The international nature of our operations may make the outcome of any bankruptcy proceedings difficult to predict.
We and our subsidiaries are incorporated under the laws of the Republic of the Marshall Islands or Liberia, we have limited operations in the United States, and we maintain limited assets, if any, in the United States. Consequently, in the event of any bankruptcy, insolvency, liquidation, dissolution, reorganization, or similar proceeding involving us or any of our subsidiaries, bankruptcy laws other than those of the United States could apply. The Marshall Islands does not have a bankruptcy statute or general statutory mechanism for insolvency proceedings, and Liberia’s insolvency laws exempt non-resident corporations from its statute. If we become a debtor under U.S. bankruptcy law, bankruptcy courts in the United States may seek to assert jurisdiction over all of our assets, wherever located, including property situated in other countries. There can be no assurance, however, that we would become a debtor in the United States, or that a U.S. bankruptcy court would accept, or be entitled to accept, jurisdiction over such a bankruptcy case, or that courts in other countries that have jurisdiction over us and our operations would recognize a U.S. bankruptcy court’s jurisdiction if any other bankruptcy court would determine it had jurisdiction. These factors may delay or prevent us from entering bankruptcy in the United States and may affect the ability of our shareholders to receive any recovery following our bankruptcy.
As a Marshall Islands corporation with principal executive offices in Greece and subsidiaries in the Marshall Islands and other offshore jurisdictions, our operations may be subject to economic substance requirements.
The Council of the European Union, or the Council, routinely publishes a list of “non-cooperative jurisdictions” for tax purposes, which includes countries that the Council believes need to improve their legal framework and to work towards compliance with international standards in taxation. In February 2023, the Republic of the Marshall Islands, among others, was placed by the EU on the list of non-cooperative jurisdictions for lacking in the enforcement of economic substance requirements, and was subsequently removed from such list in October 2023. EU member states have agreed upon a set of measures, which they can choose to apply against the listed countries, including increased monitoring and audits, withholding taxes, and non-deductibility of costs, and although we are not currently aware of any such measures being adopted they can be adopted by one or more EU members states in the future. The European Commission has stated it will continue to support member states’ efforts to develop a more coordinated approach to sanctions for the listed countries. EU legislation prohibits certain EU funds from being channeled or transited through entities in non-cooperative jurisdictions.
We are a Marshall Islands corporation with principal executive offices in Greece. Our commercial manager is also a Marshall Islands entity. The Marshall Islands has enacted economic substance regulations with which we may be obligated to comply. Those regulations require certain entities that are not otherwise tax resident elsewhere that carry out particular activities to comply with an economic substance test whereby the entity must show that it (i) is directed and managed in the Marshall Islands in relation to that relevant activity, (ii) carries out core income-generating activity in relation to that relevant activity in the Marshall Islands (although it is being understood and acknowledged by the regulators that income-generated activities for shipping companies will generally occur in international waters), and (iii) having regard to the level of relevant activity carried out in the Marshall Islands, has (a) an adequate amount of expenditures in the Marshall Islands, (b) adequate physical presence in the Marshall Islands, and (c) an adequate number of qualified employees in the Marshall Islands.
If we fail to comply with our obligations under this legislation or any similar law applicable to us in any other jurisdictions, we could be subject to financial penalties and spontaneous disclosure of information to foreign tax officials or with respect to the Marshall Islands economic substance requirements, revocation of the formation documents and dissolution of the applicable non-compliant Marshall Islands entity or struck from the register of companies in related jurisdictions. Any of the foregoing could be disruptive to our business and could have a material adverse effect on our business, financial conditions, and operating results. Accordingly, any implementation of, or changes to, any of the economic substance regulations that impact us could increase the complexity and costs of carrying on business in these jurisdictions, and thus could adversely affect our business, financial condition or results of operations.
We do not know what actions the Marshall Islands may take, if any, to remove itself from the list of “non-cooperative jurisdictions” if it should be placed back on the list; how quickly the EU would react to any changes in legislation of the Marshall Islands; or how EU banks or other counterparties will react while we or our subsidiaries remain as entities organized and existing under the laws of the Marshall Islands during a period if the Marshall Islands is again placed on the list of “non-cooperative jurisdictions.” The effect of the EU list of non-cooperative jurisdictions, and any noncompliance by us with legislation adopted by the Marshall Islands to achieve removal from the list, could have a material adverse effect on our business, financial conditions and operating results.
42
RISKS RELATING TO OUR RELATIONSHIP WITH OUR TECHNICAL MANAGER AND ITS AFFILIATES
We depend on KMC to manage our business.
We do not have the employee infrastructure to manage our operations. In common with industry practice, our subsidiaries own the vessels in the fleet or charter-in vessels on a bareboat basis from a leasing house, and would be the counterparties to any contracts to construct newbuildings. KMC provides our day-to-day fleet technical management, such as vessel operations, repairs, insurance consulting, supplies, and crewing. We, through our vessel-owning subsidiaries, have also entered into ETS Services Agreements with KMC pursuant to which KMC obtains, transfers and surrenders emission allowances under the EU Emissions Trading Scheme that came into effect on January 1, 2024. Furthermore, our wholly owned subsidiary OET Chartering Inc. has entered into a shared services agreement with KMC to document the mutual exchange of business support in respect of the management of our vessels by way of corporate, accounting, financial and other operational and administrative services. As a result, we depend upon the continued services provided by KMC.
We derive significant benefits from our relationship with KMC and its affiliated companies, including purchasing discounts to which we otherwise would not have access. We would be materially adversely affected if KMC becomes unable or unwilling to continue providing services for our benefit at the level of quality they have provided such services in the past and at comparable costs as they have charged in the past. If we were required to employ a ship management company other than KMC, we cannot offer any assurances that the terms of such management agreements would be on terms as favorable to the Company in the long term. If KMC suffers material damage to its reputation or relationships it may harm our ability to:
● | continue to operate our vessels, or vessels we may acquire, and service our customers; |
● | renew existing charters upon their expiration; |
● | obtain new charters; |
● | obtain financing and insurance on commercially acceptable terms; |
● | maintain satisfactory relationships with our customers and suppliers; and |
● | successfully execute our growth strategy. |
In addition, each of the amended and restated technical management agreements grants KMC a termination right, subject to 30-days’ advance written notice, in the event of a change of control of the relevant ship owning subsidiary (in the event that such change of control has not been consented to by KMC in advance). The amended and restated technical management agreements retain the right to terminate for convenience subject to a 36-month advance written notice, in addition to either party being able to terminate for cause (provided that, unless the cause for termination is KMC’s failure to meet its obligations under the relevant technical management agreement, we are required to continue payment of the management fees thereunder for 36 months from the termination date or, if a notice of termination for convenience has preceded such for cause termination, 36 months from the date of such notice).
KMC is a privately held company and there is little or no publicly available information about it.
The ability of KMC to continue providing services for our and our subsidiaries’ benefit will depend in part on its own financial strength. Circumstances beyond our control could impair its financial strength and because KMC is privately held, it is unlikely that information about KMC’s financial strength would become public. As a result, an investor in our common shares might have little advance warning of problems affecting KMC, even though these problems could have a material adverse effect on us.
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Management fees are payable to KMC regardless of our profitability or whether our vessels are employed.
The fees payable to KMC are payable whether or not our vessels are employed, and regardless of our profitability, and we have no ability to require KMC to reduce the fees under such agreements if our profitability decreases. In addition, each of the amended and restated technical management agreements grants KMC a termination right, subject to 30-days’ advance written notice, in the event of a change of control of the relevant ship owning subsidiary (in the event that such change of control has not been consented to by KMC in advance). The amended and restated technical management agreements also retain the right to terminate for convenience subject to a 36-month advance written notice, in addition to either party to the agreements being able to terminate for cause (provided that, unless the cause for termination is KMC’s failure to meet its obligations under the relevant technical management agreement, we are required to continue payment of the management fees thereunder for 36 months from the termination date or, if a notice of termination for convenience has preceded such for cause termination, 36 months from the date of such notice).
Our Chairman is a significant shareholder of KMC, which could create conflicts of interest.
Our Chairman, Ioannis Alafouzos, owns a 50% stake in KMC, with his brother, Themistoklis Alafouzos, owning the other 50% stake. Our Chairman’s interest and position in KMC could create conflicts of interest that could result in losing revenue or business opportunities or increase our expenses. Our Chairman or KMC may take actions that are not in our or our other shareholders’ best interest and conflicts of interest between them and us may arise as a result of their operation of or investment in businesses that compete with us.
The Alafouzos family and KMC may have conflicts of interest between us and KMC’s other clients.
We subcontract the day-to-day technical vessel management of our fleet, including crewing, maintenance, and repair to KMC. We, through our vessel-owning subsidiaries, have also entered into ETS Services Agreements with KMC pursuant to which KMC obtains, transfers and surrenders emission allowances under the EU Emissions Trading Scheme that came into effect on January 1, 2024. Furthermore, our wholly owned subsidiary OET Chartering Inc. has entered into a shared services agreement with KMC to document the mutual exchange of business support in respect of the management of our vessels by way of corporate, accounting, financial and other operational and administrative services. KMC may provide similar services for vessels owned or operated by other shipping companies, and it also may provide similar services to companies with which KMC is affiliated. Notably, KMC provides such services to vessels owned by our Chairman and his brother. These responsibilities and relationships could create conflicts of interest between KMC’s performance of its obligations to us, on the one hand, and KMC’s performance of its obligations to its other clients, on the other hand. These conflicts may arise in connection, among others, with the crewing, supply provisioning, and operations of the vessels in our fleet versus vessels owned or operated by other clients of KMC. In particular, KMC may give preferential treatment or be contractually or otherwise obligated to give preferential treatment to vessels owned or operated by other clients or affiliated companies. In addition, our Chairman and his brother own fleets of ships that are not owned by us and we therefore may be competing for the same charterers or other business opportunities. These conflicts of interest may have an adverse effect on our results of operations.
ITEM 4. INFORMATION ON THE COMPANY
A. |
History and Development of the Company |
We are Okeanis Eco Tankers Corp., an international shipping company incorporated under the laws of the Republic of the Marshall Islands, pursuant to the BCA, on April 30, 2018. The legislation under which Okeanis Eco Tankers Corp. operates is the BCA, and its registered agent and registered address in the Marshall Islands is The Trust Company of the Marshall Islands, Inc., Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Republic of the Marshall Islands, MH 96960. Our executive offices are currently located at c/o OET Chartering Inc., Ethnarchou Makariou Ave., & 2 D. Falireos St., 185 47 N. Faliro, Greece and our telephone number at that address is +30 210 480 4200. Our website is www.okeanisecotankers.com. The Commission maintains a website that contains reports, proxy and information statements, and other information that we and other issuers file electronically at www.sec.gov. Information that is or will be on or accessed through such websites does not constitute a part of, and is not incorporated by reference into, this Annual Report.
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On June 28, 2018, we acquired 15 single-purpose companies and OET Chartering Inc. from Ioannis Alafouzos and Okeanis Marine Holdings S.A., a Marshall Islands corporation controlled by our Chairman, Ioannis Alafouzos, and his brother, Themistoklis Alafouzos. In consideration for the contribution of the vessel-owning entities, newbuilding contract purchasing entities and the chartering entity to us, we issued 15,990,000 of our common shares to Glafki Marine Corp., controlled by the two brothers and which already held 10,000 common shares that were initially issued by us. Glafki Marine Corp. is currently controlled by Ioannis Alafouzos. In July 2022, Glafki Marine Corp. sold 6,646,063 of our common shares to Hospitality Assets Corp., a company controlled by Themistoklis Alafouzos, by way of share exchange in conjunction with Ioannis Alafouzos’ purchase of Themistoklis Alafouzos’ minority shares in Glafki Marine Corp. Following this transaction, the two brothers separated their indirect interests and Ioannis Alafouzos became the sole shareholder of Glafki Marine Corp. Collectively, Glafki Marine Corp. and Hospitality Assets Corp. are majority shareholders in the Company, owning an aggregate of 17,665,000 of its common shares (53.7% of the issued and outstanding shares in the Company), with Ioannis Alafouzos owning another 437,286 of its common shares directly.
Our common shares began trading on Euronext Growth (ex - Merkur Market) on July 3, 2018. On March 8, 2019, our shares began trading on Euronext Expand (ex - Oslo Axess) and ceased trading on Euronext Growth. On January 29, 2021, our shares began trading on the Oslo Børs and ceased trading on Euronext Expand (ex-Oslo Axess). On December 11, 2023, our shares began trading on the NYSE, and our listing on the Oslo Børs was converted into a secondary listing.
In May 2021, the Company signed memoranda of agreement (“MoAs”) for the sale of its Aframax/ LR2 vessel fleet, comprising three vessels (Nissos Therassia, Nissos Schinoussa and Nissos Heraclea) to an unaffiliated third party for a total of $120.75 million. Nissos Therassia and Nissos Schinoussa were delivered to their new owners in June 2021 and Nissos Heraclea was delivered in August 2021.
In June 2021, the Company signed MoAs for the sale of the VLCC crude tankers, Nissos Santorini and Nissos Antiparos, to an unaffiliated third party for consideration of $180 million. The vessels were delivered to their new owner in the October 2021 and November 2021, respectively.
In June 2021, we entered into an agreement to acquire two Gas Ready (MEc), Eco-design, open loop scrubber-fitted 300,000 DWT VLCC crude tankers (Nissos Kea and Nissos Nikouria) under construction at Hyundai Heavy Industries shipyard, or HHI, from entities controlled by Mr. Ioannis Alafouzos for a total consideration of $194 million, funded with a combination of cash, senior secured debt, and senior unsecured debt (“Sponsor Loan”).
In November 2021, our board of directors authorized a share buy-back plan, pursuant to which we were permitted to repurchase up to $5.0 million of our outstanding common shares in the open market. This plan remains in effect. As of the date hereof, we have purchased 181,809 shares at an average price of NOK71.68, or $8.34 per share for a total amount of $1,515,670. We did not repurchase any shares in 2023.
In March 2022, we took delivery of the newbuilding VLCC, Nissos Kea from HHI.
In April 2022, the Company entered into a loan agreement with Okeanis Marine Holdings S.A., an entity controlled by Mr. Ioannis Alafouzos, regarding the acquisition of VLCC vessels Nissos Kea and Nissos Nikouria. Under the agreement, the loaned amount of $17.6 million for each vessel, bears a fixed interest cost of 3.5% per annum and is payable at our sole discretion, up to any date two years from the vessels’ delivery.
In May 2022, we signed our first sustainability linked loan (“SLL”) that includes customary environmental clauses which are linked to pricing. For further information, see “Item 5.B. Liquidity and Capital Resources — Credit Facilities and Financing Obligations — $125.7 Million Secured Term Loan Facility”. Gross proceeds from the transaction were $125.7 million which were used towards the refinancing of debt outstanding in connection with the financing of the VLCC vessels Nissos Kythnos and Nissos Donoussa, and for general corporate purposes.
In June 2022, we took delivery of Nissos Nikouria, the second newbuilding VLCC from HHI.
On July 18, 2023, the Company declared its option to purchase back the Suezmax vessel Milos, from its sale and lease back financier in February 2024.
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Recent Developments
On January 31, 2024, we executed an agreement for a new $34.7 million senior secured credit facility to finance the option to purchase back the Suezmax vessel Milos from its current sale and lease back financier (the “Milos Facility”). The Milos Facility is provided by a syndicate led by Kexim Asia Limited and the transaction was completed in February, 2024. It is priced at 175 bps over the applicable Term SOFR, matures in six years, will be repaid in quarterly instalments of $0.725 million each, together with a balloon instalment of $17.3 million payable at maturity, will be secured by, among other things, security over the Milos and is guaranteed by the Company.
On January 26 and 29, 2024, we executed amendments to the existing sale and leaseback agreements on the VLCC vessels Nissos Kea and Nissos Nikouria (the “Existing Leases Amendments”) and a new sale and leaseback agreement on the VLCC vessel Nissos Anafi (the “Anafi Lease”), respectively, both with CMB Financial Leasing.
The Anafi Lease, in the amount of approximately $73.5 million, will be used to refinance the existing indebtedness of the Nissos Anafi and other general corporate purposes, and was completed in February, 2024. The agreement provides for a bareboat charter with charterhire being paid quarterly, and which matures in seven years. Charterhire will be paid in quarterly installments each consisting of a fixed amount of approximately $1.180 million and a variable amount priced at 190 bps over the applicable Term SOFR. The Anafi Lease includes purchase options for the Company after the first year and throughout the tenor of the lease and is guaranteed by the Company.
The Existing Leases Amendments, which became effective in the first quarter of 2024, provide for a reduction of the pricing of the variable amount of charterhire payable thereunder to 200 bps over the applicable Term SOFR on both vessels, extend maturities to December 2030 for the Nissos Kea and March 2031 for the Nissos Nikouria, and eliminate the previously stipulated early prepayment fees in the case of exercise of the purchase options by the Company after the first year.
In March 2024, we paid an amount of approximately $21.2 million or $0.66 per share via a dividend that was classified as a return of paid-in-capital. For more information, see “Item 8. Financial Information — Dividend Policy.”
Also, in March 2024, the Company repaid an amount of $16.7 million concerning the remaining Sponsor’s loan principal amount relating to the acquisition of Nissos Kea.
B. |
Business Overview |
We are an international owner and operator of a modern, fuel-efficient Eco fleet of 14 tanker vessels, comprising six modern Suezmax tankers and eight modern VLCC tankers, focusing on the transportation of crude oil. Our vessels are built in line with Eco standards that consume less bunker fuel than conventional tanker vessels, are equipped with exhaust gas cleaning systems (“scrubbers”) and are built to comply with regulations for ballast water treatment. Our fleet has a carrying capacity of approximately 3.5 million deadweight tons and an average age of 4.4 years as of December 31, 2023. Certain of our vessels are owned by us directly and others are owned by finance leasing houses and bareboat chartered back to us (with an option for us to repurchase the vessels at certain times).
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The following table lists the vessels in our fleet as of April 30, 2024:
|
|
Year |
|
|
|
|
|
|
|
Type of |
Vessel Name |
|
Built |
|
Dwt |
|
Flag |
|
Yard |
|
Employment |
Milos |
|
2016 |
|
157,525 |
|
Greece |
|
Sungdong |
|
Spot |
Poliegos |
|
2017 |
|
157,525 |
|
Marshall Islands |
|
Sungdong |
|
Spot |
Kimolos |
|
2018 |
|
159,159 |
|
Marshall Islands |
|
JMU |
|
Spot |
Folegandros |
|
2018 |
|
159,221 |
|
Marshall Islands |
|
JMU |
|
Spot |
Nissos Sikinos |
|
2020 |
|
157,447 |
|
Marshall Islands |
|
HSHI |
|
Spot |
Nissos Sifnos |
|
2020 |
|
157,447 |
|
Marshall Islands |
|
HSHI |
|
Spot |
Nissos Rhenia |
|
2019 |
|
318,953 |
|
Marshall Islands |
|
HHI |
|
Spot |
Nissos Despotiko |
|
2019 |
|
318,953 |
|
Marshall Islands |
|
HHI |
|
Spot |
Nissos Donoussa |
|
2019 |
|
318,953 |
|
Marshall Islands |
|
HHI |
|
Spot |
Nissos Kythnos |
|
2019 |
|
318,953 |
|
Marshall Islands |
|
HHI |
|
Spot |
Nissos Keros |
|
2019 |
|
318,953 |
|
Marshall Islands |
|
HHI |
|
Spot |
Nissos Anafi |
|
2020 |
|
318,953 |
|
Marshall Islands |
|
HHI |
|
Spot |
Nissos Kea |
|
2022 |
|
300,323 |
|
Marshall Islands |
|
HHI |
|
Spot |
Nissos Nikouria |
|
2022 |
|
300,323 |
|
Marshall Islands |
|
HHI |
|
Spot |
We strategically monitor developments in the tanker industry on a regular basis and, subject to market demand, will seek to enter into shorter or longer time or bareboat charters according to prevailing market conditions.
We will compete for charters on the basis of price, vessel location, size, age, and condition of the vessel, as well as on our reputation as an operator. We will arrange our time charters and bareboat charters through the use of brokers, who negotiate the terms of the charters based on market conditions. Ownership of tankers is highly fragmented and is divided among major oil companies and independent vessel owners.
Management of Our Fleet
We have entered into management agreements with OET Chartering Inc. (a wholly owned subsidiary) as commercial manager of our vessels and with KMC as our technical manager.
KMC provides our vessels with a wide range of shipping services, such as technical support, crew management, maintenance, and insurance consulting in exchange for a daily fee of $900 per vessel, which is reflected under management fees in the consolidated statement of profit or loss and other comprehensive income. For the years ended December 31, 2023 and December 31, 2022, total technical management fees incurred from KMC amounted to $4,599,000 and $4,381,200, respectively. If required by KMC, the daily fee may be increased in line with the relevant annual inflation rates. Each technical management agreement for each vessel can be terminated by either party at any time for cause, including by reason of the other party’s failure to meet its obligations under the agreement or if we sell the vessel or upon the vessel’s loss. Furthermore, KMC has the right to terminate each technical management agreement, subject to 30-days’ advance written notice, in the event of a change of control of the relevant ship-owning entity without KMC’s consent. In each case, unless the cause for termination is KMC’s failure to meet its obligations under the relevant technical management agreement, we are required to continue payment of the management fees thereunder for 36 months from the termination date (or, if a notice of termination for convenience has preceded such for cause termination, 36 months from the date of such notice). The agreement can also be terminated by either party for convenience by giving notice to the other party, following which the agreement shall terminate upon the expiration of 36 months from the date on which notice is received.
In addition, on November 1, 2023, our wholly owned subsidiary, OET Chartering Inc., entered into a shared services agreement with KMC to document the mutual exchange of business support in respect of the management of our vessels by way of corporate, accounting, financial and other operational and administrative services. The shared services agreement does not provide for any additional fee payable. The agreement may be terminated by either party thereto (i) for cause, immediately upon written notice or (ii) for any other reason, upon two months’ written notice.
OET Chartering Inc., a wholly owned subsidiary, provides commercial management of all of the vessels in our fleet and employs our on-shore employees. We pay OET Chartering Inc. a daily management fee of $600 per vessel, but if the actual expenses of OET Chartering Inc. are higher, an additional amount will be paid.
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On March 1, 2024 each of our vessel owning subsidiaries, entered into an ETS Services Agreement with KMC, which agreement is effective as of January 1, 2024, pursuant to which KMC obtains, transfers and surrenders emission allowances under the EU Emissions Trading Scheme that came into effect on January 1, 2024, and KMC provides the vessel with emission data in a timely manner to enable compliance with any emission scheme (s) applicable to the vessel. No additional fee is payable under these agreements as the services are considered to be part of the technical management fee under the technical management agreements, set out above. These agreements may be terminated by either party (a) for cause, immediately upon written notice or (ii) for any reason, upon two months' written notice. These agreements shall also be deemed automatically terminated on the date of termination of the relevant technical management agreements, described above.
Employment of Our Fleet
We currently seek to employ our vessels primarily under voyage charters, which we believe allows us to capture the full benefit of lower fuel oil costs afforded to us by our Eco-design, scrubber-equipped, fleet. Depending on market conditions, we may also employ our vessels on time charters. Vessels operating on time charters may be chartered for several months or years, whereas vessels operating in the spot market typically are chartered for a single voyage that may last up to three months. Vessels operating in the spot market may generate increased profit margins during periods of improving tanker rates, while vessels operating on time charters generally provide more predictable cash flows. We actively monitor market conditions and changes in charter rates in managing the deployment of our vessels between voyage charters and time charters.
Voyage Charters
A voyage charter is generally a contract to carry a specific cargo from a load port to a discharge port for an agreed freight per ton of cargo or a specified total amount. Under voyage charters, we pay voyage expenses such as port, canal, and bunker costs. Voyage charter rates are volatile and fluctuate on a seasonal and year-to-year basis. Fluctuations derive from imbalances in the availability of cargoes for shipment and the number of vessels available at any given time to transport these cargoes. Vessels operating in the voyage market generate revenue that is less predictable but may enable us to capture increased profit margins during periods of improvements in tanker rates.
Time Charters
Time charters give us a fixed and stable cash flow for a known period of time. Time charters also mitigate, in part, the seasonality of the spot market business, which is typically weaker in the second and third quarters of the year. In the future, we may opportunistically look to enter our vessels into time charter contracts.
Customers
Our customers during the last three years include national, regional, and international companies. Customers individually accounting for more than 10% of our revenues during the years ended December 31, 2023, 2022 and 2021 were:
Customer |
|
2023 |
|
2022 |
|
2021 |
|
A |
|
— |
|
18 |
% |
13 |
% |
B |
|
— |
|
14 |
% |
11 |
% |
C |
|
— |
|
11 |
% |
— |
|
Total |
|
— |
|
43 |
% |
24 |
% |
Seasonality
Historically, oil trade and, therefore, charter rates increased in the winter months and eased in the summer months as demand for oil and oil products in the northern hemisphere rose in colder weather and fell in warmer weather. The tanker industry, in general, has become less dependent on the seasonal transport of heating oil than a decade ago as new uses for oil and oil products have developed, spreading consumption more evenly over the year. This is most apparent from the higher seasonal demand during the summer months due to energy requirements for air conditioning and motor vehicles. Unpredictable weather patterns and variations in oil reserves disrupt tanker scheduling. This seasonality may affect operating results. However, to the extent that our vessels, or any vessels we may acquire, are chartered at fixed rates on a long-term basis, seasonal factors will not have a significant direct effect on our business.
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Our Environmental, Social, and Governance, or ESG, Practices
We, together with our technical managers, have been monitoring relevant data for sustainability and ESG according to internationally accepted standards. Consistent with our commitments towards ESG initiatives, in January 2024 we published our ESG Report for 2022 to inform our shareholders of certain of our goals, actions, and performance with respect to ESG issues. The 2022 ESG Report (which is not incorporated by reference herein) was prepared in accordance with the Global Reporting Initiative (GRI 2021 Standards) and the internationally accepted Sustainability Accounting Standards Board (SASB) for Marine Transportation and covers various sustainability aspects, which provide relevant information about ESG issues and includes information regarding our emissions (and certain metrics with respect thereto). We also ascribe to the United Nations Sustainable Development Goals (UN SDGs), which guide our operations, and recognize the importance of the 2030 Agenda for Sustainable Development.
KMC designed and developed in-house a Vessel Monitoring & Performance System (VMPS), an innovative monitoring tool which we believe is capable of meeting current and future GHG regulatory and compliance requirements. The VMP KMC system monitors fuel capacity and emissions in real-time while providing valuable information through instant reports. KMC, recognizing the need to develop management tools to assist in managing the ongoing environmental performance of its ships, has issued a Ship Energy Efficiency Management Plan (SEEMP), in order to monitor and measure the Company’s ships and fleet efficiency performance. The SEEMP identifies energy-saving measures which have been undertaken as well as the necessary measures that can be adopted to further improve the ship’s energy efficiency providing specific tools to assess their effectiveness.
Environmental and Other Regulations
Government regulation and laws significantly affect the ownership and operation of our fleet. We are subject to international conventions and treaties, national, state, and local laws and regulations in force in the countries in which our vessels and other vessels we may acquire may operate or are registered relating to safety and health and environmental protection including the storage, handling, emission, transportation, and discharge of hazardous and non-hazardous materials, and the remediation of contamination and liability for damage to natural resources. Compliance with such laws, regulations, and other requirements entails significant expense, including vessel modifications and implementation of certain operating procedures.
A variety of government and private entities subject our vessels (and other vessels we may acquire) to both scheduled and unscheduled inspections. These entities include the local port authorities (applicable national authorities such as the United States Coast Guard, or USCG, harbor master, or equivalent), classification societies, flag state administrations (countries of registry), terminal operators, and charterers. Certain of these entities require us to obtain permits, licenses, certificates, and other authorizations for the operation of our vessels and other vessels we may acquire. Failure to maintain necessary permits or approvals could require us to incur substantial costs or result in the temporary suspension of the operation of one or more of our vessels and other vessels we may acquire.
Increasing environmental concerns have created a demand for vessels that conform to stricter environmental standards. We are required to maintain operating standards for our vessels and other vessels we may acquire that emphasize operational safety, quality maintenance, continuous training of our officers and crews, and compliance with United States and international regulations. We believe that the operation of our vessels is in substantial compliance with applicable environmental laws and regulations and that our vessels have all material permits, licenses, certificates, or other authorizations necessary for the conduct of our operations. However, because such laws and regulations frequently change and may impose increasingly stricter requirements, we cannot predict the ultimate cost of complying with these requirements, or the impact of these requirements on the resale value or useful lives of our vessels and other vessels we may acquire. In addition, a future serious marine incident that causes significant adverse environmental impact could result in additional legislation or regulation that could negatively affect our profitability.
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International Maritime Organization
The IMO, the United Nations agency for maritime safety and the prevention of pollution by vessels, has adopted the International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 relating thereto, collectively referred to as MARPOL 73/78 and herein as MARPOL, the International Convention for the Safety of Life at Sea of 1974, or SOLAS Convention, the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, or STCW, and the International Convention on Load Lines of 1966, or LL Convention. MARPOL establishes environmental standards relating to oil leakage or spilling, garbage management, sewage, air emissions, the handling and disposal of noxious liquids, and the handling of harmful substances in packaged forms. MARPOL is applicable to drybulk, tanker, and LNG carriers, among other vessels, and is divided into six Annexes, each of which regulates a different source of pollution. Annex I relates to oil leakage or spilling; Annexes II and III relate to harmful substances carried in bulk in liquid or in packaged form, respectively; Annexes IV and V relate to sewage and garbage management, respectively; and Annex VI, lastly, relates to air emissions.
Since 2014, the IMO’s Marine Environmental Protection Committee, or the MEPC, amendments to MARPOL Annex I Condition Assessment Scheme, have required compliance with the 2011 International Code on the Enhanced Programme of Inspections during Surveys of Bulk Carriers and Oil Tankers, or ESP Code, which provides for enhanced inspection programs. In January 2023, amendments to the ESP Code relating to thickness measurements at the first renewal survey of double hull oil tankers became effective. Additional amendments addressing survey requirements for bulk carriers and oil tankers are expected to enter into effect in July 2024. We may need to make certain financial expenditures to comply with these amendments.
Air Emissions
In September of 1997, the IMO adopted Annex VI to MARPOL to address air pollution from vessels. Effective May 2005, Annex VI sets limits on sulfur oxide and nitrogen oxide emissions from all commercial vessel exhausts and prohibits “deliberate emissions” of ozone depleting substances (such as halons and chlorofluorocarbons), emissions of volatile compounds from cargo tanks, and the shipboard incineration of specific substances. Annex VI also includes a global cap on the sulfur content of fuel oil and allows for special areas to be established with more stringent controls on sulfur emissions, as explained below. Emissions of “volatile organic compounds” from certain vessels, and the shipboard incineration (from incinerators installed after January 1, 2000) of certain substances (such as polychlorinated biphenyls, or PCBs) are also prohibited. We believe that our vessels are currently compliant in all material respects with these regulations.
The MEPC adopted amendments to Annex VI regarding emissions of sulfur oxide, nitrogen oxide, particulate matter, and ozone depleting substances, which entered into force on July 1, 2010. The amended Annex VI seeks to further reduce air pollution by, among other things, implementing a progressive reduction of the amount of sulfur contained in any fuel oil used on board ships. Effective January 1, 2020, there has been a global limit of 0.5% m/m sulfur oxide emissions (reduced from 3.50%). This limitation can be met by using low-sulfur compliant fuel oil, alternative fuels, or certain exhaust gas cleaning systems (referred to as “scrubbers” or “EGCS”. Ships are required to obtain bunker delivery notes and International Air Pollution Prevention, or IAPP, Certificates from their flag states that specify sulfur content. Additionally, at MEPC 73, amendments to Annex VI to prohibit the carriage of bunkers above 0.5% sulfur on ships became effective on March 1, 2020. Fuels with higher sulfur content than required by Reg. 14 of Annex VI can still be delivered to a ship, provided the ship uses equivalent measures, such as an EGCS, pursuant to Regulation 4. Additional amendments to Annex VI revising, among other terms, the definition of “Sulphur content of fuel oil” and “low-flashpoint fuel” and pertaining to the sampling and testing of onboard fuel oil, became effective in April 2022. These regulations subject ocean-going vessels to stringent emissions controls and may cause us to incur additional costs, which cannot currently be reasonably estimated.
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Sulfur content standards are even stricter within certain “Emission Control Areas,” or ECAs. As of January 1, 2015, ships operating within an ECA were not permitted to use fuel with sulfur content in excess of 0.1%. Amended Annex VI establishes procedures for designating new ECAs. Currently, the IMO has designated four ECAs, including specified portions of the Baltic Sea area, North Sea area, North American area, and United States Caribbean Sea area. Ocean-going vessels in these areas will be subject to stringent emission controls and may cause us to incur additional costs. Furthermore, in December 2022, the Committee adopted Resolution MEPC.361(79) establishing a new ECA for the Mediterranean Sea as a whole. These amendments will enter into force on May 1, 2024, however, ships operating in this ECA will be exempted from compliance with the 0.10% m/m sulfur content standard for fuel oil until July 1, 2025. Ocean-going vessels in these areas will be subject to stringent emission controls and ocean-going vessels trading in ECAs are subject to increased operational costs due to the significantly higher price of the fuel with very low Sulphur content (0.1%m/m) or due to the additional cost entailed by the use of an EGCS. If other ECAs are approved by the IMO, or other new or more stringent requirements relating to emissions from marine diesel engines or port operations by vessels are adopted by the U.S. Environmental Protection Agency, or EPA, or the states where we operate, compliance with these regulations could entail significant capital expenditures or otherwise increase the costs of our operations.
Amended Annex VI also establishes new tiers of stringent nitrogen oxide emissions standards for marine diesel engines, depending on their date of installation. Now Annex VI provides for a three-tier reduction in NOx emissions from marine diesel engines, with the final tier (or Tier III) to apply to engines installed on vessels constructed on or after January 1, 2016, and which operate in the North American ECA or the U.S. Caribbean Sea ECA, as well as ECAs designated in the future by the IMO. At MEPC 70 and MEPC 71, the MEPC approved the North Sea and Baltic Sea as ECAs for nitrogen oxide for ships built on or after January 1, 2021. The EPA promulgated equivalent (and in some senses stricter) emissions standards in late 2009. Additionally, amendments to Annex II, which strengthen discharge requirements for cargo residues and tank washings in specified sea areas (including North West European waters, Baltic Sea area, Western European waters, and Norwegian Sea), came into effect in January 2021.
As determined at the MEPC 70, the new Regulation 22A of MARPOL Annex VI became effective as of March 1, 2018, and requires ships above 5,000 gross tonnage to collect and report annual data on fuel oil consumption to an IMO database, with the first year of data collection commencing on January 1, 2019. The IMO intends to use such data as the first step in its roadmap (through 2023) for developing its strategy to reduce greenhouse gas emissions from ships, as discussed further herein. Amendments to Annex VI, requiring will require bunker delivery notes to include a flashpoint of fuel oil or a statement that the flashpoint has been measured at or above 70°C as mandatory information, are expected to become effective on May 1, 2024. Pursuant to MEPC 80, in July 2023, the IMO adopted the 2023 IMO Strategy on Reduction of GHG Emissions from Ships, which identifies a number of levels of ambition, including (1) decreasing the carbon intensity from ships through implementation of further phases of energy efficiency for new ships; (2) reducing carbon dioxide emissions per transport work, as an average across international shipping, by at least 40% by 2030; and (3) pursuing net-zero GHG emissions by or around 2050.
As of January 1, 2013, MARPOL made mandatory certain measures relating to energy efficiency for ships. All ships are now required to develop and implement Ship Energy Efficiency Management Plans, or SEEMPS, and new ships must be designed in compliance with minimum energy efficiency levels per capacity mile as defined by the Energy Efficiency Design Index, or EEDI. Under these measures, by 2025, all new ships built will be 30% more energy efficient than those built in 2014. Additionally, MEPC 75 adopted amendments to MARPOL Annex VI which brought forward the effective date of the EEDI’s “phase 3” requirements, from January 1, 2025 to April 1, 2022, for several ship types, including gas carriers, general cargo ships, and LNG carriers.
Additionally, MEPC 76 adopted amendments to Annex VI, which impose new regulations to reduce greenhouse gas emissions from ships. The revised Annex VI entered into force in November 2022 and includes requirements to assess and measure the energy efficiency of all ships and set the required attainment values, with the goal of reducing the carbon intensity of international shipping. The requirements include (1) a technical requirement to reduce carbon intensity based on a new Energy Efficiency Existing Ship Index (or EEXI), and (2) operational carbon intensity reduction requirements based on a new operational carbon intensity indicator (or CII). The attained EEXI is required to be calculated for ships of 400 gross tonnage and above, in accordance with different values set for ship types and categories. With respect to the CII, taking effect from January 1, 2023, ships of 5,000 gross tonnage are required to document and verify their actual annual operational CII achieved against a determined required annual operational CII. All ships that fall under the new CII regime will have to have a CII rating of C or above from 2023 in order to be compliant. Ships that have a CII rating of D for three consecutive years or E for one year are required to submit a corrective action plan, to show how the required index (C or above) would be achieved or else they will be deemed non-compliant. The EEXI and CII certification requirements came into effect on January 1, 2023.
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Additionally, MEPC 76 adopted amendments requiring ships of 5,000 gross tonnage and above to revise their SEEMP to include methodology for calculating the ship’s attained annual operation CII and the required annual operational CII on or before June 1, 2023. MEPC 76 also approved amendments to MARPOL Annex I to prohibit the use and carriage for use as fuel of heavy fuel oil (or HFO) by ships in Arctic waters on and after July 1, 2024. For ships subject to Regulation 12A (oil fuel tank protection), the prohibition becomes effective on or after July 1, 2029.
We may incur costs to comply with these revised standards, although it is difficult to predict any such costs. Additional or new conventions, laws, and regulations may be adopted that could require the installation of expensive emission control systems and could adversely affect our business, results of operations, cash flows, and financial condition.
Safety Management System Requirements
The SOLAS Convention was amended to address the safe manning of vessels and emergency training drills. The Convention of Limitation of Liability for Maritime Claims, or the LLMC, sets limitations of liability for a loss of life or personal injury claim or a property claim against ship owners. We believe that our vessels are in substantial compliance with SOLAS and LLMC standards.
Under Chapter IX of the SOLAS Convention, or the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention, or the ISM Code, our operations are also subject to environmental standards and requirements. The ISM Code requires the party with operational control of a vessel to develop an extensive safety management system that includes, among other things, the adoption of a safety and environmental protection policy setting forth instructions and procedures for operating its vessels safely and describing procedures for responding to emergencies. We rely upon the safety management system that we and our technical management team have developed for compliance with the ISM Code. The failure of a vessel owner or bareboat charterer to comply with the ISM Code may subject such party to increased liability, may decrease available insurance coverage for the affected vessels, and may result in a denial of access to, or detention in, certain ports.
The Military Sealift Command adopted amendments to modernize the Global Maritime Distress and Safety System (or GMDSS), which entered into force on January 1, 2024. The amendments, which include amendments to SOLAS, may require vessel owners/operators to ensure their radio equipment is compliant.
The ISM Code requires that vessel operators obtain a safety management certificate for each vessel they operate. This certificate evidences compliance by a vessel’s management with the ISM Code requirements for a safety management system. No vessel can obtain a safety management certificate unless its manager has been awarded a document of compliance, issued by each flag state (or recognized organization on behalf of the flag administration), under the ISM Code. We have obtained applicable documents of compliance for our offices and safety management certificates for our vessels as required by the IMO. The documents of compliance and safety management certificate are renewed as required.
Regulation II-1/3-10 of the SOLAS Convention governs ship construction and stipulates that ships over 150 meters in length must have adequate strength, integrity, and stability to minimize risk of loss or pollution. Goal-based standards amendments in SOLAS regulation II-1/3-10 entered into force in 2012, and from July 1, 2016 with respect to new oil tankers and bulk carriers. Regulation II-1/3-10 on goal-based ship construction standards for bulk carriers and oil tankers, which entered into force on January 1, 2012, requires that all oil tankers and bulk carriers of 150 meters in length and above, for which the building contract is placed on or after July 1, 2016, satisfy applicable structural requirements conforming to the functional requirements of the International Goal-based Ship Construction Standards for Bulk Carriers and Oil Tankers, or GBS Standards.
Amendments to the SOLAS Convention Chapter VII apply to vessels transporting dangerous goods and require those vessels be in compliance with the International Maritime Dangerous Goods Code, or IMDG Code. Effective January 1, 2018, the IMDG Code includes (1) updates to the provisions for radioactive material, reflecting the latest provisions from the International Atomic Energy Agency, (2) new marking, packing, and classification requirements for dangerous goods, and (3) new mandatory training requirements. Amendments which took effect on January 1, 2020, also reflect the latest material from the UN Recommendations on the Transport of Dangerous Goods, including (1) new provisions regarding IMO type 9 tank, (2) new abbreviations for segregation groups, and (3) special provisions for carriage of lithium batteries and of vehicles powered by flammable liquid or gas. Amendments to the IMDG Code relating to segregation requirements for certain substances, and classification and transport of carbon came into effect in June 2022.
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The IMO has also adopted the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, or STCW. As of February 2017, all seafarers are required to meet the STCW standards and be in possession of a valid STCW certificate. Flag states that have ratified SOLAS and STCW generally employ recognized organizations, which have incorporated SOLAS and STCW requirements into their class rules, to undertake surveys to confirm compliance, and to conduct ISM audits.
Furthermore, recent actions by the IMO’s Maritime Safety Committee and United States agencies indicate that cybersecurity regulations for the maritime industry are likely to be further developed in the near future in an attempt to combat cybersecurity threats. For example, effective January 2021, cyber-risk management systems must be incorporated by shipowners and managers. This might cause companies to create additional procedures for monitoring cybersecurity, which could require additional expenses and/or capital expenditures. The impact of such regulations is hard to predict at this time.
Pollution Control and Liability Requirements
The IMO has negotiated international conventions that impose liability for pollution in international waters and the territorial waters of the signatories to such conventions. For example, the IMO adopted the International Convention for the Control and Management of Ships’ Ballast Water and Sediments, or the BWM Convention, in 2004. The BWM Convention entered into force on September 9, 2017. The BWM Convention requires ships to manage their ballast water to remove, render harmless, or avoid the uptake or discharge of new or invasive aquatic organisms and pathogens within ballast water and sediments. The BWM Convention’s implementing regulations call for a phased introduction of mandatory ballast water exchange requirements, to be replaced in time with mandatory concentration limits, and require all ships to carry a ballast water record book and an international ballast water management certificate.
Specifically, ships over 400 gross tons generally must comply with a “D-1 standard,” requiring the exchange of ballast water only in open seas and away from coastal waters. The “D-2 standard” specifies the maximum amount of viable organisms allowed to be discharged, and compliance dates vary depending on the IOPP renewal dates. For most ships, compliance with the D-2 standard will involve installing on- board systems to treat ballast water and eliminate unwanted organisms. Ballast Water Management systems (or BWMS), which include systems that make use of chemical, biocides, organisms, or biological mechanisms, or which alter the chemical or physical characteristics of the Ballast Water, must be approved in accordance with IMO Guidelines (Regulation D-3). Pursuant to the BWM Convention amendments that entered into force in October 2019, BWMS installed on or after October 28, 2020, shall be approved in accordance with BWMS Code, while BWMS installed before October 23, 2020, must be approved taking into account guidelines developed by the IMO or the BWMS Code. As of October 23, 2019, MEPC 72’s amendments to the BWM Convention took effect, requiring all ships to meet the D-2 standard by September 8, 2024. Costs of compliance with these regulations may be substantial. However, many countries already regulate the discharge of ballast water carried by vessels from country to country to prevent the introduction of invasive and harmful species via such discharges. The U.S., for example, requires vessels entering its waters from another country to conduct mid-ocean ballast exchange, or undertake some alternate measure, and to comply with certain reporting requirements. Amendments to the BWM Convention concerning commissioning testing of BWMS and the form of the International Ballast Water Management Certificate became effective in June 2022. All of our vessels have Ballast Water Treatment Systems that ensure compliance with the new environmental regulations.
The IMO adopted the International Convention on Civil Liability for Oil Pollution Damage of 1969, as amended by different Protocols in 1976, 1984, and 1992, and amended in 2000, the CLC. Under the CLC and depending on whether the country in which the damage results is a party to the 1992 Protocol to the CLC, a vessel’s registered owner may be strictly liable for pollution damage caused in the territorial waters of a contracting state by discharge of persistent oil, subject to certain exceptions. The 1992 Protocol changed certain limits on liability expressed using the International Monetary Fund currency unit, the Special Drawing Rights. The limits on liability have since been amended so that the compensation limits on liability were raised. The right to limit liability is forfeited under the CLC where the spill is caused by the shipowner’s actual fault and, under the 1992 Protocol, where the spill is caused by the shipowner’s intentional or reckless act or omission where the shipowner knew pollution damage would probably result. The CLC requires ships over 2,000 tons covered by it to maintain insurance covering the liability of the owner in a sum equivalent to an owner’s liability for a single incident. We have protection and indemnity insurance for environmental incidents. P&I Clubs in the International Group issue the required Bunkers Convention “Blue Cards” to enable signatory states to issue certificates. We will ensure that our vessels are in possession of a CLC State issued certificate attesting that the required insurance coverage is in force as required by law.
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The IMO also adopted the International Convention on Civil Liability for Bunker Oil Pollution Damage, or the Bunker Convention, to impose strict liability on ship owners (including the registered owner, bareboat charterer, manager, or operator) for pollution damage in jurisdictional waters of ratifying states caused by discharges of bunker fuel. The Bunker Convention requires registered owners of ships over 1,000 gross tons to maintain insurance for pollution damage in an amount equal to the limits of liability under the applicable national or international limitation regime (but not exceeding the amount calculated in accordance with the LLMC). With respect to non-ratifying states, liability for spills or releases of oil carried as fuel in a ship’s bunkers typically is determined by the national or other domestic laws in the jurisdiction where the events or damages occur.
Ships are required to maintain a certificate attesting that they maintain adequate insurance to cover an incident. In jurisdictions such as the United States where the Bunker Convention has not been adopted, various legislative schemes or common law govern, and liability is imposed either on the basis of fault or on a strict-liability basis.
Anti-Fouling Requirements
In 2001, the IMO adopted the International Convention on the Control of Harmful Anti-fouling Systems on Ships, or the “Anti-fouling Convention,” which entered into force in September 2008 and prohibits the use of organotin compound coatings to prevent the attachment of mollusks and other sea life to the hulls of vessels. Vessels of over 400 gross tons engaged in international voyages will also be required to undergo an initial survey before the vessel is put into service or before an International Anti-fouling System Certificate is issued for the first time, and subsequent surveys when the anti-fouling systems are altered or replaced. We have obtained Anti-fouling System Certificates for our vessels that are subject to the Anti- fouling Convention. MEPC 76 adopted amendments to the Anti-fouling Convention to include controls on the biocide cybutryne; ships may not apply cybutryne or re-apply anti-fouling systems containing that substance. In addition, ships are required to remove or apply a coating to anti-fouling systems with cybutryne, at the next scheduled renewal of the anti-fouling system after January 1, 2023. This does not apply to our fleet, as our vessels bear cybutryne-free products.
Compliance Enforcement
Noncompliance with the ISM Code or other IMO regulations may subject the ship owner or bareboat charterer to increased liability, may lead to decreases in available insurance coverage for affected vessels, and may result in the denial of access to, or detention in, some ports. The USCG and European Union authorities (and other authorities in a number of countries) have indicated that vessels not in compliance with the ISM Code by applicable deadlines will be prohibited from trading in U.S., European Union (and other countries’) ports, respectively. As of the date of this Annual Report, our vessels are ISM Code certified. However, there can be no assurance that such certificates will be maintained in the future. The IMO continues to review and introduce new regulations. It is impossible to predict what additional regulations, if any, may be passed by the IMO and what effect, if any, such regulations might have on our operations.
United States Regulations
The U.S. Oil Pollution Act of 1990 and the Comprehensive Environmental Response, Compensation and Liability Act
The U.S. Oil Pollution Act of 1990, or OPA, established an extensive regulatory and liability regime for the protection and clean-up of the environment from oil spills. OPA affects all “owners and operators” whose vessels trade or operate within the U.S., its territories, and possessions or whose vessels operate in U.S. waters, which includes the U.S.’s territorial sea and its 200 nautical mile exclusive economic zone around the U.S. The U.S. has also enacted the Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, which applies to the discharge of hazardous substances other than oil, except in limited circumstances, whether on land or at sea. OPA and CERCLA both define “owner and operator” in the case of a vessel as any person owning, operating, or chartering by demise, the vessel. Both OPA and CERCLA impact our operations.
Under OPA, vessel owners and operators are “responsible parties” and are jointly, severally, and strictly liable (unless the spill results solely from the act or omission of a third party, an act of God, or an act of war) for all containment and clean-up costs and other damages arising from discharges or threatened discharges of oil from their vessels, including bunkers (fuel). OPA defines these other damages broadly to include:
(i) |
injury to, destruction or loss of, or loss of use of, natural resources and related assessment costs; |
(ii) |
injury to, or economic losses resulting from, the destruction of real and personal property; |
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(iii) |
loss of subsistence use of natural resources that are injured, destroyed, or lost; |
(iv) |
net loss of taxes, royalties, rents, fees, or net profit revenues resulting from injury, destruction, or loss of real or personal property or natural resources; |
(v) |
lost profits or impairment of earning capacity due to injury, destruction, or loss of real or personal property or natural resources; and |
(vi) |
net cost of increased or additional public services necessitated by removal activities following a discharge of oil, such as protection from fire, safety, or health hazards, and loss of subsistence use of natural resources. |
OPA contains statutory caps on liability and damages; such caps do not apply to direct clean-up costs. Effective December 23, 2022, the USCG adjusted the limits of OPA liability for non-tank vessels, edible oil tank vessels, and any oil spill response vessels, to the greater of $1,300 per gross ton or $1,076,000 (subject to periodic adjustment for inflation); the USCG adjusted the limits of OPA liability for a tank vessel, other than a single-hull tank vessel, over 3,000 gross tons liability to the greater of $2,500 per gross ton or $21,521,000 (subject to periodic adjustment for inflation). These limits of liability do not apply if an incident was proximately caused by the violation of an applicable U.S. federal safety, construction, or operating regulation by a responsible party (or its agent, employee, or a person acting pursuant to a contractual relationship), or a responsible party’s gross negligence or willful misconduct. The limitation on liability similarly does not apply if the responsible party fails or refuses to (i) report the incident as required by law where the responsible party knows or has reason to know of the incident; (ii) reasonably cooperate and assist as requested in connection with oil removal activities; or (iii) without sufficient cause, comply with an order issued under the Federal Water Pollution Act (Section 311 (c), (e)) or the Intervention on the High Seas Act.
CERCLA contains a similar liability regime related to hazardous substances (which include petroleum products that are contaminated with hazardous substances) whereby owners and operators of vessels are liable for clean-up, removal, and remedial costs, as well as damages for injury to, or destruction or loss of, natural resources, including the reasonable costs associated with assessing the same, and health assessments or health effects studies. There is no liability if the discharge of a hazardous substance results solely from the act or omission of a third party, an act of God, or an act of war. Liability under CERCLA is limited to the greater of $300 per gross ton or $5.0 million for vessels carrying a hazardous substance as cargo and the greater of $300 per gross ton or $500,000 for any other vessel. These limits do not apply (rendering the responsible person liable for the total cost of response and damages) if the release or threat of release of a hazardous substance resulted from willful misconduct or negligence, or the primary cause of the release was a violation of applicable safety, construction, or operating standards or regulations. The limitation on liability also does not apply if the responsible person fails or refuses to provide all reasonable cooperation and assistance as requested in connection with response activities where the vessel is subject to OPA.
OPA and CERCLA each preserve the right to recover damages under existing law, including maritime tort law. OPA and CERCLA both require owners and operators of vessels to establish and maintain with the USCG evidence of financial responsibility sufficient to meet the maximum amount of liability to which the particular responsible person may be subject. Vessel owners and operators may satisfy their financial responsibility obligations by providing a proof of insurance, a surety bond, qualification as a self-insurer, or a guarantee. We comply and plan to comply going forward with the USCG’s financial responsibility regulations by providing applicable certificates of financial responsibility.
The 2010 Deepwater Horizon oil spill in the Gulf of Mexico resulted in additional regulatory initiatives or statutes, including higher liability caps under OPA, new regulations regarding offshore oil and gas drilling, and a pilot inspection program for offshore facilities. However, several of these initiatives and regulations have been or may be revised. For example, the U.S. Bureau of Safety and Environmental Enforcement’s, or BSEE, revised Production Safety Systems Rule, or PSSR, effective December 27, 2018, modified and relaxed certain environmental and safety protections under the 2016 PSSR. Additionally, the BSEE released a final Well Control Rule in August 2023, which strengthens testing and performance requirements, and may affect offshore drilling operations and cause us to incur additional costs to comply. Compliance with any new requirements of OPA and future legislation or regulations applicable to the operation of our vessels and other vessels we may acquire could negatively impact the cost of our operations and adversely affect our business.
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OPA specifically permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within their boundaries, provided they accept, at a minimum, the levels of liability established under OPA and some states have enacted legislation providing for unlimited liability for oil spills. Many U.S. states that border a navigable waterway have enacted environmental pollution laws that impose strict liability on a person for removal costs and damages resulting from a discharge of oil or a release of a hazardous substance. These laws may be more stringent than U.S. federal law. Moreover, some states have enacted legislation providing for unlimited liability for discharge of pollutants within their waters, although in some cases, states which have enacted this type of legislation have not yet issued implementing regulations defining vessel owners’ responsibilities under these laws. We intend to comply with all applicable state regulations in the ports where our vessels call.
We currently maintain pollution liability coverage insurance in the amount of $1 billion per incident for each of our vessels. If the damages from a catastrophic spill were to exceed our insurance coverage, that could have an adverse effect on our business and results of operation.
Other United States Environmental Initiatives
The U.S. Clean Air Act of 1970 (including its amendments of 1977 and 1990), or CAA, requires the EPA to promulgate standards applicable to emissions of volatile organic compounds and other air contaminants. The CAA requires states to adopt State Implementation Plans, or SIPs, some of which regulate emissions resulting from vessel loading and unloading operations, which may affect our vessels and other vessels we may acquire.
The U.S. Clean Water Act, or CWA, prohibits the discharge of oil, hazardous substances, and ballast water in U.S. navigable waters unless authorized by a duly issued permit or exemption, and imposes strict liability in the form of penalties for any unauthorized discharges. The CWA also imposes substantial liability for the costs of removal, remediation, and damages and complements the remedies available under OPA and CERCLA. In 2015, the EPA expanded the definition of “waters of the United States,” or WOTUS, thereby expanding federal authority under the CWA. In April 2020, the EPA and Department of the Army published the Navigable Waters Protection Rule to finalize a revised WOTUS definition, which rule became effective in June 2020. However, in light of a court order issued by the U.S. District Court for the District of Arizona on August 30, 2021, the EPA and U.S. Army Corps of Engineers are interpreting WOTUS consistent with the pre-2015 regulatory regime. On December 30, 2022, the EPA and U.S. Army Corps of Engineers announced the revised WOTUS rule, which was published on January 18, 2023. In August 2023, the EPA and Department of the Army issued a final rule to amend the revised WOTUS definition to conform the definition of WOTUS to the U.S. Supreme Court’s interpretation of the Clean Water Act in its decision dated May 25, 2023. The final rule became effective September 8, 2023 and operates to limit the Clean Water Act.
The EPA and the USCG have also enacted rules relating to ballast water discharge, compliance with which requires the installation of equipment on our vessels and other vessels we may acquire to treat ballast water before it is discharged or the implementation of other port facility disposal arrangements or procedures at potentially substantial costs, and/or otherwise restrict our vessels and other vessels we may acquire from entering U.S. Waters. The EPA will regulate these ballast water discharges and other discharges incidental to the normal operation of certain vessels within United States waters pursuant to the Vessel Incidental Discharge Act, or VIDA, which was signed into law on December 4, 2018, and requires that the USCG develop implementation, compliance and enforcement regulations regarding ballast water. On October 26, 2020, the EPA published a Notice of Proposed rulemaking for Vessel Incidental Discharge National Standards of Performance under VIDA, and in November 2020, held virtual public meetings. On October 18, 2023, the EPA published a Supplemental Notice to the Vessel Incidental Discharge National Standards of Performance, which shares new ballast water information that the EPA received from the USCG. Comments to the Supplemental Notice were due by December 18, 2023. Under VIDA, all provisions of the VGP 2013 and USCG ballast water regulations remain in force and effect as currently written until the EPA publishes standards. Current Coast Guard ballast water management regulations adopted under the U.S. National Invasive Species Act, or NISA, require mid-ocean ballast exchange programs and installation of approved USCG technology for all vessels equipped with ballast water tanks bound for U.S. ports or entering U.S. waters. Until new USCG regulations are final and enforceable, non-military, non-recreational vessels greater than 79 feet in length must continue to comply with the requirements of the VGP, including submission of a Notice of Intent, or NOI, or retention of a PARI form and submission of annual reports. We have submitted NOIs for our vessels where required. Compliance with the EPA, U.S. Coast Guard, and state regulations could require the installation of ballast water treatment equipment on our vessels and other vessels we may acquire or the implementation of other port facility disposal procedures at potentially substantial cost or may otherwise restrict our vessels and other vessels we may acquire from entering U.S. waters.
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European Union Regulations
In October 2009, the European Union amended a directive to impose criminal sanctions for illicit ship- source discharges of polluting substances, including minor discharges, if committed with intent, recklessly, or with serious negligence and the discharges individually or in the aggregate result in deterioration of the quality of water. Aiding and abetting the discharge of a polluting substance may also lead to criminal penalties. The directive applies to all types of vessels, irrespective of their flag, but certain exceptions apply to warships or where human safety or that of the ship is in danger. Criminal liability for pollution may result in substantial penalties or fines and increased civil liability claims. Regulation (EU) 2015/757 of the European Parliament and of the Council of April 29, 2015, (amended by Regulation (EU) 2016/2071 with respect to methods of calculating, inter alia, emission and consumption) governs the monitoring, reporting, and verification of carbon dioxide emissions from maritime transport, and, subject to some exclusions, requires companies with ships over 5,000 gross tonnage to monitor and report carbon dioxide emissions annually, which may cause us to incur additional expenses. As of January 2019, large ships calling at EU ports have been required to collect and publish data on carbon dioxide emissions and other information. The system entered into force on March 1, 2018. July 2020 saw the European Parliament’s Committee on Environment, Public Health and Food Safety vote in favor of the inclusion of vessels of 5,000 gross tons and above in the EU Emissions Trading System (in addition to voting for a revision to the monitoring, reporting, and verification of CO2 emissions). In September 2020, the European Parliament adopted the proposal from the European Commission to amend the regulation on monitoring carbon dioxide emissions from maritime transport.
On July 14, 2021, the European Commission published a package of draft proposals as part of its ‘Fit for 55’ environmental legislative agenda and as part of the wider EU Green Deal growth strategy. There are two key initiatives relevant to maritime arising from the Proposals: (a) a bespoke emissions trading scheme for the maritime sector, or ETS, which entered into force on January 1, 2024 and which applies to all ships above a gross tonnage of 5,000; and (b) a FuelEU regulation, which seeks to require all ships above a gross tonnage of 5,000 to carry on board a ‘FuelEU certificate of compliance’ from June 30, 2025, as evidence of compliance with the limits on the greenhouse gas intensity of the energy used on-board by a ship and with the requirements on the use of on-shore power supply (OPS) at berth. More specifically, ETS is to apply gradually over the period from 2024-2026. 40% of allowances would have to be surrendered in 2025 for the year 2024; 70% of allowances would have to be surrendered in 2026 for the year 2025; 100% of allowances would have to be surrendered in 2027 for the year 2026. Compliance is to be on a companywide (rather than per ship) basis and “shipping company” is defined widely to capture both the ship owner and any contractually appointed commercial operator/ship manager/bareboat charterer who not only assume full compliance for ETS but also under the ISM Code. If the latter contractual arrangement is entered into, this needs to be reflected in a certified mandate signed by both parties and presented to the administrator of the scheme. The cap under the ETS is set by taking into account EU MRV system emissions data for the years 2018 and 2019, adjusted, from year 2021 and is to capture 100% of the emissions from intra-EU maritime voyages; 100% of emissions from ships at berth in EU ports and 50% of emissions from voyages which start or end at EU ports (but the other destination is outside the EU). The European Commission has also signaled that 100% of non-EU emissions may be caught if the IMO does not introduce a global market-based measure by 2028. In addition, the MRV system is also being revised such that the scope of ships to be monitored will now extend to those that are 400GT and more. The reason for this is because the ETS will apply to ships that are between 400GT and 5000GT from circa 2027. Furthermore, the newly passed EU Emissions Trading Directive 2023/959/EC makes clear that all maritime allowances would be auctioned and there will be no free allocation. 78.4 million emissions allowances are to be allocated specifically to maritime. From a risk management perspective, new systems, personnel, data management systems, costs recovery mechanisms, revised service agreement terms and emissions reporting procedures will have to be put in place, at significant cost, to prepare for and manage the administrative aspect of ETS compliance.
Responsible recycling and scrapping of ships is becoming an increasingly important issue for shipowners and charterers alike as the industry strives to replace old ships with cleaner, more energy efficient models. The recognition of the need to impose recycling obligations on the shipping industry is not new. In 2009, the IMO oversaw the creation of the Hong Kong Ship Recycling Convention (the “Hong Kong Convention”), which sets standards for ship recycling. Concerned at the lack of progress in satisfying the conditions needed to bring the Hong Kong Convention into force, the EU published its own Ship Recycling Regulation 1257/ 2013 (SRR) in 2013, with a view to facilitating early ratification of the Hong Kong Convention both within the EU and in other countries outside the EU. Bangladesh is expected to ratify the Hong Kong Convention in June 2023. If his takes place then the Convention will finally enter into force. Parties to the Convention will then have two years to implement the requirements of the Convention in their respective jurisdictions and ensure that the highest possible ship recycling standards and in well run and green ship recycling yards are created/maintained. In the meantime, since the Hong Kong Convention will come into force on June 26, 2025, the 2013 regulations are vital to responsible ship recycling in the EU. SRR requires that, from December 31, 2020, all existing ships sailing under the flag of EU member states and non-EU flagged ships calling at an EU port or anchorage must carry on board an Inventory of Hazardous Materials (IHM) with a certificate or statement of compliance, as appropriate. For EU-flagged vessels, a certificate (either an Inventory Certificate or Ready for Recycling Certificate) will be necessary, while non-EU flagged vessels will need a Statement of Compliance.
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The European Union has adopted several regulations and directives requiring, among other things, more frequent inspections of high-risk ships, as determined by type, age, and flag, as well as the number of times the ship has been detained. The European Union also adopted and extended a ban on substandard ships and enacted a minimum ban period and a definitive ban for repeated offenses. The regulation also provided the European Union with greater authority and control over classification societies, by imposing more requirements on classification societies and providing for fines or penalty payments for organizations that failed to comply. Furthermore, the EU has implemented regulations requiring vessels to use reduced sulfur content fuel for their main and auxiliary engines. Since January 1, 2015, vessels have been required to burn fuel with sulfur content not exceeding 0.1% while within EU member states’ territorial seas, exclusive economic zones, and pollution control zones that are included in “Sox Emission Control Areas.” EU Directive (EU) 2016/802 establishes limits on the maximum sulfur content of gas oils and heavy fuel oil and contains fuel- specific requirements for ships calling at EU ports.
EU Directive 2004/35/CE (as amended) regarding the prevention and remedying of environmental damage addresses liability for environmental damage (including damage to water, land, protected species, and habitats) on the basis of the “polluter pays” principle. Operators whose activities caused the environmental damage are liable for the damage (subject to certain exceptions). With regard to specified activities causing environmental damage, operators are strictly liable. The directive applies where damage has already occurred and where there is an imminent threat of damage. The directive requires preventative and remedial actions, and that operators report environmental damage or an imminent threat of such damage.
On November 10, 2022, the EU Parliament adopted the Corporate Sustainability Reporting Directive (“CSRD”). EU member states have 18 months to integrate it into national law. The CSRD will create new, detailed sustainability reporting requirements and will significantly expand the number of EU and non-EU companies subject to the EU sustainability reporting framework. The required disclosures will go beyond environmental and climate change reporting to include social and governance matters (for example, respect for employee and human rights, anti-corruption and bribery, corporate governance and diversity and inclusion). In addition, it will require disclosure regarding the due diligence processes implemented by a company in relation to sustainability matters and the actual and potential adverse sustainability impacts of an in-scope company’s operations and value chain. The CSRD will apply on a phased basis, starting from the financial year 2024 through 2028, to large EU and non-EU undertakings subject to certain financial and employee thresholds being met. New systems, personnel, data management systems and reporting procedures will have to be put in place, at significant cost, to prepare for and manage the administrative aspect of CSRD compliance.
International Labor Organization
The International Labor Organization, or the ILO, is a specialized agency of the UN that has adopted the Maritime Labor Convention 2006, or MLC 2006. A Maritime Labor Certificate and a Declaration of Maritime Labor Compliance is required to ensure compliance with the MLC 2006 for all ships above 500 gross tons in international trade. Additionally ships subject to MLC 2006 must display a certificate confirming insurance or other financial security for liabilities for seafarer wages and repatriation and compensation for death and long-term disability. We believe that our vessels are in substantial compliance with and are certified to meet MLC 2006.
Greenhouse Gas Regulation
Currently, the emissions of greenhouse gases from international shipping are not subject to the Kyoto Protocol to the United Nations Framework Convention on Climate Change (this task having been delegated to the IMO), which entered into force in 2005 and pursuant to which adopting countries have been required to implement national programs to reduce greenhouse gas emissions with targets extended through 2020. International negotiations are continuing with respect to a successor to the Kyoto Protocol, and restrictions on shipping emissions may be included in any new treaty. In December 2009, more than 27 nations, including the U.S. and China, signed the Copenhagen Accord, which includes a non-binding commitment to reduce greenhouse gas emissions. The 2015 United Nations Climate Change Conference in Paris resulted in the Paris Agreement, which entered into force on November 4, 2016, and does not directly limit greenhouse gas emissions from ships. The United States rejoined the Paris Agreement in February 2021.
Additionally, at MEPC 80 in July 2023, the IMO adopted the 2023 IMO Strategy on Reduction of GHG Emissions from Ships, which identifies a number of levels of ambition, including (1) decreasing the carbon intensity from ships through implementation of further phases of energy efficiency for new ships; (2) reducing carbon dioxide emissions per transport work, as an average across international shipping, by at least 40% by 2030; and (3) pursuing net-zero GHG emissions by or around 2050.
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In October 2016 at MEPC 70, the IMO adopted a mandatory data collection system (DCS) that requires ships above 5,000 gross tons to report consumption data for fuel oil, hours under way, and distance traveled. Unlike the EU MRV (see below), the IMO DCS covers any maritime activity carried out by ships, including dredging, pipeline laying, ice-breaking, fish-catching, and off-shore installations.
The SEEMPs of all ships covered by the IMO DCS must include a description of the methodology for data collection and reporting. After each calendar year, the aggregated data are reported to the flag state. If the data have been reported in accordance with the requirements, the flag state issues a statement of compliance to the ship. Flag states subsequently transfer this data to an IMO ship fuel oil consumption database, which is part of the Global Integrated Shipping Information System (GISIS) platform. IMO will then produce annual reports, summarizing the data collected. Thus, currently, data related to the GHG emissions of ships above 5,000 gross tons calling at ports in the European Economic Area (EEA) must be reported in two separate, but largely overlapping, systems: the EU MRV, which applies since 2018, and the IMO DCS, which applies since 2019. The proposed revision of Regulation (EU) 2015/757 adopted on February 4, 2019, aims to align and facilitate the simultaneous implementation of the two systems, although it is still not clear when the proposal will be adopted.
IMO’s MEPC 76 adopted amendments to MARPOL Annex VI requiring ships to reduce their greenhouse gas emissions. The Revised MARPOL Annex VI entered into force on November 1, 2022. The revised Annex VI includes carbon intensity measures (requirements for ships to calculate their Energy Efficiency Existing Ship Index (EEXI)) following technical means to improve their energy efficiency and to establish their annual operational carbon intensity indicator and rating. MEPC 76 also adopted guidelines to support implementation of the amendments.
In 2021, the EU adopted a European Climate Law (Regulation (EU) 2021/1119), establishing the aim of reaching net zero greenhouse gas emissions in the EU by 2050, with an intermediate target of reducing greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels. In July 2021, the European Commission launched the Fit for 55 (described above) to support the climate policy agenda. As of January 2019, large ships calling at EU ports have been required to collect and publish data on carbon dioxide emissions and other information.
In the United States, the EPA issued a finding that greenhouse gases endanger the public health and safety, adopted regulations to limit greenhouse gas emissions from certain mobile sources, and proposed regulations to limit greenhouse gas emissions from large stationary sources. The EPA or individual U.S. states could enact environmental regulations that could negatively affect our operations. On November 2, 2021, the EPA issued a proposed rule under the CAA designed to reduce methane emissions from oil and gas sources. In November 2022, the EPA issued a supplemental proposal that would achieve more comprehensive emissions reductions and add proposed requirements for sources not previously covered. The EPA held a public hearing in January 2023, and in December 2023, the EPA announced a final rule to reduce methane and other air pollutants from the oil and natural gas industry. The rule includes “Emissions Guidelines” for states to follow as they develop plans to limit methane emissions from existing sources.
Any passage of climate control legislation or other regulatory initiatives by the IMO, the EU, the U.S., or other countries where we operate, or any treaty adopted at the international level to succeed the Kyoto Protocol or Paris Agreement, that restricts emissions of greenhouse gases could require us to make significant expenditures which we cannot predict with certainty at this time. Even in the absence of climate control legislation, our business may be indirectly affected to the extent that climate change may result in sea level changes or certain weather events.
Vessel Security Regulations
Since the terrorist attacks of September 11, 2001, in the United States, there have been a variety of initiatives intended to enhance vessel security, such as the U.S. Maritime Transportation Security Act of 2002, or MTSA.
To implement certain portions of the MTSA, the USCG issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of the United States and at certain ports and facilities, some of which are regulated by the EPA.
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Similarly, Chapter XI-2 of the SOLAS Convention imposes detailed security obligations on vessels and port authorities and mandates compliance with the International Ship and Port Facilities Security Code, or the ISPS Code. The ISPS Code is designed to enhance the security of ports and ships against terrorism. To trade internationally, a vessel must attain an International Ship Security Certificate, or ISSC, from a recognized security organization approved by the vessel’s flag state. Ships operating without a valid certificate will be refused entry at port until they obtain an ISSC. The various requirements, some of which are found in the SOLAS Convention, include, for example, on-board installation of automatic identification systems to provide a means for the automatic transmission of safety-related information from among similarly equipped ships and shore stations, including information on a ship’s identity, position, course, speed, and navigational status; on-board installation of ship security alert systems, which do not sound on the vessel but only alert the authorities on shore; the development of vessel security plans; ship identification number to be permanently marked on a vessel’s hull; a continuous synopsis record kept onboard showing a vessel’s history including the name of the ship, the state whose flag the ship is entitled to fly, the date on which the ship was registered with that state, the ship’s identification number, the port at which the ship is registered, and the name of the registered owner(s) and their registered address; and compliance with flag state security certification requirements.
The USCG regulations, intended to align with international maritime security standards, exempt non-U.S. vessels from MTSA vessel security measures, provided such vessels have on board a valid ISSC that attests to the vessel’s compliance with the SOLAS Convention security requirements and the ISPS Code. Future security measures could have a significant negative financial impact on us. All the vessels in our fleet comply with the various security measures addressed by MTSA, the SOLAS Convention, and the ISPS Code.
The cost of vessel security measures has also been affected by the escalation in the frequency of acts of piracy against ships, notably in the Gulf of Guinea, the Red Sea and the Indian Ocean. Substantial loss of revenue and other costs may be incurred as a result of detention of a vessel or additional security measures, and the risk of uninsured losses could significantly and negatively affect our business. Costs may be incurred in taking additional security measures in accordance with Best Management Practices to Deter Piracy and Enhance Security, notably those contained in the BMP5 industry standard.
Surveys by Classification Societies
The hull and machinery of every commercial vessel must be classed by a classification society authorized by its country of registry. The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and SOLAS. Most insurance underwriters make it a condition for insurance coverage and lending that a vessel be certified “in class” by a classification society which is a member of the International Association of Classification Societies, the IACS. The IACS has adopted harmonized Common Structural Rules, or the Rules, which apply to oil tankers and bulk carriers constructed on or after July 1, 2015. The Rules attempt to create a level of consistency between IACS Societies. Our vessels are certified as being “in class” by her Classification Society (i.e., American Bureau of Shipping).
A vessel must undergo annual surveys, intermediate surveys, drydockings, and special surveys. In lieu of a special survey/dry-docking, a vessel’s machinery may be on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-year period until a vessel reaches 10 years of age, after which a vessel is required to be specially surveyed/dry-docked approximately every 2.5 years. If any vessel does not maintain its class and/or fails any annual survey, intermediate survey, drydocking or special survey, the vessel will be unable to carry cargo between ports and will be unemployable and uninsurable which could cause us to be in violation of certain covenants in our loan agreements. Any such inability to carry cargo or be employed, or any such violation of covenants, could have a material adverse impact on our financial condition and results of operations.
Risk of Loss and Liability Insurance
General
The operation of any cargo vessel includes risks, such as mechanical failure, physical damage, collision, property loss, cargo loss or damage, and business interruption due to political circumstances in foreign countries, piracy incidents, hostilities, and labor strikes. In addition, there is always an inherent possibility of marine disaster, including oil spills and other environmental mishaps, and the liabilities arising from owning and operating vessels in international trade. OPA, which imposes virtually unlimited liability upon shipowners, operators and bareboat charterers of any vessel trading in the exclusive economic zone of the United States for certain oil pollution accidents in the United States, has made liability insurance more expensive for shipowners and operators trading in the United States market. We carry insurance coverage as customary in the shipping industry. However, not all risks can be insured, specific claims may be rejected and we might not be always able to obtain adequate insurance coverage at reasonable rates.
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Hull & Machinery and War Risks Insurances
We maintain marine hull and machinery and war risks insurances, which include the risk of actual or constructive total loss, for each of our vessels. Under our hull and machinery policy there is also cover for damage to fixed and floating objects and claims arising from collisions with other vessels. Each of our vessels is covered up to at least its fair market value with a deductible that ranges from $130,000 to $250,000 depending on each vessel’s market value, per incident. We also maintain increased value coverage for our vessels. Under this increased value coverage, in the event of total loss of a vessel, we will be able to recover the sum insured under the increased value policy in addition to the sum insured under the hull and machinery policy. Increased value insurance also covers excess liabilities which are not recoverable under our hull and machinery policy by reason of under insurance. So far, we do not maintain insurance against loss of hire, which covers business interruptions that result in the loss of use of a vessel.
Protection and Indemnity Insurance
Protection and indemnity insurance, provided by mutual protection and indemnity associations, or P&I Associations, covers our third-party liabilities in connection with our shipping activities. This includes third-party liability and other related expenses of injury, illness or death of crew, passengers and other third parties, loss or damage to cargo, claims arising from damage to other third-party property, pollution arising from oil or other substances, salvage, towing and other related costs, including wreck removal. Protection and indemnity insurance is a form of mutual indemnity insurance, extended by protection and indemnity mutual associations, or “clubs.”
Our coverage limit is as per International Group’s rules, where there are standard sub-limits for oil pollution at $1 billion, passenger liability at $2 billion and seamen liabilities at $3 billion. The 12 P&I Associations that comprise the International Group insure approximately 90% of the world’s commercial tonnage and have entered into a pooling agreement to reinsure each association’s liabilities in excess of each association’s own retention of $10 million up to, currently, approximately $8.9 billion. As a member of a P&I Association, which is a member of the International Group, we are subject to calls payable to the associations based on our claim records as well as the claim records of all other members of the individual associations and members of the shipping pool of P&I Associations comprising the International Group.
Permits and Authorizations
We are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses and certificates with respect to our vessels and other vessels we may acquire. The kinds of permits, licenses and certificates required depend upon several factors, including the commodity transported, the waters in which the vessel operates, the nationality of the vessel’s crew and the age of a vessel. We believe that we have obtained all permits, licenses and certificates currently required to permit our vessels to operate as planned. Additional laws and regulations, environmental or otherwise, may be adopted which could limit our ability to do business or increase the cost of us doing business in the future.
The Tanker Shipping Industry
The oil tanker shipping industry constitutes a vital link in the global energy supply chain, in which tanker vessels play a critical role by carrying large quantities of crude oil. The rationale behind this is that only tanker vessels can carry crude oil from one continent to the other and across the oceans based on practical and economical terms. The shipping of crude oil is the only transportation method that implies the lower cost per oil barrel compared to other methods, such as pipelines.
Αn oil tanker shipping company earns revenues by the freight rates paid for transportation capacity. Freight is paid for the movement of cargo between a load port and a discharge port. The cost of moving the ship from a discharge port to the next load port is not directly compensated by the charterers in the freight payment but is an expense of the owners if not on time charter.
The main categories of crude tanker vessels are:
● | VLCCs, with an oil cargo carrying capacity in excess of 200,000 dwt (typically 300,000 to 320,000 dwt or approximately two million barrels). VLCCs generally trade on long-haul routes from the Middle East and West Africa to Asia, Europe, and the U.S. Gulf or the Caribbean. |
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● | Suezmax tankers, with an oil cargo carrying capacity of approximately 120,000 to 200,000 dwt (typically 150,000 to 160,000 dwt or approximately one million barrels). Suezmax tanker vessels are engaged in a range of crude oil trades across a number of major loading zones. |
● | Aframax tankers, with an oil cargo carrying capacity of approximately 80,000 to 120,000 dwt (or approximately 500,000 barrels). Aframax tanker vessels are employed in shorter regional trades, mainly in North West Europe, the Caribbean, the Mediterranean, and Asia. |
Tanker Newbuilding Prices
The factors which influence new-built prices include ship type, shipyard capacity, demand for ships, “berth cover”, i.e., the forward book of business of shipyards, buyer relationships with the yard, individual design specifications, including fuel efficiency or environmental features and the price of ship materials, engine and machinery equipment and particularly the price of steel.
Tanker Secondhand Prices
Second-hand prices are primarily driven by trends in the supply and demand for vessel capacity. During extended periods of high demand, as evidenced by high charter rates, secondhand vessel values tend to appreciate, and during periods of low demand, evidenced by low charter rates, vessel values tend to decline. Vessel values are also influenced by age and specification and by the replacement cost (new-built price) in the case of vessels up to five years old.
The sale and purchase (S&P) market, where vessels are sold and bought through specialized brokers, determines vessel values on a daily basis. The S&P market is transparent and liquid, with a significant number of vessels changing hands annually.
Values for younger vessels tend to fluctuate on a percentage basis less than values for older vessels. This is due to the fact that younger vessels with a longer remaining economic life are less susceptible to the level of charter rates than older vessels with limited remaining economic life.
The Crude Oil Tanker Market
Charter Types
Employment of oil tanker vessels occurs through the following chartering options:
● | Bareboat Charter: In this charter type, vessels are usually employed for several years. All voyage related costs such as bunkers, port dues, and daily operating expenses are paid by the charterer. The owner of the vessel is entitled to monthly charter hire payments and covers the capital cost associated with the vessel. |
● | Time Charter: Involves the use of the vessel for a number of months or years or for a trip between specific delivery and redelivery positions. The charterer covers all voyage related costs while the owner receives monthly charter hire payments on a per day basis and pays all operating expenses and capital costs of the vessel. |
● | Pool Charter: In this charter type, the vessel’s owner earns a portion of total revenues generated by the pool, net of expenses incurred by the pool. The amount allocated to each pool participant vessel, is determined in accordance with an agreed-upon formula, which is determined by the margins awarded to each vessel in the pool based on the vessel’s age, design and other performance characteristics. |
● | Spot or Voyage Charter: Vessels are used for a single voyage for the carriage of a specific amount and type of cargo on a load port to discharge port. The owner covers the repositioning cost of the ship as well as all expenses, namely voyage, operating, and capital costs of the ship. |
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Tanker Vessels Charter Rates
The main factors affecting vessel charter rates are primarily the supply and demand for tanker shipping. The shorter the charter period, the greater the vessel charter rate is affected by the current supply to demand balance and by the current phase of the market cycle (high point or low point). For longer charter periods, vessel charter rates tend to be more stable and less cyclical because the period may cover not only a particular phase of a market cycle but a full market cycle or several market cycles. Other factors affecting charter rates include the age and characteristics of the ships (fuel consumption, speed), the price of new-built and secondhand ships (buying as an alternative to chartering ships), and market conditions.
C. |
Organizational Structure |
See Exhibit 8.1 to this Annual Report for a list of our significant subsidiaries.
D. |
Property, Plants and Equipment |
We do not own any real estate property. We maintain our principal executive offices at c/o OET Chartering Inc., Ethnarchou Makariou Ave.,&2 D. Falireos St., 185 47 N. Faliro, Greece. Other than our vessels, we do not have any material property. See “Item 4.B. Business Overview — Our Current Fleet” and “Item 4.B. Business Overview — Environmental and Other Regulations.”
ITEM 4A. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion of the results of our operations and our financial condition should be read in conjunction with the financial statements and the notes to those statements included in “Item 18. Financial Statements.”
For a discussion of our results for the year ended December 31, 2022 compared to the year ended December 31, 2021, please see “Item 5.A. Operating Results — Results of Operations — Year ended December 31, 2022 compared with the year ended December 31, 2021” and “Item 5.B. Liquidity and Capital Resources” contained in Amendment No. 1 to our registration statement on Form 20-F, filed with the Commission on November 22, 2023.
This discussion contains forward-looking statements that involve risks, uncertainties, and assumptions. Actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth in “Item 3.D. Risk Factors.” See the section entitled “Cautionary Statement Regarding Forward-Looking Statements.”
A. |
Operating Results |
Principal Factors Affecting Our Business
The principal factors that affect our financial position, results of operations and cash flows include the following:
● | number of vessels owned and operated; |
● | voyage charter rates; |
● | time charter trip rates; |
● | period time charter rates; |
● | the nature and duration of our voyage charters; |
● | vessels repositioning; |
63
● | vessel operating expenses and direct voyage costs; |
● | maintenance and upgrade work; |
● | the age, condition and specifications of our vessels and other vessels we may acquire; |
● | issuance of our common shares and other securities; |
● | amount of debt obligations; and |
● | financing costs related to debt obligations. |
We are also affected by the types of charters we enter into. Vessels operating on period time charters and bareboat time charters provide more predictable cash flows, but can yield lower profit margins than vessels operating in the spot charter market, either on trip time charters or voyage charters, during periods characterized by favorable market conditions.
Vessels operating in the spot charter market generate revenues that are less predictable, but can yield increased profit margins during periods of improvements in tankers rates. Spot charters also expose vessel owners to the risk of declining tanker rates and rising fuel costs in case of voyage charters.
Critical Accounting Policies
Critical accounting policies are those that are both most important to the portrayal of the company’s financial condition and results, and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. For a description of all our significant accounting policies, see Note 4 to our annual audited financial statements included in this Annual Report.
Important Financial and Operational Terms and Concepts
We use a variety of financial and operational terms and concepts when analyzing our performance. These include the following:
Revenues
Revenues include revenues from time charters and voyage charters. Revenues are affected by hire rates and the number of operating days. Revenues are also affected by the mix of business between vessels on time charter and vessels operating on voyage charter. Revenues from vessels on voyage charter are more volatile, as they are typically tied to prevailing market rates.
Voyage and Time Charters
Voyage charters or spot voyages are charters under which the customer pays a transportation charge for the movement of a specific cargo between two or more specified ports. We pay all of the voyage expenses. Under time charters, we lease the vessel for a set length of time to a charterer, where the latter is free to sail to any port or transport any cargo of his preference (subject to legal restrictions). All voyage expenses are incurred by the charterer.
Commissions
We pay commissions of typically up to 6.25% of the total daily charter hire rate of each charter to unaffiliated ship brokers and to in-house brokers associated with the charterer, depending on the number of brokers involved with arranging the charter.
Voyage Expenses
Voyage expenses mainly relate to voyage charter agreements and consist of port, canal and bunker costs that are unique to a particular voyage and are recognized as incurred. Under our time charter arrangements, charterers bear substantially all voyage expenses, including bunker fuel, port charges and canal tolls.
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Vessel Operating Expenses
Vessel operating expenses comprise all expenses relating to the operation of the vessel, including crewing, insurance, repairs and maintenance, stores, lubricants, spares and consumables and miscellaneous expenses. Vessel operating expenses can fluctuate due to factors beyond our control, such as unplanned repairs and maintenance attributable to damages or regulatory compliance and factors which may affect the shipping industry in general, such as developments relating to insurance premiums, or developments relating to the availability of crew.
Drydocking Costs
Drydocking costs relate to regularly scheduled intermediate survey or special survey drydocking necessary to preserve the quality of our vessels as well as to comply with international shipping standards and environmental laws and regulations. Drydocking costs can vary according to the age of the vessel, the location where the drydock takes place, shipyard availability, local availability of manpower and material, and the billing currency of the yard. Please see “Item 18. Financial Statements — Note 4 — Significant Accounting Policies.” In the case of tankers, drydocking costs may also be affected by new rules and regulations. For further information, please see “Item 4. B. Business Overview — Environmental Regulations.”
Vessel Depreciation
We depreciate all our vessels on a straight-line basis over their estimated useful lives, which we estimate to be 25 years from the date of their initial delivery from the shipyard, after considering their estimated residual value. Each vessel’s residual value is equal to the product of its lightweight tonnage and its estimated scrap rate. The scrap price is estimated to be approximately $400 per ton of lightweight steel. The Company may revise the estimated residual values of the vessel in the future in response to changing market conditions.
General and Administrative Expenses
General and administrative expenses mainly consist of employee costs, directors’ liability insurance, directors’ fees and expenses, executive compensation, professional fees and other expenses.
Management Fees
Management fees concern services provided from the technical manager of our vessels, for a wide range of shipping services, among others, technical support, maintenance, acquisition of emission allowances, insurance consulting, for a daily fee of $900 per vessel.
Inflation
Inflation has had a moderate impact on our vessel operating expenses and corporate overheads. It is anticipated that insurance costs, which have risen over the last three years, may well continue to rise over the next few years. Oil transportation is a specialized area and the number of vessels is increasing. There is therefore expected to be an increased demand for qualified crew and this has and will continue to put inflationary pressure on crew costs. However, in a shipping downturn, costs subject to inflation can usually be controlled because shipping companies typically monitor costs to preserve liquidity and encourage suppliers and service providers to lower rates and prices in the event of a downturn. Interest on our SOFR-based loans (or loans based on another reference rate or its successor) can increase following any interest rate hikes undertaken by financial authorities (such as central banks) in response to, among other things, inflation.
Interest and Other Finance Costs
We incur interest expense on outstanding indebtedness under our loans, which we include in interest and finance costs. We also incur finance costs in establishing our debt facilities.
65
Unrealized/Realized Gain/Loss from Derivatives
Unrealized/realized gain/loss from derivatives represents (1) the fluctuations in the fair value of the Company’s derivative instruments, recorded as unrealized gain or loss and (2) the actual amounts paid or received upon termination of the derivative instruments, recorded as realized gain or loss in the statements of profit or loss.
Main components of managing our business and main drivers of profitability
The management of financial, general and administrative elements involved in the conduct of our business and ownership or operation of our vessels requires the following main components:
● | management of our financial resources, including banking relationships, i.e., administration of bank loans and bank accounts; |
● | management of our accounting system and records and financial reporting; |
● | administration of the legal and regulatory requirements affecting our business and assets; and |
● | management of the relationships with our service providers and customers. |
The principal factors that affect our profitability, cash flows and shareholders’ return on investment include:
● | charter rates and periods of charter hire for our tanker vessels; |
● | utilization of our tanker vessels (earnings efficiency); |
● | levels of our tanker vessels’ operating expenses and drydocking costs; |
● | depreciation and amortization expenses; |
● | financing costs; and |
● | fluctuations in foreign exchange rates. |
Implications of Being an Emerging Growth Company and a Foreign Private Issuer
We had less than $1.235 billion in revenue during our last fiscal year, which means that we qualify as an “emerging growth company” as defined in the JOBS Act. An emerging growth company may take advantage or specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:
● | exemption from the auditor attestation requirement in the assessment of the emerging growth company’s internal controls over financial reporting under Section 404(b) of Sarbanes-Oxley; |
● | exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and financial statements. |
66
We may take advantage of these provisions until the end of the fiscal year following the fifth anniversary of the date we first sell our common equity securities pursuant to an effective registration statement under the Securities Act or such earlier time that we are no longer an emerging growth company. We will cease to be an emerging growth company if, among other things, we have more than $1.235 billion in “total annual gross revenues” during the most recently completed fiscal year, if we issue more than $1 billion of non- convertible debt over a three-year period, or we qualify as a large accelerated filer, meaning a public float of over $700 million. We may choose to take advantage of some, but not all, of these reduced burdens. For as long as we take advantage of the reduced reporting obligations, the information that we provide shareholders may be different from information provided by other public companies. We are choosing to “opt out” of the extended transition period relating to the exemption from new or revised financial accounting standards and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth public companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.
As a foreign private issuer, we may take advantage of certain provisions under the NYSE rules that allow us to follow Marshall Islands law for certain corporate governance matters. Even after we no longer qualify as an emerging growth company, as long as we qualify as a foreign private issuer under the Exchange Act, we will not be subject to certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including:
● | the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; |
● | the sections of the Exchange Act requiring insiders to file public reports of their ownership of common shares and trading activities and liability for insiders who profit from trades made in a short period of time; and |
● | the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events. |
In addition, as a foreign private issuer and an emerging growth company, we are permitted to provide less detailed disclosure regarding executive compensation. Thus, for so long as we remain a foreign private issuer, even if we no longer qualify as an emerging growth company, we will continue to not be subject to more stringent executive compensation disclosures required of public companies that are neither an emerging growth company nor a foreign private issuer.
Results of Operations
Year ended December 31, 2023 compared with the year ended December 31, 2022
Revenue
(In millions of U.S. dollars) |
|
2023 |
|
2022 |
|
Increase |
|
Revenue |
|
413.1 |
|
271.0 |
|
52 |
% |
Revenue was $413.1 million for the year ended December 31, 2023, an increase of $142.1 million, from $271.0 million for the year ended December 31, 2022. The increase in revenue was primarily due to a 48% average increase in Daily Time Charter Equivalent Rates resulting from the spot employment of the fleet in the profitable tanker market of 2023 and the addition of Nissos Kea and Nissos Nikouria, on March 31, 2022, and June 3, 2022, respectively.
Commissions
(In millions of U.S. dollars) |
|
2023 |
|
2022 |
|
Increase |
|
Commissions |
|
(5.8) |
|
(3.4) |
|
71 |
% |
Commissions were $5.8 million for the year ended December 31, 2023, an increase of $2.4 million, from $3.4 million for the year ended December 31, 2022. The increase in broker’s commissions is attributable to the strong voyage charter market, the increased cargos carried, as well as the longer ton-miles travelled and is in line with the increase in revenue generated from voyage charters.
67
Voyage expenses
(In millions of U.S. dollars) |
|
2023 |
|
2022 |
|
Increase |
|
Voyage expenses |
|
(109.6) |
|
(74.1) |
|
48 |
% |
Voyage expenses were $109.6 million for the year ended December 31, 2023, an increase of $35.5 million, from $74.1 million for the year ended December 31, 2022. Under voyage charters, the majority of voyage expenses are generally borne by us, whereas for vessels under time charters such expenses are borne by the charterer.
The increase in voyage expenses was primarily due to the employment of our vessels under voyage charters and consequently higher bunker fuel cost and port expenses as compared with the corresponding period in 2022. More specifically, the utilization of the Company’s vessels in the voyage charter market increased to 80% for the year ended December 31, 2023 from 60% for the year ended December 31, 2022.
Fuel cost increased from $55.7 million for the year ended December 31, 2022 to $76.2 million for the year ended December 31, 2023. The increase was primarily due to the longer ton-mile voyages carried out as a result of the disruption in the crude oil market, partially offset by a 19% decrease in fuel prices.
Port expenses increased from $18.0 million for the year ended December 31, 2022, to $30.4 million for the year ended December 31, 2023, because our vessels received substantially more port calls in 2023, compared to 2022, due to the strong spot market.
Vessel operating expenses
(In millions of U.S. dollars) |
|
2023 |
|
2022 |
|
Increase |
|
Vessel operating expenses |
|
(41.7) |
|
(35.7) |
|
17 |
% |
Vessel operating expenses were $41.7 million for the year ended December 31, 2023, an increase of $6.0 million, from $35.7 million for the year ended December 31, 2022. The increase was mainly due to a 5% increase in vessels’ calendar days for the year ended December 31, 2023, compared to the year ended December 31, 2022, resulting from the addition of Nissos Kea and Nissos Nikouria, on March 31, 2022 and June 3, 2022, respectively and due to the pre-operating expenses for the preparation of the drydocking of Kimolos and Folegandros. The remaining increase is attributable to inflation.
Management fees
(In millions of U.S. dollars) |
|
2023 |
|
2022 |
|
Increase |
|
Management fees |
|
(4.6) |
|
(4.4) |
|
5.0 |
% |
Management fees were $4.6 million for the year ended December 31, 2023, an increase of $0.2 million, from $4.4 million for the year ended December 31, 2022. The increase in management fees was primarily due to the addition of Nissos Kea and Nissos Nikouria, on March 31, 2022 and June 3, 2022, respectively.
Depreciation
(In millions of U.S. dollars) |
|
2023 |
|
2022 |
|
Increase |
|
Depreciation |
|
(40.4) |
|
(38.0) |
|
6.0 |
% |
Depreciation was $40.4 million for the year ended December 31, 2023, an increase of $2.4 million, from $38.0 million for the year ended December 31, 2022. The increase in depreciation was primarily due to the addition of Nissos Kea and Nissos Nikouria to our fleet, on March 31, 2022 and June 3, 2022, respectively.
General and administrative expenses
(In millions of U.S. dollars) |
|
2023 |
|
2022 |
|
Increase |
|
General and administrative expenses |
|
(9.9) |
|
(5.3) |
|
87 |
% |
68
General and administrative expenses were $9.9 million for the year ended December 31, 2023, an increase of $4.6 million, from $5.3 million for the year ended December 31, 2022. The increase in general and administrative expenses was primarily due to increased costs related to shore-based employees along with an increase in professional fees of 1.7 million in connection with the Company’s NYSE listing. For the years ended December 31, 2023, and 2022, key management personnel remuneration, amounted to $3.6 million compared to $1.7 million in 2022.
Other income/(expenses)
(In millions of U.S. dollars) |
|
2023 |
|
2022 |
|
Increase |
|
Other income/(expenses) |
|
(55.9) |
|
(25.6) |
|
118 |
% |
Other expenses, net were $55.9 million for the year ended December 31, 2023, an increase of $30.3 million, from $25.6 million for the year ended December 31, 2022. Other income/(expenses) primarily consists of interest income/expense, other finance costs, realized/unrealized gain/loss from derivative instruments as well as various other expenses.
The increase in other expenses, net was primarily due to (1) realized/unrealized net gain from derivatives of $0.5 million for the year ended December 31, 2023 compared to $11.5 million for the year ended December 31, 2022 as a result of the termination of our interest rate swap contracts on June 30, 2022, which resulted in us realizing gains previously recorded at fair value through profit or loss; and (2) higher interest expense in 2023 attributable to the steep SOFR (substituted LIBOR from July 1, 2023) increase; in particular, interest expense and other finance cost was $61.2 million for the year ended December 31, 2023, compared to $38.1 million for the year ended December 31, 2022, partially offset by an increase of $3.4 million in interest income.
B. |
Liquidity and Capital Resources |
Since our formation, our principal sources of funds have been funds in the form of equity or working capital provided by operating cash flow and long-term borrowing. Our principal use of funds has been capital expenditures for the acquisition of our vessels and to maintain their quality, comply with international shipping standards and environmental laws and regulations, fund working capital requirements, service our debt, and distribute capital to our shareholders.
Our business is capital intensive and its future success will depend on our ability to maintain a high-quality fleet through the acquisition of newer vessels and the selective sale of older vessels. Future acquisitions are subject to management’s expectation of future market conditions, our ability to acquire vessels on favorable terms and our liquidity and capital resources. Our ability to continue to meet our liquidity needs is subject to and will be affected by cash generated from operations, the economic or business environment in which we operate, shipping industry conditions, the financial condition of our customers, vendors and service providers, our ability to comply with the financial and other covenants of our indebtedness, and other factors.
In the future, we may require capital to fund acquisitions or to improve or support our ongoing operations and debt structure, particularly in light of economic conditions resulting from the Russian/ Ukraine conflict and general conditions in the tanker market. We may from time to time seek to raise additional capital through equity or debt offerings, selling vessels or other assets, pursuing strategic opportunities, or otherwise. We may also from time to time seek to incur additional debt financing from private or public sector sources, refinance our indebtedness or obtain waivers or modifications to our credit agreements to obtain more favorable terms, enhance flexibility in conducting our business, or otherwise. We may also seek to manage our interest rate exposure through hedging transactions. We may seek to accomplish any of these independently or in conjunction with one or more of these actions. However, if market conditions are unfavorable, we may be unable to accomplish any of the foregoing on acceptable terms or at all.
Our medium- and long-term liquidity requirements relate to the operation and maintenance of our vessels, including covering costs of compliance with existing or future environmental or other regulations, which may be material. Sources of funding for these requirements include cash flows from operations or new debt financings if required.
As of December 31, 2023, we had an indebtedness of $698.5 million, which after excluding unamortized financing fees amounts to a total indebtedness of $693.3 million.
As of December 31, 2022, we had an indebtedness of $739.0 million, which after excluding unamortized financing fees amounts to a total indebtedness of $744.8 million.
69
As of December 31, 2023, our cash and cash equivalent balances amounted to $54.9 million, primarily held in U.S. Dollar accounts, $4.9 million of which are classified as restricted cash.
As of December 31, 2022, our cash and cash equivalent balances amounted to $88.3 million, held in U.S. Dollar accounts, $6.9 million of which are classified as restricted cash.
As of December 31, 2023 and December 31, 2022, we did not have any material commitments for capital expenditures and we do not expect to have any other requirement or obligation, to which we should allocate capital resources.
Please see “Item 5.B. Liquidity and Capital Resources — Credit Facilities and Financing Obligations” for further information about our loan arrangements and credit facilities. Our primary uses of funds have been vessel operating expenses, general and administrative expenses, expenditures incurred in connection with ensuring that our vessels comply with international and regulatory standards, financing expenses, installments under construction contracts and repayments of loans.
As of the date of this Annual Report we have no contractual commitments for the acquisition of any vessel. Our cash flow projections indicate that cash on hand and cash to be provided by operating activities will be sufficient to cover the liquidity needs that become due in the twelve-month period ending one year after December 31, 2023.
Working Capital Requirements and Sources of Capital
Working capital, which is current assets, minus current liabilities, amounted to approximately $32.3 million as of December 31, 2023 and $61.6 million as of December 31, 2022. If we are unable to satisfy our liquidity requirements, we may not be able to continue as a going concern. All of our vessels are pledged as collateral to the banks, and therefore if we were to sell one or more of those vessels, the net proceeds of such sale would be used first to repay the outstanding debt to which the vessel is collateralized, and the remainder, if any, would be for our use, subject to the terms of our remaining outstanding loan and credit arrangements.
We make capital expenditures from time to time in connection with our vessel acquisitions or vessel improvements. We have no current binding agreements to purchase any additional vessels but may do so in the future. We expect that any purchases of vessels will be paid for with cash from operations, with funds from new credit facilities from banks with whom we currently transact business, with loans from banks with whom we do not have a banking relationship but will provide us funds at terms acceptable to us, with funds from equity or debt issuances or any combination thereof.
We incur additional capital expenditures when our vessels undergo surveys. This process of recertification may require us to reposition these vessels from a discharge port to shipyard facilities, which will reduce our operating days during the relevant period. The loss of earnings associated with the decrease in operating days, together with the capital needs for repairs and upgrades, is expected to result in increased cash flow needs. We expect to fund these expenditures with cash on hand.
We believe that our cash flows from operations, amounts available for borrowing under our financing agreements and our cash balance will be sufficient to meet our existing liquidity requirements for at least the next twelve months from December 31, 2023. Please see Note 13, Long-term borrowings, to our consolidated financial statements for additional information about our indebtedness.
Cash Flows
As of December 31, 2023, our cash and cash equivalent balances amounted to $54.9 million, $4.9 million of which were classified as restricted cash. As of December 31, 2022, our cash and cash equivalent balances amounted to $88.3 million, $6.9 million of which were classified as restricted cash. We consider highly liquid investments such as time deposits and certificates of deposit with an original maturity of around three months or less to be cash equivalents. Cash and cash equivalents are held in U.S. dollars and Euros.
Net Cash from Operating Activities
Net cash from operating activities increased by $91.5 million to $174.0 million for the year ended December 31, 2023, compared to $82.5 million for the year-ended December 31, 2022. This increase is attributable to the (a) improved spot rates that prevailed during the period and (b) fleet expansion attributable to the acquisition of vessels Nissos Kea and Nissos Nikouria.
70
Net Cash from Investing Activities
Net cash from investing activities was as follows:
For the year-ended December 31, 2023, net cash provided by investing activities was $1.0 million as a result of: (a) the increase in interest income received from time deposits of $2.2 million resulting from rising interest rates and (b) the reduction of restricted cash of $2.0 million as a result of the Kimolos, Nissos Donoussa, Nissos Kythnos, Nissos Sifnos and Nissos Sikinos refinancings, partially offset by payments for drydock expenses for Kimolos and Folegandros of $3.3 million.
For the year ended December 31, 2022, net cash used in investing activities was $178.7 million mainly connected to the VLCC vessel acquisitions of Nissos Kea and Nissos Nikouria, amounting to approximately $178.6 million.
Net Cash from Financing Activities
Net cash used in financing activities was $207.1 million for the year-ended December 31, 2023, deriving mainly from: (a) the refinancing of loans relating to Kimolos, Folegandros, Nissos Keros, Nissos Sifnos and Nissos Sikinos amounting to $197.0 million, (b) the repayment of loans relating to the financing of Kimolos, Folegandros, Nissos Keros, Nissos Sifnos and Nissos Sikinos, amounting to $197.5 million, (c) the prepayment of the Company’s scrubber loan in the amount of $1.4 million, (d) a return of paid-in-capital of $159.4 million, (d) the payment of scheduled loan instalments of $44.5 million and (e) the payment of loan financing fees of $1.4 million.
Net cash provided by financing activities was $139.0 million for the year ended December 31, 2022 deriving mainly from: (a) the new bank loan of $145.5 million and the new Sponsor loan of $35.1 million entered into in connection with the acquisition of the VLCC vessels Nissos Kea and Nissos Nikouria, (b) the refinancing of loans relating to Nissos Kythnos and Nissos Donoussa, amounting to $125.7 million, (c) the repayment of the Nissos Kythnos and Nissos Donoussa refinanced loans amounting to $97.1 million, (d) the payment of scheduled loan instalments of $46.3 million and (e) a return of paid-in-capital of $19.6 million. Furthermore, the Company paid financing fees related to the new loans of $1.7 million and acquired own stock of $1.0 million.
As of the date of this Annual Report we have no contractual commitments for the acquisition of any vessel. For further information, please see “— Working Capital Requirements and Sources of Capital” above. However, if market conditions were to worsen significantly, then our cash resources may decline to a level that may put at risk our ability to pay our lenders and other creditors.
71
Credit Facilities and Financing Obligations
As of December 31, 2023 and December 31, 2022, we had $698.5 million and $744.8 million, respectively, of outstanding borrowings under our credit facilities and financing obligations described below as shown in the following table:
|
|
Amount |
|
Amount |
|
||
|
|
outstanding at |
|
outstanding at |
|
||
|
|
December 31, |
|
December 31, |
|
||
In thousands of U.S. dollars |
|
2023 |
|
2022 |
|
||
$44.0 Million Secured Credit Facility – Kimolos |
|
|
— |
|
$ |
35,914 |
|
$40.0 Million Secured Term Loan Facility – Folegandros |
|
|
— |
|
$ |
33,811 |
|
$103.2 Million Secured Term Loan Facility – Nissos Sikinos and Nissos Sifnos |
|
$ |
— |
|
$ |
87,882 |
|
$84.0 Million Secured Term Loan facility – Nissos Sikinos and Nissos Sifnos |
|
$ |
82,425 |
|
|
— |
|
$125.7 Million Secured Term Loan Facility – Nissos Kythnos and Nissos Donoussa |
|
$ |
116,670 |
|
$ |
122,670 |
|
$58.2 Million Secured Term Loan Facility – Nissos Keros |
|
|
— |
|
$ |
48,479 |
|
$58.0 Million Secured Term Loan Facility – Nissos Anafi |
|
$ |
44,500 |
|
$ |
48,100 |
(1) |
$113.0 Million Secured Term Loan Facility – Kimolos, Folegandros and Nissos Keros |
|
$ |
108,600 |
|
|
— |
|
$56.0 Million Sale and Leaseback Agreement – Milos |
|
$ |
35,016 |
|
$ |
38,047 |
(2) |
$54.0 Million Sale and Leaseback Agreement – Poliegos |
|
$ |
32,255 |
|
$ |
34,730 |
|
$167.5 Million Sale and Leaseback Agreements – Nissos Rhenia and Nissos Despotiko |
|
$ |
111,108 |
|
$ |
118,304 |
|
$194.0 Million Sale and Leaseback Agreements – Nissos Kea and Nissos Nikouria |
|
$ |
133,679 |
|
$ |
140,953 |
|
$11.0 Million Scrubber Financing |
|
|
— |
|
$ |
1,719 |
|
$35.1 Million Unsecured Term Loan with Okeanis Marine Holdings S.A. |
|
$ |
34,233 |
|
$ |
34,233 |
|
Total |
|
$ |
698,486 |
|
$ |
744,842 |
|
(1) |
This secured term loan facility was repaid in January 2024, and a new sale leaseback transaction was entered into. |
(2) |
We exercised our right to repurchase the vessel in January 2024 and therefore this sale and leaseback agreement is no longer in effect. |
We believe that, at the current charter rates, we should have the ability to generate and obtain adequate amounts of cash to meet our current credit facility requirements for the next twelve months.
Credit Facilities and Other Financing Arrangements
$44.0 Million Secured Credit Term Loan Facility
On July 8, 2020, we, through one of our vessel-owning subsidiaries, Omega Three Marine Corp., entered into a $44.0 million secured credit facility with ABN AMRO Bank N.V. to refinance then-existing indebtedness on our vessel, Kimolos. The facility bore interest at LIBOR plus a margin of 2.50% per annum and had a final maturity date of July 9, 2026. We drew down $42.2 million of this facility. The facility was repayable in 24 equal quarterly installments of $695,000, with a balloon payment of $25,488,750 due upon maturity. This facility was secured by, among other things, a first priority mortgage on Kimolos and was guaranteed by us. This loan was prepaid in June 2023.
$40.0 Million Secured Term Loan Facility
On July 7, 2020, we, through one of our vessel-owning subsidiaries, Omega Four Marine Corp., entered into a $40.0 million secured term loan facility with BNP Paribas to refinance then-existing indebtedness on our vessel, Folegandros. The facility bore interest at LIBOR plus a margin of 2.60% per annum and had a final maturity date of July 9, 2026. The facility was repayable in 24 equal quarterly installments of $593,250, with a balloon payment of $24,912,000 due upon maturity. This facility was secured by, among other things, a first priority mortgage on Folegandros and was guaranteed by us. This loan was prepaid in June 2023.
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$103.2 Million Secured Term Loan Facility
On September 9, 2020, we, through two of our vessel-owning subsidiaries, Omega Six Marine Corp. and Omega Ten Marine Corp., entered into an approximately $103.2 million secured term loan facility with KEXIM Bank (UK) Limited to finance our acquisition of Nissos Sikinos and Nissos Sifnos, which we amended and restated on July 6, 2023 to amend the provisions in relation to the calculation of interest from LIBOR to the term SOFR reference rate administered by CME Group Benchmark Administration Limited (“Term SOFR”), subject to (i) a mandatory switch mechanism to the daily non-cumulative compounded SOFR (“Compounded SOFR”) and (ii) the borrowers’ option to switch the interest rate to Compounded SOFR. The facility was comprised of a KEXIM facility of up to $61,924,800 and a commercial facility of up to $41,283,200. Each of the two tranches of the KEXIM facility bore interest at Term SOFR (previously LIBOR) plus a margin of 1.80% per annum and a credit adjustment spread (“CAS”) of 0.26161% per annum relating to the transition from LIBOR, was repayable in 48 equal consecutive quarterly installments of $645,050, and had a final maturity date of September 11 and September 23, 2032 (each tranche respectively). Each of the two tranches of the commercial facility bore interest at Term SOFR (previously LIBOR) plus a margin of 2.20% per annum and a CAS of 0.26161% per annum relating to the transition from LIBOR, was repayable in 20 equal consecutive quarterly installments of $206,416, with a balloon payment of $16,513,280 due upon maturity, and had a final maturity date of September 11 and September 23, 2025 (each tranche respectively). This facility was secured by, among other things, a first priority mortgage on each of Nissos Sikinos and Nissos Sifnos and was guaranteed by us. This loan was prepaid in September 2023.
$125.7 Million Secured Term Loan Facility
In May 23, 2022, we, through two of our vessel-owning subsidiaries, Anassa Navigation S.A. and Nellmare Marine Ltd., entered into an approximately $125.7 million secured term loan facility with the National Bank of Greece to refinance the then-existing indebtedness on our vessels, Nissos Kythnos and Nissos Donoussa, which agreement we amended on June 29, 2023 to amend the provisions in relation to the calculation of interest from LIBOR to Term SOFR, subject to the borrowers’ option to switch the interest rate to the cumulative compounded SOFR. The facility has a final maturity date of May 25, 2029 and bears interest at SOFR (previously LIBOR) plus a margin of 2.50% per annum. The margin may be increased following discussions between the lender and the borrowers if it is determined that, pursuant to the sustainability certificate provided by ourselves to the lender annually, (1) the weighted average of the efficiency ratio of all fleet vessels (using the parameters of fuel consumption, distance travelled and deadweight at maximum summer draught, reported in unit grams of CO2 per ton per mile) for that calendar year, as certified by an approved classification society, is equal to or above the target set for the relevant year and (2) the weighted average percentage of the total waste incinerated on board for all fleet vessels in that calendar year (calculated in line with Class Approved Plans & Record Books, MARPOL Annex I — “Oil Record Book” (endorsed by Flag Administration) & “Fuel Management Plan” (approved by class) and MARPOL Annex V — “Garbage Record Book” & “Garbage Management Plan” (approved by class)) is equal to or above the target set for the relevant year. The amount of any increase in the margin will be based on discussions between the lender and the borrowers. Other than as set out above, there will be no other assessment of the information contained in any sustainability certificate and the sustainability certificates themselves will not be made publicly available unless we deem them to be material. Each of the two tranches of the facility is repayable in 28 quarterly installments, the first 8 of which are $750,000 and the next 20 of which are $850,000, with a balloon payment of $39,835,000 due upon maturity. This facility is secured by, among other things, a first priority mortgage on each of Nissos Kythnos and Nissos Donoussa and is guaranteed by us.
$58.2 Million Secured Term Loan Facility
On January 24, 2019, we, through one of our vessel-owning subsidiaries, Arethusa Shipping Corp., entered into an approximately $58.2 million secured term loan facility with BNP Paribas to finance our acquisition of Nissos Keros. The facility bore interest at LIBOR plus a margin of 2.25% per annum and had a final maturity date of October 16, 2025. The facility was repayable in 24 equal quarterly installments of $808,000, with a balloon payment of $38,783,000 due upon maturity. This facility was secured by, among other things, a first priority mortgage on Nissos Keros and is guaranteed by us. This loan was prepaid in June 2023.
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$58.0 Million Secured Term Loan Facility
On February 27, 2019, we, through one of our vessel-owning subsidiaries, Moonsprite Shipping Corp., entered into a $58.0 million secured term loan facility with Crédit Agricole Corporate and Investment Bank (“CACIB”) and the Export-Import Bank of Korea (“KEXIM”) to finance our acquisition of Nissos Anafi, which agreement we amended and restated on November 11, 2020 in order to include a hedging mechanism and further amended and restated again on June 16, 2023 to amend the provisions in relation to the calculation of interest from LIBOR to Term SOFR. The facility consisted of a commercial facility by CACIB in the amount of $38 million and a KEXIM facility loan in the amount of $20 million. The commercial facility bore interest at Term SOFR (previously LIBOR) plus a margin of 2.25% per annum and the applicable CAS relating to the transition from LIBOR depending on the applicable interest period (namely, 0.26161% per annum for interest periods exceeding month and up to three months, 0.42826% per annum for interest periods exceeding three months and up to six months, or 0.71513% per annum for interest periods exceeding six months and up to twelve months), was repayable in 32 equal quarterly installments of $275,000, with a balloon payment of $29,200,000 due upon maturity and had a final maturity date of January 3, 2028. The KEXIM facility loan bore interest at Term SOFR (previously LIBOR) plus a margin of 1.80% per annum and a CAS of 0.26161% per annum relating to the transition from LIBOR, was repayable in 32 equal quarterly installments of $625,000 and had a final maturity date of January 3, 2028. The facility was secured by, among other things, a first priority mortgage on Nissos Anafi and was guaranteed by us. In December 2020, through an assignment agreement, CACIB transferred to Siemens Financial Services, Inc. 50% of its outstanding loan balance, i.e., $18,587,500. This loan was prepaid in February 2024.
$113.0 Million Secured Term Loan Facility
On June 27, 2023, we, through three of our vessel-owning subsidiaries, Omega Three Marine Corp., Omega Four Marine Corp. and Arethusa Shipping Corp., entered into a $113.0 million senior secured credit facility with ABN AMRO Bank N.V. to refinance then-existing indebtedness on our vessels, Kimolos, Folegandros and Nissos Keros. The facility bears interest at Term SOFR, subject to a mandatory switch mechanism to Compounded SOFR, plus a margin of 1.90% per annum and has a final maturity date of June 30, 2028. The facility is repayable in 20 equal consecutive quarterly installments of $2,200,000, with a balloon payment of $69,000,000 due upon maturity. This facility is secured by, among other things, a first priority mortgage on each of Kimolos, Folegandros and Nissos Keros and is guaranteed by us.
$84.0 Million Secured Term Loan Facility
On September 8, 2023, we, through two of our vessel-owning subsidiaries, Omega Six Marine Corp. and Omega Ten Marine Corp., entered into an $84.0 million senior secured credit facility with CACIB to refinance the then-existing indebtedness on our vessels, Nissos Sikinos and Nissos Sifnos. The facility bears interest at Term SOFR, plus a margin of 1.85% per annum, and has a final maturity date in September 2029. Each of the two tranches is repayable in 24 equal consecutive quarterly installments of $787,500, with a balloon payment of $23,100,000 due upon maturity. This facility is secured by, among other things, a first priority mortgage on each of Nissos Sikinos and Nissos Sifnos and is guaranteed by us.
$34.7 Million Secured Term Loan Facility
On January 31, 2024, we, through one of our vessel-owning subsidiaries, Omega One Marine Corp., entered into an $34.7 million senior secured term loan facility with Kexim Asia Limited and Kexim Bank (UK) Limited to refinance the then-existing indebtedness on our vessel Milos. The facility bears interest at the applicable Term SOFR, plus a margin of 1.75% per annum, and has a final maturity date in February 2030. The facility is repayable in 24 equal consecutive quarterly installments of $725,000, with a balloon payment of $17,300,000 due upon maturity. This facility is secured by, among other things, a first priority mortgage on Milos and is guaranteed by us.
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$56.0 Million Sale and Leaseback Agreement — Milos
On January 29, 2019, we, through one of our subsidiaries, Omega One Marine Corp., entered into a $49.0 million sale and leaseback agreement with Ocean Yield with respect to our vessel, Milos, which included a $7.0 million non-cash element. The charter period was 156 months from delivery and the charter hire was paid monthly, in advance, in a cash amount equal to $12,825 per day plus a non-cash amount of $1,475 per day (which is set off against the $7.0 million prepaid hire that we made). On April 27, 2023, we entered into an addendum to the bareboat charter to amend the provisions of the bareboat charter in relation to the calculation of charter hire from LIBOR to Term SOFR. The charter hire was subject to an adjustment based on Term SOFR (previously LIBOR) and a CAS of 0.26161% per annum. The charter was guaranteed by us, and we permitted a mortgage to be filed regarding the finance lease, as well as entered into assignment of earnings, assignment of insurances, charter guarantee, pledge of account and a manager’s undertaking. We also had the option to repurchase the vessel at the end of years 5, 7, 10, and 12, at purchase option prices that range from $34.7 million to $11.5 million at the end of year 12. The vessel was delivered in February 2019. We repurchased the Milos in February 2024, and therefore this sale and leaseback arrangement is no longer in effect.
$54.0 Million Sale and Leaseback Agreement — Poliegos
On June 8, 2017, we, through one of our subsidiaries, Omega Two Marine Corp., entered into a $47.2 million sale and leaseback agreement with Ocean Yield with respect to our vessel, Poliegos, which included a $6.8 million non-cash element. The charter period is 168 months from the delivery date and the charter hire is paid monthly, in advance, in a cash amount equal to $11,550 per day plus a non-cash amount of $1,368.93 per day (which is set off against the $7.0 million prepaid hire that we made). On April 27, 2023, we entered into an addendum to the bareboat charter to amend the provisions of the bareboat charter in relation to the calculation of charter hire from LIBOR to Term SOFR. The charter hire is subject to an adjustment based on Term SOFR (previously LIBOR) and a CAS of 0.26161% per annum, relating to the transition from LIBOR. The charter is guaranteed by us, and we have permitted a mortgage to be filed regarding the finance lease, as well as entered into assignment of earnings, assignment of insurances, charter guarantee, pledge of account and a manager’s undertaking. We also have the option to repurchase the vessel at the end of years 7, 10, and 12, and at purchase option prices that range from $31.1 million to $17.2 million at the end of year 12. The vessel was delivered in June 2017.
$167.5 Million Sale and Leaseback Agreements — Nissos Rhenia and Nissos Despotiko
On February 10, 2018, we, through two of our subsidiaries, Omega Five Marine Corp. and Omega Seven Marine Corp., entered into approximate $150.52 million sale and leaseback agreements with Ocean Yield with respect to our vessels, Nissos Rhenia and Nissos Despotiko.
The charter period for each of the Nissos Rhenia and Nissos Despotiko is 180 months from respective delivery and the charter hire for the each such ship is paid monthly, in advance, in a cash amount equal to $18,600 per day per ship for the first five years from the delivery date and $18,350 per day per ship from year six until the end of the charter period, subsequently amended to $18,600 per day per ship for the first two years, $25,200 per day for Nissos Rhenia and $23,336 for Nissos Despotiko for years three and four and $17,200 per day per ship for year five until the end of the charter, plus a non-cash amount of $1,734 per day per ship (which is set off against the $9.5 million prepaid hire that we made for each ship). On April 27, 2023, we entered into an addendum to each bareboat charter to amend the provisions of such bareboat charters in relation to the calculation of charter hire from LIBOR to Term SOFR. The charter hire is subject to an adjustment based on Term SOFR (previously LIBOR) and a CAS of 0.26161% per annum (for three-month periods) or 0.71513% per annum (for twelve-month periods), as applicable, relating to the transition from LIBOR. Each charter is guaranteed by us, and we have permitted a mortgage to be filed regarding the finance lease, as well as entered into assignment of insurances, assignment of management agreement, charter guarantee, pledge of account, pledge of shares of the bareboat charterer, a manager’s undertaking and a time charter general assignment. We also have the option to repurchase each or both vessels at the end of years 7, 10, 12 and 14, in varying amounts per ship from $49.8 million to $14.2 million. The Nissos Rhenia was delivered in May 2019 and the Nissos Despotiko was delivered in June 2019.
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$194.0 Million Sale and Leaseback Agreements — Nissos Kea and Nissos Nikouria
On March 21, 2022, we, through two of our subsidiaries, Ark Marine S.A. and Theta Navigation Ltd, entered into an approximate $145.5 million sale and leaseback agreements with CMB Financial Leasing Co., Ltd. (“CMBFL”), with respect to our vessels, Nissos Kea and Nissos Nikouria. On June 29, 2023 and on January 26, 2024, respectively, we entered into amendment and restatement agreements of each bareboat charter to amend certain provisions of the bareboat charters The charter period for each of the vessels is 84 months from December 31, 2023 (with respect to Nissos Kea) and March 3, 2024 (with respect to Nissos Nikouria) and charterhire is payable quarterly as follows: (a) from the delivery date of each vessel and up to and including December 31, 2023 (with respect to Nissos Kea) and March 3, 2024 (with respect to the Nissos Nikouria), a fixed amount equal to $909,375 plus a variable amount by priced at 260 basis points (being 2.45% as margin and 0.15% as CAS) over the applicable three-month Term SOFR, and (b) following December 31, 2023, with respect to Nissos Kea, and March 3, 2024, with respect to the Nissos Nikouria, a fixed amount equal to $909,375 plus a variable amount priced at 200 basis points over the applicable three-month Term SOFR. The first part of the sale and leaseback relating to the delivery of Nissos Kea was drawn on March 31, 2022 and matures on the date falling 84 months from December 31, 2023 and the second part of the sale and leaseback relating to the delivery of Nissos Nikouria was drawn on June 3, 2022 and matures on the date falling 84 months from March 3, 2024. According to each bareboat charter, the Company has a purchase option that it can exercise annually as from December 31, 2024 (with respect to Nissos Kea) and March 3, 2025 (with respect to Nissos Nikouria). If the purchase option date falls after the first but prior to the seventh anniversary of December 31, 2023 (with respect to Nissos Kea) and March 3, 2024 (with respect to Nissos Nikouria), the purchase option price for the relevant vessel is an amount equal to the opening capital balance i.e., $72,750,000 amount drawn per vessel (75% of the purchase price) minus charterhire paid (the “owner’s costs”), plus (a) accrued but unpaid charterhire, (b) breakfunding costs including any swap costs, (c) legal and other documented costs of the owner to sell the relevant vessel, and any other additional amounts due under the sale and leaseback documentation. If the purchase option date falls on the seventh anniversary of December 31, 2023 (with respect to Nissos Kea) and March 3, 2024 (with respect to Nissos Nikouria), the purchase option price for the relevant vessel is an amount equal to $40,921,875 (the “amended owner’s costs”), plus (a) accrued but unpaid charterhire, (b) and other documented costs of the owner to sell the relevant vessel, and (c) any other additional amounts due under the sale and leaseback documentation. Each charter is guaranteed by us, and we have permitted a mortgage to be filed regarding the finance lease (no mortgage on either vessel has been registered so far) as well as entered into an account charge, general assignment, pledge of shares of the bareboat charterer, a builder’s warranties assignment, and a manager’s undertaking.
$73.5 Million Sale and Leaseback Agreement — Nissos Anafi
On January 29, 2024, we, through one of our subsidiaries Moonsprite Shipping Corp., entered into an approximately $73.5 million sale and leaseback agreements with CMBFL, with respect to our vessel Nissos Anafi. The charter period is 84 months from the vessel’s delivery date and charterhire is payable quarterly in a fixed amount equal to approximately $1.2 million plus a variable amount priced at 190 basis points over the applicable three-month Term SOFR. We also have the option to repurchase the vessel, such option being exercisable quarterly following the one-year anniversary of the vessel’s delivery. If the purchase option date falls prior to the seventh anniversary of the date of the vessel’s delivery, the purchase option price is an amount equal to the opening capital balance (i.e. $73,450,000 (being 65% of the purchase price) minus the fixed amount of charterhire paid on the purchase date (the “owners’ costs”), plus (a) accrued but unpaid charterhire, (b) legal and other documented costs of the owner to sell the vessel, (c) any break-funding costs, and (d) any other additional amounts due under the sale and leaseback documentation. The charter is guaranteed by us, and we have also entered into an account charge and a pledge of the shares of the bareboat charterer.
$11 Million Scrubber Financing
On June 25, 2019, we entered into an $11 million facility agreement with BNP Paribas, with four of our subsidiaries, Therassia Marine Corp., Ios Maritime Corp., Omega Three Marine Corp. and Omega Four Marine Corp., acting as guarantors, in order to finance the installation of scrubbers on six vessels in our fleet, namely, Nissos Therassia, Nissos Schinoussa, Kimolos, Folegandros, Milos and Poliegos. In July 2020, the second priority mortgage over Kimolos and all the other additional second priority securities were released upon full repayment of the Kimolos tranche. In June 2021, the Nissos Therassia and Nissos Schinoussa were sold and the second priority mortgages and all the other additional second priority securities over these vessels were released upon full prepayment of their respective loan tranches. The facility bore interest at LIBOR plus a margin of 2.0% per annum and had a final maturity date of December 30, 2024. Each of the six tranches of the facility was for an amount of $1,833,333 and was repayable in 15 equal quarterly installments of $114,583 and a final quarterly payment of $114,588, in each case commencing 12 months after the date the relevant tranche is utilized. The facility was secured by, among other things, a second priority mortgage over Folegandros, a second priority security over the ship’s earnings, a first priority security over an earnings account and a second priority manager’s undertaking. This loan was prepaid in June 2023.
76
$35.1 Million Unsecured Sponsor Loan
On April 18, 2022, we (on behalf of two of our subsidiaries, Ark Marine S.A. and Theta Navigation Ltd), entered into an unsecured loan facility with Okeanis Marine Holdings S.A., an entity controlled by Mr. Ioannis Alafouzos (on behalf of its subsidiaries Felton Enterprises S.A. and Sandre Enterprises S.A.), relating to the acquisition of the vessels Nissos Kea and Nissos Nikouria. Under the agreement, the loaned amount of approximately $17.6 million for each vessel bears a fixed interest cost of 3.5% per annum and is repayable at our sole discretion without penalty, up to the maturity date of two years from the relevant vessel’s delivery. We repaid $16.7 million in principal under this loan facility in March 2024.
Security
Except as noted above, each secured credit facility is secured by, among other things:
● | a first priority mortgage over the relevant collateralized vessels; |
● | a first priority assignment of earnings, and insurances from the mortgaged vessels for the specific facility; |
● | a pledge of the earnings account of the mortgaged vessels for the specific facility; |
● | a pledge of the equity interests of each vessel owning subsidiary under the specific facility; and |
● | a corporate guarantee by us. |
Separately, the vessels on bareboat charter to Ocean Yield also have mortgages placed on them, as the vessel owner separately borrowed money with respect thereto. The vessels on bareboat charter to CMBFL have no mortgage registered on them so far although the owner have the right to do so.
Loan Covenants
Our credit facilities and financing obligations discussed above, have, among other things, the following financial covenants relating to the Company as guarantor, as amended or waived, the most stringent of which, as of the date of this Annual Report, require us to maintain:
● | a security cover ratio (which is a minimum percentage of the vessel market value over the secured outstanding loan amount) of no less than 170%; |
● | minimum corporate liquidity, being the higher of $10,000,000 and $750,000 per vessel, in the form of free and unencumbered cash and cash equivalents; |
● | a consolidated net worth of more than $100,000,000; and |
● | a leverage ratio of total liabilities to the carrying value of total assets (adjusted for the vessel’s fair market value) of no more than 75%. |
Our credit facilities discussed above have, among other things, the following restrictive covenants which limit our ability to:
● | incur additional indebtedness; |
● | sell the collateral vessel, if applicable; |
● | make additional investments or acquisitions; |
● | pay dividends at certain times; |
● | effect a change to the general nature of the business; or |
77
● | effect a change of control of us. |
A number of our financing agreements require that we maintain a minimum fair value of the collateral for each credit facility, such that the aggregate fair value of the vessels collateralizing the credit facility is at least between 125% and 170% depending on the credit facility, of the aggregate principal amount outstanding under such credit facility, or, if we do not meet these thresholds to prepay a portion of the loan or provide additional security to eliminate the shortfall.
A number of our financing agreements limit our ability to declare, make or pay any dividends or other distributions (whether in cash or in kind) or repay or distribute any dividend or share premium reserve following the occurrence of an event of default under the relevant financing agreement or if such action would result in the occurrence of an event of default under the relevant financing agreement.
A number of our financing agreements require that the Alafouzos family maintain a minimum 35% ownership interest in us, and some of our financing agreements provide that a breach of the financing will occur if Mr. Ioannis Alafouzos and Mr. Themistoklis Alafouzos cease to control us and, in one instance, if Mr. Ioannis Alafouzos ceases to be our chairman. In addition, one loan agreement provides that the acquisition by a person or group of persons acting in concert (directly or indirectly) of more than 35% of the ultimate legal or beneficial ownership of the Company is a breach of that loan agreement, and certain of our guarantees on our sale and leaseback agreements provide that we may not permit certain changes in corporate or ownership structure or permit a new party or parties acting in concert to become owners of, or control, more than 51% of our shares and/or voting rights.
A violation of any of the covenants contained in our financing agreements described above may constitute an event of default under all of our financing agreements, which, unless cured within the grace period set forth under the financing agreement, if applicable, or waived or modified by our lenders, provides our lenders, by notice to the borrowers, with the right to, among other things, cancel the commitments immediately, declare that all or part of the loan, together with accrued interest, and all other amounts accrued or outstanding under the agreement, be immediately due and payable, enforce any or all security under the security documents, and/or exercise any or all of the rights, remedies, powers or discretions granted to the facility agent or finance parties under the finance documents or by any applicable law or regulation or otherwise as a consequence of such event of default.
Furthermore, our financing agreements contain a cross-default provision that may be triggered by a default of one of our other financing agreements. A cross-default provision means that a default on one loan would result in a default on certain of our other loans. Because of the presence of cross-default provisions in certain of our financing agreements, the refusal of any one lender under our financing agreements to grant or extend a waiver in connection with any potential default thereunder could result in certain of our indebtedness being accelerated, even if our other lenders under our financing agreements have waived covenant defaults under the respective agreements. If our secured indebtedness is accelerated in full or in part, it would be very difficult in the current financing environment for us to refinance our debt or obtain additional financing and we could lose our vessels and other assets securing our financing agreements if our lenders foreclose their liens, which would adversely affect our ability to conduct our business.
Moreover, in connection with any waivers of or amendments to our financing agreements that we have obtained, or may obtain in the future, our lenders may impose additional operating and financial restrictions on us or modify the terms of our existing financing agreements. These restrictions may further restrict our ability to, among other things, pay dividends, make capital expenditures or incur additional indebtedness, including through the issuance of guarantees. In addition, our lenders may require the payment of additional fees, require prepayment of a portion of our indebtedness to them, accelerate the amortization schedule for our indebtedness and increase the interest rates they charge us on our outstanding indebtedness.
As of December 31, 2023 and 2022, we were in compliance with all of the financial covenants contained in our credit facilities and other financing arrangements that we had entered into as of that date. We believe that, at the current charter rates, we should have the ability to generate and obtain adequate amounts of cash to meet our current credit facility requirements for the next twelve months.
Please see Note 13, Long-term borrowings, to our consolidated financial statements for additional information about our indebtedness.
Financial Instruments
The major trading currency of our business is the U.S. dollar. Movements in the U.S. dollar relative to other currencies can potentially impact our operating and administrative expenses and therefore our operating results.
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We believe that we have a low-risk approach to treasury management. Cash balances are invested in term deposit accounts, with their maturity dates projected to coincide with our liquidity requirements. Credit risk is reduced by placing cash on deposit with a variety of institutions in Europe, including a small number of banks in Greece, which are selected based on their credit ratings. We have policies to limit the amount of credit exposure to any particular financial institution.
As of December 31, 2023 and 2022, we did not use any financial instruments other than those used to hedge against market and interest rate fluctuations. For further information please see “Item 11. Quantitative and Qualitative Disclosures about Market Risk — Interest Rate Risk and — Market Risk.”
C. |
Research and development, patents and licenses, etc. |
Not applicable.
D. |
Trend Information |
Our results of operations depend primarily on the charter rates earned by our vessels. Over the course of 2023, the BDTI reached a high of 1,648 and a low of 713. Historically the BDTI has been characterized by volatility. Although the BDTI was 1,096 as of April 25, 2024, there can be no assurance that the crude oil charter market will continue to increase, and the market could again decline.
Meanwhile, the war in Ukraine has amplified the volatility in the tanker market. In the short term, the effect of the invasion of Ukraine has been positive for the tanker market, yet the overall longer term effect on ton-mile demand is uncertain given that cargoes exported previously from Russia will need to be substituted by cargoes from different sources due to the oil embargo enacted by the United States, the European Union and the United Kingdom.
In addition, the continuing war in Ukraine led to increased economic uncertainty amidst fears of a more generalized military conflict or significant inflationary pressures, due to the increases in fuel and grain prices following the sanctions imposed on Russia. Whether the present dislocation in the markets and resultant inflationary pressures will transition to a long-term inflationary environment is uncertain, and the effects of such a development on charter rates, vessel demand and operating expenses in the sector in which we operate are uncertain. As described above, the initial effect of the invasion in Ukraine on the tanker freight market was positive, despite the short-term volatility in charter rates and increases on specific items of operating costs, mainly in the context of increased crew costs. If these conditions are sustained, the longer-term net impact on the tanker market and our business would be difficult to predict. However, such events may have unpredictable consequences, and contribute to instability in global economy, a decrease in supply or cause a decrease in worldwide demand for certain goods and, thus, shipping. Regarding the possible impact of supply chain disruptions that have or may emanate from the military conflict in Ukraine, our operations have not been affected materially and we do not expect them to be in the future.
Inflation has had a moderate impact on our vessel operating expenses and corporate overheads. It is anticipated that insurance costs, which have risen over the last three years, may well continue to rise over the next few years. Oil transportation is a specialized area and the number of vessels is increasing. There will therefore be an increased demand for qualified crew and this has and will continue to put inflationary pressure on crew costs. However, in a shipping downturn, costs subject to inflation can usually be controlled because shipping companies typically monitor costs to preserve liquidity and encourage suppliers and service providers to lower rates and prices in the event of a downturn.
Important Measures and Definitions for Analyzing Results of Operations
We use a variety of financial and operational terms and concepts. These include the following:
Calendar days. We define calendar days as the total number of days the vessels were in our possession for the relevant period. Calendar days are an indicator of the size of our fleet during the relevant period and affect the amount of expenses that we record during that period.
Operating days. We define operating days as the number of calendar days in a period less any scheduled or unscheduled days that our vessels are off-hire due to unforeseen technical and commercial circumstances. We and the shipping industry uses operating days to measure the aggregate number of days in a period that our vessels actually generate revenues.
Off-hire. The period a vessel is not being chartered or is unable to perform the services for which it is required under a charter.
79
Fleet utilization. We calculate fleet utilization by dividing the number of operating days during a period by the number of calendar days during that period. We and the shipping industry uses fleet utilization to measure a company’s efficiency in finding suitable employment for its vessels and minimizing the number of days that its vessels are off-hire for reasons other than scheduled repairs or scheduled guarantee inspections in the case of new buildings, vessel upgrades, special or intermediate surveys and vessel positioning.
Daily Time Charter Equivalent (“TCE”) Rate. The Daily Time Charter Equivalent Rate (“Daily TCE Rate”) is a measure of the average daily revenue performance of a vessel. The Daily TCE Rate is not a measure of revenue under U.S. GAAP (i.e., it is a non-GAAP measure) or IFRS and should not be considered as an alternative to any measure of revenue and financial performance presented in accordance with IFRS. We calculate Daily TCE Rate by dividing revenues (time charter and/or voyage charter revenues), less commission and voyage expenses, by the number of operating days during that period. Our calculation of the Daily TCE Rates may not be comparable to that reported by other companies.
Daily vessel operating expenses, including technical management fees. Daily vessel operating expenses, including technical management fees, calculated as the sum of vessel operating expenses and technical management fees divided by the calendar days of the period, is an alternative performance measure that provides meaningful information to our management with regards to our vessels’ efficiency and deployment. Our calculation of daily vessel operating expense, including technical management fees, may deviate from that reported by other companies.
Performance Indicators
The figures shown below are financial and non-financial statistical metrics used by management to measure performance of our vessels. For the “Fleet Data” figures, there are no comparable GAAP or IFRS measures.
In the shipping industry, economic decisions are based on vessels’ deployment upon anticipated Daily TCE Rates, and industry analysts typically measure shipping freight rates in terms of Daily TCE Rates. This is because under time-charter and bareboat contracts the customer usually pays the voyage expenses, while under voyage charters the ship-owner usually pays the voyage expenses, which typically are added to the hire rate at an approximate cost. In a voyage charter contract, consideration is received for the use of a vessel between designated ports for the duration of the voyage only, at an agreed upon rate per volume of cargo carried. In a time charter contract, the customer (also known as the charterer) is responsible to pay for fuel consumed and port expenses incurred during the agreed period of time. In a voyage charter contract, the Company is responsible for maintaining the voyage, including vessel scheduling and routing, as well as any related voyage expenses, such as fuel, port and other expenses. Under voyage charters, the majority of voyage expenses are generally borne by us whereas for vessels in a pool, such expenses are borne by the pool operator. In a bareboat charter, the customer pays for all of the vessel’s operating expenses, and undertakes to maintain the vessel in a good state of repair and efficient operating condition and drydock the vessel during this period as per the classification society requirements. We may incur voyage related expenses when positioning or repositioning vessels before or after the period of a time or other charter, during periods of commercial waiting time or while off-hire during drydocking or due to other unforeseen circumstances. Because of the different nature of these types of arrangements, the amount of revenues earned by the Company can differ significantly between them.
Consistent with industry practice, we use the Daily TCE Rates because it provides a means of comparison between different types of vessel employment and, therefore, assists in evaluating their financial performance and in our decision-making process regarding the deployment and use of our vessels and in evaluating our financial performance. The Daily TCE rate is a non-GAAP and non-IFRS measure. We believe the Daily TCE Rate provides additional meaningful information in conjunction with vessel operating expenses, the most directly comparable GAAP and IFRS measure, because it assists our management in making decisions regarding the deployment and use of our vessels and in evaluating their financial performance. The Daily TCE Rate is a measure used to compare period-to-period changes in a company’s performance and, management believes that the Daily TCE Rate provides meaningful information to our investors.
80
In evaluating our financial condition, we focus on the below measures to assess our historical operating performance and we use future estimates of the same measures to assess our future financial performance. In assessing the future performance of our fleet, the greatest uncertainty relates to future charter rates at the expiration of a vessel’s present period employment, whether under a time charter or a bareboat charter. Decisions about future purchases and sales of vessels are based on the availability of excess internal funds, the availability of financing and the financial and operational evaluation of such actions and depend on the overall state of the shipping market and the availability of relevant purchase candidates.
|
|
Year Ended December 31, |
|
||||
|
|
2023 |
|
2022 |
|
2021 |
|
Fleet Data: |
|
|
|
|
|
|
|
Calendar days |
|
5,110 |
|
4,868 |
|
5,568 |
|
Operating days |
|
5,023 |
|
4,833 |
|
5,279 |
|
Fleet utilization |
|
98 |
% |
99 |
% |
95 |
% |
The following is a reconciliation of revenue to time charter equivalent revenue and the calculation of Daily TCE rate for the periods presented:
|
|
Year Ended December 31, |
|||||||
|
|
2023 |
|
2022 |
|
2021 |
|||
(Expressed in U.S. Dollars) |
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
413,096,606 |
|
$ |
270,972,421 |
|
$ |
168,998,225 |
Voyage expenses |
|
$ |
(109,559,239) |
|
$ |
(74,086,221) |
|
$ |
(45,006,762) |
Commissions |
|
$ |
(5,757,159) |
|
$ |
(3,382,419) |
|
$ |
(2,229,156) |
Time charter equivalent revenue |
|
$ |
297,780,208 |
|
$ |
193,503,781 |
|
$ |
121,762,307 |
Operating days |
|
|
5,023 |
|
|
4,833 |
|
|
5,279 |
Daily TCE Rate |
|
$ |
59,283 |
|
$ |
40,040 |
|
$ |
23,064 |
The following table reconciles our vessel operating expenses to vessel operating expenses including management fees (a non-GAAP and non-IFRS measure). Daily operating expenses, including management fees are derived by dividing vessel operating expenses, including management fees by calendar days.
|
|
Year Ended December 31, |
|||||||
|
|
2023 |
|
2022 |
|
2021 |
|||
(Expressed In U.S. Dollars) |
|
|
|
|
|
|
|
|
|
Vessel operating expenses |
|
$ |
41,742,285 |
|
$ |
35,740,460 |
|
$ |
40,695,997 |
Management fees |
|
$ |
4,599,000 |
|
$ |
4,381,200 |
|
$ |
5,425,200 |
Vessel operating expenses, including management fees |
|
$ |
46,341,285 |
|
$ |
40,121,660 |
|
$ |
46,121,197 |
Calendar days |
|
|
5,110 |
|
|
4,868 |
|
|
5,568 |
Daily vessel operating expenses, including management fees |
|
$ |
9,069 |
|
$ |
8,242 |
|
$ |
8,283 |
E. |
Critical Accounting Estimates |
Because we apply in our primary financial statements IFRS as issued by the IASB, we are not required to discuss information about our critical accounting estimates here. For a description of our critical accounting judgements and key sources of estimation uncertainty, see Note 5, Critical accounting judgments and key sources of estimation uncertainty, to our consolidated financial statements.
81
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. |
Directors and Senior Management |
Set forth below are the names, ages and positions of our directors and executive officers (i.e., our senior management). Members of our board of directors are elected annually. Officers are elected from time to time by vote of our board of directors and hold office until a successor is elected. The business address of each of our directors and executive officers listed below is the address of our principal executive offices: c/o OET Chartering Inc., Ethnarchou Makariou Ave.,&2 D. Falireos St., 185 47 N. Faliro, Greece.
Name |
|
Age |
|
Position |
Aristidis Alafouzos |
|
37 |
|
Chief Executive Officer |
Ioannis Alafouzos |
|
66 |
|
Chairman and Director |
Iraklis Sbarounis |
|
38 |
|
Chief Financial Officer |
Christopher Papaioannou |
|
37 |
|
Chief Commercial Officer |
Robert Knapp |
|
57 |
|
Director* |
Daniel Gold |
|
56 |
|
Director* |
Joshua Nemser |
|
39 |
|
Director* |
Charlotte Stratos |
|
69 |
|
Director* |
John Kittmer |
|
56 |
|
Director* |
Petros Siakotos Konstantinidis |
|
59 |
|
Director* |
* |
Independent Director |
Biographical information with respect to each of our directors and executives is set forth below.
Aristidis Alafouzos has served as our Chief Executive Officer since December 2022. He previously served as our Chief Operating Officer from 2018 until December 2022. Mr. Alafouzos has worked with KMC for eight years and is involved in chartering, projects and vessel sale and purchase. He studied International Relations at Boston University and holds an M.Sc. in Shipping Trade and Finance from Bayes Business School (formerly known as Cass Business School) of City University in London. He has been a board member of Gard P. & I. LTD since 2019. Aristidis Alafouzos is the son of our Chairman, Ioannis Alafouzos.
Ioannis Alafouzos has served as our Chairman and as a member of our board of directors since our inception. Mr. Alafouzos previously served as our Chief Executive Officer from our inception until December 2022. Mr. Alafouzos began his career in shipping in 1981 and has over 40 years of experience in all facets of the industry. Mr. Alafouzos founded Kyklades Maritime Corporation’s tanker arm and has been the key strategist for the company’s cyclical asset plays. Mr. Alafouzos holds an MA from Oxford University in History of Economics. He was a member of the ABS Technical Committee from 2005-2009, a board member of Ionian and Popular Bank in the 1990’s, and a board member of the Hellenic Chamber of Shipping in the 1980’s. Mr Alafouzos also holds other interests outside of shipping, including in media and professional sports. Ioannis Alafouzos is the father of our Chief Executive Officer, Aristidis Alafouzos.
Iraklis Sbarounis has served as our Chief Financial Officer since January 2023. Mr. Sbarounis was previously with the TMS Shipping Group for 14 years, most recently having served as its Group CFO. He also served as Ocean Rig UDW’s (formerly listed on NASDAQ) Chief Financial Officer, Corporate Secretary and Director, until its merger with Transocean in 2018, and prior to that as its VP Business Development. He started his career in investment banking with BNP Paribas. Mr. Sbarounis has extensive experience in dealing with corporate finance, commercial and investment matters as an executive in the shipping industry, as well as in capital markets. He holds a B.S. degree in Management Science from the Massachusetts Institute of Technology (MIT) and a M.Sc. degree in Finance and Economics from the London School of Economics and Political Science (LSE).
Christopher Papaioannou has served as our Chief Commercial Officer since May 2023. He began his career in the chartering department of KMC. Prior to becoming CCO of the Company, he served as the Head of Chartering for OET Chartering Inc., a wholly owned subsidiary of Okeanis Eco Tankers Corp., since June 2018. He holds a Bachelor’s degree in Economics from New York University.
82
Robert Knapp has been a director since our inception. He is the CIO of Ironsides Partners, an investment manager based in Boston, which he founded in 2007. Ironsides is an asset value investor with an emphasis on market dislocations or disruptions. Mr. Knapp serves as a director for several investment companies, including Barings BDC, which is listed on the NYSE, Lamington Road DAC, an Irish investment company with a portfolio of insurance assets, and the African Opportunity Fund Ltd, Pacific Alliance Asian Opportunity Fund and Pacific Alliance Group Asset Management, which are investment vehicles. Mr. Knapp was also a director of MPC Container Ships AS when it was founded. He is a graduate of Princeton University and Oxford University.
Daniel Gold has been a director since our inception. He is the CEO of QVT Financial LP, an asset management company with offices in New York and New Delhi. QVT Financial, through its managed funds, is an experienced global investor in the shipping and offshore industries. Mr. Gold holds an AB in Physics from Harvard College.
Joshua Nemser has been a director since our inception. He is the founder and chief investment officer of Nine Left Capital LP, an asset management firm. Prior to April 2024, he was a New York-based senior portfolio manager at VR Capital Group, where he oversaw the portfolio and members of the firm’s NA+ team, which pursues performing and distressed credit and other special situations in North America and other developed markets as well as transportation and other hard asset sectors. Prior to VR, Mr. Nemser was an investment banking associate at Moelis & Company, where he advised on a range of mergers, acquisitions, recapitalizations, and restructurings. Prior to Moelis, he was an attorney in the Business Finance & Restructuring department of Weil, Gotshal & Manges. Prior to Weil, he was vice president and chief pilot of a federally certificated air carrier. Mr. Nemser holds a J.D. from the New York University School of Law, where he graduated magna cum laude, and a B.S. in business administration from the University of Southern California. He is a licensed airline transport pilot with over 2,000 flight hours.
Charlotte Stratos has been a director since our inception. She has served as a Senior Advisor to Morgan Stanley’s Investment Banking Division Global Transportation Group from 2008 to 2020. From 1987 to 2007, Ms. Stratos was Managing Director and head of Global Greek Shipping for Calyon Corporate and Investment Bank of the Credit Agricole Group. Ms. Stratos served in various roles with Bankers Trust Company as Vice President of Greek shipping finance from 1976 to 1987. She currently serves as an independent director and audit committee member of Costamare Inc., a containership company listed on the NYSE. Previously, she held the position of independent director for Hellenic Carriers Limited, a shipping company listed on London’s AIM between 2007 to 2016 and as a board member of Emporiki Bank from 2006 to 2008.
John Kittmer has been a director since our inception. He has held senior positions across the U.K. public sector. Between 2013-2016, he was the British Ambassador to Greece and responsible among other things for British commercial relations in Greece. He has served other senior roles in the U.K. Foreign and Commonwealth Office, the Department for Environment, Food and Rural Affairs, and the Cabinet Office. He holds a BA from the University of Cambridge, an MA from the University of London and a PhD from King’s College London. He is Chairman of The Anglo-Hellenic League, a U.K. registered charity working on educational and cultural issues.
Petros Siakotos Konstantinidis has been a director since December 2021. He has spent most of his career in international banking, successively with Salomon Brothers, HSBC, Credit Suisse and as Managing Director at UBS Russia. He has advised the Greek and Russian governments in key privatizations and has helped corporate clients with numerous equity and debt raising and strategic transactions. He then served as Senior Advisor to EBRD for the Greek market until 2018. He is currently a director and chief financial officer at NUR MINOS, a company developing renewable energy generation projects and is involved in several energy efficiency initiatives. Mr. Siakotos Konstantinidis is also a director in Inspiration Holdings Limited, a private investment company, and in Res Capital S.A., a private equity firm. Mr. Siakotos Konstantinidis has a BA from Yale University and an MBA from the Anderson School of Management at UCLA.
Aristidis Alafouzos is the son of our Chairman, Ioannis Alafouzos. Other than the aforementioned, there are no other family relationships between any of our directors or senior management. There are no arrangements or understandings with major shareholders, customers, suppliers or others, pursuant to which any person referred to above was selected as a director or member of senior management.
The Company is not aware of any agreements or arrangements between any director and any person or entity other than the Company relating to the compensation or other payments in connection with such director’s candidacy or service as a director of the Company.
Konstantinos Oikonomopoulos was our Chief Development Officer and he resigned on January 31, 2024.
83
B. |
Compensation |
Our directors, except our Chairman, who has waived such right, are each entitled to receive $75,000 in cash per year, from the respective start of their service on our Board of Directors. In addition, each director is entitled to a reimbursement for traveling and other minor out-of-pocket expenses. Our directors have standard letters of appointment but do not receive any benefits upon termination of their directorships. For the year ended December 31, 2023, the compensation paid, in the aggregate, to our directors was $0.5 million. Each director is fully indemnified by us for actions associated with being a director to the extent permitted under Marshall Islands law. For the year ended December 31, 2023, the compensation paid, in the aggregate, to our executive officers was $3.6 million. Our executive officers are each paid a salary.
While each of our executive officers has an employment agreement with us, none of them provide for benefits upon termination of employment or change of control except as described in this paragraph. Each such employment agreement provides for a total agreed annual compensation. It further provides for an additional bonus dependent on certain mutually agreed goals with us. Each such employment agreement provides for three months’ severance pay if the officer’s employment is terminated within five years of commencement and an amount determined in accordance with Greek labor law if terminated after five years of employment. Upon the termination of employment, whether by the employee or us, the employee will complete three months of garden leave and shall receive salary and a proportional bonus during that time. In line with NYSE requirements, we have established a clawback policy which, subject to limited exceptions, requires that any incentive compensation (including both cash and equity compensation) paid to any current or former executive officer on or after October 2, 2023 is subject to recoupment if (i) the incentive compensation was calculated based on financial statements that were required to be restated due to material noncompliance with financial reporting requirements, without regard to any fault or misconduct; and (ii) that noncompliance resulted in overpayment of the incentive compensation within the three fiscal years preceding the date the restatement.
We do not have a retirement plan for our officers or directors.
C. |
Board Practices |
Director Independence
Our board of directors has determined that Mr. Knapp, Mr. Gold, Mr. Nemser, Ms. Stratos, Mr. Kittmer and Mr. Siakotos Konstantinidis are “independent directors” as defined in the NYSE listing standards and Rule 10A-3 of the Exchange Act. We currently intend to maintain a board of directors comprised of a majority of independent directors. As a foreign private issuer, we are exempt from certain NYSE requirements that are applicable to U.S. domestic companies, including the requirement to maintain a board of directors comprised of a majority of independent directors.
Board Committees
Our board of directors has an audit committee, a nominating/corporate governance committee and a remuneration committee. Our board of directors has adopted a charter for each of the audit committee, the nominating/corporate governance committee and the remuneration committee, as well as a code of business conduct and ethics that governs the conduct of our directors, officers, employees and agents. From time-to- time our board of directors may create special committees to address particular situations or transactions, such as potential conflict of interest transactions that may arise with our affiliates or related parties. The members’ duration and powers of any special committee will be as established by the board of directors as appropriate for the particular situation or transaction. In addition, we adopted Corporate Governance Guidelines that set out guidelines regarding our board’s role, composition, director selection and compensation, among other things, and also set out the methods for communicating with the chairperson of any of the audit, nominating/corporate governance and remuneration committees or the non-management or independent directors of the Company as a group. Each of the Corporate Governance Guidelines, audit committee charter, nominating/corporate governance committee charter and the remuneration committee charter is available on the Corporate Governance section of our website at www.okeanisecotankers.com and in print to any shareholder upon request. Information on or accessed through our website does not constitute a part of this Annual Report and is not incorporated by reference herein.
84
Audit Committee
Our audit committee consists of Charlotte Stratos (Chairperson), Petros Siakotos Konstantinidis and John Kittmer, each of whom is an independent director. Our board of directors has determined that the members of the audit committee meet the applicable independence requirements of the Commission, the NYSE and the Oslo Stock Exchange. Ms. Stratos is also our audit committee financial expert.
The audit committee has powers and performs the functions customarily performed by such a committee (including those required of such a committee by the NYSE and the Commission, as well as the Oslo Stock Exchange). The audit committee is responsible for (a) assisting in the Board’s supervision of the Company’s financial reporting process, (b) monitoring the systems for internal control and risk management, (c) maintaining continuous contact with the Company’s auditor, an independent registered public accounting firm, regarding the audit of the annual accounts and (d) reviewing and monitoring the independence of the Company’s auditor, including in particular the extent to which the auditing services provided by the auditor or the audit firm represent a threat to the independence of the auditor.
Remuneration Committee
Our remuneration committee consists of Charlotte Stratos (Chairperson), Robert Knapp and John Kittmer, each of whom is an independent director. The remuneration committee determines, reviews and approves or recommends the approval of the salaries and other remuneration for our executive officers and reviews other matters relating to remuneration and other material employment issues relating to our executive officers.
Nominating/Corporate Governance Committee
Our nominating/corporate governance committee consists of Petros Siakotos Konstantinidis (Chairperson) and Charlotte Stratos. The nominating/corporate governance committee (a) identifies individuals qualified to become board members consistent with board-approved criteria and the process for board selection of nominees for election by shareholders; (b) selects, or recommends that board select, director nominees for next annual meeting of shareholders; (c) develops and recommends to board a set of corporate governance guidelines; (d) oversees evaluation of board and management; and (e) annually performs an evaluation of the nominating/corporate governance committee.
Foreign Private Issuer Exemption
In general, under the NYSE corporate governance standards, foreign private issuers, as defined under the Exchange Act, are permitted to follow home country corporate governance practices instead of the corporate governance practices of the NYSE. Accordingly, we intend to follow certain corporate governance practices of our home country, the Republic of the Marshall Islands, in lieu of certain of the corporate governance requirements of the NYSE. A brief summary of those differences is provided below.
Related Party Transactions. In lieu of obtaining an independent review of related party transactions for conflicts of interests, consistent with Marshall Islands law requirements, a related party transaction will be permitted if: (i) the material facts as to such director’s interest in such contract or transaction and as to any such common directorship, officership or financial interest are disclosed in good faith or known to the board or committee, and the board or committee approves such contract or transaction by a vote sufficient for such purpose without counting the vote of such interested director, or, if the votes of the disinterested directors are insufficient to constitute an act of the board, by unanimous vote of the disinterested directors; or (ii) if the material facts as to such director’s interest in such contract or transaction and as to any such common directorship, officership or financial interest are disclosed in good faith or known to the shareholders entitled to vote thereon, and such contract or transaction is approved by vote of such shareholders.
Proxy Statements. As a foreign private issuer, we are not required to solicit proxies or provide proxy statements to the NYSE pursuant to the NYSE corporate governance rules or Marshall Islands law. Consistent with Marshall Islands law, we will notify our shareholders of meetings between 15 and 60 days before the meeting. This notification will contain, among other things, information regarding business to be transacted at the meeting. In addition, our bylaws provide that certain shareholders must give us advance notice to properly introduce any business at a meeting of the shareholders. Our bylaws also provide that shareholders may designate in writing a proxy to act on their behalf.
85
Shareholder Approval of Equity Compensation Plans. The NYSE requires listed companies to obtain prior shareholder approval to adopt or materially revise any equity compensation plan. As permitted under Marshall Islands law, we do not need prior shareholder approval to adopt or revise equity compensation plans, including our equity incentive plan.
Share Issuances. In lieu of obtaining shareholder approval prior to the issuance of designated securities, we will comply with provisions of the Marshall Islands Business Corporations Act, which allows the board of directors to approve all share issuances, including share issuances (i) in connection with the acquisition of stock or assets of another company; (ii) when it would result in a change of control; (iii) when a share option or purchase plan is to be established or materially amended or other equity compensation arrangement made or materially amended, pursuant to which shares may be acquired by officers, directors, employees, or consultants; or (iv) in connection with a transaction (other than a public offering) involving the sale, issuance or potential issuance of shares at a price less than market value. Pursuant to 313.00 of Section 3 of the NYSE Listed Company Manual, the NYSE will accept any action or issuance relating to the voting rights structure of a non-U.S. company that is in compliance with the NYSE’s requirements for domestic companies or that is not prohibited by the company’s home country law. We are not subject to such restrictions under our home country, Marshall Islands, law.
Meetings of Directors. In lieu of holding regularly scheduled meetings of the board of directors at which only non-management directors are present, we will not be holding such regularly scheduled meetings. In addition, our board of directors may not make a self-assessment of its performance at least once a year to determine if it or its committees function effectively.
Committee Authority. In lieu of having an audit committee, remuneration committee and nomination and corporate governance committee with the composition, size, authorities and responsibilities set forth in the NYSE rules, our audit committee, remuneration committee and nomination and corporate governance committee are not required to have such composition, size, authorities and responsibilities. For example, our audit committee charter provides that the audit committee may be comprised of two or more independent directors. Our remuneration committee is not required to provide a remuneration committee report.
Corporate Governance Guidelines. Listed companies must adopt and disclose corporate governance guidelines that cover certain minimum specified subjects. We are not required to comply with these requirements.
If at any time we cease to be a “foreign private issuer” under the rules of the NYSE and the Exchange Act, as applicable, our board of directors will be required to take all action necessary to comply with the NYSE corporate governance rules.
Due to our status as a foreign private issuer and our intent to follow certain home country corporate governance practices, our shareholders will not have the same protections afforded to shareholders of companies that are subject to all the NYSE corporate governance standards. See “Item 10.B. — Memorandum and Articles of Association.”
D. |
Employees |
As of December 31, 2023, we employed approximately 14 people in our offices in Greece, through our wholly owned subsidiary OET Chartering Inc., compared to 13 employees as of December 31, 2022 and 12 employees as of December 31, 2021. KMC provides technical management services in respect of our vessels and ensures that all seamen have the qualifications and licenses required to comply with international regulations and shipping conventions, and that our vessels employ experienced and competent personnel.
86
E. |
Share Ownership |
As of April 26, 2024, the beneficial interests of our directors and officers in our common shares were as follows, based on 32,194,108 common shares outstanding (and not taking into account any shares held in treasury):
Name |
|
Position |
|
Shares held |
|
Percentage |
|
Ioannis Alafouzos(1) |
|
Chairman and Director |
|
11,456,223 |
|
35.6 |
% |
Daniel Gold |
|
Director |
|
— |
|
— |
|
Joshua Nemser |
|
Director |
|
— |
|
— |
|
Robert Knapp(2) |
|
Director |
|
225,000 |
|
* |
% |
John Kittmer |
|
Director |
|
— |
|
— |
|
Charlotte Stratos |
|
Director |
|
— |
|
— |
|
Petros Siakotos Konstantinidis |
|
Director |
|
— |
|
— |
|
Aristidis Alafouzos |
|
Chief Executive Officer |
|
79,800 |
|
* |
% |
Iraklis Sbarounis |
|
Chief Financial Officer |
|
5,600 |
|
* |
% |
Christopher Papaioannou |
|
Chief Commercial Officer |
|
11,200 |
|
* |
% |
* |
Denotes less than 1.0%. |
(1) |
Shares owned both directly and beneficially owned through Glafki Marine Corp. |
(2) |
Mr. Knapp owns his shares through a retirement account as well as Ironsides Energy LLC, an entity that he wholly owns. |
F. |
Disclosure of a registrant’s action to recover erroneously awarded compensation. |
None.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. |
Major Shareholders |
The table below sets forth the beneficial ownership of our common shares by each person we know to beneficially own more than 5% of our common stock based upon 32,194,108 common shares outstanding as of April 26, 2024, and the amounts and percentages as are contained in the public filings of such persons and based on knowledge of the Company. While we have 695,892 shares held in treasury, those shares are not deemed outstanding for purposes of these calculations. The number of common shares beneficially owned by each person is determined under SEC rules and the information is not necessarily indicative of beneficial ownership for any other purpose. Under SEC rules, a person beneficially owns any shares as to which the person has or shares voting or investment power. In addition, under SEC rules, a person beneficially owns any common shares that the person or entity has the right to acquire within 60 days through the exercise of any right. All of the shareholders, including the shareholders listed in this table, are entitled to one vote per common share held.
Name of Beneficial Owner |
|
Number of Shares held |
|
Shareholding Percentage |
|
Ioannis Alafouzos(1) |
|
11,456,223 |
|
35.6 |
% |
Themistoklis Alafouzos(2) |
|
7,202,563 |
|
22.4 |
% |
(1) |
Ioannis Alafouzos owns 437,286 common shares directly and 11,018,937 common shares beneficially through Glafki Marine Corp., a company of which he is the beneficial owner. |
(2) |
Themistoklis Alafouzos owns 556,500 common shares beneficially through Sea Shell Enterprises Limited and 6,646,063 common shares beneficially through Hospitality Assets Corp., each company of which he is the beneficial owner. |
As of April 26, 2024, we had one shareholder of record, Cede & Co., a nominee of The Depository Trust Company, which is located in the United States and held all 32,194,108 of our issued and outstanding common shares. We believe that the common shares that are held by Cede & Co. include common shares beneficially owned by both holders in the United States and non-U.S. beneficial owners. Our major shareholders have the same voting rights as our other shareholders. We are not aware of any arrangements, the operation of which may at a subsequent date result in a change in control of the Company.
87
B. |
Related Party Transactions |
Management Agreements
Please see “Item 4.B. Business Overview — Management of Our Fleet” for a description of the management of our vessels, or any vessels we may acquire, including of the amended technical management agreements with respect thereto. The daily management fee we pay to KMC for the technical management of our vessels in 2022, 2023 and currently is $900.
Amounts Paid to Vessel Owning Companies Privately Owned by Members of the Alafouzos Family
For the sake of operational convenience, various expenses or other liabilities that are required to be paid by us, are from time to time instead paid by or on behalf of the vessel owning companies privately owned by the Alafouzos family, or by KMC, and recorded as unsecured amounts payable/receivables, with no fixed terms of payment. The purpose is to optimize capital management and to secure volumetric discounts. Examples of the types of expenses and liabilities giving rise to such payables/receivables due/from to the vessel owning companies privately owned by members of the Alafouzos family include, without limitation, bunker fuel, port expenses, canal fees and other operating expenses. There were no amounts due to/from vessel owning companies privately owned by members of the Alafouzos family as of December 31, 2023.
Shared Services Agreement
Please see “Item 4.B. Business Overview — Management of Our Fleet” for a description of the shared services agreement that we have entered into with KMC. There is no additional fee payable under this agreement.
ETS Services Agreement
Please see “Item 4.B. Business Overview — Management of Our Fleet” for a description of the ETS services agreements that we have entered into with KMC. There is no additional fee payable under these agreements.
Registration Rights Agreement
On December 6, 2023, we entered into a registration rights agreement with Hospitality Assets Corp. and Glafki Marine Corp., pursuant to which we have granted them and their affiliates (including Ioannis Alafouzos, Themistoklis Alafouzos and certain of their transferees) the right, under certain circumstances and subject to certain restrictions, to require us to register under the Securities Act our common shares held by them. Under the registration rights agreement, these persons have the right to request us to register the sale of shares held by them on their behalf and may require us to make available shelf registration statements permitting sales of shares into the market from time to time over an extended period. In addition, these persons have the ability to exercise certain piggyback registration rights in connection with registered offerings requested by other shareholders or initiated by us.
Employment of Relative of our Chairman
Mr. Ioannis Alafouzos has been a director and chairman of the board of directors of the Company since our inception and was our Chief Executive Officer until December 2022. Mr. Aristidis Alafouzos, the son of Mr. Ioannis Alafouzos, was our Chief Operating Officer until December 2022 and thereafter became our Chief Executive Officer.
Sponsor Loan
Please see “Item 5.B. Liquidity and Capital Resources — Credit Facilities and Financing Obligations — $35.1 Million Unsecured Sponsor Loan” for a description of a related party loan. The lender is an entity that is owned by our Chairman, Mr. Ioannis Alafouzos.
Lease of Office Space
We lease our office space in Piraeus from SINGLE MEMBER ANONYMOS TECHNIKI ETAIRIA ERGON, an entity owned by Themistoklis Alafouzos. On August 1, 2018, we entered into a lease agreement for 165.28 square meters of office space for our operations with SINGLE MEMBER ANONYMOS TECHNIKI ETAIRIA ERGON at a monthly rate of Euro 890. The lease expires on July 31, 2024.
88
C. |
Interests of Experts and Counsel |
Not applicable.
ITEM 8. FINANCIAL INFORMATION
A. |
Consolidated Statements and Other Financial Information |
See “Item 18. Financial Statements”.
Legal Proceedings
Various claims, suits, and complaints, including those involving government regulations and product liability, arise in the ordinary course of the shipping business. To our knowledge, we are not a party to any material litigation where claims or counterclaims have been filed against us other than routine legal proceedings incidental to our business. We have not been involved in any legal proceedings that we believe may have a significant effect on our business, financial position, results of operations or liquidity, and we are not aware of any proceedings that are pending or threatened that may have a material effect on our business, financial position, results of operations or liquidity.
From time to time, we may be subject to legal proceedings and claims in the ordinary course of business, principally property damage and personal injury claims. We expect that these claims would be covered by our existing insurance policies, subject to certain deductibles. However, those claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources.
Dividend Policy
The declaration, timing and amount of any dividend is subject to the discretion of our board of directors and will be dependent upon our earnings, financial condition, market prospects, capital expenditure requirements, investment opportunities, restrictions in our loan agreements, the provisions of the Marshall Islands law affecting the payment of dividends to shareholders, overall market conditions and other factors. Subject to these limitations, we seek to offer our shareholders with a competitive yield which is reflective of the cash flows generated by us, and currently intend to pay dividends in an amount depending on and taking into consideration the amount of our net profits, after adjusting for non-recurring items, working capital needs, our capital structure and other discretionary items as our board of directors decides, from time to time. We define “net profits” as the profit or loss for the relevant period, as disclosed in the Company’s published consolidated statement of profit or loss and other comprehensive income. We have no written dividend policy and are able to adopt, amend, change or terminate any dividend policy in the future.
We can provide no assurance that dividends will be paid in the future and there may be a high degree of variability from period to period in the amount of cash, if any, that is available for the payment of dividends. Please see “Item 3.D. Risk Factors — Risks Related to our Common Shares — Our ability to declare and pay dividends to holders of our common shares will depend on a number of factors and will always be subject to the discretion of our board of directors.”
Since we are a holding company with no material assets other than the shares of our subsidiary and affiliates through which we conduct our operations, our ability to pay dividends will depend on our subsidiary and affiliates distributing to us their earnings and cash flow. Our financing arrangements impose certain limitations on our ability to pay dividends and our subsidiaries’ ability to make distributions to us. Please see “Item 5.B. Liquidity and Capital Resources — Credit Facilities and Financing Obligations — Loan Covenants” for further information.
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During the last three years we have paid the following dividends:
|
|
Approximate |
|
|
|
|
|
|
Per Common |
|
|
|
|
Month and Year Paid |
|
Share Amount |
|
Aggregate Amount |
||
March 2024* |
|
$ |
0.66 |
|
$ |
21,248,111 |
November 2023* |
|
$ |
0.60 |
|
$ |
19,316,465 |
September 2023* |
|
$ |
1.50 |
|
$ |
48,291,162 |
June 2023* |
|
$ |
1.60 |
|
$ |
51,510,573 |
March 2023* |
|
$ |
1.25 |
|
$ |
40,242,635 |
December 2022* |
|
$ |
0.30 |
|
$ |
9,798,167 |
September 2022* |
|
$ |
0.30 |
|
$ |
9,796,830 |
December 2021* |
|
$ |
0.31 |
|
$ |
10,027,079 |
June 2021* |
|
$ |
0.75 |
|
$ |
24,281,938 |
March 2021 |
|
$ |
0.10 |
|
$ |
3,219,686 |
* |
Dividends paid were classified as capital returns/a write-down of paid-in capital for accounting purposes. Marshall Islands law does not differentiate between what may be considered a return of capital or a dividend for accounting purposes and treats all cash given to shareholders as dividends. |
B. |
Significant Changes |
There have been no significant changes since the date of the financial statements included in this Annual Report, other than those described in Note 25 “Subsequent events” to our consolidated financial statements.
ITEM 9. THE OFFER AND LISTING
A.Offer and Listing Details
Our common shares have been listed on the NYSE under the trading symbol “ECO” since December 11, 2023 and on the Oslo Børs under the trading symbol “OET” since January 29, 2021. In conjunction with the NYSE listing of our common shares, we changed the listing status of our common shares on the Oslo Børs from a primary listing to a secondary listing. We incurred a trading suspension of two trading days on December 7 and 8, 2023 on the Oslo Børs in connection with the changes to our share registration structure in order to facilitate the dual listing of our common shares.
Our common shares began trading on Euronext Growth (ex-Merkur Market) on July 3, 2018. On March 8, 2019, our shares began trading on Euronext Expand (ex-Oslo Axess) and ceased trading on Euronext Growth. On January 29, 2021, our shares began trading on the Oslo Børs and ceased trading on Euronext Expand (ex-Oslo Axess).
B. |
Plan of Distribution |
Not applicable.
C. |
Markets |
Our common shares are currently listed on the Oslo Børs under the trading symbol “OET” and on the NYSE under the trading symbol “ECO.”
D. |
Selling Shareholders |
Not applicable.
E. |
Dilution |
Not applicable.
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F. |
Expenses of the Issue |
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
A. |
Share Capital |
Not applicable.
B. |
Memorandum and Articles of Association |
Our second amended and restated articles of incorporation and third amended and restated bylaws have been filed as exhibits to this Annual Report, A description of the material terms of our second amended and restated articles of incorporation and our third amended and restated bylaws and of the rights, preferences and restrictions attaching to each class of our shares is included in “Description of securities registered under Section 12 of the Exchange Act” which has been filed as Exhibit 2.2 to this Annual Report and is incorporated by reference herein.
C. |
Material contracts |
Attached as exhibits to this Annual Report are the contracts we consider to be both material and outside the ordinary course of business and are to be performed in whole or in part after the filing of this Annual Report. We refer you to “Item 4.A. History and Development of the Company,” “Item 4.B. Business Overview,” “Item 5.B. Liquidity and Capital Resources,” “Item 6.B. Compensation,” and “Item 7.B. Related Party Transactions” for a discussion of these contracts. Other than as discussed in this Annual Report, we have no material contracts, other than contracts entered into in the ordinary course of business, to which we are a party.
D. |
Exchange controls |
Under Marshall Islands law, there are currently no restrictions on the export or import of capital, including foreign exchange controls, or restrictions that affect the remittance of dividends, interest or other payments to holders of our common shares that are neither Marshall Islands resident nor Marshall Islands citizens.
E. |
Taxation |
The following is a discussion of the material Marshall Islands, Liberian, Greek and U.S. federal income tax considerations relevant to a U.S. Holder and a Non-U.S. Holder, each as defined below, with respect to the ownership and disposition of our common shares. The discussion of U.S. federal income tax matters is based on the U.S. Internal Revenue Code of 1986, as amended, or the Code, judicial decisions, administrative pronouncements, and existing and proposed regulations issued by the U.S. Department of the Treasury, or the Treasury Regulations, all of which are subject to change, possibly with retroactive effect. This discussion does not purport to deal with the tax consequences of owning common shares to all categories of investors, some of which, such as financial institutions, regulated investment companies, real estate investment trusts, tax-exempt organizations, insurance companies, persons holding our common shares as part of a hedging, integrated, conversion or constructive sale transaction or a straddle, traders in securities that have elected the mark-to-market method of accounting for their securities, persons liable for the alternative minimum tax or the “base erosion and anti-avoidance” tax, dealers in securities or currencies, U.S. Holders, as defined below, whose functional currency is not the U.S. dollar, persons required to recognize income for U.S. federal income tax purposes no later than when such income is included on an “applicable financial statement” and investors that own, actually or under applicable constructive ownership rules, 10% or more of our common shares, may be subject to special rules. This discussion deals only with holders who own the common shares as a capital asset. You are encouraged to consult your own tax advisors concerning the overall tax consequences arising in your own particular situation under U.S. federal, state, local or non-U.S. law of the ownership of common shares.
Marshall Islands Tax Consequences
The following is applicable only to persons who are not citizens of and do not reside in, maintain offices in or carry on business or conduct transactions or operations in the Marshall Islands.
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Because we (including our subsidiaries) do not, and assuming that we continue not to, and assuming our future subsidiaries will not, carry on business or conduct transactions or operations in the Marshall Islands, and because we anticipate that all documentation related to any offerings of our securities will be executed outside of the Marshall Islands, under current Marshall Islands law we are not subject to tax on our income or capital gains and our shareholders will not be subject to Marshall Islands taxation or withholding tax on our dividends. In addition, our shareholders will not be subject to Marshall Islands stamp, capital gains or other taxes on the purchase, ownership or disposition of our common shares, and our shareholders will not be required by the Marshall Islands to file a tax return related to our common shares.
Liberian Tax Consequences
Under current Liberian law, no Liberian taxes or withholding will be imposed on payments to holders of our securities other than to a holder that is a resident Liberian entity or a resident individual or an individual or entity subject to taxation in Liberia as a result of having a permanent establishment within the meaning of the Liberia Revenue Code of 2000 as amended in Liberia.
Greek Tax Considerations
In January 2013, a tax law 4110/2013 amended the long-standing provisions of art. 26 of law 27/1975 by imposing a fixed annual tonnage tax on vessels flying a foreign (i.e., non-Greek) flag which are managed by a Law 89 company, establishing an identical tonnage tax regime as the one already in force for vessels flying the Greek flag. This tax varies depending on the size of the vessel, calculated in gross registered tonnage, as well as on the age of each vessel. Payment of this tonnage tax completely satisfies all income tax obligations of both the shipowning company and of all its shareholders up to the ultimate beneficial owners. Any tax payable to the state of the flag of each vessel as a result of its registration with a foreign flag registry (including the Marshall Islands) is subtracted from the amount of tonnage tax due to the Greek tax authorities.
By virtue of article 6 of new Law 5000/2022, the Addendum to the New Voluntary Contribution Agreement between the Greek Government and the Greek Maritime Community was ratified by the Greek Parliament and is applicable as of January 1, 2022. The rate of the voluntary contribution payable by the members of the Greek Maritime Community has been reduced to 5% on shipping dividends imported in Greece. The rate was previously set at 10%. The New Voluntary Contribution also captures imported amounts related to capital gains from the sale of shares in ship-owning companies or their holding companies. Payment of the Voluntary Contribution continues to satisfy any other Greek tax obligation with respect to the worldwide income of the ultimate shareholders of the companies that fall within the scope of the New Voluntary Contribution Agreement. If the total Voluntary Contribution paid per year is less than EUR 60 million, the members of the Greek Maritime Community undertake the obligation to pay the remaining amount. This threshold has been increased from EUR 40 million. A 10% tax is imposed on special payments and bonuses paid by Greek shipping companies of article 25 L. 27/1975 to members of their Board of Directors, managers, executives and employees on top of their regular salary.
U.S. Federal Income Taxation of our Company
Taxation of Operating Income: In General
Unless exempt from U.S. federal income taxation under the rules discussed below, a foreign corporation is subject to U.S. federal income taxation in respect of any income that is derived from the use of vessels, from the hiring or leasing of vessels for use on a time, voyage or bareboat charter basis, from the participation in a pool, partnership, strategic alliance, joint operating agreement, cost sharing arrangement or other joint venture it directly or indirectly owns or participates in that generates such income, or from the performance of services directly related to those uses, which we refer to as “shipping income,” to the extent that the shipping income is derived from sources within the United States. For these purposes, 50% of shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States constitutes income from sources within the United States, which we refer to as “U.S.-source shipping income.”
Shipping income attributable to transportation that both begins and ends in the United States is considered to be 100% from sources within the United States. We are not permitted by law to engage in transportation that produces income which is considered to be 100% from sources within the United States.
Shipping income attributable to transportation exclusively between non-U.S. ports will be considered to be 100% derived from sources outside the United States. Shipping income derived from sources outside the United States will not be subject to any U.S. federal income tax.
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In the absence of exemption from tax under Section 883 of the Code, our gross U.S.-source shipping income would be subject to a 4% tax imposed without allowance for deductions as described below.
Exemption of Operating Income from U.S. Federal Income Taxation
Under Section 883 of the Code and the regulations thereunder, we will be exempt from U.S. federal income tax on our U.S.-source shipping income if:
(1) |
we are organized in a foreign country, or our country of organization, that grants an “equivalent exemption” to corporations organized in the United States; and |
(2) |
either: |
A. |
more than 50% of the value of our stock is owned, directly or indirectly, by individuals or other shareholders described below who are “residents” of or meet certain criteria described below with respect to our country of organization or of another foreign country that grants an “equivalent exemption” to corporations organized in the United States (each such shareholder a “qualified shareholder” and such shareholders collectively, “qualified shareholders”), which we refer to as the “50% Ownership Test,” or |
B. |
our stock is “primarily and regularly traded on an established securities market” in our country of organization, in another country that grants an “equivalent exemption” to U.S. corporations, or in the United States, which we refer to as the “Publicly-Traded Test.” |
The Marshall Islands, the jurisdiction where we and most of our shipowning subsidiaries are incorporated, grants an “equivalent exemption” to U.S. corporations. Therefore, we will be exempt from U.S. federal income tax with respect to our U.S.-source shipping income if either the 50% Ownership Test or the Publicly-Traded Test is met.
In order to satisfy the 50% Ownership Test, a non-U.S. corporation must be able to substantiate that more than 50% of the value of its shares is owned, for at least half of the number of days in the non-U.S. corporation’s taxable year, directly or indirectly, by “qualified shareholders.” For this purpose, qualified shareholders are: (1) individuals who are residents (as defined in the Treasury Regulations) of countries, other than the United States, that grant an equivalent exemption, (2) non-U.S. corporations that meet the Publicly- Traded Test and are organized in countries that grant an equivalent exemption, or (3) certain foreign governments, non-profit organizations, and certain beneficiaries of foreign pension funds. In order for a shareholder to be a qualified shareholder, there generally cannot be any bearer shares in the chain of ownership between the shareholder and the taxpayer claiming the exemption (unless such bearer shares are maintained in a dematerialized or immobilized book-entry system as permitted under the Treasury Regulations). A corporation claiming the Section 883 exemption based on the 50% Ownership Test must obtain all the facts necessary to satisfy the IRS that the 50% Ownership Test has been satisfied (as detailed in the Treasury Regulations). We believe that we satisfied the 50% Ownership Test in 2023.
In order to satisfy the Publicly-Traded Test, Treasury Regulations provide, in pertinent part, that stock of a foreign corporation will be considered to be “primarily traded” on an established securities market if the number of shares of each class of stock that are traded during any taxable year on all established securities markets in that country exceeds the number of shares in each such class that are traded during that year on established securities markets in any other single country. The Treasury Regulations also require that our stock be “regularly traded” on an established securities market. Under the Treasury Regulations, our stock will be considered to be “regularly traded” if one or more classes of our stock representing more than 50% of our outstanding shares, by total combined voting power of all classes of stock entitled to vote and by total combined value of all classes of stock, are listed on one or more established securities markets, and in the case of an established securities market located outside the United States, satisfy certain minimum trading requirements. In addition, even if the “primarily and regularly traded” tests described above are satisfied, a class of shares will not be treated as primarily and regularly traded on an established securities market if, during more than half the number of days during the taxable year, one or more shareholders holding, directly or indirectly, at least 5% of the vote and value of that class of shares, which we refer to as “5% Shareholders,” own, in the aggregate, 50% or more of the vote and value of that class of shares. This is referred to as the “5% Override Rule.” In the event the 5% Override Rule is triggered, the Treasury Regulations provide that the 5% Override Rule will nevertheless not apply if the company can establish that among the closely-held group of 5% Shareholders, sufficient shares are owned by 5% Shareholders that are considered to be “qualified shareholders,” as defined above, to preclude non-qualified 5% Shareholders in the closely-held group from owning 50% or more of the total value of the relevant class of shares held by 5% Shareholders for more than half the number of days during the taxable year.
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Our common shares, which are our sole class of issued and outstanding stock that is traded, were traded on the Oslo Børs and the NYSE in 2023. The Oslo Børs is an established securities market, and our common shares were “primarily traded” on the Oslo Børs in 2023 because the number of our common shares that were traded during on the Oslo Børs exceeded the number of shares that were traded on the NYSE (which is also an established securities market). Furthermore, we believe that our common shares satisfied the “regularly traded” test in 2023. We believe that the 5% Override Rule was triggered in 2023 because 5% Shareholders owned, in the aggregate, 50% or more of the vote and value of our common shares. However, we further anticipate that we will be able to establish that among the closely-held group of 5% Shareholders, sufficient shares are owned by 5% Shareholders that are considered to be “qualified shareholders,” as defined above, to preclude non-qualified 5% Shareholders in the closely-held group from owning 50% or more of the total value of our common shares for more than half the number of days during the taxable year. Therefore, we believe that we satisfied the Publicly-Traded Test in 2023.
Due to the factual nature of the issues involved, there can be no assurance that we will qualify for the benefits of Section 883 of the Code for 2024 or our subsequent taxable years.
Taxation in the Absence of Exemption under Section 883 of the Code
To the extent the benefits of Section 883 of the Code are unavailable, our U.S.-source shipping income, to the extent not considered to be “effectively connected” with the conduct of a U.S. trade or business, as described below, would be subject to a 4% tax imposed by Section 887 of the Code on a gross basis, without the benefit of deductions, which we refer to as the “4% gross basis tax regime.” Since under the sourcing rules described above, no more than 50% of our shipping income would be treated as being derived from U.S. sources, the maximum effective rate of U.S. federal income tax on our shipping income would never exceed 2% under the 4% gross basis tax regime.
To the extent the benefits of the exemption under Section 883 of the Code are unavailable and our U.S.- source shipping income is considered to be “effectively connected” with the conduct of a U.S. trade or business, as described below, any such “effectively connected” U.S.-source shipping income, net of applicable deductions, would be subject to the U.S. federal corporate income tax imposed at a current rate of 21%. In addition, we may be subject to the 30% “branch profits” tax on earnings effectively connected with the conduct of such U.S. trade or business, as determined after allowance for certain adjustments.
Our U.S.-source shipping income would be considered “effectively connected” with the conduct of a U.S. trade or business only if:
● | We have, or are considered to have, a fixed place of business in the United States involved in the earning of shipping income; and |
● | substantially all of our U.S.-source shipping income is attributable to regularly scheduled transportation, such as the operation of a vessel that follows a published schedule with repeated sailings at regular intervals between the same points for voyages that begin or end in the United States, or is leasing income that is attributable to such fixed place of business in the United States. |
We do not currently have, nor intend to have or permit circumstances that would result in having, any vessel operating to the United States on a regularly scheduled basis. Based on the foregoing and on the expected mode of our shipping operations and other activities, we believe that none of our U.S.-source shipping income will be “effectively connected” with the conduct of a U.S. trade or business.
U.S. Taxation of Gain on Sale of Vessels
Regardless of whether we qualify for exemption under Section 883 of the Code, we will not be subject to U.S. federal income taxation with respect to gain realized on a sale of a vessel, provided the sale is considered to occur outside of the United States under U.S. federal income tax principles. In general, a sale of a vessel will be considered to occur outside of the United States for this purpose if title to the vessel, and risk of loss with respect to the vessel, pass to the buyer outside of the United States. It is expected that any sale of a vessel by us will be considered to occur outside of the United States or will otherwise not be subject to U.S. federal income taxation.
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U.S. Federal Income Taxation of U.S. Holders
As used herein, the term “U.S. Holder” means a beneficial owner of our common shares that is a U.S. citizen or resident, U.S. corporation or other U.S. entity taxable as a corporation, an estate the income of which is subject to U.S. federal income taxation regardless of its source, or a trust (i) if a court within the United States is able to exercise primary jurisdiction over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (ii) the trust has in effect a valid election to be treated as a United States person for U.S. federal income tax purposes;
● | owns the common shares as a capital asset, generally, for investment purposes; and |
● | owns less than 10% of our common shares for U.S. federal income tax purposes. |
If a partnership holds our common shares, the tax treatment of a partner of such partnership will generally depend upon the status of the partner and upon the activities of the partnership. If you are a partner in a partnership holding our common shares, you are encouraged to consult your tax advisor.
Distributions
Subject to the discussion of passive foreign investment companies, or PFICs, below, any distributions made by us with respect to our common shares to a U.S. Holder will generally constitute dividends to the extent of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of such earnings and profits will be treated first as a nontaxable return of capital to the extent of the U.S. Holder’s tax basis in its common shares on a dollar-for-dollar basis and thereafter as capital gain. Because we are not a U.S. corporation, U.S. Holders that are corporations will not be entitled to claim a dividends received deduction with respect to any distributions they receive from us. Dividends paid with respect to our common shares will generally be treated as “passive category income” for purposes of computing allowable foreign tax credits for U.S. foreign tax credit purposes.
Dividends paid on our common shares to a U.S. Holder who is an individual, trust or estate (a “U.S. Non-Corporate Holder”) will generally be treated as “qualified dividend income” that is taxable to such U.S. Non-Corporate Holder at preferential tax rates provided that (1) the common shares are readily tradable on an established securities market in the United States (such as the New York Stock Exchange on which our common shares will be traded); (2) we are not a PFIC for the taxable year during which the dividend is paid or the immediately preceding taxable year (as discussed in more detail below); (3) the U.S. Non-Corporate Holder has owned the common shares for more than 60 days in the 121-day period beginning 60 days before the date on which the common shares become ex-dividend; and (4) the U.S. Non-Corporate Holder is not under an obligation to make related payments with respect to positions in substantially similar or related property.
We believe that we were not a PFIC for our 2023 taxable year, and we do not expect to be a PFIC for subsequent taxable years. If we were treated as a PFIC for our 2023 or 2024 taxable year, any dividends paid by us during 2024 will not be treated as “qualified dividend income” in the hands of a U.S. Non-Corporate Holder. Any dividends we pay which are not eligible for the preferential rates applicable to “qualified dividend income” will be taxed as ordinary income to a U.S. Non-Corporate Holder.
Special rules may apply to any “extraordinary dividend,” generally, a dividend paid by us in an amount which is equal to or in excess of 10% of a shareholder’s adjusted tax basis in (or, in certain circumstances, fair market value of) a common share or dividends received within a one-year period that, in the aggregate, equal or exceed 20% of a shareholder’s adjusted tax basis (or fair market value upon the shareholder’s election) in a common share. If we pay an “extraordinary dividend” on our common shares that is treated as “qualified dividend income,” then any loss derived by a U.S. Non-Corporate Holder from the sale or exchange of such common shares will be treated as long-term capital loss to the extent of such dividend.
Sale, Exchange or Other Disposition of Common Shares
Subject to the discussion of our status as a PFIC below, a U.S. Holder generally will recognize taxable gain or loss upon a sale, exchange or other disposition of our common shares in an amount equal to the difference between the amount realized by the U.S. Holder from such sale, exchange or other disposition and the U.S. Holder’s tax basis in such stock. Such gain or loss will be treated as long-term capital gain or loss if the U.S. Holder’s holding period is greater than one year at the time of the sale, exchange or other disposition. Such capital gain or loss will generally be treated as U.S.-source income or loss, as applicable, for U.S. foreign tax credit purposes. A U.S. Holder’s ability to deduct capital losses is subject to certain limitations.
95
Passive Foreign Investment Company Status and Significant Tax Consequences
Special U.S. federal income tax rules apply to a U.S. Holder that holds stock in a foreign corporation classified as a PFIC for U.S. federal income tax purposes. In general, we will be treated as a PFIC with respect to a U.S. Holder if, for any taxable year in which such holder held our common shares, either:
● | at least 75% of our gross income for such taxable year consists of passive income (e.g., dividends, interest, capital gains and rents derived other than in the active conduct of a rental business); or |
● | at least 50% of the average value of the assets held by the corporation during such taxable year produce, or are held for the production of, passive income. |
For purposes of determining whether we are a PFIC, we will be treated as earning and owning our proportionate share of the income and assets, respectively, of any of our subsidiary corporations in which we own at least 25% of the value of the subsidiary’s stock. Income earned, or deemed earned, by us in connection with the performance of services would not constitute “passive income” for these purposes. By contrast, rental income would generally constitute “passive income” unless we were treated under specific rules as deriving our rental income in the active conduct of a trade or business.
In general, income derived from the bareboat charter of a vessel will be treated as “passive income” for purposes of determining whether we are a PFIC and such vessel will be treated as an asset which produces or is held for the production of “passive income.” On the other hand, income derived from the time charter of a vessel should not be treated as “passive income” for such purpose, but rather should be treated as services income; likewise, a time chartered vessel should generally not be treated as an asset which produces or is held for the production of “passive income.”
We believe that we were not a PFIC for our 2023 taxable year because we had no bareboat chartered- out vessels and consequently no gross income from vessels on bareboat charter. Furthermore, based on our current assets and activities, we do not believe that we will be a PFIC for subsequent taxable years. Although there is no legal authority directly on point, and we are not relying upon an opinion of counsel on this issue, our belief is based principally on the position that, for purposes of determining whether we are a passive foreign investment company, the gross income we derive or are deemed to derive from the time chartering and voyage chartering activities of our wholly-owned subsidiaries should constitute services income, rather than rental income. Correspondingly, such income should not constitute passive income, and the assets that we or our wholly-owned subsidiaries own and operate in connection with the production of such income, in particular, the vessels, should not constitute passive assets for purposes of determining whether we were a passive foreign investment company. We believe there is substantial legal authority supporting our position consisting of case law and IRS pronouncements concerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes. However, in the absence of any legal authority specifically relating to the statutory provisions governing passive foreign investment companies, the IRS or a court could disagree with our position. In addition, although we intend to conduct our affairs in a manner to avoid being classified as a passive foreign investment company with respect to any taxable year, we cannot assure you that the nature of our operations will not change in the future.
If we are a PFIC for any taxable year, a U.S. Holder will be treated as owning its proportionate share of the stock of any of our subsidiaries which is a PFIC. The PFIC rules discussed below will apply on a company-by-company basis with respect to us and each of our subsidiaries which is treated as a PFIC.
As discussed more fully below, if we were to be treated as a PFIC for any taxable year, a U.S. Holder would be subject to different U.S. federal income taxation rules depending on whether the U.S. Holder makes an election to treat us as a “Qualified Electing Fund,” which election is referred to as a “QEF Election.” As discussed below, as an alternative to making a QEF Election, a U.S. Holder should be able to make a “mark-to-market” election with respect to our common shares, which election is referred to as a “Mark-to- Market Election.” A U.S. Holder holding PFIC shares that does not make either a “QEF Election” or “Mark- to-Market Election” will be subject to the Default PFIC Regime, as defined and discussed below in “Item 10.E. Taxation — U.S. Federal Income Taxation of U.S. Holders — Taxation of U.S. Holders Not Making a Timely QEF or ‘Mark-to-Market’ Election.”
If we were to be treated as a PFIC, a U.S. Holder would be required to file IRS Form 8621 to report certain information regarding us.
96
The QEF Election
If a U.S. Holder makes a timely QEF Election, which U.S. Holder we refer to as an “Electing Holder,” the Electing Holder must report each year for United States federal income tax purposes its pro rata share of our ordinary earnings and our net capital gain, if any, for our taxable year that ends with or within the taxable year of the Electing Holder, regardless of whether or not distributions were made by us to the Electing Holder. The Electing Holder’s adjusted tax basis in the common shares will be increased to reflect taxed but undistributed earnings and profits. Distributions of earnings and profits that had been previously taxed will result in a corresponding reduction in the adjusted tax basis in the common shares and will not be taxed again once distributed. An Electing Holder would generally recognize capital gain or loss on the sale, exchange or other disposition of our common shares. A U.S. Holder would make a QEF Election with respect to any year that our company is a PFIC by filing a copy of IRS Form 8621 with its United States federal income tax return.
Taxation of U.S. Holders Making a “Mark-to-Market” Election
Making the Election. Alternatively, if, as is anticipated, our common shares are treated as “marketable stock,” a U.S. Holder would be allowed to make a Mark-to-Market Election with respect to the common shares, provided the U.S. Holder completes and files IRS Form 8621 in accordance with the relevant instructions and related Treasury Regulations. The common shares will be treated as “marketable stock” for this purpose if they are “regularly traded” on a “qualified exchange or other market.” The common shares will be “regularly traded” on a qualified exchange or other market for any calendar year during which they are traded (other than in de minimis quantities) on at least 15 days during each calendar quarter. The New York Stock Exchange should be treated as a “qualified exchange or other market” for this purpose. However, it should be noted that a separate Mark-to-Market Election would need to be made with respect to each of our subsidiaries which is treated as a PFIC. The stock of these subsidiaries is not expected to be “marketable stock.” Therefore, a “mark-to-market” election is not expected to be available with respect to these subsidiaries.
Current Taxation and Dividends. If the Mark-to-Market Election is made, the U.S. Holder generally would include as ordinary income in each taxable year the excess, if any, of the fair market value of the common shares at the end of the taxable year over such U.S. Holder’s adjusted tax basis in the common shares. The U.S. Holder would also be permitted an ordinary loss in respect of the excess, if any, of the U.S. Holder’s adjusted tax basis in its common shares over their fair market value at the end of the taxable year, but only to the extent of the net amount previously included in income as a result of the Mark-to-Market Election. Any income inclusion or loss under the preceding rules should be treated as gain or loss from the sale of common shares for purposes of determining the source of the income or loss. Accordingly, any such gain or loss generally should be treated as U.S.-source income or loss for U.S. foreign tax credit limitation purposes. A U.S. Holder’s tax basis in its common shares would be adjusted to reflect any such income or loss amount. Distributions by us to a U.S. Holder who has made a Mark-to-Market Election generally will be treated as discussed above under “Item 10.E. Taxation — U.S. Federal Income Taxation of U.S. Holders — Distributions.”
Sale, Exchange or Other Disposition. Gain realized on the sale, exchange, redemption or other disposition of the common shares would be treated as ordinary income, and any loss realized on the sale, exchange, redemption or other disposition of the common shares would be treated as ordinary loss to the extent that such loss does not exceed the net mark-to-market gains previously included in income by the U.S. Holder. Any loss in excess of such previous inclusions would be treated as a capital loss by the U.S. Holder. A U.S. Holder’s ability to deduct capital losses is subject to certain limitations. Any such gain or loss generally should be treated as U.S.-source income or loss for U.S. foreign tax credit limitation purposes.
Taxation of U.S. Holders Not Making a Timely QEF or “Mark-to-Market” Election
Finally, a U.S. Holder who does not make either a QEF Election or a Mark-to-Market Election with respect to any taxable year in which we are treated as a PFIC, or a U.S. Holder whose QEF Election is invalidated or terminated, or a Non-Electing Holder, would be subject to special rules, or the Default PFIC Regime, with respect to (1) any excess distribution (i.e., the portion of any distributions received by the Non- Electing Holder on the common shares in a taxable year in excess of 125% of the average annual distributions received by the Non-Electing Holder in the three preceding taxable years, or, if shorter, the Non-Electing Holder’s holding period for the common shares), and (2) any gain realized on the sale, exchange, redemption or other disposition of the common shares.
Under the Default PFIC Regime:
● | the excess distribution or gain would be allocated ratably over the Non-Electing Holder’s aggregate holding period for the common shares; |
97
● | the amount allocated to the current taxable year and any taxable year before we became a PFIC would be taxed as ordinary income; and |
● | the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed tax deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year. |
Any distributions other than “excess distributions” by us to a Non-Electing Holder will be treated as discussed above under “Item 10.E. Taxation — U.S. Federal Income Taxation of U.S. Holders — Distributions.”
These penalties would not apply to a pension or profit-sharing trust or other tax-exempt organization that did not borrow funds or otherwise utilize leverage in connection with its acquisition of the common shares. If a Non-Electing Holder who is an individual dies while owning the common shares, such Non- Electing Holder’s successor generally would not receive a step-up in tax basis with respect to the common shares.
3.8% Tax on Net Investment Income
A U.S. Holder that is an individual, estate, or, in certain cases, a trust, will generally be subject to a 3.8% tax on the lesser of (1) the U.S. Holder’s net investment income for the taxable year and (2) the excess of the U.S. Holder’s modified adjusted gross income for the taxable year over a certain threshold (which in the case of individuals is between $125,000 and $250,000). A U.S. Holder’s net investment income will generally include distributions made by us which constitute a dividend for U.S. federal income tax purposes and gain realized from the sale, exchange or other disposition of our common shares. This tax is in addition to any income taxes due on such investment income. Net investment income generally will not include a U.S. Holder’s pro rata share of the Company’s income and gain if we are a PFIC and that U.S. Holder makes a QEF election, as described above in “Item 10.E. Taxation — U.S. Federal Income Taxation of U.S. Holders — The QEF Election”. However, a U.S. Holder may elect to treat inclusions of income and gain from a QEF election as net investment income. Failure to make this election could result in a mismatch between a U.S. Holder’s ordinary income and net investment income.
If you are a U.S. Holder that is an individual, estate or trust, you are encouraged to consult your tax advisors regarding the applicability of the 3.8% tax on net investment income to the ownership and disposition of our common shares.
U.S. Federal Income Taxation of “Non-U.S. Holders”
A beneficial owner of our common shares (other than a partnership) that is not a U.S. Holder is referred to herein as a “Non-U.S. Holder.”
Dividends on Common Shares
Non-U.S. Holders generally will not be subject to U.S. federal income tax or withholding tax on dividends received from us with respect to our common shares, unless that income is effectively connected with a trade or business conducted by the Non-U.S. Holder in the United States. If the Non-U.S. Holder is entitled to the benefits of a U.S. income tax treaty with respect to those dividends, that income is taxable only if it is attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States.
Sale, Exchange or Other Disposition of Common Shares
Non-U.S. Holders generally will not be subject to U.S. federal income tax or withholding tax on any gain realized upon the sale, exchange or other disposition of our common shares, unless:
● | the gain is effectively connected with a trade or business conducted by the Non-U.S. Holder in the United States. If the Non-U.S. Holder is entitled to the benefits of a U.S. income tax treaty with respect to that gain, that gain is taxable only if it is attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States; or |
● | the Non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition and other conditions are met. |
98
If the Non-U.S. Holder is engaged in a U.S. trade or business for U.S. federal income tax purposes, the income from the common shares, including dividends and the gain from the sale, exchange or other disposition of the stock that is effectively connected with the conduct of that trade or business will generally be subject to U.S. federal income tax in the same manner as discussed in the previous section relating to the taxation of U.S. Holders. In addition, in the case of a corporate Non-U.S. Holder, the earnings and profits of such Non-U.S. Holder that are attributable to effectively connected income, subject to certain adjustments, may be subject to an additional branch profits tax at a rate of 30%, or at a lower rate as may be specified by an applicable U.S. income tax treaty.
Backup Withholding and Information Reporting
In general, dividend payments, or other taxable distributions, made within the United States to you will be subject to information reporting requirements. In addition, such payments will be subject to backup withholding tax if you are a non-corporate U.S. Holder and you:
● | fail to provide an accurate taxpayer identification number; |
● | are notified by the IRS that you have failed to report all interest or dividends required to be shown on your U.S. federal income tax returns; or |
● | in certain circumstances, fail to comply with applicable certification requirements. |
Non-U.S. Holders may be required to establish their exemption from information reporting and backup withholding by certifying their status on an applicable IRS Form W-8.
If you sell your common shares to or through a U.S. office of a broker, the payment of the proceeds is subject to both U.S. backup withholding and information reporting unless you certify that you are a non-U.S. person, under penalties of perjury, or you otherwise establish an exemption. If you sell your common shares through a non-U.S. office of a non-U.S. broker and the sales proceeds are paid to you outside the United States, then information reporting and backup withholding generally will not apply to that payment. However, U.S. information reporting requirements, but not backup withholding, will apply to a payment of sales proceeds, even if that payment is made to you outside the United States, if you sell your common shares through a non-U.S. office of a broker that is a U.S. person or has some other contacts with the United States. Backup withholding tax is not an additional tax. Rather, you generally may obtain a refund of any amounts withheld under backup withholding rules that exceed your U.S. federal income tax liability by filing a refund claim with the IRS.
Individuals who are U.S. Holders (and to the extent specified in applicable Treasury Regulations, certain individuals who are Non-U.S. Holders and certain U.S. entities) who hold “specified foreign financial assets” (as defined in Section 6038D of the Code) are required to file IRS Form 8938 with information relating to the asset for each taxable year in which the aggregate value of all such assets exceeds $75,000 at any time during the taxable year or $50,000 on the last day of the taxable year (or such higher dollar amount as prescribed by applicable Treasury Regulations). Specified foreign financial assets would include, among other assets, our common shares, unless the shares are held through an account maintained with a U.S. financial institution. Substantial penalties apply to any failure to timely file IRS Form 8938, unless the failure is shown to be due to reasonable cause and not due to willful neglect. Additionally, in the event an individual U.S. Holder (and to the extent specified in applicable Treasury regulations, an individual Non-U.S. Holder or a U.S. entity) that is required to file IRS Form 8938 does not file such form, the statute of limitations on the assessment and collection of U.S. federal income taxes of such holder for the related tax year may not close until three years after the date that the required information is filed. U.S. Holders (including U.S. entities) and Non-U.S. Holders are encouraged to consult their own tax advisors regarding their reporting obligations under this legislation.
F. |
Dividends and paying agents |
Not applicable.
G. |
Statement by experts |
Not applicable.
99
H. |
Documents on display |
We are subject to the informational requirements of the Exchange Act. In accordance with these requirements, we file reports and other information with the SEC. Our Commission filings are available to the public at the website maintained by the Commission at http://www.sec.gov, as well as on our website at www.okeanisecotankers.com. Information that is or will be on or accessed through such websites does not constitute a part of, and is not incorporated by reference into, this Annual Report.
As a foreign private issuer, we are exempt under the Exchange Act from, among other things, the rules prescribing the furnishing and content of proxy statements, and our executive officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act.
We will also provide without charge to each person, including any beneficial owner of our common stock, upon written or oral request of that person, a copy of any and all of the information that has been incorporated by reference in this Annual Report. Please direct such requests to Okeanis Eco Tankers Corp., c/o OET Chartering Inc., Ethnarchou Makariou Ave.,&2 D. Falireos St., 185 47 N. Faliro, Greece, telephone number +30 210 480 4200.
In addition, since our common shares are traded on the Oslo Børs, we have filed periodic and immediate reports with, and furnish information to, the Oslo Stock Exchange.
I. |
Subsidiary information |
Not applicable.
J. |
Annual Report to Security Holders. |
We are currently not required to provide an annual report to security holders in response to the requirements of Form 6-K.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
We are exposed to the impact of interest rate changes primarily through its floating-rate borrowings that require us to make interest payments based on LIBOR (as, although we amended our financing arrangements to transition from LIBOR to SOFR, such arrangements previously used LIBOR, including during the fiscal years ended December 31, 2023 and 2022). Significant increases in interest rates could adversely affect operating margins, results of operations and ability to service debt. From time to time, we use interest rate swaps to reduce its exposure to market risk from changes in interest rates. The principal objective of these contracts is to manage the risks and costs associated with its floating-rate debt.
As an indication of the sensitivity from changes in interest rates, an increase by 100 basis points in interest rates would increase interest expense for the year ended December 31, 2023 by $6,894,010 (2022 and 2021 increased by 50 basis points: $2,251,130 and $1,948,856, respectively) assuming all other variables held constant and taking into consideration that the Group has entered into interest rate swap agreements for some of its loans, therefore partially economically hedging part of its floating-rate borrowings.
Credit Risk
We only trade with charterers who have been subject to satisfactory credit screening procedures. Furthermore, outstanding balances are monitored on an ongoing basis with the result that our exposure to bad debts is not significant.
With respect to the credit risk arising from our cash and cash equivalents and restricted cash, our exposure arises from default by the counterparties, with a maximum exposure equivalent to the carrying amount of these instruments. We mitigate such risks by dealing only with high credit quality financial institutions.
100
Foreign Currency Exchange Rate Risk
Our vessels operate in international shipping markets, which utilize the U.S. dollar as the functional currency. We generate substantially all of our revenues from the trading of our vessels in U.S. dollars, but certain of our vessel operating expenses and administrative expenses are generated in currencies other than the U.S. dollar. Notably, we are considerably dependent on European seafarers, who are paid in Euros, to fill key positions on board our vessels. Consequently, our Euro-denominated crew expense forms a significant percentage of our operating expenses. Furthermore, we have significant exposure to the Euro in our general and administrative expenses. For accounting purposes, expenses incurred in other currencies are converted into U.S. dollars at the exchange rate prevailing on the date of each transaction. However, the portion of our business conducted in other currencies could increase in the future, which could expand our exposure to losses arising from exchange rate fluctuations. We have only partially hedged currency exchange risks associated with our expenses. As such our exposure to Euro-U.S. dollar exchange rate fluctuations may have a significant impact on our expenses, business and future cash flows. We do not have any hedging mechanisms in place, however, when opportunity arises, we convert significant cash balances from U.S. dollars to Euros to hedge against adverse fluctuations. We do not consider the risk to be significant.
Market Risk
The tanker shipping industry is cyclical with high volatility in charter rates and profitability. We charter our vessels principally in the spot market, being exposed to various unpredictable factors such as supply and demand of energy resources, global economic and political conditions, natural or other disasters, disruptions in international trade, the COVID-19 outbreak, environmental and other legal regulatory developments.
The Company cannot reliably estimate the effect that any positive or adverse fluctuation in the spot market rates may have on its operating income. We estimate that for every $1,000 per day increase or decrease in the spot rates, our operating profit would have increased or decreased by $4.0, $2.9, and $2.7 million for the years 2023, 2022 and 2021, respectively.
From time to time, we may enter into freight derivatives, such as Forward Freight Agreements (“FFAs”). Generally freight derivatives may be used to hedge a vessel owner’s exposure to the charter market for a specified route and period of time. Upon settlement, if the contracted charter rate is less than the average of the rates reported on an identified index for the specified route and time period, the seller of the FFA is required to pay the buyer the settlement sum, being an amount equal to the difference between the contracted rate and the settlement rate, multiplied by the number of days of the specified period. Conversely, if the contracted rate is greater than the settlement rate, the buyer is required to pay the seller the settlement sum. If we take positions in FFAs or other derivative instruments we could suffer losses in the settling or termination of these agreements. This could adversely affect our results of operations and cash flow.
During 2023, 2022 and 2021, we entered into forward freight agreements in order to partially hedge our exposure to spot charter rate fluctuations and mitigate any adverse effect this may have in our operating cash flows and dividend policy. For the year ended December 31, 2023, 2022 and 2021, we incurred a net gain on forward freight agreements in the amount of $0.5 million, $2.2 million and $nil, respectively.
Inflation
See “Item 5. A. Operating Results — Principal Factors Affecting our Business — Inflation.”
Liquidity
Liquidity risk is the risk that arises when the maturity of assets and liabilities does not match. An unmatched position potentially enhances profitability but can also increase the risk of losses. We minimize liquidity risk by maintaining sufficient cash and cash equivalents.
101
The following table details the Group’s expected cash outflows for its financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities, on the earliest date on which the Group would be required to pay to settle. The table includes both interest and principal cash flows. Variable future interest payments were determined based on SOFR as of December 31, 2023 of 3.41%, plus the margin applicable to the Group’s loan at the end of the year presented.
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
average |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
effective |
|
Less than |
|
|
|
|
|
|
|
|
|
|
|
|
interest rate |
|
1 month |
|
1 – 3 months |
|
3 – 12 months |
|
1 – 5 years |
|
5+ years |
|
Total |
December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Derivative Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables |
|
|
|
— |
|
— |
|
23,522,506 |
|
— |
|
— |
|
23,522,506 |
Accrued expenses |
|
|
|
— |
|
— |
|
3,485,042 |
|
— |
|
— |
|
3,485,042 |
Current accounts due to related parties |
|
|
|
— |
|
— |
|
659,974 |
|
— |
|
— |
|
659,974 |
Variable interest loans |
|
4.08 |
% |
3,138,123 |
|
28,239,371 |
|
62,054,619 |
|
307,066,226 |
|
237,943,153 |
|
638,441,492 |
Variable interest for debt financing |
|
9.07 |
% |
2,330,290 |
|
4,567,896 |
|
21,015,413 |
|
106,212,689 |
|
139,492,319 |
|
273,618,607 |
Total |
|
|
|
5,468,413 |
|
32,807,267 |
|
110,737,554 |
|
413,278,915 |
|
377,435,472 |
|
939,727,621 |
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
average |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
effective |
|
Less than |
|
|
|
|
|
|
|
|
|
|
|
|
interest rate |
|
1 month |
|
1 – 3 months |
|
3 – 12 months |
|
1 – 5 years |
|
5+ years |
|
Total |
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Derivative Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables |
|
|
|
— |
|
— |
|
11,771,964 |
|
— |
|
— |
|
11,771,964 |
Accrued expenses |
|
|
|
— |
|
— |
|
6,024,899 |
|
— |
|
— |
|
6,024,899 |
Variable interest loans |
|
6.26 |
% |
5,922,596 |
|
21,564,122 |
|
65,076,153 |
|
365,728,156 |
|
241,508,738 |
|
699,799,765 |
Variable interest for debt financing |
|
10.02 |
% |
2,823,905 |
|
5,526,029 |
|
22,237,116 |
|
112,171,014 |
|
167,665,884 |
|
310,423,948 |
Total |
|
|
|
8,746,501 |
|
27,090,151 |
|
105,110,132 |
|
477,899,170 |
|
409,174,622 |
|
1,028,020,576 |
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.
102
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
None.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
None.
ITEM 15. CONTROLS AND PROCEDURES
(a) |
Disclosure Controls and Procedures |
We evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2023. Based on that evaluation, our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer) have concluded that, as of such date, our disclosure controls and procedures were effective and ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.
(b) |
Management’s Annual Report on Internal Control over Financial Reporting |
This Annual Report does not include a report of management’s assessment regarding internal control over financial reporting due to a transition period established by rules of the SEC for newly public companies.
(c) |
Attestation Report of the Registered Public Accounting Firm |
This Annual Report does not include an attestation report of the Company’s registered public accounting firm due to a transition period established by rules of the SEC for newly public companies and because, as an emerging growth company, we are exempt from this requirement.
(d) |
Changes in Internal Control over Financial Reporting |
There have been no changes in our internal control over financial reporting during the year covered by this Annual Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 16. RESERVED
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Ms. Charlotte Stratos serves as a member of our audit committee. Our board of directors has determined that Ms. Stratos qualifies as an “audit committee financial expert” and is “independent” according to the applicable SEC rules.
103
ITEM 16B. CODE OF ETHICS
We have adopted a Code of Business Conduct and Ethics that applies to all of the employees, directors, officers and certain long-term consultants of the Company and its subsidiaries, in addition to certain employees of KMC. Our Code of Business Conduct and Ethics is available on the Corporate Governance section of our website at www.okeanisecotankers.com. Information on or accessed through our website does not constitute a part of this Annual Report and is not incorporated by reference herein. We will also provide a hard copy of our Code of Business Conduct and Ethics free of charge upon written request to Investor Relations, c/o OET Chartering Inc., Ethnarchou Makariou Ave., & 2 D. Falireos St., 185 47 N. Faliro, Greece. We intend to satisfy any disclosure requirements regarding any amendment to, or waiver from, a provision of our Code of Business Conduct and Ethics by posting such information on our website.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Deloitte Certified Public Accountants S.A. (“Deloitte”), an independent registered public accounting firm, has audited our annual financial statements acting as our independent auditor for the fiscal years ended December 31, 2023 and 2022. Audit, audit-related and non-audit services billed and accrued from Deloitte are as follows:
|
|
2023 |
|
2022 |
||
Audit fees(1) |
|
$ |
663,094 |
|
$ |
182,540 |
Audit-related fees |
|
|
— |
|
|
— |
Tax fees |
|
|
— |
|
|
— |
All other fees |
|
|
— |
|
|
— |
Total fees |
|
$ |
663,094 |
|
$ |
182,540 |
(1) |
Audit fees consist of the aggregate fees billed for professional services rendered for the audit of our annual financial statements, the review of the interim financial statements and audit services related to the public listing, including services related to consents and the review of documents filed with the SEC. |
Audit Committee’s Pre-Approval Policies and Procedures
Our audit committee charter contains pre-approval policies and procedures in compliance with paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X that require our audit committee to review and pre-approve all auditing services and permitted non-auditing services rendered to the Company by its outside auditors (subject to the exception provided in paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X for certain de minimis non-audit services not recognized by the Company at the time of the engagement), in each case including fees. All services provided by Deloitte during the year ended December 31, 2023 and 2022 were approved by our audit committee pursuant to the pre-approval policy.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
None.
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 16G. CORPORATE GOVERNANCE
Pursuant to Section 303A.11 of the NYSE listing standards, applicable to foreign private issuers, we are permitted to follow our home country practices in lieu of certain NYSE corporate governance requirements. For a summary of any significant ways in which our corporate governance practices differ from those followed by U.S. domestic companies under NYSE rules, please see “Item 10.C. Board Practices — Foreign Private Issuer Exemption”.
104
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
ITEM 16J. INSIDER TRADING POLICIES
We have adopted an insider trading policy which applies to all of the Company’s directors, officers and employees as well as certain related parties, and sets forth procedures governing the purchase, sale and other disposition of our securities by such parties. Our insider trading policy is reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and any listing standards applicable to the Company. A copy of our insider trading policy has been filed as Exhibit 11.1 to this Annual Report.
ITEM 16K. CYBERSECURITY
Cybersecurity is fundamental in our operations and we are committed to maintaining robust governance and oversight of cybersecurity risks. Senior management has implemented comprehensive processes and procedures for identifying, assessing, and managing material risks from cybersecurity threats as part of our broader risk management system Our cybersecurity risk management strategy prioritizes detection, analysis and response to known, anticipated or unexpected threats; effective management of security risks; and resiliency against incidents. With the ever-changing cybersecurity landscape and continual emergence of new cybersecurity threats, our senior management ensures that significant resources are devoted to cybersecurity risk management and the technologies, processes and people that support it. We implement risk-based controls to protect our information, the information of our customers, suppliers, and other third parties, our information systems, our business operations, and our vessels.
We have in place safety and security measures on our vessels and onshore operations to secure our operations against cybersecurity incidents. In order to assess, identify and manage material risks from cybersecurity threats we take into consideration the following:
(i) | IMO Resolution MSC.428(98): Code for the Safe Operation of Ships and Pollution Prevention, relating to maritime cyber risk management in safety management systems; |
(ii) | BIMCO, OCIMF, INTERCARGO, INTERTANKO, ICS, CLIA, IUMI: The Guidelines on Cyber Security Onboard Ships; |
(iii) | USCG Cyber Security Strategy and Bulletins; |
(iv) | UK Cyber Security Code of Practice for ships; and |
(v) | EU Regulation 679/2016: Protection of natural persons processing personal data. |
The Information and Communication Technology Department (“ICT”) is responsible for monitoring, detecting and assessing cybersecurity risks and incidents at the Company, subsidiary and vessel level. The team is comprised of dedicated privacy, safety, and security professionals who oversee cybersecurity risk management and mitigation, incident prevention, detection, and remediation. We also annually engage third parties such as assessors, consultants to audit our information security programs, whose findings are reported, on occasion, to our senior management.
As part of our cybersecurity risk management system, our ICT department has established clear methodologies, reporting channels and governance principles, that are aligned with the broader risk management processes of our Company to remediate and resolve any cybersecurity incident. Incidents are reviewed by the ICT Department Head, having the appropriate professional experience and academic background, to determine whether further escalation is appropriate. Any incident assessed as potentially being or potentially becoming material is immediately escalated for further assessment and reported to any member of our senior management, who then consult with our audit committee.
105
We have not had, any cybersecurity incidents that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition.
Our audit committee has oversight responsibility for risks and incidents relating to cybersecurity threats, including compliance with disclosure requirements, cooperation with law enforcement, and related effects on financial and other risks, and it reports any findings and recommendations, as appropriate, to our board of directors for consideration. Senior management regularly discusses cyber risks and trends and, should they arise, any material incidents with our audit committee.
Overall, our approach to cybersecurity risk management includes the following key elements:
(i) | Continuous monitoring of cybersecurity threats, both internal and external. through the use of data analytics and network monitoring systems; |
(ii) | Engagement of third-party consultants and other advisors to assist in assessing points of vulnerability of our information security systems; |
(iii) | We have various information technology policies relating to cybersecurity; |
(iv) | We provide employee mandatory training that is administered on a periodic basis that reinforces our information technology policies, standards and practices, as well as the expectation that employees comply with these policies and identify and report potential cybersecurity risks. |
(v) | We require employees to sign confidentiality agreements, where appropriate to their role; |
(vi) | Access controls; |
(vii) | Network security measures; |
(viii) | Data protection; |
(ix) | Incident response planning; |
(x) | Third-party risk assessment; |
(xi) | Security audits; and |
(xii) | Compliance with industry standards |
We continue to invest in our cybersecurity systems and to enhance our internal controls and processes. Our business strategy, results of operations and financial condition have not been materially affected by risks from cybersecurity threats, including as a result of previously identified cybersecurity incidents, but we cannot provide assurance that they will not be materially affected in the future by such risks or any future material incidents. While we have dedicated significant resources to identifying, assessing, and managing material risks from cybersecurity threats, our efforts may not be adequate, may fail to accurately assess the severity of an incident, may not be sufficient to prevent or limit harm, or may fail to sufficiently remediate an incident in a timely fashion, any of which could harm our business, reputation, results of operations and financial condition. For more information certain risks associated with cybersecurity, see “Item 3.D. Risk Factors — Company-Specific Risk Factors — A cyber-attack could materially disrupt our business.”
106
PART III
ITEM 17. FINANCIAL STATEMENTS
See “Item 18. Financial Statements”.
ITEM 18. FINANCIAL STATEMENTS
The financial information required by this item, together with the report of Deloitte Certified Public Accountants S.A., is set forth on pages F-1 through F-38 and are filed as part of this Annual Report.
ITEM 19. EXHIBITS
Exhibit |
|
|
---|---|---|
Number |
|
Description |
|
|
|
1.1 |
|
Second Amended and Restated Articles of Incorporation of the Company.* |
1.2 |
|
|
2.1 |
|
|
2.2 |
|
Description of Securities registered under Section 12 of the Exchange Act.* |
4.1 |
|
|
4.2 |
|
|
4.3 |
|
|
4.4 |
|
|
4.5 |
|
107
Exhibit |
|
|
---|---|---|
Number |
|
Description |
|
|
|
4.6 |
|
|
4.7 |
|
|
4.8 |
|
|
4.9 |
|
|
4.10 |
|
|
4.11 |
|
|
4.12 |
|
|
4.13 |
|
|
4.14 |
|
|
4.15 |
|
|
8.1 |
|
|
11.1 |
|
108
Exhibit |
|
|
---|---|---|
Number |
|
Description |
|
|
|
12.1 |
|
|
12.2 |
|
|
13.1 |
|
|
13.2 |
|
|
97.1 |
|
Policy for the Recovery of Erroneously Awarded Compensation* |
101 |
|
The following financial information from Okeanis Eco Tanker Corp.’s Annual Report on Form 20-F for the fiscal year ended December 31, 2023, formatted as Inline eXtensible Business Reporting Language (iXBRL): (1) Consolidated Balance Sheets as of December 31, 2023 and 2022; (2) Consolidated Statements of Operations for the years ended December 31, 2023, 2022, and 2021; (3) Consolidated Statements of Comprehensive Income / (Loss) for the years ended December 31, 2023, 2022, and 2021; (4) Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2023, 2022, and 2021; (5) Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022, and 2021; and (6) Notes to Consolidated Financial Statements.* |
104 |
|
Cover Page Interactive Data File (formatted as Inline eXtensible Business Reporting Language (iXBRL) and contained in Exhibit 101)* |
* |
Filed herewith. |
109
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
|
Okeanis Eco Tankers Corp. |
|
|
|
|
|
By: |
/s/ Iraklis Sbarounis |
|
|
Name: Iraklis Sbarounis |
|
|
Title: Chief Financial Officer |
Date: April 30, 2024 |
|
110
OKEANIS ECO TANKERS CORP.
(Incorporated under the laws of the Republic of the Marshall Islands with registration number 96382)
Consolidated Financial Statements and Report of Independent Registered Public Accounting Firm
F-1
Index to financial statements
F-2
Report of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Okeanis Eco Tankers Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial position of Okeanis Eco Tankers Corp. and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of profit or loss and other comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2023 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte Certified Public Accountants S.A.
Athens, Greece
April 30, 2024
We have served as the Company’s auditor since 2018.
F-3
Consolidated statements of profit or loss and other comprehensive income for the years ended
December 31, 2023, 2022 and 2021
(amounts expressed in U.S. Dollars)
|
|
NOTES |
|
2023 |
|
2022 |
|
2021 |
Revenue |
|
21,24 |
|
413,096,606 |
|
270,972,421 |
|
168,998,225 |
Operating expenses |
|
|
|
|
|
|
|
|
Commissions |
|
|
|
(5,757,159) |
|
(3,382,419) |
|
(2,229,156) |
Voyage expenses |
|
11 |
|
(109,559,239) |
|
(74,086,221) |
|
(45,006,762) |
Vessel operating expenses |
|
10 |
|
(41,742,285) |
|
(35,740,460) |
|
(40,695,997) |
Management fees - related party |
|
14 |
|
(4,599,000) |
|
(4,381,200) |
|
(5,425,200) |
Depreciation and amortization |
|
7 |
|
(40,382,628) |
|
(37,962,924) |
|
(38,666,266) |
General and administrative expenses |
|
12 |
|
(9,933,373) |
|
(5,296,523) |
|
(5,094,940) |
Impairment loss on classification of vessels as held for sale |
|
7 |
|
— |
|
— |
|
(3,932,873) |
Net gain on disposal of vessels |
|
7 |
|
— |
|
— |
|
4,076,668 |
Operating profit |
|
|
|
201,122,922 |
|
110,122,674 |
|
32,023,699 |
Other income / (expenses) |
|
|
|
|
|
|
|
|
Interest income |
|
22 |
|
4,104,564 |
|
721,528 |
|
3,470 |
Interest expense and other finance costs |
|
22 |
|
(61,179,066) |
|
(38,081,975) |
|
(36,465,423) |
Unrealized gain, net on derivatives |
|
23 |
|
229,373 |
|
45,960 |
|
4,156,933 |
Realized gain/(loss), net on derivatives |
|
23 |
|
300,262 |
|
11,436,481 |
|
(558,916) |
Foreign exchange gain/(loss) |
|
|
|
672,969 |
|
315,327 |
|
(62,662) |
Total other income/(expenses) |
|
|
|
(55,871,898) |
|
(25,562,679) |
|
(32,926,598) |
Profit/(loss) for the year |
|
|
|
145,251,024 |
|
84,559,995 |
|
(902,899) |
Other comprehensive income |
|
|
|
|
|
|
|
|
Items that will not be reclassified to profit or loss: |
|
|
|
|
|
|
|
|
Re-measurement of post-employment benefit obligations |
|
|
|
(1,302) |
|
(2,456) |
|
(203) |
Total comprehensive (loss)/income for the year |
|
|
|
145,249,722 |
|
84,557,539 |
|
(903,102) |
Attributable to the owners of the Group |
|
|
|
145,249,722 |
|
84,557,539 |
|
(903,102) |
Earnings/(loss) per share – basic & diluted |
|
18 |
|
4.51 |
|
2.63 |
|
(0.03) |
Weighted average no. of shares – basic & diluted |
|
|
|
32,194,108 |
|
32,202,394 |
|
32,372,393 |
The accompanying notes are an integral part of these consolidated financial statements.
F-4
Consolidated statements of financial position as of December 31, 2023 and 2022
(amounts expressed in U.S. Dollars)
|
|
NOTES |
|
2023 |
|
2022 |
ASSETS |
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
Vessels, net |
|
7 |
|
988,068,180 |
|
1,024,296,035 |
Other fixed assets |
|
7 |
|
87,252 |
|
132,223 |
Restricted cash |
|
|
|
3,010,000 |
|
4,510,000 |
Total non-current assets |
|
|
|
991,165,432 |
|
1,028,938,258 |
Current assets |
|
|
|
|
|
|
Inventories |
|
6 |
|
25,354,017 |
|
17,010,531 |
Trade and other receivables |
|
|
|
57,336,089 |
|
49,630,484 |
Claims receivable |
|
19 |
|
115,528 |
|
108,391 |
Prepaid expenses and other current assets |
|
|
|
3,037,366 |
|
3,245,055 |
Current accounts due from related parties |
|
14 |
|
— |
|
449,629 |
Derivative financial instruments |
|
23 |
|
229,373 |
|
209,238 |
Current portion of restricted cash |
|
|
|
1,884,852 |
|
2,417,779 |
Cash & cash equivalents |
|
|
|
49,992,391 |
|
81,345,877 |
Total current assets |
|
|
|
137,949,616 |
|
154,416,984 |
TOTAL ASSETS |
|
|
|
1,129,115,048 |
|
1,183,355,242 |
SHAREHOLDERS’ EQUITY & LIABILITIES |
|
|
|
|
|
|
Shareholders’ equity |
|
|
|
|
|
|
Share capital |
|
15 |
|
32,890 |
|
32,890 |
Additional paid-in capital |
|
15 |
|
121,064,014 |
|
280,424,849 |
Treasury shares |
|
15 |
|
(4,583,929) |
|
(4,583,929) |
Other reserves |
|
|
|
(29,908) |
|
(28,606) |
Retained earnings |
|
|
|
291,649,081 |
|
146,398,057 |
Total shareholders’ equity |
|
|
|
408,132,148 |
|
422,243,261 |
Non-current liabilities |
|
|
|
|
|
|
Long-term borrowings, net of current portion (including payable to Sponsor of $8,561,987 as of December 31, 2022) (Note 13) |
|
13 |
|
615,333,863 |
|
668,236,463 |
Retirement benefit obligations |
|
|
|
32,692 |
|
23,937 |
Total non-current liabilities |
|
|
|
615,366,555 |
|
668,260,400 |
Current liabilities |
|
|
|
|
|
|
Trade payables |
|
|
|
23,522,506 |
|
11,771,964 |
Accrued expenses |
|
9 |
|
3,485,042 |
|
6,024,899 |
Deferred revenue |
|
|
|
— |
|
4,255,500 |
Current accounts due to related parties |
|
14 |
|
659,974 |
|
— |
Current portion of long-term borrowings (including payable to Sponsor of $34,233,375 and $25,671,388 as of December 31, 2023 and 2022) (Note 13) |
|
13 |
|
77,948,823 |
|
70,799,218 |
Total current liabilities |
|
|
|
105,616,345 |
|
92,851,581 |
TOTAL LIABILITIES |
|
|
|
720,982,900 |
|
761,111,981 |
TOTAL SHAREHOLDERS’ EQUITY & LIABILITIES |
|
|
|
1,129,115,048 |
|
1,183,355,242 |
The accompanying notes are an integral part of these consolidated financial statements.
F-5
Consolidated statements of changes in equity for the years ended December 31, 2023, 2022 and 2021
(amounts, expressed in U.S. Dollars, except for number of shares)
|
|
|
|
|
|
|
|
ADDITIONAL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PAID IN |
|
|
|
|
|
|
|
|
|
|
|
|
NUMBER OF |
|
SHARE |
|
CAPITAL |
|
TREASURY |
|
OTHER |
|
RETAINED |
|
|
|
|
Notes |
|
SHARES |
|
CAPITAL |
|
(NOTE 15) |
|
SHARES |
|
RESERVES |
|
EARNINGS |
|
TOTAL |
Balance – January 1, 2021 |
|
|
|
32,375,917 |
|
32,890 |
|
334,328,863 |
|
(3,068,260) |
|
(25,947) |
|
65,960,647 |
|
397,228,193 |
Acquisition of common stock |
|
15 |
|
(59,236) |
|
— |
|
— |
|
(503,530) |
|
— |
|
— |
|
(503,530) |
Loss for the year |
|
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
(902,899) |
|
(902,899) |
Capital distribution ($1.06 per share) |
|
15 |
|
— |
|
— |
|
(34,309,017) |
|
— |
|
— |
|
— |
|
(34,309,017) |
Dividend paid ($0.10 per share) |
|
15 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(3,219,686) |
|
(3,219,686) |
Other comprehensive loss for the year |
|
|
|
— |
|
— |
|
— |
|
— |
|
(203) |
|
— |
|
(203) |
Balance - December 31, 2021 |
|
|
|
32,316,681 |
|
32,890 |
|
300,019,846 |
|
(3,571,790) |
|
(26,150) |
|
61,838,062 |
|
358,292,858 |
Acquisition of common stock |
|
15 |
|
(122,573) |
|
— |
|
— |
|
(1,012,139) |
|
— |
|
— |
|
(1,012,139) |
Profit for the year |
|
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
84,559,995 |
|
84,559,995 |
Capital distribution ($0.60 per share) |
|
15 |
|
— |
|
— |
|
(19,594,997) |
|
— |
|
— |
|
— |
|
(19,594,997) |
Other comprehensive loss for the year |
|
|
|
— |
|
— |
|
— |
|
— |
|
(2,456) |
|
— |
|
(2,456) |
Balance – December 31, 2022 |
|
|
|
32,194,108 |
|
32,890 |
|
280,424,849 |
|
(4,583,929) |
|
(28,606) |
|
146,398,057 |
|
422,243,261 |
Profit for the year |
|
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
145,251,024 |
|
145,251,024 |
Capital distribution ($4.95 per share) |
|
15 |
|
— |
|
— |
|
(159,360,835) |
|
— |
|
— |
|
— |
|
(159,360,835) |
Other comprehensive loss for the year |
|
|
|
— |
|
— |
|
— |
|
— |
|
(1,302) |
|
— |
|
(1,302) |
Balance – December 31, 2023 |
|
|
|
32,194,108 |
|
32,890 |
|
121,064,014 |
|
(4,583,929) |
|
(29,908) |
|
291,649,081 |
|
408,132,148 |
The accompanying notes are an integral part of these consolidated financial statements.
F-6
Consolidated statements of cash flows for the years ended December 31, 2023, 2022 and 2021
(all amounts expressed in U.S. Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES |
|
Notes |
|
2023 |
|
2022 |
|
2021 |
Profit/(loss) for the year |
|
|
|
145,251,024 |
|
84,559,995 |
|
(902,899) |
Adjustments to reconcile profit/(loss) to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
40,382,628 |
|
37,962,924 |
|
38,666,266 |
Interest expense |
|
|
|
58,680,985 |
|
35,077,293 |
|
27,082,841 |
Amortization of loan financing fees |
|
|
|
1,994,191 |
|
1,693,117 |
|
4,233,322 |
Unrealized (loss)/gain, net on derivatives |
|
|
|
(20,135) |
|
2,941,529 |
|
(4,156,933) |
Interest income |
|
|
|
(4,104,564) |
|
(721,528) |
|
(3,470) |
Other non-cash items |
|
|
|
(43,323) |
|
6,643 |
|
(44,084) |
Net gain on disposal of vessels |
|
|
|
— |
|
— |
|
(4,076,668) |
Impairment loss |
|
|
|
— |
|
— |
|
3,932,873 |
Foreign exchange differences |
|
|
|
(712,765) |
|
(339,622) |
|
— |
Total reconciliation adjustments |
|
|
|
96,177,017 |
|
76,620,356 |
|
65,634,147 |
Changes in working capital: |
|
|
|
|
|
|
|
|
Trade and other receivables |
|
|
|
(5,853,175) |
|
(42,241,830) |
|
7,184,671 |
Prepaid expenses and other current assets |
|
|
|
(824,682) |
|
(1,235,237) |
|
(173,406) |
Inventories |
|
|
|
(8,343,486) |
|
(4,380,000) |
|
(6,863,047) |
Trade payables |
|
|
|
10,958,162 |
|
(2,901,680) |
|
(2,945,453) |
Accrued expenses |
|
|
|
(530,625) |
|
871,637 |
|
469,704 |
Deferred revenue |
|
|
|
(4,255,500) |
|
4,255,500 |
|
(6,462,292) |
Claims receivable |
|
|
|
(7,137) |
|
152,702 |
|
(106,645) |
Collections from related parties |
|
|
|
1,109,603 |
|
— |
|
— |
Total changes in working capital |
|
|
|
(7,746,840) |
|
(45,478,908) |
|
(8,896,468) |
Interest paid |
|
|
|
(59,649,091) |
|
(33,181,517) |
|
(27,240,486) |
Net cash provided by operating activities |
|
|
|
174,032,110 |
|
82,519,926 |
|
28,594,294 |
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
Current accounts due from related parties |
|
|
|
— |
|
620,472 |
|
5,993,518 |
Payments for other fixed assets |
|
|
|
— |
|
— |
|
(20,000) |
Proceeds from vessels’ disposal |
|
|
|
— |
|
— |
|
300,938,574 |
Decrease in restricted cash |
|
|
|
2,032,927 |
|
421,664 |
|
1,051,938 |
Payments for special survey and dry-docking costs |
|
|
|
(3,306,052) |
|
(1,536,579) |
|
(1,921,472) |
Payments for vessels and vessels under construction |
|
|
|
— |
|
(178,601,323) |
|
(20,367,653) |
Interest received |
|
|
|
2,233,711 |
|
375,636 |
|
3,470 |
Net cash provided by/(used in) investing activities |
|
|
|
960,586 |
|
(178,720,130) |
|
285,678,375 |
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Proceeds from long-term borrowings |
|
|
|
197,000,000 |
|
306,298,000 |
|
— |
Repayments of long-term borrowings |
|
|
|
(243,355,165) |
|
(144,294,604) |
|
(261,713,694) |
Capital distribution |
|
|
|
(159,360,835) |
|
(19,594,997) |
|
(34,309,017) |
Current accounts due to related parties |
|
|
|
— |
|
(698,153) |
|
318,350 |
Payment of long-term borrowing fees |
|
|
|
(1,350,000) |
|
(1,732,860) |
|
— |
Acquisition of common stock |
|
15 |
|
— |
|
(1,012,139) |
|
(503,530) |
Dividends paid |
|
|
|
— |
|
— |
|
(3,219,686) |
Net cash (used in)/provided by financing activities |
|
|
|
(207,066,000) |
|
138,965,247 |
|
(299,427,577) |
Effects of exchange rate changes of cash held in foreign currency |
|
|
|
719,818 |
|
397,680 |
|
— |
Net change in cash and cash equivalents |
|
|
|
(32,073,304) |
|
42,765,043 |
|
14,845,092 |
Cash and cash equivalents at beginning of year |
|
|
|
81,345,877 |
|
38,183,154 |
|
23,338,062 |
Cash and cash equivalents at end of year |
|
|
|
49,992,391 |
|
81,345,877 |
|
38,183,154 |
Supplemental cash flow information |
|
|
|
|
|
|
|
|
Capital expenditures included in trade payables |
|
|
|
803,751 |
|
— |
|
235,000 |
The accompanying notes are an integral part of these consolidated financial statements.
F-7
Notes to the consolidated Financial Statements
1. |
Incorporation and General Information |
Okeanis Eco Tankers Corp. (“OET,” the “Company” or “Okeanis Eco Tankers” and together with its wholly owned subsidiaries, the “Group”) was incorporated on April 30, 2018 as a corporation under the laws of the Republic of the Marshall Islands having its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Republic of the Marshall Islands MH96960. Glafki Marine Corp. (“Glafki”), owned by Messrs. Ioannis and Themistoklis Alafouzos, were the controlling shareholders of OET until June 2022. In June 2022, the voting interests of Mr. Themistoklis Alafouzos were transferred to Hospitality Assets Corp. (“Hospitality”) and as of June 2022, Glafki and Hospitality, each owned by Messrs. Ioannis and Themistoklis Alafouzos, respectively, collectively hold a controlling interest in OET.
Glafki and Hospitality currently own 34.2% and 20.6% of the Company’s outstanding common shares, respectively.
The Group, as of the date of this report, owns or bareboat charters-in under a finance lease fourteen vessels. The principal activity of its subsidiaries is to own, charter-out and operate tanker vessels in the international shipping market.
The consolidated financial statements comprise the financial statements of the Group.
The Alafouzos family currently holds a stake of 58.21% in the Company. The Company traded on the Euronext Growth Oslo (ex-Merkur Market) from July 3, 2018 until March 8, 2019, when it was then admitted for trading on the Euronext Expand (ex-Oslo Axess). On January 29, 2021, the Company transferred its listing from Euronext Expand to Oslo Børs.
On December 11, 2023, the Company’s common shares began primarily trading on the New York Stock Exchange (“NYSE”), simultaneously with their trading on the Oslo Børs, that is currently considered as the Company’s secondary listing.
As at December 31, 2023 the Group comprises the following companies:
Company name |
|
Date of |
|
Incorporated |
|
Interest held by OET |
|
Therassia Marine Corp. |
|
28-Jun-18 |
|
Liberia |
|
100 |
% |
Milos Marine Corp. |
|
28-Jun-18 |
|
Liberia |
|
100 |
% |
Ios Maritime Corp. |
|
28-Jun-18 |
|
Liberia |
|
100 |
% |
Omega One Marine Corp. |
|
28-Jun-18 |
|
Marshall Islands |
|
100 |
% |
Omega Two Marine Corp. |
|
28-Jun-18 |
|
Marshall Islands |
|
100 |
% |
Omega Three Marine Corp. |
|
28-Jun-18 |
|
Marshall Islands |
|
100 |
% |
Omega Four Marine Corp. |
|
28-Jun-18 |
|
Marshall Islands |
|
100 |
% |
Omega Five Marine Corp. |
|
28-Jun-18 |
|
Marshall Islands |
|
100 |
% |
Omega Six Marine Corp. |
|
9-Oct-19 |
|
Marshall Islands |
|
100 |
% |
Omega Seven Marine Corp. |
|
28-Jun-18 |
|
Marshall Islands |
|
100 |
% |
Omega Nine Marine Corp. |
|
28-Jun-18 |
|
Marshall Islands |
|
100 |
% |
Omega Ten Marine Corp. |
|
9-Oct-19 |
|
Marshall Islands |
|
100 |
% |
Omega Eleven Marine Corp. |
|
28-Jun-18 |
|
Marshall Islands |
|
100 |
% |
Nellmare Marine Ltd |
|
28-Jun-18 |
|
Marshall Islands |
|
100 |
% |
Anassa Navigation S.A. |
|
28-Jun-18 |
|
Marshall Islands |
|
100 |
% |
Arethusa Shipping Ltd. |
|
28-Jun-18 |
|
Marshall Islands |
|
100 |
% |
Moonsprite Shipping Corp. |
|
28-Jun-18 |
|
Marshall Islands |
|
100 |
% |
Theta Navigation Ltd |
|
15-Jun-21 |
|
Marshall Islands |
|
100 |
% |
Ark Marine S.A. |
|
15-Jun-21 |
|
Marshall Islands |
|
100 |
% |
OET Chartering Inc. |
|
28-Jun-18 |
|
Marshall Islands |
|
100 |
% |
Okeanis Eco Tankers Corp. |
|
— |
|
Marshall Islands |
|
— |
|
F-8
2. |
Basis of Preparation and statement of compliance |
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
The consolidated financial statements are presented in United States Dollars ($) since this is the currency in which the majority of the Group’s transactions are denominated, thus the United States Dollar is the Group’s functional and presentation currency.
The consolidated financial statements have been prepared on the historical cost basis, except for derivatives measured at their fair value.
The consolidated financial statements have been prepared on a going concern basis as the directors have, at the time of approving the financial statements, reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.
The Group’s annual consolidated financial statements were approved and authorized for issue by the Board of Directors on April 29, 2024.
3. |
Basis of Consolidation |
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statements of profit or loss and other comprehensive income from the date the Company gains control until the date it ceases to control the subsidiary.
Control is achieved when the Company:
● | has power over the investee; |
● | is exposed, or has rights, to variable returns from its involvement with the investee; and |
● | has the ability to use its power to affect its returns. |
The Company reassesses whether or not it controls a subsidiary if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.
4. |
Summary of Material Accounting Policies |
Use of estimates
The preparation of the consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the stated amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Vessel revenue recognition
Revenues are generated from time charter and voyage charter agreements.
Under a voyage charter agreement, the vessel transports a specific agreed-upon cargo for a single voyage which may include multiple load and discharge ports. The consideration is determined on the basis of a freight rate per metric ton of cargo carried, or on a lump sum basis. The voyage charter agreement generally has a minimum amount of cargo. The charterer is liable for any short loading of cargo or “dead” freight. The voyage charter agreement generally has standard payment terms, where freight is paid within certain days after the completion of discharge. The voyage charter agreement generally has a “demurrage” or “despatch” clause. The considerations received under the demurrage and despatch clauses are considered variable consideration and are recognized at contract inception and the estimates of initial recognition are updated throughout the period of the voyage charter agreement.
F-9
The consideration received under the demurrage clause represents damages paid to the shipowner for exceeded laytime (i.e., the charterer exceeds the amount of time specified in the contract for loading or discharging the cargo from the vessel, or both). Conversely, the shipowner may be required to pay despatch fees to the charterer as incentive for loading or discharging cargo in less time (i.e., for reducing the time a vessel must spend in port loading or discharging cargo). The consideration received under the demurrage and despatch clauses are calculated based on the number of days the charterer exceeds/reduces the loading/discharging time multiplied by the daily rate which is based on specific terms of the voyage charter agreement.
Management makes a detailed assessment of demurrage and despatch amount expected to be received/ paid which is included in revenue only to the extent that it is highly probable that the amount will be collectible and not be subject to a significant reversal.
In a voyage charter agreement, the performance obligations begin to be satisfied once the vessel begins loading the cargo. The Group determined that its voyage charter agreements consist of a single performance obligation of transporting the cargo within a specified time period. Therefore, the performance obligation is met evenly as the voyage progresses, and as a result revenue is recognized on a straight-line basis over the voyage days.
The voyage charter agreements are considered service contracts which fall under the provisions of IFRS 15, because the Group as shipowner retains control over the operations of the vessel, such as directing the routes taken or the vessel’s speed.
Under a voyage charter agreement, the Group bears all voyage related costs such as fuel costs, port charges and canal tolls, as applicable. Voyage related costs which are incurred during the period prior to commencement of cargo loading are accounted for as contract fulfilment costs when they (a) relate directly to a contract or anticipated contract, (b) generate or enhance resources that will be used in satisfying a performance obligation and (c) they are expected to be recovered. These costs are deferred and recorded under current assets, and are amortized on a straight-line basis as the related performance obligation to which they relate is satisfied.
Under a time charter agreement, the vessel is hired by the charterer for a specified period of time in exchange for consideration which is usually based on a daily hire rate. In addition, certain of our time charter arrangements may, from time to time, include profit-sharing clauses, arising from the sharing of earnings together with third parties and the allocation to the Group of such earnings based on a predefined methodology. Subject to any restrictions in the time charter agreement, the charterer has the full discretion over the ports visited, shipping routes and vessel speed. The time charter agreement generally provides typical warranties regarding the speed and performance of the vessel. The time charter agreement generally has some owner- protective restrictions such that the vessel is sent only to safe ports by the charterer, subject always to compliance with applicable sanction laws, and carries only lawful or non-hazardous cargo. In a time charter agreement, the Group is responsible for all the costs incurred for running the vessel such as crew costs, vessel insurance, repairs and maintenance and lubricants. The charterer bears the voyage-related costs such as bunker expenses, port charges and canal tolls during the hire period. The performance obligations in a time charter agreement are satisfied over the term of the agreement, beginning when the vessel is delivered to the charterer until it is redelivered back to the Group. The charterer generally pays the charter hire in advance of the upcoming period of the agreement. The time charter agreements are considered operating leases and are accounted for in accordance with IFRS 16. Time charter agreements do not fall under the scope of IFRS 15 Revenue from Contracts with Customers because (i) the vessel is an identifiable asset, (ii) the Group does not have substantive substitution rights and (iii) the charterer has the right to control the use of the vessel during the term of the agreement and derives the economic benefits from such use. Revenue from time charter agreements is recognized on a straight-line basis over the duration of the time charter agreement. In case of a time charter agreement with contractual changes in rates throughout the term of the agreement, any differences between the actual and the straight-line revenue in a reporting period is recognized as a straight-line asset or liability and reflected under current assets or current liabilities, respectively, in the consolidated statement of financial position.
Address commissions are discounts provided to charterers under time and voyage charter agreements. Brokerage commissions are commissions payable to third-party chartering brokers for commercial services rendered. Both address and brokerage commissions are recognized on a straight-line basis over the duration of the voyage or the time charter period, and are reflected under Revenue and Commissions, respectively, in the consolidated statements of profit or loss and other comprehensive income.
Deferred revenue represents revenue collected in advance of being earned. The portion of deferred revenue, which is recognized in the next twelve months from the consolidated statements of financial position date, is classified under current liabilities in the consolidated statements of financial position.
F-10
Vessel voyage expenses
Vessel voyage expenses mainly relate to voyage charter agreements and consist of port, canal and bunker costs that are unique to a particular voyage, and are recognized as incurred. Under time charter arrangements, voyage expenses are paid by charterers, except when off-hire.
Management believes that mobilization of a vessel from a previous port of discharge to a subsequent port of loading does not result in a separate benefit for charterers and that the activity is thus incapable of being distinct. This activity is considered to be a required set-up activity to fulfill the contract. Consequently, positioning and repositioning fees and associated expenses should be recognized over the period of the contract to match the recognition of the respective hire revenues realized, and not at a certain point in time following the adoption of IFRS 15 Revenue from Contracts with Customers. All other voyage expenses are expensed as incurred, with the exception of commissions, which are also recognized on a pro-rata basis over the duration of the period of the time and voyage charter. Bunkers’ consumption included in voyage expenses represents mainly bunkers consumed during vessels’ unemployment and offhire days.
Vessel operating expenses
Vessel operating expenses comprise all expenses relating to the operation of the vessel under time and voyage charter agreements, including crewing, insurance, repairs and maintenance, stores, lubricants, spares and consumables and miscellaneous expenses. Vessel operating expenses are recognized as incurred; payments in advance of services or use are recorded as prepaid expenses.
The majority of the Group’s operating expenses (such as crew costs, spares, stores, insurances, repairs, surveys, telecommunication and various other expenses) are paid from Kyklades Maritime Corporation (“KMC”).
Trade and other receivables
Trade receivables include estimated recoveries from hire and freight billings to charterers, net of any provision for doubtful accounts, as well as interest receivable from time deposits. At each statement of financial position date, the Group assesses its potential expected credit losses in accordance with IFRS 9. As of December 31, 2023 and 2022, the Group performed a respective exercise and concluded that the expected credit losses calculated were immaterial.
As of the date of this report, trade and other receivables’ fair value approximates their carrying amount.
Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Deferred financing costs
Fees incurred for obtaining new borrowings or refinancing existing facilities such as arrangement, structuring, legal and agency fees are deferred and classified against long-term borrowings in the consolidated statements of financial position. Any fees incurred for borrowing facilities not yet advanced, but it is considered certain that they will be drawn down, are deferred and classified under non-current assets in the consolidated statements of financial position. These fees are classified against long-term borrowings on the loan drawdown date.
Deferred financing costs are deferred and amortized over the term of the relevant borrowing using the effective interest method, with the amortization expense reflected under interest and finance costs in the consolidated statements of profit or loss and other comprehensive income. Any unamortized deferred financing costs related to borrowings which are either fully repaid before their scheduled maturities or related to borrowings extinguished are written-off in the consolidated statements of profit or loss and other comprehensive income.
F-11
Vessels and depreciation
Vessels are stated at cost, which comprises vessels’ contract price, major improvements, and direct delivery and acquisition expenses less accumulated depreciation and any impairment. Depreciation is calculated on a straight-line basis over the estimated useful life of the vessels, after considering their estimated residual value. Each vessel’s residual value is equal to the product of its lightweight tonnage and its estimated scrap rate. The scrap rate is estimated to be approximately $400 per ton of lightweight steel. The Group currently estimates the useful life of each vessel to be 25 years from the date of original construction.
Special survey and dry-docking costs
Special survey and dry-docking costs are capitalized as a separate component of vessel cost. These costs are capitalized when incurred and depreciated over the estimated period to the next scheduled special survey/dry-docking. The Group’s vessels are required to undergo special survey/dry-docking approximately every 5 years, until a vessel reaches 10 years of age, after which a vessel is required to be specially surveyed/dry-docked approximately every 2.5 years. If a special survey or dry-docking is performed prior to the scheduled date, any remaining balances are written-off and reflected in depreciation in the statements of profit or loss and other comprehensive income.
Impairment of vessels, vessels under construction and right-of-use assets
The Group assesses at each reporting date whether there are any indications that the carrying amounts of the vessels, vessels under construction and right-of-use assets may not be recoverable. If such an indication exists, and where the carrying amount exceeds the estimated recoverable amount, the vessels, vessels under construction and right-of-use assets, are written down to their recoverable amount. The recoverable amount is the greater of fair value less costs to sell and value-in-use. The fair value less costs to sell is the amount obtainable from the sale of a vessel in an arm’s length transaction, less any associated costs of disposal. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the vessels.
Advances for vessels under construction
Advances for vessels under construction comprise the cumulative amount of instalments paid to shipyards for vessels under construction, other pre-delivery expenses directly related to the construction of the vessel and capitalized interest at the statements of financial position date. On delivery of a vessel, the balance is transferred to vessels, net, in the consolidated statements of financial position.
Vessels held for sale and discontinued operations
Vessels are classified as current assets in the statements of financial position when their carrying amount will be recovered through a sale transaction rather than continuing use. A vessel is classified as held for sale when it is available for immediate sale in its present condition and the sale is highly probable.
A highly probable sale implies that, management is committed to a plan to sell the vessel and the plan has been initiated and, further, that the Company is actively seeking to locate a buyer. The vessel must be actively marketed for sale at a reasonable price and the sale is expected to be completed within one year from the date of classification as held for sale.
Vessels classified as held for sale are measured at the lower of their carrying amount and fair value less cost to sell.
A discontinued operation is a component of the Company’s business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale, or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal. When an operation is classified as a discontinued operation, the comparative statements of profit or loss and other comprehensive income is presented as if the operation had been discontinued from the start of the comparative period.
F-12
Foreign currency translations
The functional currency of the Company and its subsidiaries is the U.S. dollar because the vessels operate in international shipping markets, which primarily transact business in U.S. dollars. Transactions denominated in foreign currencies are converted into U.S. dollars and are recorded at the exchange rate in effect at the date of the transactions. For the purposes of presenting these consolidated financial statements, monetary assets and liabilities denominated in foreign currencies are translated to U.S. dollars at the rate of exchange prevailing at the consolidated statement of financial position date. Any resulting foreign exchange differences are reflected under foreign exchange gain/(loss) in the consolidated statement of profit or loss and other comprehensive income. The Company presents its consolidated financial statements in U.S. dollars.
Interest-bearing borrowings
Borrowings are initially recognized at fair value, being the fair value of the consideration received net of issue costs associated with the borrowing. After initial recognition, interest-bearing borrowings are subsequently measured at amortized cost using the effective interest method and classified as current and non-current based on their repayment profile. The Company derecognizes a borrowing when it is repaid or refinanced (in case of the latter, when its terms are modified and the cash flows of the modified borrowing liability are substantially different, the new liability is being recognised based on the modified terms and is recognized at fair value).
Cash and cash equivalents
The Group considers highly liquid investments such as time deposits and certificates of deposit with original maturities of three months or less to be cash equivalents. For the purposes of the consolidated cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above.
Restricted cash
Restricted cash represents pledged cash deposits or minimum liquidity to be maintained with certain banks under the Group’s borrowing arrangements. In the event that the borrowing relating to such deposits is expected to be terminated within the next twelve months from the statements of financial position date, they are classified under current assets otherwise they are classified as non-current assets on the statements of financial position. The Group classifies restricted cash separately from cash and cash equivalents in the consolidated statements of financial position. Restricted cash does not include general minimum liquidity requirement.
Segment Information
The Group evaluates its vessels’ operations and financial results, principally by assessing their revenue generation, and not by the type of vessel, employment, customer or type of charter. Among others, Earnings before Interest, Tax, Depreciation and Amortization (“EBITDA”), Operating expenses (“Opex”) and Gross profit (or otherwise referred to as “Time Charter Equivalent”), are used as key performance indicators. The CEO, who is the chief operating decision maker, reviews these performance metrics of the fleet in aggregate, and thus, the Group has determined that it operates under one reportable segment, that of operating tanker vessels transporting crude oil. Furthermore, due to the international nature of oil transportation, the vessels’ employability is on a worldwide scale, subject to restrictions as per the charter agreement, and, as a result, we disclose the revenue generated per country, based on the Company’s customers’ headquarters.
Inventories
Inventories consist of bunkers, lubricating oils, urea and other items including stock provisions remaining on board and are owned by the Group at the end of each reporting period. Inventories are stated at the lower of cost and net realizable value. Cost is determined using the first-in, first-out method. For an analysis of inventories as of December 31, 2023 and 2022, refer to Note 6.
Cash flow statement policy
The Group uses the indirect method to report cash flows from operating activities.
F-13
Earnings/(Loss) per share
Basic earnings/(loss) per share is calculated by dividing income/(loss) attributable to common stock holders by the weighted average number of common shares outstanding. Diluted earnings per share is calculated by adjusting income/(loss) attributable to common stock holders and the weighted average number of common shares used for calculating basic earnings per share for the effects of all potentially dilutive shares. Such dilutive common shares are excluded when the effect would be to reduce a loss per share or increase earnings per share. The Group applies the if-converted method when determining diluted earnings per share.
This requires the assumption that all securities or contracts to issue common shares have been exercised or converted into common shares at the beginning of the period or, if not in existence at the beginning of the period, the date of the issue of the financial instrument or the granting of the rights by which they are granted. Under this method, once potential common shares are converted into common shares during the period, the dividends, interest and other expense associated with those securities or contracts to issue common shares will no longer be incurred. The effect of conversion, therefore, is to increase income attributable to common shareholders as well as the number of shares issued. Conversion will not be assumed for purposes of computing diluted earnings per share if the effect would be anti-dilutive. Common shares held in treasury are not deemed outstanding.
Employee compensation — personnel
Employee compensation is recognized as an expense, unless the cost qualifies to be capitalized as an asset. Defined contribution plans are post-employment benefit plan under which the Group pays fixed contributions into separate entities on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The Group’s contributions are recognized as employee compensation expenses when they are due.
Employee entitlements to annual leave are recognized when they accrue to employees. A provision is made for the estimated liability of annual leave as a result of services rendered by employees up to the consolidated statements of financial position date.
Termination benefits are those benefits which are payable when employment is terminated before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognizes termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the statement of financial position date are discounted to present value.
Pension and retirement benefit obligations — crew
Crew on board is employed under short-term contracts (usually up to nine months) and, accordingly, the Group is not liable for any pension or other retirement benefits.
Taxation
A non-U.S. corporation such as the Company and its subsidiaries generally is subject to a 2% U.S. federal income tax (the “freight tax”) in respect of gross shipping income earned from voyages to or from the U.S. However, a corporation that qualifies for the benefits of Section 883 of the U.S. Internal Revenue Code (which depends, in part, on the ownership of the corporation) is exempt from this tax. The Group intends to take the position that it qualified for the Section 883 exemption in 2023, and therefore, that the freight tax should not be owed for such year. However, the freight tax could be owed in future years due to a change in circumstances.
All companies comprising the Group are not subject to any other tax on international shipping income since their countries of incorporation do not impose such taxes. The Group’s vessels are subject to registration and tonnage taxes, which are included under vessel operating expenses in the consolidated statements of profit or loss and other comprehensive income.
Equity
The Company has one class of common stock. All the shares rank in parity with one another. Each share carries the right to one vote in a meeting of the shareholders and all shares are otherwise equal in all respects.
F-14
The Company’s registered share capital is represented by 32,194,108 shares outstanding, par value $0.001 per share. In addition, as of the date of this report the OET holds 695,892 common shares in treasury (which are not deemed outstanding) amounting to $4,583,929, measured at cost.
Dividends and capital distributions to shareholders are recognized in shareholder’s equity in the period when they are authorized. Share buybacks are recognized when they occur.
Treasury shares
Common share repurchases are recorded at cost based on the settlement date of the transaction. These shares are classified as treasury shares, which is a reduction to shareholders’ equity. Treasury shares are included in authorized and issued shares but excluded from outstanding shares.
Provisions and contingencies
Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle this obligation and a reliable estimate of the amount of the obligation can be made.
Provisions are reviewed at each consolidated statement of financial position date and adjusted to reflect the present value of the expenditure expected to be required to settle the obligation. Contingent liabilities are not recognized in the consolidated financial statements but are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognized in the consolidated financial statements but are disclosed when an inflow of economic benefits is probable.
Fair value of financial assets and liabilities
The definitions of the levels, provided by IFRS 13 Fair Value Measurement, are based on the degree to which the fair value is observable.
● | Level 1 fair value measurements are those derived from quoted prices in active markets for identical assets or liabilities. |
● | Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices). |
● | Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). |
Cash and cash equivalents and restricted cash are considered Level 1 financial instruments. Variable rate long-term borrowings, interest rate swaps and forward agreements are considered Level 2 financial instruments. There are no financial instruments in Level 3, nor any transfers between fair value hierarchy levels during the periods presented.
The carrying amounts reflected in the consolidated statements of financial position for cash and cash equivalents, restricted cash, trade and other receivables, claims receivable, current accounts due from/ (due to) related parties and other current liabilities, approximate their respective fair values due to the relatively short-term maturity of these financial instruments.
The fair value of variable rate long-term borrowings approximates their recorded value, due to their variable interest being the U.S. dollar SOFR (that substituted LIBOR from July 1, 2023 onwards) and due to the fact that financing institutions have the ability to pass on their funding cost to the Group under certain circumstances, which reflects their current assessed risk. The terms of the Group’s long-term borrowings are similar to those that could be procured as of December 31, 2022. SOFR rates are observable at commonly quoted intervals for the full term of the loans and hence variable rate long-term borrowings are considered Level 2 financial instruments.
F-15
Sale and leaseback transactions
If a vessel is sold and subsequently leased back by the Group, pursuant to a memorandum of agreement (MoA) and a bareboat charter agreement, the Group determines when a performance obligation is satisfied in IFRS 15, to determine whether the transfer of a vessel is accounted for as a sale. If the transfer of a vessel satisfies the requirements of IFRS 15 to be accounted for as a sale, the Group measures the right-of- use asset arising from the leaseback at the proportion of the previous carrying amount of the asset that relates to the right of use retained and recognizes only the amount of any gain or loss that relates to the rights transferred to the buyer-lessor. If the transfer of a vessel does not satisfy the requirements of IFRS 15 to be accounted for as a sale, the Group continues to recognize the transferred vessel and shall recognize a financial liability equal to the transfer proceeds. All of the Group lease financing agreements as of December 31, 2023 and 2022 were of this type. Please refer to Note 13 for the description of the nature of these sale and leaseback arrangements, general terms, covenants included, any variable payments, if any, as well as the purchase options and/or obligations they provide for.
Leases
The Group as a Lessee
The Group is a lessee, pursuant to contracts for the lease of office space and a company car.
The Group assesses whether a contract is, or contains a lease, at inception of the contract applying the provisions of IFRS 16, and recognizes a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for instances where the Group makes use of the available practical expedients included in IFRS 16. These expedients relate to short-term leases (defined as leases with a lease term of twelve months or less) or leases of low value assets. For these leases, the Group continues to recognize the lease payments as an operating expense on a straight-line basis over the term of the lease, unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate.
The Group as a lessor
The Group enters into lease agreements as a lessor with respect to chartering out its vessels.
Leases for which the Group is a lessor are classified as finance or operating leases. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases. Lease classification is made at the inception date and is reassessed only if there is a lease modification. Changes in estimates (for example, changes in estimates of the economic life or of the residual value of the underlying asset), or changes in circumstances (for example, default by the lessee), do not give rise to a new classification of a lease.
Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the asset and recognized on a straight-line basis over the lease term. Amounts due from leases under finance leases are recognized as receivables at the amount of the Group’s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group’s net investment outstanding in respect of the leases.
When a lease agreement includes lease and non-lease components, the Group applies IFRS 15 to allocate the consideration under the agreement to each component.
The Group has determined that the lease component is the lease of a vessel and the non-lease component is the technical management services provided to operate the vessel. Each component is quantified on the basis of the relative stand-alone price of each lease component, and on the aggregate stand-alone price of the non- lease components.
F-16
These components are accounted for as follows:
● | All fixed lease revenue earned under these lease agreements is recognized on a straight-line basis over the term of the lease under IFRS 16. |
● | The non-lease component is accounted for as services revenue under IFRS 15. This revenue is recognized “over time” as the customer (i.e., the charterer) is simultaneously receiving and consuming the benefits of the service. |
Derivative financial instruments — interest rate swaps
The Group uses, from time-to time, interest rate swaps to economically hedge its exposure to interest rate risk arising from its variable rate borrowings. Interest rate swaps are initially recognized at fair value on the consolidated statements of financial position on the date the derivative contracts are entered into and are subsequently remeasured to their fair value at each reporting date. The fair value of these derivative financial instruments is based on a discounted cash flow calculation. The resulting changes in fair value are recognized in the consolidated statements of profit or loss and other comprehensive income unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in the consolidated statements of profit or loss and other comprehensive income depends on the nature of the hedge relationship. Derivatives are presented as current or non-current assets when their valuation is favourable to the Group and as current or non-current liabilities when unfavourable to the Group. Cash outflows and inflows resulting from derivative contracts are presented as cash flows from operations in the consolidated statements of cash flows. The Company has selected not to apply hedge accounting and records the effect from its interest rate swaps movement in its consolidated statement of profit or loss.
Derivative financial instruments — Forward Freight Agreements (FFAs)
The Group enters into FFAs to economically hedge its trading exposure in the spot market. FFAs are derivative financial instruments initially recognized at fair value on the consolidated statements of financial position on the date the FFAs are entered into and are subsequently remeasured to their fair value at each reporting date. Upon settlement, if the contracted charter rate is less than the average of the rates, as reported by an identified index, for the specified route and time period, the seller of the FFA is required to pay the buyer the settlement sum, being an amount equal to the difference between the contracted rate and the settlement rate, multiplied by the number of days in the specified period covered by the FFA. Conversely, if the contracted rate is greater than the settlement rate, the buyer is required to pay the seller the settlement sum. The resulting changes in fair value are recognized in the consolidated statements of profit or loss and other comprehensive income unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in the consolidated statements of profit or loss and other comprehensive income depends on the nature of the hedge relationship. FFA derivatives are presented as current or non-current assets when their valuation is favourable to the Group and as current or non- current liabilities when unfavourable to the Group. Classification as current or non-current is determined based on the FFA’s maturities. Cash outflows and inflows resulting from the FFAs are presented as cash flows from operations in the consolidated statements of cash flows. FFA derivatives are considered to be Level 2 items in accordance with the fair value hierarchy as defined in IFRS 13 Fair Value Measurement. FFAs do not qualify for hedge accounting and therefore unrealized gains or losses are recognized under Unrealized/realized gain/(loss) on derivatives in the consolidated statements of profit or loss and other comprehensive income.
Derivative financial instruments — Foreign Exchange Swaps (FXSs)
The Group enters into foreign exchange forward swaps (“FXSs”) to economically hedge its exposure to floating foreign exchange rates arising from the Group’s exposure to Euro versus USD fluctuations. FXSs are initially recognized at fair value on the consolidated statement of financial position on the date the derivative contracts are entered into and are subsequently re-measured to their fair value at each reporting date. The fair value of these derivative financial instruments is based on a discounted cash flow calculation. The resulting changes in fair value are recognized in the consolidated statements of profit or loss and other comprehensive income. FXSs are presented as assets when their valuation is favorable to the Group and as liabilities when unfavorable to the Group. Cash outflows and inflows resulting from FXSs derivative contracts are presented as cash flows from operations in the consolidated statement of cash flows. Foreign exchange forward swap agreements are considered Level 2 financial instruments.
Interest income and finance cost
Interest income comprise interest receivable from available bank balances and short-term deposits. Financing costs comprise interest payable on borrowings, various banks charges and bank related fees. Interest income and finance costs are recognized in the consolidated statements of profit or loss and other comprehensive income, using the effective interest rate method, as they accrue.
F-17
Adoption of new and revised IFRS
Standards and interpretations effective in the current year
The following standards and amendments relevant to the Group were effective in the current year:
In February 2021, the IASB amended IAS 1 Presentation of Financial Statements, IFRS Practice Statement 2 and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to improve accounting policy disclosures and to help the users of the financial statements to distinguish between changes in accounting estimates and changes in accounting policies. The amendments are effective for annual periods beginning on or after January 1, 2023. These amendments did not have a material impact on the Group’s financial statements.
All other IFRS standards and amendments that became effective in the current year were not relevant to the Group or were not material with respect to the Group’s financial statements.
Standards and amendments in issue not yet effective
At the date of authorization of these consolidated financial statements, the following standards and amendments relevant to the Group were in issue but not yet effective:
In January 2020, the IASB issued a narrow-scope amendment to IAS 1 Presentation of Financial Statements, to clarify that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period. Classification is unaffected by the expectations of the entity or events after the reporting date (for example, the receipt of a waiver or a breach of covenant). The amendment also clarifies what IAS 1 means when it refers to the “settlement” of a liability as the extinguishment of a liability with cash, other economic resources or an entity’s own equity instruments. The amendment will be effective for annual periods beginning on or after January 1, 2024, and should be applied retrospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. Earlier application is permitted. Management anticipates that this amendment will not have a material impact on the Group’s financial statements.
In September 2022, the IASB issued “Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)”. The amendments require a seller-lessee to measure the lease liability arising from a leaseback in a way that it does not result in recognition of a gain or loss that relates to the right of use it retains, after the commencement date. The amendments will be effective for annual reporting periods beginning on or after January 1, 2024, with earlier application permitted. Management anticipates that these amendments will not have a material impact on the Group’s financial statements.
In October 2022, the IASB has published “Non-current liabilities with covenants (Amendments to IAS 1)” to clarify how conditions with which an entity must comply within twelve months after the reporting period affect the classification of a liability. The amendments will be effective for annual reporting periods beginning on or after January 1, 2024, with earlier application permitted. Management anticipates that this amendment will not have a material impact on the Group’s financial statements.
In June 2023, the International Sustainability Standards Board (“ISSB”) issued IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures. The objective of IFRS S1 and IFRS S2 is to require an entity to disclose information about its sustainability-related risks and opportunities and climate-related risks and opportunities, respectively, that is useful to users of general-purpose financial reports in making decisions relating to providing resources to the entity. IFRS S1 is effective for annual reporting periods beginning on or after January 1, 2024 with earlier application permitted as long as IFRS S2 is also applied. IFRS S2 is effective for annual reporting periods beginning on or after January 1, 2024 with earlier application permitted as long as IFRS S1 is also applied. Management anticipates that these standards will have a disclosure impact on the Group’s financial statements.
There are no other IFRS standards and amendments issued by but not yet effective that are expected to have a material effect on the Group’s financial statements.
F-18
5. |
Critical Accounting Judgments and Key Sources of Estimation Uncertainty |
The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the stated amounts of revenues and expenses during the reporting period. Management evaluates whether estimates should be in use on an ongoing basis by utilizing historical experience, consultancy with experts, and other methods it considers reasonable in the particular circumstances. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability in the future.
The key sources of estimation uncertainty are as follows:
Classification of lease contracts
The classification of the leaseback element of a sale and leaseback transaction as either an operating or a finance leaseback requires judgment. The Group follows a formalized process to determine whether a sale of the vessel has taken place, in accordance with the criteria established in IFRS 15. In this determination, an assessment of the nature of any repurchase options is made. The outcome of the transaction (at option exercise dates in particular) may differ from the original assessment made at inception of the lease contract.
Vessel lives and residual values
The carrying value of the vessels represents their original cost at the time of purchase, less accumulated depreciation and any impairment. Vessels are depreciated to their residual values on a straight-line basis over their estimated useful lives. The estimated useful life of 25 years is management’s best estimate, that remains unchanged compared to prior year. The residual value is estimated as the lightweight tonnage of the vessel multiplied by a forecast scrap value per ton. The scrap value per ton is estimated using the current scrap prices, assuming a vessel is already of age, and its condition is as expected at the end of its useful life at the statement of financial position date. The scrap rate is estimated to be approximately $400 per ton of lightweight steel.
An increase in the estimated useful life of a vessel or in its scrap value would have the effect of decreasing the annual depreciation charge. A decrease in the useful life of a vessel or in its scrap value would have the effect of increasing the annual depreciation charge.
When regulations place significant limitations over the ability of a vessel to trade on a worldwide basis, the vessel’s useful life is adjusted to end at the date such regulations become effective. The estimated salvage value of the vessel may not represent the fair market value at any one time since market prices of scrap values tend to fluctuate.
Impairment of vessels
We evaluate the carrying amounts of our vessels to determine whether there is any indication that they have suffered an impairment loss by considering both internal and external sources of information. If any such indication exists, their recoverable amounts are estimated in order to determine the extent of the impairment loss, if any.
Likewise, if there is an indication that an impairment loss recognized in prior periods no longer exists or may have decreased, the need for recognizing an impairment reversal is assessed by comparing the carrying amount of the vessels to the latest estimate of recoverable amount.
Recoverable amount is the higher of fair value less costs to sell and value in use. As part of this evaluation, we consider both internal and external indicators of potential impairment, in accordance with IAS 36. Indicators of possible impairment may include, but are not limited to, comparing the carrying amount of net assets to market capitalization, changes in interest rates, changes in the technological, market, economic, or legal environments in which we operate, changes in forecasted charter rates, and movements in external broker valuations. We also assess whether any evidence suggests the obsolescence or physical damage of our assets, whether we have any plans to dispose of an asset before the end.
F-19
In assessing value-in- use, the estimated future cash flows are discounted to their present value, using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. The projection of cash flows related to the vessel is complex and requires management to make various estimates, including future vessel earnings, operating expenses, dry-docking costs, management fees, commissions, and discount rates. The key assumption, to which the outcome of the impairment assessment is most sensitive, is the estimate of long-term charter rates for non-contracted revenue days. Each vessel’s future cash flows from revenue are estimated, based on a combination of the current contracted charter rates until their expiration and thereafter, until the end of the vessel’s useful life, the estimated daily hire rate for the first 5 years (from 2022 to 2026) is based on the prevailing spot and time charter market as of date of this report for year 1 and then linearly moving to the newbuilding parity curve in year 5, while being onwards estimated using the simple historical average rate. This change in estimate was effectuated from the fourth quarter of 2021. As part of the process of assessing the fair value less cost to sell for a vessel, the Group obtains valuations from independent ship brokers on a quarterly basis or when there is an indication that an asset or assets may be impaired. If an indication of impairment is identified, the need for recognizing an impairment loss is assessed by comparing the carrying amount of the vessel to the higher of the fair value less cost to sell and the value-in-use.
As of December 31, 2023 and 2022, the carrying amount of the vessels owned by the Group was lower than their respective fair values, as estimated by management with consideration to independent brokers’ valuations. As a result, there were no events or circumstances triggering the existence of potential impairment or reversal of impairment of its vessels.
Deferred dry-docking costs
The Group recognizes dry-docking costs as a separate component from the vessels’ carrying amounts and depreciates them on a straight-line basis over the estimated period until the next dry-docking of the vessels. If a vessel is disposed of before the next scheduled dry-docking, the remaining balance is written-off and forms part of the gain or loss recognized upon disposal of vessels in the period when contracted. Vessels are estimated to undergo dry-docking every 5 years after their initial delivery from the shipyard, until a vessel reaches 10 years of age, and thereafter every 2.5 years to undergo special or intermediate surveys, for major repairs and maintenance that cannot be performed while in operation. However, this estimate might be revised in the future. Management estimates costs capitalized as part of the dry-docking component as costs to be incurred during the first dry-docking at the dry-dock yard for a special survey and parts and supplies used in making such repairs that meet the recognition criteria, based on historical experience with similar types of vessels.
Climate and environmental risk factors
The Group might incur increased operating and maintenance costs to maintain the operational performance and superiority of its vessels. In fact, these cost factors are taken into consideration when an indication of impairment arises, and included in the Group’s discounted cash flows calculations. Management adjusts its cash flows, accordingly with the following:
● | an increase in its operating costs both for inflation, as well as extra operating costs associated with the vessels operating effectiveness; |
● | an increase associated with the vessels’ special surveys and future Dry-dock costs; and |
● | an adjustment of its weighted average cost of capital calculation. |
Management has concluded that its vessels’ carrying values, as well as their useful lives, have not been impaired.
6. |
Inventories |
Inventories are analyzed as follows:
As of December 31, |
|
2023 |
|
2022 |
Bunkers |
|
21,986,056 |
|
13,914,723 |
Lubricants |
|
2,979,904 |
|
2,740,559 |
Provisions |
|
351,307 |
|
355,249 |
Urea |
|
36,750 |
|
— |
Total |
|
25,354,017 |
|
17,010,531 |
Inventories’ carrying values approximate their fair values as at the reporting date.
F-20
7. |
Vessels, Net |
Vessels, net are analyzed as follows:
|
|
Vessels’ cost |
|
Dry-docking and |
|
Total |
Cost |
|
|
|
|
|
|
Balance – January 1, 2022 |
|
943,569,428 |
|
11,337,851 |
|
954,907,279 |
Transfers from Vessels under construction |
|
194,652,377 |
|
2,000,000 |
|
196,652,377 |
Additions |
|
— |
|
367,669 |
|
367,669 |
Balance - December 31, 2022 |
|
1,138,221,805 |
|
13,705,520 |
|
1,151,927,325 |
Fully amortized Dry-Dock component |
|
— |
|
(1,600,000) |
|
(1,600,000) |
Additions |
|
— |
|
4,109,803 |
|
4,109,803 |
Balance – December 31, 2023 |
|
1,138,221,805 |
|
16,215,323 |
|
1,154,437,128 |
Accumulated Depreciation |
|
|
|
|
|
|
Balance – January 1, 2022 |
|
(85,311,684) |
|
(4,387,215) |
|
(89,698,899) |
Depreciation charge for the year |
|
(35,353,891) |
|
(2,578,500) |
|
(37,932,391) |
Balance - December 31, 2022 |
|
(120,665,575) |
|
(6,965,715) |
|
(127,631,290) |
Fully amortized Dry-Dock component |
|
— |
|
1,600,000 |
|
1,600,000 |
Depreciation charge for the year |
|
(37,517,768) |
|
(2,819,890) |
|
(40,337,658) |
Balance – December 31, 2023 |
|
(158,183,343) |
|
(8,185,605) |
|
(166,368,948) |
Net Book Value – December 31, 2022 |
|
1,017,556,230 |
|
6,739,805 |
|
1,024,296,035 |
Net Book Value – December 31, 2023 |
|
980,038,462 |
|
8,029,718 |
|
988,068,180 |
During the year ended December 31, 2022, the Company took delivery of the newbuilding VLCC vessels, Nissos Kea and Nissos Nikouria, for a total cost of $196.7 million.
In the year ended December 31, 2023, the Group drydocked its Suezmax vessels, Kimolos and Folegandros, for their primary five-year scheduled special survey. The dry-dock cost amounted to approximately $1.9 and $2.0 million for Kimolos and Folegandros, respectively.
Depreciation for the years ended December 31, 2023, 2022, and 2021, amounted to $40,337,658, $37,932,391, and $38,666,266, respectively.
The Group has pledged its vessels to secure the borrowing facilities (see Note 13).
Other Fixed Assets
As of December 31, |
|
2023 |
|
2022 |
Right-of-Use assets |
|
26,233 |
|
71,204 |
Other fixed assets |
|
61,019 |
|
61,019 |
Total |
|
87,252 |
|
132,223 |
The Group has recognized Right-of-Use assets, pursuant to contracts for the lease of office space and a company car. For the year ended December 31, 2023 and 2022, the Group recorded an amount of $44,970 and $30,533, respectively as depreciation expense with regards to Right-of-Use assets recognized.
8. |
Vessels Under Construction |
Vessels under construction are analyzed as follows:
Balance – January 1, 2022 |
|
18,193,257 |
Additions during the period |
|
178,459,120 |
Transfers during the period to vessels, net |
|
(196,652,377) |
Balance – December 31, 2022 |
|
— |
F-21
Additions for 2022, as well as the opening balance from 2021, relate to Nissos Kea and Nissos Nikouria, with hull numbers 3211 and 3212, which were named Nissos Kea and Nissos Nikouria upon their respective deliveries. The subsidiaries that own these vessels are wholly owned by OET.
9. |
Accrued Expenses |
Accrued expenses are analyzed as follows:
As of December 31, |
|
2023 |
|
2022 |
|
2021 |
Accrued payroll related taxes |
|
25,581 |
|
15,645 |
|
15,842 |
Accrued voyage expenses |
|
456,344 |
|
1,021,539 |
|
30,406 |
Accrued loan interest |
|
1,780,885 |
|
3,781,363 |
|
1,254,301 |
Accrued social insurance contributions |
|
164,406 |
|
91,573 |
|
94,530 |
Accrued operating expenses |
|
1,001,994 |
|
1,036,952 |
|
826,166 |
Other accrued expenses |
|
55,832 |
|
77,827 |
|
402,500 |
Total |
|
3,485,042 |
|
6,024,899 |
|
2,623,745 |
10. |
Vessel Operating Expenses |
Vessel operating expenses are analyzed as follows:
For the year ended December 31, |
|
2023 |
|
2022 |
|
2021 |
Crew costs |
|
25,824,142 |
|
23,283,420 |
|
27,617,203 |
Insurances |
|
3,273,552 |
|
3,084,189 |
|
3,332,394 |
Stores |
|
1,874,962 |
|
1,566,555 |
|
1,206,306 |
Spares |
|
2,556,623 |
|
1,382,223 |
|
1,450,609 |
Repairs and surveys |
|
2,188,650 |
|
1,826,758 |
|
2,153,673 |
Flag expenses |
|
643,661 |
|
531,871 |
|
417,241 |
Lubricants |
|
3,250,710 |
|
2,466,943 |
|
2,282,815 |
Telecommunication expenses |
|
450,040 |
|
195,605 |
|
280,936 |
Miscellaneous expenses |
|
1,679,945 |
|
1,402,896 |
|
1,954,820 |
Total |
|
41,742,285 |
|
35,740,460 |
|
40,695,997 |
11. |
Voyage Expenses |
Voyage expenses are analyzed as follows:
For the year ended December 31, |
|
2023 |
|
2022 |
|
2021 |
Port expenses |
|
30,385,334 |
|
17,962,872 |
|
13,678,442 |
Bunkers |
|
76,215,708 |
|
55,671,538 |
|
31,070,105 |
Other voyage expenses |
|
2,958,197 |
|
451,811 |
|
258,215 |
Total |
|
109,559,239 |
|
74,086,221 |
|
45,006,762 |
12. |
General and Administrative expenses |
General and administrative expenses are analyzed as follows:
For the year ended December 31, |
|
2023 |
|
2022 |
|
2021 |
Employee costs |
|
5,816,591 |
|
3,998,981 |
|
3,896,025 |
Directors’ fees and expenses |
|
906,598 |
|
850,942 |
|
875,506 |
Professional fees |
|
2,032,332 |
|
287,355 |
|
262,332 |
Other expenses |
|
1,177,852 |
|
159,245 |
|
61,077 |
Total |
|
9,933,373 |
|
5,296,523 |
|
5,094,940 |
F-22
Audit fees, included in professional fees, for the years ended December 31, 2023, 2022, and 2021 amounted to $663,094, $182,540 and $204,490, respectively. The increased expenditure for the year ended December 31, 2023 concerns fees incurred in relation to the Company’s listing on the New York Stock Exchange.
Insurance cover, for certain directors and executives of the Group, in respect to their potential liability towards the Group and third parties for the years ended December 31, 2023, 2022 and 2021, amounted to $387,864, $164,200, and $200,000, respectively.
13. |
Long-Term Borrowings |
The Companies have entered into borrowing agreements which are analyzed as follows:
Loan Facility |
|
Vessel |
|
|
Outstanding Loan |
|
|
Unamortized |
|
|
Outstanding Net of |
|
Interest Rate |
|
$56.0 Million Sale and Leaseback Agreement |
|
Milos |
|
|
35,016,494 |
|
|
244,178 |
|
|
34,772,316 |
|
S+5.84 |
% |
$54.0 Million Sale and Leaseback Agreement |
|
Poliegos |
|
|
32,255,273 |
|
|
230,740 |
|
|
32,024,533 |
|
S+7.01 |
% |
$113.0 Million Secured Term Loan Facility |
|
Kimolos |
|
|
32,100,000 |
|
|
178,654 |
|
|
31,921,346 |
|
S+1.90 |
% |
|
|
Folegandros |
|
|
32,100,000 |
|
|
178,654 |
|
|
31,921,346 |
|
S+1.90 |
% |
|
|
Nissos Keros |
|
|
44,400,000 |
|
|
247,113 |
|
|
44,152,887 |
|
S+1.90 |
% |
$84.0 Million Secured Term Loan facility |
|
Nissos Sikinos |
|
|
41,212,500 |
|
|
317,556 |
|
|
40,894,944 |
|
S+1.85 |
% |
|
|
Nissos Sifnos |
|
|
41,212,500 |
|
|
319,363 |
|
|
40,893,137 |
|
S+1.85 |
% |
$167.5 Million Sale and Leaseback Agreements |
|
Nissos Rhenia |
|
|
55,383,053 |
|
|
994,469 |
|
|
54,388,584 |
|
S+5.21 |
% |
|
|
Nissos Despotiko |
|
|
55,725,044 |
|
|
1,009,605 |
|
|
54,715,439 |
|
S+5.21 |
% |
$125.7 Million Secured Term Loan Facility |
|
Nissos Donoussa |
|
|
58,335,000 |
|
|
374,932 |
|
|
57,960,068 |
|
S+2.50 |
% |
|
|
Nissos Kythnos |
|
|
58,335,000 |
|
|
374,932 |
|
|
57,960,068 |
|
S+2.50 |
% |
$58.0 Million Secured Term Loan Facility |
|
Nissos Anafi |
|
|
44,500,000 |
|
|
231,108 |
|
|
44,268,892 |
|
S+2.09 |
% |
$194.0 Million Sale and Leaseback Agreements and $35.1 Million Unsecured Term Loan with Okeanis Marine Holdings S.A. |
|
Nissos Kea |
|
|
83,053,750 |
|
|
263,396 |
|
|
82,790,354 |
|
S+2.66 |
%(*) |
|
|
Nissos Nikouria |
|
|
84,857,750 |
|
|
272,716 |
|
|
84,585,034 |
|
S+2.67 |
%(*) |
|
|
Total |
|
|
698,486,364 |
|
|
5,237,416 |
|
|
693,248,948 |
|
S+3.15 |
% |
|
|
Other Finance-lease liabilities |
|
|
|
|
|
|
|
|
33,738 |
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
693,282,686 |
|
|
|
* |
Weighted average between primary lender margin & Sponsor borrowing fixed rate. |
** |
Post the transition from LIBOR to SOFR as the base rate, certain financings include an applicable Credit Adjustment Spread (“CAS”) on top of the SOFR base rate |
F-23
Transition from LIBOR to SOFR
While our loan arrangements previously used LIBOR, including during the fiscal years ended December 31, 2023 and December 31, 2022, in 2023 the Company amended those loan agreements to transition from LIBOR to SOFR. As a result, from July 1, 2023, none of our financing arrangements currently utilizes LIBOR, and those that have a reference rate use SOFR, in line with current market practice.
Description of Group borrowing and other financing arrangements
$44.0 Million Secured Credit Term Loan Facility
On July 8, 2020, we, through one of our vessel-owning subsidiaries, Omega Three Marine Corp., entered into a $44.0 million secured credit facility with ABN AMRO Bank N.V. to refinance then-existing indebtedness on our vessel, Kimolos. The facility bore interest at LIBOR plus a margin of 2.50% per annum and had a final maturity date of July 9, 2026. We drew down $42.2 million of this facility. The facility was repayable in 24 equal quarterly installments of $695,000, with a balloon payment of $25,488,750 due upon maturity. This facility was secured by, among other things, a first priority mortgage on Kimolos and was guaranteed by us. This loan was prepaid in June 2023.
$40.0 Million Secured Term Loan Facility
On July 7, 2020, we, through one of our vessel-owning subsidiaries, Omega Four Marine Corp., entered into a $40.0 million secured term loan facility with BNP Paribas to refinance then-existing indebtedness on our vessel, Folegandros. The facility bore interest at LIBOR plus a margin of 2.60% per annum and had a final maturity date of July 9, 2026. This loan was prepaid in June 2023.
$103.2 Million Secured Term Loan Facility
On September 9, 2020, we, through two of our vessel-owning subsidiaries, Omega Six Marine Corp. and Omega Ten Marine Corp., entered into an approximately $103.2 million secured term loan facility with KEXIM Bank (UK) Limited to finance our acquisition of vessels Nissos Sikinos and Nissos Sifnos, which we amended and restated on July 6, 2023 to amend the provisions in relation to the calculation of interest from LIBOR to the term SOFR reference rate administered by CME Group Benchmark Administration Limited (“Term SOFR”), subject to (i) a mandatory switch mechanism to the daily non-cumulative compounded SOFR (“Compounded SOFR”) and (ii) the borrowers’ option to switch the interest rate to Compounded SOFR. The facility was comprised of a KEXIM facility of up to $61,924,800 and a commercial facility of up to $41,283,200. Each of the two tranches of the KEXIM facility bore interest at Term SOFR (previously LIBOR) plus a margin of 1.80% per annum and a CAS of 0.26161% per annum relating to the transition from LIBOR, was repayable in 48 equal consecutive quarterly installments of $645,050, and had a final maturity date of September 11 and September 23, 2032 (each tranche respectively). This loan was prepaid in September 2023.
F-24
$125.7 Million Secured Term Loan Facility
In May 23, 2022, we, through two of our vessel-owning subsidiaries, Anassa Navigation S.A. and Nellmare Marine Ltd., entered into an approximately $125.7 million secured term loan facility with the National Bank of Greece to refinance the then-existing indebtedness on our vessels, Nissos Kythnos and Nissos Donoussa, which agreement we amended on June 29, 2023 to amend the provisions in relation to the calculation of interest from LIBOR to Term SOFR, subject to the borrowers’ option to switch the interest rate to the cumulative compounded SOFR. The facility has a final maturity date of May 25, 2029 and bears interest at SOFR (previously LIBOR) plus a margin of 2.50% per annum. The margin may be increased following discussions between the lender and the borrowers if it is determined that, pursuant to the sustainability certificate provided by ourselves to the lender annually, (1) the weighted average of the efficiency ratio of all fleet vessels (using the parameters of fuel consumption, distance travelled and deadweight at maximum summer draught, reported in unit grams of CO2 per ton per mile) for that calendar year, as certified by an approved classification society, is equal to or above the target set for the relevant year and (2) the weighted average percentage of the total waste incinerated on board for all fleet vessels in that calendar year (calculated in line with Class Approved Plans & Record Books, MARPOL Annex I — “Oil Record Book” (endorsed by Flag Administration) & “Fuel Management Plan” (approved by class) and MARPOL Annex V — “Garbage Record Book” & “Garbage Management Plan” (approved by class)) is equal to or above the target set for the relevant year. The amount of any increase in the margin will be based on discussions between the lender and the borrowers. Other than as set out above, there will be no other assessment of the information contained in any sustainability certificate and the sustainability certificates themselves will not be made publicly available unless we deem them to be material. Each of the two tranches of the facility is repayable in 28 quarterly installments, the first 8 of which are $750,000 and the next 20 of which are $850,000, with a balloon payment of $39,835,000 due upon maturity. This facility is secured by, among other things, a first priority mortgage on each of Nissos Kythnos and Nissos Donoussa and is guaranteed by us.
$58.2 Million Secured Term Loan Facility
On January 24, 2019, we, through one of our vessel-owning subsidiaries, Arethusa Shipping Corp., entered into an approximately $58.2 million secured term loan facility with BNP Paribas to finance our acquisition of vessel Nissos Keros. The facility bore interest at LIBOR plus a margin of 2.25% per annum and had a final maturity date of October 16, 2025. The facility was repayable in 24 equal quarterly installments of $808,000, with a balloon payment of $38,783,000 due upon maturity. This facility was secured by, among other things, a first priority mortgage on Nissos Keros and is guaranteed by us. This loan was prepaid in June 2023.
$58.0 Million Secured Term Loan Facility $113.0 Million Secured Term Loan Facility
On February 27, 2019, we, through one of our vessel-owning subsidiaries, Moonsprite Shipping Corp., entered into a $58.0 million secured term loan facility with Crédit Agricole Corporate and Investment Bank (“CACIB”) and the Export-Import Bank of Korea (“KEXIM”) to finance our acquisition of Nissos Anafi, which agreement we amended and restated on November 11, 2020 in order to include a hedging mechanism and further amended and restated again on June 16, 2023 to amend the provisions in relation to the calculation of interest from LIBOR to Term SOFR. The facility consisted of a commercial facility by CACIB in the amount of $38 million and a KEXIM facility loan in the amount of $20 million. The commercial facility bore interest at Term SOFR (previously LIBOR) plus a margin of 2.25% per annum and the applicable CAS relating to the transition from LIBOR depending on the applicable interest period (namely, 0.26161% per annum for interest periods exceeding month and up to three months, 0.42826% per annum for interest periods exceeding three months and up to six months, or 0.71513% per annum for interest periods exceeding six months and up to twelve months), was repayable in 32 equal quarterly installments of $275,000, with a balloon payment of $29,200,000 due upon maturity and had a final maturity date of January 3, 2028. The KEXIM facility loan bore interest at Term SOFR (previously LIBOR) plus a margin of 1.80% per annum and a CAS of 0.26161% per annum relating to the transition from LIBOR, was repayable in 32 equal quarterly installments of $625,000 and had a final maturity date of January 3, 2028. The facility was secured by, among other things, a first priority mortgage on Nissos Anafi and was guaranteed by us. In December 2020, through an assignment agreement, CACIB transferred to Siemens Financial Services, Inc. 50% of its outstanding loan balance, i.e., $18,587,500. This loan was prepaid in February 2024.
F-25
On June 27, 2023, we, through three of our vessel-owning subsidiaries, Omega Three Marine Corp., Omega Four Marine Corp. and Arethusa Shipping Corp., entered into a $113.0 million senior secured credit facility with ABN AMRO Bank N.V. to refinance then-existing indebtedness on our vessels, Kimolos, Folegandros and Nissos Keros. The facility bears interest at Term SOFR, subject to a mandatory switch mechanism to Compounded SOFR, plus a margin of 1.90% per annum and has a final maturity date of June 30, 2028. The facility is repayable in 20 equal consecutive quarterly installments of $2,200,000, with a balloon payment of $69,000,000 due upon maturity. This facility is secured by, among other things, a first priority mortgage on each of Kimolos, Folegandros and Nissos Keros and is guaranteed by us.
$84.0 Million Secured Term Loan Facility
On September 8, 2023, we, through two of our vessel-owning subsidiaries, Omega Six Marine Corp. and Omega Ten Marine Corp., entered into an $84.0 million senior secured credit facility with CACIB to refinance the then-existing indebtedness on our vessels, Nissos Sikinos and Nissos Sifnos. The facility bears interest at Term SOFR, plus a margin of 1.85% per annum, and has a final maturity date in September 2029. Each of the two tranches is repayable in 24 equal consecutive quarterly installments of $787,500, with a balloon payment of $23,100,000 due upon maturity. This facility is secured by, among other things, a first priority mortgage on each of Nissos Sikinos and Nissos Sifnos and is guaranteed by us.
$56.0 Million Sale and Leaseback Agreement — Milos
On January 29, 2019, we, through one of our subsidiaries, Omega One Marine Corp., entered into a $49.0 million sale and leaseback agreement with Ocean Yield with respect to our vessel, Milos, which included a $7.0 million non-cash element. The charter period was 156 months from delivery and the charter hire was paid monthly, in advance, in a cash amount equal to $12,825 per day plus a non-cash amount of $1,475 per day (which is set off against the $7.0 million prepaid hire that we made). On April 27, 2023, we entered into an addendum to the bareboat charter to amend the provisions of the bareboat charter in relation to the calculation of charter hire from LIBOR to Term SOFR. The charter hire was subject to an adjustment based on Term SOFR (previously LIBOR) and a CAS of 0.26161% per annum. The charter was guaranteed by us, and we permitted a mortgage to be filed regarding the finance lease, as well as entered into assignment of earnings, assignment of insurances, charter guarantee, pledge of account and a manager’s undertaking. We also had the option to repurchase the vessel at the end of years 5, 7, 10, and 12, at purchase option prices that range from $34.7 million to $11.5 million at the end of year 12. The vessel was delivered in February 2019. We repurchased the Milos in February 2024, and therefore this sale and leaseback agreement was terminated.
$54.0 Million Sale and Leaseback Agreement — Poliegos
On June 8, 2017, we, through one of our subsidiary, Omega Two Marine Corp., entered into a $47.2 million sale and leaseback agreement with Ocean Yield with respect to our vessel, Poliegos, which included a $6.8 million non-cash element. The leaseback period is 168 months from the delivery date and the charter hire is paid monthly, in advance, in a cash amount equal to $11,550 per day plus a non-cash amount of $1,368.93 per day (which is set off against the $7.0 million prepaid hire that we made). On April 27, 2023, we entered into an addendum to the bareboat charter to amend the provisions of the bareboat charter in relation to the calculation of charter hire from LIBOR to Term SOFR. The charter hire is subject to an adjustment based on Term SOFR (previously LIBOR) and a CAS of 0.26161% per annum, relating to the transition from LIBOR. The charter is guaranteed by us, and we have permitted a mortgage to be filed regarding the finance lease, as well as entered into assignment of earnings, assignment of insurances, charter guarantee, pledge of account and a manager’s undertaking. We also have the option to repurchase the vessel at the end of years 7, 10, and 12, and at purchase option prices that range from $31.1 million to $17.2 million at the end of year 12. The vessel was delivered in June 2017.
$167.5 Million Sale and Leaseback Agreements — Nissos Rhenia and Nissos Despotiko $194.0 Million Sale and Leaseback Agreements — Nissos Kea and Nissos Nikouria
On February 10, 2018, we, through two of our subsidiaries, Omega Five Marine Corp. and Omega Seven Marine Corp., entered into approximate $150.52 million sale and leaseback agreements with Ocean Yield with respect to our vessels, Nissos Rhenia and Nissos Despotiko.
F-26
The charter period for each of the Nissos Rhenia and Nissos Despotiko is 180 months from respective delivery and the charter hire for the each such ship is paid monthly, in advance, in a cash amount equal to $18,600 per day per ship for the first five years from the delivery date and $18,350 per day per ship from year six until the end of the charter period, subsequently amended to $18,600 per day per ship for the first two years, $25,200 per day for Nissos Rhenia and $23,336 for Nissos Despotiko for years three and four and $17,200 per day per ship for year five until the end of the charter, plus a non-cash amount of $1,734 per day per ship (which is set off against the $9.5 million prepaid hire that we made for each ship). On April 27, 2023, we entered into an addendum to each bareboat charter to amend the provisions of such bareboat charters in relation to the calculation of charter hire from LIBOR to Term SOFR. The charter hire is subject to an adjustment based on Term SOFR (previously LIBOR) and a CAS of 0.26161% per annum (for three-month periods) or 0.71513% per annum (for twelve-month periods), as applicable, relating to the transition from LIBOR. Each charter is guaranteed by us, and we have permitted a mortgage to be filed regarding the finance lease, as well as entered into assignment of insurances, assignment of management agreement, charter guarantee, pledge of account, pledge of shares of the bareboat charterer, a manager’s undertaking and a time charter general assignment. We also have the option to repurchase each or both vessels at the end of years 7, 10, 12 and 14, in varying amounts per ship from $49.8 million to $14.2 million. The Nissos Rhenia was delivered in May 2019 and the Nissos Despotiko was delivered in June 2019.
On March 21, 2022, we, through two of our subsidiaries, Ark Marine S.A. and Theta Navigation Ltd, entered into an approximate $145.5 million sale and leaseback agreements with CMB Financial Leasing Co., Ltd. (“CMBFL”), with respect to our vessels, Nissos Kea and Nissos Nikouria. On June 29, 2023 and on January 26, 2024, respectively, we entered into amendment and restatement agreements of each bareboat charter to amend certain provisions of the bareboat charters The charter period for each of the vessels is 84 months from December 31, 2023 (with respect to Nissos Kea) and March 3, 2024 (with respect to Nissos Nikouria) and charterhire is payable quarterly as follows: (a) from the delivery date of each vessel and up to and including December 31, 2023 (with respect to Nissos Kea) and March 3, 2024 (with respect to the Nissos Nikouria), a fixed amount equal to $909,375 plus a variable amount by priced at 260 basis points (being 2.45% as margin and 0.15% as CAS) over the applicable three - month Term SOFR, and (b) following December 31, 2023, with respect to Nissos Kea, and March 3, 2024, with respect to the Nissos Nikouria, a fixed amount equal to $909,375 plus a variable amount priced at 200 basis points over the applicable three-month Term SOFR. The first part of the sale and leaseback relating to the delivery of Nissos Kea was drawn on March 31, 2022 and matures on the date falling 84 months from December 31, 2023 and the second part of the sale and leaseback relating to the delivery of Nissos Nikouria was drawn on June 3, 2022 and matures on the date falling 84 months from March 3, 2024. According to each bareboat charter, the Company has a purchase option that it can exercise annually as from December 31, 2024 (with respect to Nissos Kea) and March 3, 2025 (with respect to Nissos Nikouria). If the purchase option date falls after the first but prior to the seventh anniversary of December 31, 2023 (with respect to Nissos Kea) and March 3, 2024 (with respect to Nissos Nikouria), the purchase option price for the relevant vessel is an amount equal to the opening capital balance i.e., $72,750,000 amount drawn per vessel (75% of the purchase price) minus charterhire paid (the “owner’s costs”), plus (a) accrued but unpaid charterhire, (b) breakfunding costs including any swap costs, (c) legal and other documented costs of the owner to sell the relevant vessel, and any other additional amounts due under the sale and leaseback documentation. If the purchase option date falls on the seventh anniversary of December 31, 2023 (with respect to Nissos Kea) and March 3, 2024 (with respect to Nissos Nikouria), the purchase option price for the relevant vessel is an amount equal to $40,921,875 (the “amended owner’s costs”), plus (a) accrued but unpaid charterhire, (b) and other documented costs of the owner to sell the relevant vessel, and (c) any other additional amounts due under the sale and leaseback documentation. Each charter is guaranteed by us, and we have permitted a mortgage to be filed regarding the finance lease (no mortgage on either vessel has been registered so far) as well as entered into an account charge, general assignment, pledge of shares of the bareboat charterer, a builder’s warranties assignment, and a manager’s undertaking.
$11 Million Scrubber Financing
On June 25, 2019, we entered into an $11 million facility agreement with BNP Paribas, with four of our subsidiaries, Therassia Marine Corp., Ios Maritime Corp., Omega Three Marine Corp. and Omega Four Marine Corp., acting as guarantors, in order to finance the installation of scrubbers on six vessels in our fleet, namely, Nissos Therassia, Nissos Schinoussa, Kimolos, Folegandros, Milos and Poliegos. In July 2020, the second priority mortgage over Kimolos and all the other additional second priority securities were released upon full repayment of the Kimolos tranche. In June 2021, the Nissos Therassia and Nissos Schinoussa were sold and the second priority mortgages and all the other additional second priority securities over these vessels were released upon full prepayment of their respective loan tranches. The facility bore interest at LIBOR plus a margin of 2.0% per annum and had a final maturity date of December 30, 2024. This loan was prepaid in June 2023.
F-27
$35.1 Million Unsecured Sponsor Loan
On April 18, 2022, we (on behalf of two of our subsidiaries, Ark Marine S.A. and Theta Navigation Ltd), entered into an unsecured loan facility with Okeanis Marine Holdings S.A., an entity controlled by Mr. Ioannis Alafouzos (on behalf of its subsidiaries Felton Enterprises S.A. and Sandre Enterprises S.A.), relating to the acquisition of the vessels Nissos Kea and Nissos Nikouria. Under the facility, the loaned amount of approximately $17.6 million for each vessel bears a fixed interest cost of 3.5% per annum and is repayable at our sole discretion without penalty, up to the maturity date of two years from the relevant vessel’s delivery. We repaid $16.7 million in principal under this loan facility in March 2024.
OET is the corporate guarantor for all bank loans as at December 31, 2023.
Lease liabilities connected to Right-of-Use assets
The Group has recognized the following finance lease liabilities with respect to the Right-of-Use assets:
As of December 31, |
|
2023 |
|
2022 |
Office space |
|
14,518 |
|
36,249 |
Cars |
|
19,220 |
|
39,510 |
Total |
|
33,738 |
|
75,759 |
The maturities of lease liabilities are the following:
For the year ended December 31, |
|
2023 |
|
2022 |
No later than one year |
|
34,506 |
|
50,599 |
Later than one year and not later than five years |
|
— |
|
29,516 |
Total |
|
34,506 |
|
80,115 |
Long-term debt net of current portion and current portion of long-term borrowings are analyzed as follows:
|
|
Long-term borrowings, |
|
Current portion of |
|
|
As of December 31, 2022 |
|
net of current portion |
|
long-term borrowings |
|
Total |
Outstanding loan balance |
|
673,022,123 |
|
71,819,405 |
|
744,841,528 |
Financing fees |
|
(4,814,520) |
|
(1,067,086) |
|
(5,881,606) |
Total |
|
668,207,603 |
|
70,752,319 |
|
738,959,922 |
|
|
Long-term borrowings, |
|
Current portion of |
|
|
As of December 31, 2023 |
|
net of current portion |
|
long-term borrowings |
|
Total |
Outstanding loan balance |
|
619,582,782 |
|
78,903,582 |
|
698,486,364 |
Financing fees |
|
(4,282,657) |
|
(954,759) |
|
(5,237,416) |
Total |
|
615,300,125 |
|
77,948,823 |
|
693,248,948 |
The borrowings are repayable as follows:
As of December 31, |
|
2023 |
|
2022 |
No later than one year |
|
78,903,582 |
|
71,819,405 |
Later than one year and not later than five years |
|
278,087,160 |
|
298,690,490 |
Thereafter |
|
341,495,622 |
|
374,331,633 |
Total |
|
698,486,364 |
|
744,841,528 |
Less: Amounts due for settlement within 12 months |
|
(78,903,582) |
|
(71,819,405) |
Long-term borrowings, net of current portion |
|
619,582,782 |
|
673,022,123 |
F-28
Cash flow reconciliation of liabilities arising from financing activities
A reconciliation of the Group’s financing activities for the years ended December 31, 2023, 2022 and 2021 are presented in the tables below:
Long-term borrowings – January 1, 2021 |
|
834,476,641 |
Cash flows – repayments |
|
(261,713,694) |
Non-cash flows – amortisation of loan financing fees |
|
4,233,322 |
Long-term borrowings – December 31, 2021 |
|
576,996,269 |
Cash flows – drawdowns |
|
306,298,000 |
Cash flows – repayments |
|
(144,294,604) |
Loan financing fees |
|
(1,732,860) |
Other Finance-lease liabilities |
|
75,759 |
Non-cash flows – amortisation of loan financing fees |
|
1,693,117 |
Long-term borrowings – December 31, 2022 |
|
739,035,681 |
Cash flows – drawdowns |
|
197,000,000 |
Cash flows – repayments |
|
(243,355,165) |
Loan financing fees |
|
(1,350,000) |
Other Finance-lease liabilities |
|
(42,021) |
Non-cash flows – amortisation of loan financing fees |
|
1,994,191 |
Long-term borrowings – December 31, 2023 |
|
693,282,686 |
All borrowings are secured by first preferred mortgages of the Companies’ vessels and assignment of earnings and insurances.
The borrowing agreements include several covenants, including restrictions as to changes in management and ownership of the vessels, payment of dividends in the event of default, further incurring indebtedness, mortgaging of vessels without the bank’s prior consent and several financial covenants including:
● | a security cover ratio (which is a minimum percentage of the vessel market value over the secured outstanding loan amount) of no less than 145%. |
● | minimum corporate liquidity, being the higher of $10,000,000 and $750,000 per vessel, in the form of free and unencumbered cash and cash equivalents. |
● | a consolidated net worth of more than $100,000,000 and |
● | a leverage ratio of total liabilities to the carrying value of total assets (adjusted for the vessel’s fair market value) of no more than 75%. |
A number of the financing agreements limit the Company’s ability to declare, make or pay any dividends or other distributions (whether in cash or in kind) or repay or distribute any dividend or share premium reserve following the occurrence of an event of default under the relevant financing agreement or if such action would result in the occurrence of an event of default under the relevant financing agreement.
A number of our financing agreements require that the Alafouzos family maintain a minimum 35% ownership interest in us, and some of our financing agreements provide that a breach of the financing will occur if Mr. Ioannis Alafouzos and Mr. Themistoklis Alafouzos cease to control us and, in one instance, if Mr. Ioannis Alafouzos ceases to be our chairman. In addition, one agreement provides that the acquisition by a person or group of persons acting in concert (directly or indirectly) of more than 35% of the ultimate legal or beneficial ownership of the Company is a breach of that agreement, and certain of our guarantees on our sale and leaseback agreements provide that we may not permit certain changes in corporate or ownership structure or permit a new party or parties acting in concert to become owners of, or control, more than 51% of our shares and/or voting rights.
As at December 31, 2023 and 2022, the Group was in compliance with its covenants.
F-29
14. |
Transactions and Balances with Related Parties |
The Group has entered into technical management agreements with Kyklades Maritime Corporation (“Kyklades,” “KMC” or the “Management Company”) as technical manager. Kyklades provides the vessels with a wide range of shipping services such as technical support, maintenance and insurance consulting in exchange for a daily fee of $900 per vessel, which is reflected under management fees in the consolidated statements of profit or loss and other comprehensive income.
Related party balances’ analysis
The below table presents the Group’s outstanding balances due (to)/from related parties:
As of December 31, |
|
2023 |
|
2022 |
Kyklades Maritime Corporation |
|
(659,974) |
|
449,629 |
Total |
|
(659,974) |
|
449,629 |
Amounts due to the Management Company as of December 31, 2023 of $659,974 as compared to amounts due from the Management Company as of December 31, 2022 of $449,629 represent expenses paid by the Management Company on behalf of the Company / advances from the Company to the Management Company, per the terms of the respective vessel technical management agreements.
All balances noted above are unsecured, interest-free, with no fixed terms of payment and repayable on demand.
Related party transactions’ analysis
The below table presents the Group’s transactions with its related parties:
For the years ended December 31, |
|
2023 |
|
2022 |
|
2021 |
Management fees |
|
|
|
|
|
|
Kyklades Maritime Corporation |
|
4,599,000 |
|
4,381,200 |
|
5,425,200 |
Total |
|
4,599,000 |
|
4,381,200 |
|
5,425,200 |
KMC solely administers the transactions on behalf of OET’s subsidiaries, without recharging any expenditure back to the ship owning companies. All operating expenses are being incurred and charged directly to OET’s subsidiary companies.
The below table presents an analysis of all payments executed by KMC on behalf of the Group:
For the years ended December 31, |
|
2023 |
|
2022 |
|
2021 |
Crew wages |
|
21,043,047 |
|
18,572,373 |
|
22,411,827 |
Other crew expenses |
|
3,639,086 |
|
3,357,800 |
|
3,555,432 |
Stores |
|
3,864,683 |
|
3,098,044 |
|
2,999,210 |
Technical expenses |
|
8,647,728 |
|
5,611,199 |
|
6,274,107 |
Insurance |
|
2,717,938 |
|
3,193,137 |
|
2,490,958 |
Health, Safety, Quality, Environmental (HSQE) expenses |
|
592,246 |
|
525,210 |
|
672,704 |
Other |
|
801,196 |
|
931,952 |
|
1,416,495 |
Total |
|
41,305,924 |
|
35,289,715 |
|
39,820,733 |
Key management and Directors’ remuneration
Each of the Group’s directors, except for the Chairman of the Board of Directors, is entitled to an annual fee of $75,000. Directors’ fees for the years ended December 31, 2023, 2022 and 2021 amounted to $450,000, $450,000 and $418,900, respectively. In addition, each director is entitled to reimbursement for travelling and other minor out-of-pocket expenses.
F-30
Furthermore, OET Chartering Inc. and OET provide compensation to members of key management personnel, which currently comprise of its Chief Executive Officer, Chief Financial Officer, and Chief Operating Officer. The remuneration structure comprises salaries, bonuses, insurance cover (also covering the members of the Board of Directors), telecommunications and other expenses which are minor in nature (e.g., travel expenses). For the years ended December 31, 2023, 2022 and 2021, key management personnel remuneration, covering all the above amounted to $3,588,185, $1,704,665 and $2,071,165. There was no amount payable related to key management remuneration as of December 31, 2023, 2022 and 2021.
None of the members of the administrative, management or supervisory bodies of the Group have any service contracts with Okeanis Eco Tankers Corp. or any of its subsidiaries in the Group providing for benefits upon termination of employment.
Amendments to management agreements
Technical management agreements
On November 1, 2023, the Company amended and restated its technical management agreements with KMC. The amended and restated technical management agreements, among others, retain the right to terminate for convenience, subject to a 36-month advance written notice, in addition to either party being able to terminate for cause. Furthermore, KMC has the right to terminate each technical management agreement, subject to 30-days advance written notice, in the event of a change of control of the relevant shipowning entity without KMC’s consent. In each case, unless the cause for termination is KMC’s failure to meet its obligations under the relevant technical management agreement, the Company is required to continue payment of the management fees thereunder for 36 months from the termination date (or, if a notice of termination for convenience has preceded such for cause termination, 36 months from the date of such notice). If required by KMC, the daily fee may be increased in line with the relevant annual inflation rates.
Shared Services Agreement
On November 1, 2023, our wholly owned subsidiary, OET Chartering Inc., entered into a shared services agreement with KMC to document the mutual exchange of business support in respect of the management of our vessels by way of corporate, accounting, financial and other operational and administrative services. The shared services agreement does not provide for any additional fee payable. The agreement may be terminated by either party thereto (i) for cause, immediately upon written notice or (ii) for any other reason, upon two months’ written notice.
15. |
Share Capital and Additional Paid-in Capital |
On January 27, 2021, the board of directors of the Oslo Stock Exchange approved the Company’s listing application to transfer its listing from Euronext Expand to Oslo Børs. Trading in the shares on Oslo Børs commenced on January 29, 2021, under the trading symbol “OET.”
In March 2021, the Company paid cash dividends of $0.10 per share amounting to $3.2 million.
In June 2021, the Company distributed $24.3 million or $0.75 per share via a return of paid-in capital.
On December 6, 2021, the Company purchased 22,500 of its own shares for an aggregate consideration of $197,116 at an average price of NOK 75.3 or $8.76 per share.
On December 9, 2021, the Company purchased 8,000 of its own shares for an aggregate consideration of $70,642 at an average price of NOK 75.9 or $8.83 per share.
On December 14, 2021, the Company purchased 28,736 of its own shares for an aggregate consideration of $235,772 at an average price of NOK 70.5 or $8.20 per share.
In December 2021, the Company distributed $10.0 million or $0.31 per share via a return of paid-in-capital.
On January 24, 2022, the Company purchased 20,000 of its own shares for an aggregate consideration of $162,117 at the price of NOK 69.7 or $8.11 per share.
F-31
On January 26, 2022, the Company purchased 102,573 of its own shares for an aggregate consideration of $850,022 at the price of NOK 71.3 or $8.29 per share.
In September 2022, the Company distributed approximately $9.8 million or $0.30 per share via a dividend that was classified as a return of paid-in-capital.
In December 2022, the Company distributed approximately $9.8 million or $0.30 per share via a dividend that was classified as a return of paid-in-capital.
In March 2023, the Company distributed approximately $40.2 million or $1.25 per share via a dividend that was classified as a return of paid-in-capital.
In June 2023, the Company distributed approximately $51.5 million or $1.60 per share via a dividend that was classified as a return of paid-in-capital.
In September 2023, the Company distributed an amount of approximately $48.3 million or $1.50 per share via a dividend that was classified as a return of paid-in-capital.
In November 2023, the Company paid approximately $19.3 million or $0.60 per share via a dividend that was classified as a return of paid-in-capital.
As of December 31, 2023, the Company had 32,194,108 shares outstanding (such amount does not include 695,892 treasury shares).
Neither the Company nor any of its subsidiaries have issued any restricted shares, share options, warrants, convertible loans or other instruments that would entitle a holder of any such instrument to subscribe for any shares in the Company or its subsidiaries. Neither the Company nor any of its subsidiaries have issued subordinated debt or transferable securities other than the shares in the Company and the shares in the Company’s subsidiaries which are held directly or indirectly by the Company.
The table below shows the movement in the Company’s issued share capital up to and for the year ended on December 31, 2023 hereof:
Date |
|
Type of change |
|
Change in |
|
New issued |
|
No. of shares |
|
Par value |
09-Mar-20 |
|
Share buy-back |
|
— |
|
— |
|
32,625,917 |
|
0.001 |
06-Apr-20 |
|
Share buy-back |
|
— |
|
— |
|
32,375,917 |
|
0.001 |
06-Dec-21 |
|
Share buy-back |
|
— |
|
— |
|
32,353,417 |
|
0.001 |
09-Dec-21 |
|
Share buy-back |
|
— |
|
— |
|
32,345,417 |
|
0.001 |
14-Dec-21 |
|
Share buy-back |
|
— |
|
— |
|
32,316,681 |
|
0.001 |
24-Jan-22 |
|
Share buy-back |
|
— |
|
— |
|
32,296,681 |
|
0.001 |
26-Jan-22 |
|
Share buy-back |
|
— |
|
— |
|
32,194,108 |
|
0.001 |
16. |
Financial Risk Management |
The Group’s principal financial instruments comprise long-term borrowings, interest rate swaps (terminated in 2022), forward freight agreements, cash and cash equivalents and restricted cash. The main purpose of these financial instruments is to finance the Group’s operations and mitigate its exposure to market and interest rate fluctuations. The Group has various other financial assets and liabilities such as trade receivables, current accounts with related parties and payables which arise directly from its operations.
F-32
The main risks arising from the Group’s financial instruments are foreign currency risk, interest rate risk, credit risk, market risk and liquidity risk. The Group’s policies for addressing these risks are set out below:
● | Foreign currency risk |
The Group’s vessels operate in international shipping markets, which utilize the U.S. dollar as the functional currency. Although certain operating expenses are incurred in foreign currencies, the Group does not consider the risk to be significant. The Group has no hedging mechanisms in place, however, when opportunity arises, it converts significant cash balances from U.S. dollars to Euros, to hedge against adverse fluctuations.
● | Interest rate risk |
The Group is exposed to the impact of interest rate changes primarily through its floating-rate borrowings that require the Group to make interest payments based on SOFR. Significant increases in interest rates could adversely affect operating margins, results of operations and ability to service debt. From time to time, the Group uses interest rate swaps to reduce its exposure to market risk from changes in interest rates. The principal objective of these interest rate swaps is to manage the risks and costs associated with its floating-rate borrowings (Note 23).
As an indication of the sensitivity from changes in interest rates, an increase by 100 basis points in interest rates would increase interest expense for the year ended December 31, 2023 by $6,894,010 (2022: $2,251,130 increased by 50 basis points) assuming all other variables held constant and taking into consideration that the Group has entered into interest rate swap agreements for some of its borrowings, therefore partially economically hedging part of its floating-rate borrowings.
● | Credit risk |
The Group only trades with charterers who have been subject to satisfactory credit screening procedures. Furthermore, outstanding balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.
With respect to the credit risk arising from the Group’s cash and cash equivalents and restricted cash, the Group’s exposure arises from default by the counterparties, with a maximum exposure equivalent to the carrying amount of these instruments. The Group mitigates such risks by dealing only with high credit quality financial institutions.
● | Market risk |
The tanker shipping industry is cyclical with high volatility in charter rates and profitability. The Group charters its vessels principally in the spot market, being exposed to various unpredictable factors such as: supply and demand of energy resources, global economic and political conditions, natural or other disasters, disruptions in international trade, COVID-19 outbreak, environmental and other legal regulatory developments and so on. During 2022 and 2023, the Group entered into FFAs in order to minimize losses from charter rate fluctuations and eliminate any adverse effect charter rate fluctuations may have in our operating cash flows and dividend distributions.
● | Liquidity risk |
Liquidity risk is the risk that arises when the maturity of assets and liabilities does not match. An unmatched position potentially enhances profitability, but can also increase the risk of losses. The Group minimizes liquidity risk by maintaining sufficient cash and cash equivalents.
F-33
The following table details the Group’s expected cash outflows for its financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities, on the earliest date on which the Group would be required to pay to settle. The table includes both interest and principal cash flows. Variable future interest payments were determined based on the one-month SOFR as of December 31, 2023, of 3.41% (LIBOR for 2022: 4.41%), plus the margin applicable to the Group’s loans at the end of the year presented.
|
|
Weighted |
|
Less |
|
1 – 3 |
|
3 – 12 |
|
1 – 5 |
|
5+ years |
|
Total |
December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Derivative Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables |
|
|
|
— |
|
— |
|
23,522,506 |
|
— |
|
— |
|
23,522,506 |
Accrued expenses |
|
|
|
— |
|
— |
|
3,485,042 |
|
— |
|
— |
|
3,485,042 |
Current accounts due to related parties |
|
|
|
— |
|
— |
|
659,974 |
|
— |
|
— |
|
659,974 |
Variable interest borrowings |
|
4.08 |
% |
3,138,123 |
|
28,239,371 |
|
62,054,619 |
|
307,066,226 |
|
237,943,153 |
|
638,441,492 |
Variable interest for debt financing (Sale and Leaseback Agreements) |
|
9.07 |
% |
2,330,290 |
|
4,567,896 |
|
21,015,413 |
|
106,212,689 |
|
139,492,319 |
|
273,618,607 |
Total |
|
|
|
5,468,413 |
|
32,807,267 |
|
110,737,554 |
|
413,278,915 |
|
377,435,472 |
|
939,727,621 |
|
|
Weighted |
|
Less |
|
1 – 3 |
|
3 – 12 |
|
1 – 5 |
|
5+ years |
|
Total |
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Derivative Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables |
|
|
|
— |
|
— |
|
11,771,964 |
|
— |
|
— |
|
11,771,964 |
Accrued expenses |
|
|
|
— |
|
— |
|
6,024,899 |
|
— |
|
— |
|
6,024,899 |
Variable interest borrowings |
|
6.26 |
% |
5,922,596 |
|
21,564,122 |
|
65,076,153 |
|
365,728,156 |
|
241,508,738 |
|
699,799,765 |
Variable interest for debt financing (Sale and Leaseback Agreements) |
|
10.02 |
% |
2,823,905 |
|
5,526,029 |
|
22,237,116 |
|
112,171,014 |
|
167,665,884 |
|
310,423,948 |
Total |
|
|
|
8,746,501 |
|
27,090,151 |
|
105,110,132 |
|
477,899,170 |
|
409,174,622 |
|
1,028,020,576 |
17. |
Commitments and Contingencies |
Commitments under time charter agreements (Lessor)
As of December 31, 2023 and 2022, future minimum contractual time charter revenue, based on our vessels’ committed, non-cancellable time charter agreements, net of address commissions were as follows:
As of December 31, |
|
2023 |
|
2022 |
Within one year |
|
— |
|
24,416,000 |
Total |
|
— |
|
24,416,000 |
18. |
Earnings/(loss) per Share |
The profit/(loss) and weighted average number of common shares used in the calculation of basic and diluted earnings/(loss) per share are as follows:
As of December 31, |
|
2023 |
|
2022 |
|
2021 |
Profit/(loss) for the period attributable to the Owners of the Group |
|
145,249,722 |
|
84,557,539 |
|
(903,102) |
Weighted average number of shares outstanding in the period |
|
32,194,108 |
|
32,202,394 |
|
32,372,393 |
Earnings/(loss) per share, basic and diluted |
|
4.51 |
|
2.63 |
|
(0.03) |
During the years ended December 31, 2023, 2022 and 2021, there were no potentially dilutive instruments affecting weighted average number of shares, and hence diluted earnings per share equals basic earnings per share for the years presented.
F-34
19. |
Claims Receivable |
As of December 31, 2023, the Group has recognized and presented under “Claims receivable” in the consolidated statements of financial position, receivable amounts from vessels’ insurers totaling $115,528 (2022: $108,391) regarding various claims. The respective receivable claims were recognized in the consolidated statements of financial position since the Group has an unconditional right to receive the claimable amounts from the insurers.
20. |
Capital Risk Management |
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholders value.
The Group monitors capital using gearing ratio, which is total debt (gross) divided by total equity plus total debt, and its calculation is presented below:
As of December 31, |
|
2023 |
|
2022 |
|
Total borrowings |
|
698,486,364 |
|
744,841,528 |
|
Total shareholders’ equity |
|
408,132,148 |
|
422,243,261 |
|
Gearing ratio |
|
63 |
% |
64 |
% |
21. |
Lease and Non-Lease Components of Revenue and voyage charter revenue |
IFRS 16 requires the identification of lease and non-lease components of revenue and account for each component in accordance with the applicable accounting standard. Regarding time charter arrangements, we have concluded that the direct lease component concerns the vessel and indirectly, the non- lease component concerns the technical management services provided to operate the vessel.
These components are being accounted for as follows:
a. | All fixed lease revenue earned under these arrangements will be recognized on a straight-line basis over the term of the lease. |
b. | Lease revenue earned under Group’s time charter arrangements will be recognized as it is earned, since it is 100% variable. |
c. | The non-lease component will be accounted for as services revenue under IFRS 15. This revenue is recognized ‘over time’ as the customer (i.e., the charterer) is simultaneously receiving and consuming the benefits of the service. |
The below table analyses revenue generated under time charter arrangements:
December 31, |
|
2023 |
|
2022 |
|
2021 |
|
Lease component |
|
|
30,584,686 |
|
50,536,021 |
|
59,098,416 |
Non-lease component |
|
|
8,817,934 |
|
15,817,114 |
|
21,486,951 |
Total |
|
|
39,402,620 |
|
66,353,135 |
|
80,585,367 |
F-35
22. |
Interest income, Interest expense and Other Finance Costs |
Interest and finance related costs are presented below:
For the years ended December 31, |
|
2023 |
|
2022 |
|
2021 |
Interest expense |
|
58,680,985 |
|
35,077,293 |
|
27,082,841 |
Amortization and write-off of financing fees |
|
1,994,191 |
|
1,693,117 |
|
4,233,322 |
Finance costs related to covenants of early termination |
|
— |
|
— |
|
4,092,000 |
Bank charges and loan commitment fees |
|
33,939 |
|
729,710 |
|
781,978 |
Other finance costs |
|
469,951 |
|
581,855 |
|
275,282 |
Total |
|
61,179,066 |
|
38,081,975 |
|
36,465,423 |
Interest income are presented below:
For the years ended December 31, |
|
2023 |
|
2022 |
|
2021 |
Interest income from time deposits |
|
3,428,321 |
|
668,032 |
|
— |
Other interest income |
|
676,243 |
|
53,496 |
|
3,470 |
Total |
|
4,104,564 |
|
721,528 |
|
3,470 |
23. |
Derivative Financial Instruments |
Interest rate swaps
During the year ended December 31, 2022, the Group terminated all interest rate swap agreements it had entered into in 2021 and 2020. The net cash received from the said terminations amounted to $12.3 million in total and was recognized in Realized gain/(loss), net on derivatives in the consolidated statements of profit or loss and other comprehensive income.
Forward freight agreements
The fair value of the Group’s derivative financial assets as of December 31, 2023 and 2022 related to FFAs and Foreign Exchange Swaps (“FXSs”) are presented below:
Derivatives’ Fair values |
|
2023 |
|
2022 |
FXSs |
|
207,488 |
|
— |
FFAs |
|
21,885 |
|
209,238 |
Total |
|
229,373 |
|
209,238 |
FFAs and FXSs are considered to be Level 2 items in accordance with the fair value hierarchy as defined in IFRS 13 Fair Value Measurement.
Effect on the Consolidated Statements of Profit or Loss and Other Comprehensive Income
For the year ended December 31, |
|
2023 |
|
2022 |
|
2021 |
Unrealized gain, net on derivatives |
|
229,373 |
|
45,960 |
|
30,105 |
Unrealized gain on interest rate swaps |
|
— |
|
— |
|
4,126,828 |
Total unrealized gain, net on derivatives |
|
229,373 |
|
45,960 |
|
4,156,933 |
For the year ended December 31, |
|
2023 |
|
2022 |
|
2021 |
Realized gain/(loss), net on derivatives |
|
300,262 |
|
2,161,927 |
|
(558,916) |
Realized gain, net on interest rate swaps |
|
— |
|
9,274,554 |
|
— |
Total realized gain/(loss), net on derivatives |
|
300,262 |
|
11,436,481 |
|
(558,916) |
F-36
24. |
Revenue |
The table below presents an analysis of revenue generated from voyage and time charter agreements:
For the years ended December 31, |
|
2023 |
|
2022 |
|
2021 |
Voyage Charter |
|
373,693,986 |
|
204,619,286 |
|
88,412,858 |
Time Charter (see Note 21) |
|
39,402,620 |
|
66,353,135 |
|
80,585,367 |
Total |
|
413,096,606 |
|
270,972,421 |
|
168,998,225 |
IFRS 15 Revenue from Contracts with Customers
As of December 31, 2023, 2022 and 2021, the Group had, within the scope of IFRS 15, unearned revenue from voyage charter agreements related to undelivered performance obligations of $5,590,403, $9,861,064 and $790,544 which will be/were recognized in the first quarter of 2024, 2023 and 2022, respectively.
Further, as of December 31, 2023 and 2022, capitalized contract fulfilment costs amounted to $1,903,516 and $1,646,450, respectively.
The table below presents an analysis of earned revenue under voyage charters:
For the years ended December 31, |
|
2023 |
|
2022 |
|
2021 |
Freight |
|
338,979,059 |
|
192,579,493 |
|
77,334,155 |
Demurrages |
|
34,714,927 |
|
12,039,793 |
|
11,078,703 |
Total |
|
373,693,986 |
|
204,619,286 |
|
88,412,858 |
As at December 31, 2023 and 2022, the Group’s trade receivables amounted to $55,234,678 and $46,393,951, respectively. Charterers, whose outstanding balance, exceed 10% of the total trade receivable amount are presented below:
Customer |
|
2023 |
|
2022 |
|
Charterer A |
|
17 |
% |
59 |
% |
Charterer B |
|
13 |
% |
10 |
% |
Charterer C |
|
10 |
% |
10 |
% |
As of December 31, 2023 and 2022, trade receivables include the amounts of $5,456,339 and $9,735,393, respectively, generated from voyage charter agreements within the scope of IFRS 15.
Credit concentration
Customers individually accounting for more than 10% of our revenues during the years ended December 31, 2023, 2022 and 2021 were:
Customer |
|
2023 |
|
2022 |
|
2021 |
|
A |
|
— |
|
18 |
% |
13 |
% |
B |
|
— |
|
14 |
% |
11 |
% |
C |
|
— |
|
11 |
% |
— |
|
Total |
|
— |
|
43 |
% |
24 |
% |
F-37
Revenue by country
The below table presents revenue generated per country, based on the Company’s customers’ headquarters, exceeding 10% of total revenues, for the years ended December 31, 2023, 2022 and 2021:
Country |
|
2023 |
|
2022 |
|
2021 |
Singapore |
|
73,621,309 |
|
42,408,360 |
|
37,250,890 |
United Kingdom |
|
54,254,181 |
|
40,158,705 |
|
— |
Hong Kong |
|
— |
|
51,127,139 |
|
26,879,765 |
Switzerland |
|
81,031,483 |
|
44,257,631 |
|
27,755,018 |
United States |
|
48,788,696 |
|
37,069,299 |
|
— |
Turkey |
|
49,470,684 |
|
— |
|
— |
Brazil |
|
40,484,566 |
|
— |
|
— |
Other |
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65,445,687 |
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55,951,287 |
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77,112,552 |
Total |
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413,096,606 |
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270,972,421 |
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168,998,225 |
All of the revenues above are reported under our single segment, the crude oil tanker segment.
25. |
Subsequent Events |
On January 26 and 29, 2024, the Group executed amendments to the existing sale and leaseback agreements on the VLCC vessels Nissos Kea and Nissos Nikouria (the “Existing Leases Amendments”) with CMB Financial Leasing. The Existing Leases Amendments, effective from the first quarter of 2024, provide for a reduction of the pricing of the variable amount of charterhire payable thereunder to 200 bps over the applicable Term SOFR on both vessels, extend maturities to December 2030 for the Nissos Kea and March 2031 for the Nissos Nikouria, and eliminate the previously stipulated early prepayment fees in the case of exercise of the purchase options by the Company after the first year.
On January 29, 2024, the Group executed a new sale and leaseback agreement of approximately $73.5 million for the VLCC vessel Nissos Anafi (the “Anafi Lease”) with CMB Financial Leasing. The agreement provides for a bareboat charter with the charterhire being paid on a quarterly basis, is priced at 190 bps over the applicable Term SOFR and matures in seven years. The Anafi Lease includes purchase options for the Company after the first year and throughout the tenor of the lease and is guaranteed by the Company. The Anafi Lease proceeds were partially used in order to repay the amount of $43.6 million, representing the outstanding syndicate loan owned to Credit Agricole and Korea Export Import Bank.
On January 31, 2024, the Group entered an agreement for a new $34.7 million senior secured credit facility to finance the option to purchase back the Suezmax vessel Milos from its current sale and lease back financier (the “Milos Facility”). The Milos Facility is provided by a syndicate led by Kexim Asia Limited, is priced at 175 bps over the applicable Term SOFR, matures in six years, is paid in quarterly instalments, and is guaranteed by the Company.
In March 2024, the Company paid an amount of approximately $21.2 million or $0.66 per share via a dividend that was classified as a return of paid-in-capital.
In March 2024, we repaid $16.7 million to Okeanis Marine Holdings S.A., an entity controlled by Mr. Ioannis Alafouzos, as repayment of loan principal relating to the acquisition of the Nissos Kea.
On March 1, 2024, each of our vessel owning subsidiaries, entered into an ETS Services Agreement with KMC, which agreement is effective as of January 1, 2024, pursuant to which KMC obtains, transfers and surrenders emission allowances under the EU Emissions Trading Scheme that came into effect on January 1, 2024, and KMC provides the vessel with emission data in a timely manner to enable compliance with any emission scheme(s) applicable to the vessel. No additional fee is payable under these agreements as the services are considered to be part of the technical management fee under the technical management agreements, set out above. These agreements may be terminated by either party (a) for cause, immediately upon written notice or (ii) for any reason, upon two months’ written notice. These agreements shall also be deemed automatically terminated on the date of termination of the relevant technical management agreements, described above.
F-38
Exhibit 1.1
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AMENDED AND RESTATED ARTICLES OF INCORPORATION OF OKEANIS ECO TANKERS CORP. Reg. No. 96382 |
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REPUBLIC OF THE MARSHALL ISLANDS REGISTRAR OF CORPORATIONS DUPLICATE COPY The original of this Document was filed in accordance with Section 5 of the Business Corporations Act on |
NON RESIDENT |
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December 5, 2023 |
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Mariam Drame |
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Deputy Registrar |
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STATEMENT TO AMEND AND RESTATE
THE AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
OKEANIS ECO TANKERS CORP.
UNDER SECTION 93 OF THE
THE MARSHALL ISLANDS BUSINESS CORPORATIONS ACT
The undersigned, Iraklis Sbarounis, as Chief Financial Officer of Okeanis Eco Tankers Corp., a corporation incorporated under the laws of the Republic of the Marshall Islands on April 30, 2018 (the “Corporation”), for the purpose of amending and restating the Amended and Restated Articles of Incorporation of said Corporation pursuant to Section 93 of the Marshall Islands Business Corporations Act, as amended, hereby certifies that:
1. |
The name of the Corporation is: Okeanis Eco Tankers Corp. |
2. |
The Articles of Incorporation were filed with the Registrar of Corporations on the 30th day of April, 2018. |
3. |
The Amended and Restated Articles of Incorporation were filed with the Registrar of Corporations on the 27th day of June, 2018. |
4. |
The Amended and Restated Articles of Incorporation are amended and restated in their entirety and are replaced by the Second Amended and Restated Articles of Incorporation attached hereto. The sections of the Amended and Restated Articles of Incorporation to be amended by the Second Amended and Restated Articles of Incorporation are sections D, E, H, J and former section L (now Q). The following sections have been added to the Second Amended and Restated Articles of Incorporation: L-P. |
5. |
The Second Amended and Restated Articles of Incorporation were duly adopted in accordance with the provisions of Sections 88(1) and 93 of the Marshall Islands Business Corporations Act. The Second Amended and Restated Articles of Incorporation were duly adopted by vote of the holders of record of no less than a majority of the issued and outstanding shares of the Corporation. |
IN WITNESS WHEREOF, the undersigned has executed this Statement to Amend and Restate the Amended and Restated Articles of Incorporation on this 5th day of December, 2023.
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/s/ Iraklis Sbarounis |
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Authorized Person |
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Name: Iraklis Sbarounis |
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Title: Chief Financial Officer |
SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
OKEANIS ECO TANKERS CORP.
PURSUANT TO THE MARSHALL ISLANDS BUSINESS CORPORATIONS ACT
A. |
The name of the corporation formed hereby (the “Corporation”) is: |
OKEANIS ECO TANKERS CORP.
B. |
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may now or hereafter be organized under the Marshall Islands Business Corporations Act (the “BCA”) may have. |
C. |
The registered address of the Corporation in the Marshall Islands is Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960. The name of the Corporation’s registered agent at such address is The Trust Company of the Marshall Islands, Inc. |
D. |
The aggregate number of shares of stock that the Corporation is authorized to issue is 600,000,000 registered shares of capital stock, each with a par value of US$0.001 per share, of which (i) 500,000,000 shares shall be registered shares of common stock, par value US$0.001 per share (the “Common Shares”), and (ii) 100,000,000 shares shall be registered shares of preferred stock, each with a par value of US$0.001 (the “Preferred Shares”). The Preferred Shares may be issued from time to time in one or more series or classes. The Board of Directors is vested with authority, with respect to any series or class of Preferred Shares, to fix by resolution or resolutions the designations and the powers, preferences and relative, participating, optional or other rights and qualifications, limitations or restrictions thereon of each such class or series, including, without limitation, (1) the designation of the series or class; (2) the number of shares in the series or class, which the Board of Directors may, except where otherwise provided in the Preferred Shares designation, to the extent permitted by applicable law, increase or decrease, but not below the number of shares then outstanding; (3) whether dividends, if any, will be cumulative or non-cumulative and the dividend rate of the series or class; (4) the dates at which dividends, if any, will be payable; (5) the redemption rights and price or prices, if any, for shares of the series or class; (6) the terms and amounts of any sinking fund provided for the purchase or redemption of shares of the series or class; (7) the amounts payable on shares of the series or class in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the affairs of the Corporation; (8) whether the shares of the series or class will be convertible into shares of any other class or series, or any other security, of the Corporation or any other entity, and, if so, the specification of the other class or series or other security, the conversion price or prices or rate or rates, any rate adjustments, the date or dates as of which the shares will be convertible and all other terms and conditions upon which the conversion may be made; (9) conditions or restrictions on the issuance of shares of the same series or class or of any other class or series of the Preferred Shares; (10) the voting rights, if any, of the holders of the series or class; and (11) the rights to elect and remove one or more directors of the Corporation. In case the number of shares of any series or class shall be decreased, the shares constituting such decrease shall resume the status of undesignated Preferred Shares. The powers, preferences and relative, participating, optional and other special rights of each class and series of Preferred Shares, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other classes and series of Preferred Shares at any time outstanding. |
E. |
No security of the Corporation whether now or hereafter authorized, solely by reason thereof, shall entitle its holder to any preferential or preemptive right to acquire additional shares of capital stock or any other security of the Corporation. Nothing herein shall prevent the Corporation from granting preferential or preemptive rights by contract. |
F. |
The Corporation shall have every power which a corporation now or hereafter organized under the BCA may have. |
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G. |
No director shall be personally liable to the Corporation or any of its shareholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or any limitation thereof is not permitted under the BCA. If the BCA is amended hereafter to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent authorized by the BCA, as so amended. Any repeal or modification of this Article G shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification with respect to acts or omissions occurring prior to such repeal or modification. |
H. |
(a) The number of directors constituting the entire Board of Directors of the Corporation (the “Board of Directors”) shall be one or more, as fixed from time to time by the shareholders or by the Board of Directors; provided, however, that the number of directors shall not be reduced so as to shorten the term of any director at the time in office. |
(b) Any vacancies in the Board of Directors for any reason, and any created directorships resulting from any increase in the number of directors, may be filled by the vote of a majority of the members of the Board of Directors then in office, although less than a quorum, and any directors so chosen shall hold office until the next election of directors. No decrease in the number of directors shall shorten the term of any incumbent director.
(c) Directors shall be elected by a plurality of the votes cast at a meeting of shareholders by the holders of shares entitled to vote in the election. Cumulative voting, as defined in Section 71(2) of the BCA, shall not be used to elect directors.
I. |
The Corporation will comply with all applicable provisions of the Republic of the Marshall Islands Business Corporations Act, including retention, maintenance, and production of accounting, shareholder, beneficial owner, and director and officer records in accordance with Division 8 of the Republic of the Marshall Islands Business Corporations Act. |
J. |
At all meetings of shareholders of the Corporation, except as otherwise expressly provided by law, there must be present either in person or by proxy shareholders of record holding at least one-third of the voting power of shares issued and outstanding and entitled to vote at such meetings in order to constitute a quorum, but if less than a quorum is present, a majority of the voting power of those shares present either in person or by proxy shall have the power to adjourn any meeting until a quorum shall be present. |
K. |
Except as provided in the BCA, any action required or permitted by the BCA to be taken at a meeting of shareholders of the Corporation may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, is signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. An electronic transmission consenting to an action to be taken and transmitted by a shareholder or proxyholder, or by a person or persons authorized to act for a shareholder or proxyholder, shall be deemed to be written and signed for the purposes of this Article K, provided that any such electronic transmission sets forth or is delivered with information from which the corporation can determine (a) that the electronic transmission was transmitted by the shareholder or proxyholder or by a person or persons authorized to act for the shareholder or proxyholder and (b) the date on which such shareholder or proxyholder or authorized person or persons transmitted such electronic transmission. |
L. |
In furtherance and not in limitation of the powers conferred by the laws of the Republic of the Marshall Islands, the Board of Directors is expressly authorized to make, adopt, alter, amend, change or repeal the Bylaws of the Corporation by resolutions adopted by the Board of Directors, subject to any Bylaw requiring the affirmative vote of a larger percentage of the members of the Board of Directors. |
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M. |
Advance notice of shareholder nominations for the election of directors and of business to be brought by shareholders before any meeting of the shareholders of the Corporation shall be given in the manner provided in the Bylaws of the Corporation. |
N. |
If any class or series of Preferred Shares are issued with more or less than one vote for any share, on any matter, every reference in these Second Amended and Restated Articles of Incorporation and the Bylaws to a majority or other proportion of stock or shares shall refer to such majority or other proportion of the votes of such stock or shares. |
O. |
The Corporation reserves the right to amend, alter, change or repeal any provision contained in these Second Amended and Restated Articles of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon the shareholders herein are granted subject to this reservation. |
P. |
The Corporation may transfer its corporate domicile from the Marshall Islands to any other place in the world. |
Q. |
If any portion of these Second Amended and Restated Articles of Incorporation is declared invalid by any court or other governmental authority of competent jurisdiction or violates applicable law, such declaration or violation shall not affect the remainder of these Second Amended and Restated Articles of Incorporation, and the remainder of these Second Amended and Restated Articles of Incorporation shall be interpreted to give full effect to its terms. |
4
Exhibit 1.2
OKEANIS ECO TANKERS CORP.
(the “Corporation”)
THIRD AMENDED AND RESTATED BYLAWS
As of 5th December, 2023
ARTICLE I
OFFICES
The principal place of business of the Corporation shall be at such place or places as the Board of Directors of the Corporation (the “Board”) shall from time to time determine. The Corporation may also have an office or offices at such other places within or without the Marshall Islands as the Board may from time to time appoint or the business of the Corporation may require.
ARTICLE II
SHAREHOLDERS
Section 1. Annual Meeting: The annual meeting of shareholders of the Corporation shall be held on such day and at such time and place within or without the Marshall Islands as the Board may determine for the purpose of electing directors and of transacting such other business as may properly be brought before the meeting. The Chairman of the Board (the “Chairman”) or, in the Chairman’s absence or if there is no Chairman, another person designated by the Board, shall act as the chairman of all annual meetings of shareholders. If there is a failure to hold the annual meeting for a period of 90 days after the date designated therefor, or if no date has been designated for a period of 13 months after the organization of the Corporation or after its last annual meeting, holders of not less than 10% of the shares entitled to vote in an election of directors may, in writing, demand the call of a special meeting specifying the time thereof, which shall not be less than two nor more than three months from the date of such call. The secretary of the Corporation upon receiving the written demand shall promptly give notice of such meeting, or if he fails to do so within five business days thereafter, any shareholder signing such demand may give such notice. The shares of stock represented at such meeting, either in person or by proxy, and entitled to vote thereat, shall constitute a quorum, notwithstanding any provision of the Articles of Incorporation of the Corporation (as amended, the “Articles of Incorporation”) or these Bylaws to the contrary.
Section 2. (a) Nature of Business at Annual Meetings of Shareholders: No business may be transacted at an annual meeting of shareholders, other than business that is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board (or any duly authorized committee thereof); (b) otherwise properly brought before the annual meeting by or at the direction of the Board (or any duly authorized committee thereof) or (c) otherwise properly brought before the annual meeting by any shareholder of the Corporation (A) who is a shareholder of record on the date of the giving of the notice provided for in this Section 2 of this Article II and has remained a shareholder of record through the record date for the determination of shareholders entitled to vote at such annual meeting and (B) who complies with the notice procedures set forth in Section 2(b) of this Article II.
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(b) In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a shareholder, such shareholder must have given timely notice thereof in proper written form to the Secretary of the Corporation. To be timely, a shareholder’s notice to the Secretary of the Corporation must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 90 days nor more than 120 days prior to the first anniversary date of the immediately preceding annual meeting of shareholders.
(c) To be in proper written form, a shareholder’s notice to the Secretary of the Corporation must set forth, as to each matter such shareholder proposes to bring before the annual meeting, (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of such shareholder, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such shareholder, (iv) a description of all arrangements or understandings between such shareholder and any other person or persons (including their names) in connection with the proposal of such business by such shareholder and any material interest of such shareholder in such business and (v) a representation that such shareholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting. In addition, notwithstanding anything in this Section 2 of this Article II to the contrary, a shareholder intending to nominate one or more persons for election as a director at an annual meeting must comply with Article III of these Bylaws for such nomination or nominations to be properly brought before such meeting.
(d) No business shall be conducted at the annual meeting of shareholders except business brought before the annual meeting in accordance with the procedures set forth in this Article II; provided, however, that, once business has been properly brought before the annual meeting in accordance with such procedures, nothing in this Article II shall be deemed to preclude discussion by any shareholder of any such business. If the chairman of an annual meeting determines that business was not properly brought before the annual meeting in accordance with the foregoing procedures, the chairman of the meeting shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.
Section 3. Special Meeting: Special meetings of shareholders, unless otherwise prescribed by law, may be called for any purpose or purposes at any time by the Chairman, the Chief Executive Officer, the Board, or the holders of not less than 20% of the voting power of the shares entitled to vote on the matter to be voted at such special meeting. No other person or persons are permitted to call a special meeting, unless otherwise prescribed by non-waivable provisions of applicable law. No business may be conducted at the special meeting other than business brought before the meeting by the person calling the meeting. Such meetings shall be held at such place and on a date and at such time as may be designated in the notice thereof by the officer of the Corporation designated by the Board to deliver the notice of such meeting. The business transacted at any special meeting shall be limited to the purposes stated in the notice.
Section 4. Notice of Meetings: Notice of every annual and special meeting of shareholders, other than any meeting the giving of notice of which is otherwise prescribed by law, stating the date, time and place, and in the case of special meetings, the purpose thereof and the name of the person or persons at whose direction the notice is being issued, shall be given personally or sent by mail or by electronic transmission not less than 15 but not more than 60 days before such meeting, to each shareholder of record entitled to vote thereat.
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If mailed, notice shall be deemed to have been given when deposited in the mail, directed to the shareholder at his or her address as the same appears on the record of shareholders of the Corporation or at such address as to which the shareholder has given notice to the Secretary. If sent by electronic transmission, notice given pursuant to this section shall be deemed given when directed to a number or electronic mail address at which the shareholder has consented to receive notice. Notice of a meeting need not be given to any shareholder who submits a signed or electronically transmitted waiver of notice, whether before or after the meeting, or who attends the meeting without objecting at the beginning of the meeting thereof to the transaction of any business because the meeting is not lawfully called or convened.
Section 5. Adjournments: Any meeting of shareholders, annual or special, may adjourn from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. If the meeting is adjourned for lack of quorum, notice of the new meeting shall be given to each shareholder of record entitled to vote at the meeting. If after an adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record on the new record date entitled to notice pursuant to Section 4 of this Article II.
Section 6. Quorum: Quorum for meetings of shareholders shall be as set forth in the Corporation’s Articles of Incorporation. If the Articles of Incorporation do not establish quorum for meetings of shareholders, the presence in person or by proxy of the minimum number of votes which is permissible by statute shall constitute a quorum. If less than a quorum is present, a majority of the total number of votes represented by those shares present either in person or by proxy shall have power to adjourn any meeting until a quorum shall be present.
Section 7. Voting: If a quorum is present, and except as otherwise expressly provided by law, the Articles of Incorporation then in effect or these Bylaws, the affirmative vote of a majority of the votes cast by holders of shares of stock represented at the meeting shall be the act of the shareholders. At any meeting of shareholders each shareholder entitled to vote any shares on any matter to be voted upon at such meeting shall be entitled to one vote on such matter for each such share, and may exercise such voting right either in person or by proxy. Shareholders may act by written consent without a meeting to the extent provided for within the Articles of Incorporation, and, if not so provided, any action which may be taken at a meeting of the shareholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed or electronically transmitted by all the shareholders entitled to vote with respect to the subject matter thereof.
Section 8. Fixing of Record Date: For the purpose of determining the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or to express consent to or dissent from any proposal without a meeting, or for the purpose of determining shareholders entitled to receive payment of any dividend or the allotment of any rights, or for the purpose of any other action, the Board may fix, in advance a date as the record date for any such determination of shareholders. Such date shall not be more than 60 nor less than 15 days before the date of such meeting, nor more than 60 days prior to any other action.
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ARTICLE III
DIRECTORS
Section 1. Number: The affairs, business and property of the Corporation shall be managed by its Board. The number of directors is determined according to the Articles of Incorporation.
Section 2. How Elected: Except as otherwise provided by law or Section 5 of this Article III or the Articles of Incorporation, the directors of the Corporation shall be elected by a plurality of the votes cast at the annual meeting of shareholders by the holders of shares entitled to vote in the election.
Section 3. Nominations: (a) Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation, except as may be otherwise provided in the Articles of Incorporation with respect to the right of holders of preferred shares of the Corporation to nominate and elect a specified number of directors in certain circumstances. Nominations of persons for election to the Board may be made at any annual meeting of shareholders (i) by or at the direction of the Board (or any duly authorized committee thereof) or (ii) by any shareholder of the Corporation (A) who is a shareholder of record on the date of the giving of the notice provided for in this Section 3 of this Article III and on the record date for the determination of shareholder entitled to vote at such meeting and (B) who complies with the notice procedures set forth in Section 3(b) of this Article III.
(b) In addition to any other applicable requirements, for a nomination to be made by a shareholder, such shareholder must have given timely notice thereof in proper written form to the Secretary of the Corporation. To be timely, a shareholder’s notice to the Secretary of the Corporation must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 90 days nor more than 120 days prior to the first anniversary date of the immediately preceding annual meeting of shareholders.
(c) To be in proper written form, a shareholder’s notice to the Secretary of the Corporation must set forth: (i) as to each person whom the shareholder proposes to nominate for election as a director (A) the name, age, business address and residence address of the person, (B) the principal occupation or employment of the person, (C) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by the person and (D) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder applicable to issuers that are not foreign private issuers and (ii) as to the shareholder giving the notice (A) the name and record address of such shareholder, (B) the class or series and number of shares of capital stock of the Corporation which are owned beneficially and of record by such shareholder, (C) a description of all arrangements or understandings between such shareholder and each proposed nominee and any other person and persons (including their names) pursuant to which the nomination(s) are to be made by such shareholder, (D) a representation that such shareholder intends to appear in person or by proxy at the meeting to nominate the person or persons named in its notice and (E) any other information relating to such shareholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.
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(d) No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 3 of this Article III. If the chairman of the meeting determines that a nomination was not made in accordance with the foregoing procedures, the chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.
Section 4. Removal: Any or all of the directors may be removed for with or without cause by vote of the shareholders and any or all of the directors may be removed by the Board with cause.
Section 5. Vacancies: Any vacancies in the Board shall be governed by the Articles of Incorporation.
Section 6. Regular Meetings: Regular meetings of the Board may be held at such time and place as may be determined by resolution of the Board and no notice shall be required for any regular meeting. Except as otherwise provided by law, any business may be transacted at any regular meeting.
Section 7. Special Meetings: Special meetings of the Board may, unless otherwise prescribed by law, be called from time to time by the Chairman, the Board, any two directors, or any officer of the Corporation who is also a director. The Chief Executive Officer or the Secretary shall call a special meeting of the Board upon written request directed to either of them by any of the foregoing persons stating the time, place, and purpose of such special meeting. Special meetings of the Board shall be held on a date and at such time and at such place as may be designated in the notice thereof by the officer calling the meeting.
Section 8. Notice of Special Meetings: Notice of the date, time and place of each special meeting of the Board shall be given to each director at least 48 hours prior to such meeting, unless the notice is given orally or delivered in person, in which case it shall be given at least 24 hours prior to such meeting. For the purpose of this section, notice shall be deemed to be duly given to a director if given to him personally (including by telephone) or if such notice is delivered to such director by mail or email to his or her last known address. Notice of a meeting need not be given to any director who submits a signed waiver of notice or waives by electronic transmission, whether before or after the meeting or who attends the meeting without protesting, at the beginning of the meeting, the lack of notice to him.
Section 9. Quorum: The greater of (i) one third of the entire Board and (ii) a majority of the directors at the time in office, present in person or by proxy or by conference telephone, shall constitute a quorum for the transaction of business.
Section 10. Interested Directors. No contract or other transaction between the Corporation and one or more of the directors, or between the Corporation and any other corporation, firm, association or other entity in which one or more of the Corporation’s directors are directors or officers, or have a substantial financial interest, shall be either void or voidable for this reason alone or by reason alone that such director or directors are present at the meeting of the Board, or of a committee thereof, which approves such contract or transaction, or that his, her or their votes are counted for such purpose: (a) if the material facts as to such director’s interest in such contract or transaction and as to any such common directorship, officership or financial interest are disclosed in good faith or known to the Board or committee, and the Board or committee approves such contract or transaction by a vote sufficient for such purpose without counting the vote of such interested director, or, if the votes of the disinterested directors are insufficient to constitute an act of the board as defined in Section 55 of the Marshall Islands Business Corporations Act (the “BCA”), by unanimous vote of the disinterested directors; or (b) if the material facts as to such director’s interest in such contract or transaction and as to any such common directorship, officership or financial interest are disclosed in good faith or known to the shareholders entitled to vote thereon, and such contract or transaction is approved by vote of such shareholders.
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Interested directors may be counted in determining the presence of a quorum at a meeting of the Board or of a committee which authorizes the contract or transaction.
Section 11. Voting: The vote of the majority of the directors, present in person, by proxy, or by conference telephone, at a meeting at which a quorum is present shall be the act of the Board. Any action required or permitted to be taken at a meeting may be taken without a meeting if all members of the Board (or committee thereof) consent thereto in writing or by electronic transmission. Members of the Board or any committee thereof may participate in a meeting of such board or committee by means of communications equipment which permits the persons participating in the meeting to communicate with each other, and participation in a meeting pursuant to this paragraph shall constitute presence in person at such meeting.
Section 12. Compensation of Directors: The Board may from time to time, in its discretion, fix the amounts which shall be payable to members of the Board and to members of any committee, for attendance at the meetings of the Board and for services rendered to the Corporation.
ARTICLE IV
COMMITTEES
The Board may, by resolution or resolutions passed by a majority of the entire Board designate one or more committees to consist of one or more directors of the Corporation, each of which shall perform such action and have such authority and powers as shall be delegated to it by said resolution or resolutions or as provided for in these Bylaws. Members of any committee shall hold office for such period as may be prescribed by the vote of a majority of the entire Board. Vacancies in membership of such committees shall be filled by the Board. Committees may adopt their own rules of procedure and may meet at stated times or on such notice as they may determine. Each committee shall keep a record of its proceedings and report the same to the Board when requested. Unless a greater voting requirement is established by the entire Board, committees act and approve matters by a vote of a majority of the committee members. No committee shall have the authority to take the actions prohibited by Section 57 of the BCA or any successor section (which, as of the date hereof, provides that no committee shall have the authority as to the following matters: (a) the submission to shareholders of any action that requires shareholders’ authorization under the BCA; (b) the filling of vacancies in the Board or in a committee; (c) the fixing of compensation of the directors for serving on the Board or on any committee; (d) the amendment or repeal of these Bylaws, or the adoption of new Bylaws; or (e) the amendment or repeal of any resolution of the Board which by its terms shall not be so amendable or repealable).
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ARTICLE V
OFFICERS
Section 1. Number of Designation: The Board shall appoint a Secretary and such other officers with such duties as it may deem necessary. Officers may be of any nationality, need not be residents of the Marshall Islands and may be, but are not required to be, directors. Officers of the Corporation may be natural persons, a Marshall Islands corporation or other business entity. Any two or more offices may be held by the same person.
The salaries of the officers and any other compensation paid to them shall be fixed from time to time by the Board. The Board may at any meeting appoint additional officers. Each officer shall hold office until his or her successor shall have been duly appointed and qualified, except in the event of the earlier termination of his or her term of office, through death, resignation, removal or otherwise. Any officer may be removed by the Board at any time with or without cause. Any vacancy in an office may be filled for the unexpired portion of the term of such office by the Board at any regular or special meeting.
Section 2. Chief Executive Officer: The Chief Executive Officer, if any, shall have general management of the affairs of the Corporation together with the powers and duties usually incident to the office of Chief Executive Officer, except as specifically limited by appropriate written resolution of the Board and shall have such other powers and perform such other duties as may be assigned to him by the Board.
Section 3. Treasurer: The Treasurer, if any, shall have general supervision over the care and custody of the funds, securities, and other valuable effects of the Corporation and shall deposit the same or cause the same to be deposited in the name of the Corporation in such depositories as the Board may designate, shall disburse the funds of the Corporation as may be ordered by the Board, shall have supervision over the accounts of all receipts and disbursements of the Corporation, shall, whenever required by the Board, render or cause to be rendered financial statements of the Corporation, shall have the power and perform the duties usually incident to the office of Treasurer, and shall have such powers and perform such other duties as may be assigned to him by the Board or the Chief Executive Officer.
Section 4. Secretary: The Secretary may act as Secretary of all meetings of the shareholders and of the Board at which he or she is present and desires to so act, shall have supervision over the giving and serving of notices of the Corporation, shall be the custodian of the corporate records and of the corporate seal of the Corporation, if any, shall be empowered to affix the corporate seal, if any, to those documents, the execution of which, on behalf of the Corporation under its seal, is duly authorized and when so affixed may attest the same, and shall exercise the powers and perform such other duties as may be assigned to him by the Board or the Chief Executive Officer. If the Secretary is a corporation, the duties of the Secretary may be carried out by any authorized representative of such corporation.
Section 5. Other Officers; Delegation: Officers other than those treated in Sections 2 through 4 of this Article shall exercise such powers and perform such duties as are customarily incident to their respective officers or as may be assigned to them by the Board or the Chief Executive Officer. Subject to any limitations imposed by the Board, any officer may delegate his or her powers and duties to any person, which delegation need not be in writing.
Section 6. Security: The Board may require any officer to give security for the faithful performance of his or her duties.
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ARTICLE VI
CERTIFICATES FOR SHARES
Section 1. Form and Issuance: The shares of the Corporation may be represented by certificates in a form meeting the requirements of law and approved by the Board. Certificates, to the extent issued, shall be signed by an officer(s) and/or a director. These signatures may be facsimiles if the certificate is countersigned by a transfer agent other than the Corporation itself or its employees. Shares of any class or series may also be represented in uncertificated form, and, specifically, the Corporation may issue shares to be represented in any manner permitted or required by the rules of any stock exchange(s) on which the shares of the Corporation may be listed.
Section 2. Loss of Stock Certificates: The Board may direct a new certificate or certificates of stock to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost or destroyed. When authorizing such issue of a new certificate or certificates, the Board may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his or her legal representative, to advertise the same in such manner as it shall require and/or give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost or destroyed. This Section does not require the Board to review or otherwise determine the replacement of stock certificates.
ARTICLE VII
DIVIDENDS
Dividends may be declared in conformity with law by, and at the discretion of, the Board. Dividends may be declared and paid in cash, stock, or other property of the Corporation.
ARTICLE VIII
INDEMNIFICATION
Section 1. Indemnification. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of no contest, or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.
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The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action or suit by or in the right of the Corporation to procure judgment in its favor by reason of the fact that he is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by him or in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the Corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper.
Section 2. When a Director or Officer is Successful. To the extent that a director or officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to above, or in the defense of a claim, issue or matter therein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection therewith.
Section 3. Advancement of Expenses. The right to be indemnified shall include, without limitation, the right of an indemnitee to be paid expenses in advance of the final disposition of any proceeding upon receipt of an undertaking to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified hereunder.
Section 4. Continuation of Indemnification. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VIII shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
Section 5. Other Rights. The rights of indemnification shall not be exclusive of any other rights to which an indemnitee may be entitled, and, to the extent permitted by law, shall not be limited by the provisions of Section 60 of the BCA or any successor statute.
Section 6. Insurance. The Corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director or officer against any liability asserted against such person and incurred by such person in such capacity whether or not the Corporation would have the power to indemnify such person against such liability by law or under the provisions of these Bylaws.
Section 7. Repeal. Any repeal or modification of this Article VIII shall not adversely affect any rights to indemnification and to the advancement of expenses of a director or officer of the Corporation existing at the time of such repeal or modification with respect to any acts or omissions occurring prior to such repeal or modification.
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ARTICLE IX
CORPORATE SEAL
The seal of the Corporation, if any, shall be circular in form, with the name of the Corporation in the circumference and such other appropriate legend as the Board may from time to time determine.
ARTICLE X
FISCAL YEAR
The fiscal year of the Corporation shall be such period of twelve consecutive months as the Board may designate.
ARTICLE XI
AMENDMENTS
The Board is expressly authorized to make, adopt, alter, amend, change or repeal these Bylaws by resolutions adopted by the Board. The shareholders may also make, adopt, alter, amend, change or repeal these Bylaws.
ARTICLE XII
SEVERABILITY; CHANGES IN LAW; MISCELLANEOUS
If any provision of these Bylaws is or becomes inconsistent with any provision of the Articles of Incorporation, the BCA or any other applicable law, the provision of these Bylaws shall not be given any effect to the extent of such inconsistency but shall otherwise be given full force and effect. If any of the provisions of the BCA referred to above are modified or superseded, the references to those provisions is to be interpreted to refer to the provisions as so modified or superseded. The headings of the Articles and Sections contained in these Bylaws are for convenience only and shall not be deemed to control or affect the meaning or construction of any provision of these Bylaws. Whenever the context may require, any pronouns used in these Bylaws shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural, and vice versa.
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Exhibit 2.2
DESCRIPTION OF SECURITIES REGISTERED UNDER SECTION 12 OF THE EXCHANGE ACT
As of December 31, 2023, Okeanis Eco Tankers Corp. (the “Company”, “we”, “us” and “our”) had the following single class of securities registered under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”):
Title of each class |
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Trading Symbol(s) |
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Name of exchange on which registered |
Shares of Common Stock, par value $0.001 |
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ECO |
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New York Stock Exchange |
Our common shares also trade on the Oslo Børs under the symbol “OET.”
Capitalized terms used but not defined herein have the meanings given to them in the Company’s annual report on Form 20-F for the year ended December 31, 2023 (the “Annual Report”).
The following is a summary of the description of the Company’s capital stock and the material terms of the Company’s second amended and restated articles of incorporation and our third amended and restated bylaws. The following summary does not purport to be complete and is subject to, and is qualified in its entirety, by reference to the applicable provisions of our second amended and restated articles of incorporation and our third amended and restated bylaws, which are filed as exhibits to the Annual Report. We encourage you to refer to our second amended and restated articles of incorporation and our third amended and restated bylaws for additional information. The Business Corporations Act (“BCA”) of the Republic of the Marshall Islands may also affect the terms of our capital stock. We were incorporated with the Marshall Islands Registrar of Corporations with entity number 96382.
There is no limitation on the right to own securities or the rights of non-resident shareholders to hold or exercise voting rights on our securities under Marshall Islands law or our articles of incorporation or bylaws.
Purpose
Our objects and purposes, as provided in Section B of second amended and restated our articles of incorporation, are to engage in any lawful act or activity for which corporations may now or hereafter be organized under the BCA.
Authorized Capitalization
Our authorized capital stock consists of 500,000,000 shares of common stock, par value $0.001, and 100,000,000 shares of preferred stock, par value $0.001. All of our shares of stock are in registered form.
Description of Common Stock
Each outstanding share of common stock generally entitles the holder to one vote on all matters submitted to a vote of shareholders. Subject to preferences that may be applicable to any outstanding shares of preferred stock, holders of shares of common stock are entitled to receive, ratably based on the number of shares held, all dividends, if any, declared by our board of directors out of funds legally available for dividends. Upon our dissolution or liquidation, after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of our common stock will be entitled to receive pro rata based on the number of shares held our remaining assets available for distribution. Holders of common stock do not have conversion, redemption or preemptive rights to subscribe to any of our securities. The rights, preferences and privileges of holders of common stock are subject to the rights of the holders of our preferred stock. Our board of directors may determine to repurchase our own shares that have already been issued, which decision does not require shareholder approval. Any such purchase can be made out of surplus (as such term is used in the BCA). We are not permitted to repurchase our shares when we are insolvent or would thereby be made insolvent.
Broadridge Corporate Issuer Solutions, LLC is the transfer agent and registrar for our common shares.
To facilitate transfers of our common shares between the New York Stock Exchange and Oslo Børs, all our common shares are primarily held and settled within DTC and secondarily held and settled in Euronext Securities Oslo (the “VPS”) through a Central Securities Depository, or CSD, link. A CSD link structure allows the VPS to give shareholders of our already issued common shares access to such common shares maintained in DTC and vice versa. Consequently, our common shares can be moved between the DTC and VPS to enable shares moving between the New York Stock Exchange and Oslo Børs.
Each person beneficially owning common shares registered through DTC must rely on the procedures thereof and on institutions that have accounts therewith to exercise any rights of a holder of the common shares.
Shares of common stock that have been entered into the DTC book-entry system will be registered in the name of Cede & Co., as nominee for DTC and transfers of beneficial ownership of shares held through DTC will be effected by electronic transfer made by DTC participants. Transfers of shares held outside of DTC or another direct registration system maintained by our transfer agent, and not represented by certificates, are effected by a stock transfer instrument.
Transfer of registered certificates is effected by presenting and surrendering the certificates to us or our transfer agent. A valid transfer requires the registered certificates to be properly endorsed for transfer as provided for in the certificates and accompanied by proper instruments of transfer.
Our articles of incorporation, bylaws and the BCA do not contain transfer restrictions on our shares of common stock or shares of preferred stock.
Description of Preferred Stock
Our board of directors is authorized to provide for the issuance of preferred stock in one or more series with designations as may be stated in the resolution or resolutions providing for the issue of such preferred stock. At the time that any series of our preferred stock is authorized, our board of directors will fix the dividend rights, any conversion rights, any voting rights, redemption provisions, liquidation preferences and any other rights, preferences, privileges and restrictions of that series, as well as the number of shares constituting that series and their designation. Our board of directors could, without shareholder approval, cause us to issue preferred stock which has voting, conversion and other rights and preferences that could adversely affect the voting power and other rights of holders of our common shares and preferred shares, or make it more difficult to effect a change in control. In addition, preferred stock could be used to dilute the share ownership of persons seeking to obtain control of us and thereby hinder a possible takeover attempt which, if our shareholders were offered a premium over the market value of their shares, might be viewed as being beneficial to our shareholders.
Shareholder Meetings
Under our third amended and restated bylaws, annual shareholder meetings will be held at a time and place selected by our board of directors. The meetings may be held in or outside of the Marshall Islands. Special meetings of the shareholders, unless otherwise prescribed by law, may be called for any purpose or purposes at any time by the chairman of the board of directors, the Chief Executive Officer, the board of directors, or the holders of not less than 20% of the voting power of the shares entitled to vote on the matter to be voted at such special meeting. Notice of every annual and special meeting of shareholders shall be given at least
15 but not more than 60 days before such meeting to each shareholder of record entitled to vote thereat. There must be present, in person or by proxy, shareholders of record holding at least one-third of the voting power of shares issued and outstanding and entitled to vote in order to constitute quorum at a shareholders meeting.
Directors
Our directors are elected by the affirmative vote of a plurality of the votes cast at a meeting of the shareholders by the holders of shares entitled to vote in the election. Our articles of incorporation and bylaws do not provide for cumulative voting in the election of directors.
The board of directors must consist of at least one member. Each director shall be elected to serve until the next annual meeting of shareholders and until his successor shall have been duly elected and qualified, except in the event of his death, resignation, removal, or the earlier termination of his term of office. The board of directors has the authority to fix the amounts which shall be payable to the members of our board of directors, and to members of any committee, for attendance at any meeting or for services rendered to us.
Our articles of incorporation provide that no director shall be personally liable to us or our shareholders for monetary damages for breach of fiduciary duty as a director, expect as such exemption from liability or any limitation thereof is not permitted under the BCA.
No contract or transaction between us and one or more of our directors or officers will be void or voidable solely for the following reason, or solely because the director or officer is present at or participates in the meeting of our board of directors or committee thereof which authorizes the contract or transaction, or solely because his or her or their votes are counted for such purpose, if (1) the material facts as to such director’s interest in such contract or transaction and as to any such common directorship, officership or financial interest are disclosed in good faith or known to the board of directors or committee, and the board of directors or committee approves such contract or transaction by a vote sufficient for such purpose without counting the vote of such interested director, or, if the votes of the disinterested directors are insufficient to constitute an act of the board, by unanimous vote of the disinterested directors; or (2) the material facts as to such director’s interest in such contract or transaction and as to any such common directorship, officership or financial interest are disclosed in good faith or known to the shareholders entitled to vote thereon, and such contract or transaction is approved by vote of such shareholders.
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Election and Removal
Our bylaws require parties other than the board of directors to give advance written notice of nominations for the election of directors. These provisions may discourage, delay or prevent the removal of incumbent officers and directors. The entire board of directors or any individual director may be removed, with or without cause by the vote of shareholders. The entire board of directors or any individual director may be removed, with cause, by the vote of the board of directors. Any vacancies in the board of directors for any reason, and any created directorships resulting from any increase in number of directors, may be filled by the vote of the majority of the board of directors then in office, although less than a quorum, and any directors so chosen shall hold office until the next election of directors.
Dissenters’ Rights of Appraisal and Payment
Under the BCA, our shareholders generally have the right to dissent from certain mergers and consolidations and the sale or exchange of all or substantially all of our assets not made in the usual and regular course of our business and receive payment of the fair value of their shares. However, the right of a dissenting shareholder to receive payment of the appraised fair value of his shares is not available under the BCA for the shares of any class or series of stock, which shares at the record date fixed to determine the shareholders entitled to receive notice of and to vote at the meeting of the shareholders to act upon the agreement of merger or consolidation or any sale or exchange of all or substantially all of the property and assets of the corporation not made in the usual course of its business, were either (i) listed on a securities exchange or admitted for trading on an interdealer quotation system or (ii) held of record by more than 2,000 holders. In the event of any further amendment of our second amended and restated articles of incorporation, a shareholder also has the right to dissent and receive payment for his or her shares if the amendment alters certain rights in respect of those shares. The dissenting shareholder must follow the procedures set forth in the BCA to receive payment.
Shareholders’ Derivative Actions
Under the BCA, any of our shareholders may bring an action in our name to procure a judgment in our favor, also known as a derivative action, provided that the shareholder bringing the action is a holder or a holder of a beneficial interest of shares both at the time the derivative action is brought and at the time of the transaction to which the action relates, or that the shares or his interest therein devolved upon him by operation of law.
Amendment of our Articles of Incorporation
In general, amendments to articles of incorporation must be authorized by vote of the holders of a majority of all outstanding shares entitled to vote thereon. In addition, the holders of the outstanding shares of a class shall be entitled to vote as a class upon a proposed amendment, and in addition to the authorization of an amendment by vote of the holders of a majority of all outstanding shares entitled to vote thereon, the amendment shall be authorized by vote of the holders of a majority of all outstanding shares of the class if the amendment would increase or decrease the aggregate number of authorized shares of such class, increase or decrease the par value of the shares of such class, or alter or change the powers, preferences or special rights of the shares of such class so as to affect them adversely.
Anti-takeover Provisions of our Organizational Documents
Several provisions of our second amended and restated articles of incorporation and third amended and restated bylaws may have anti-takeover effects. These provisions are intended to avoid costly takeover battles, lessen our vulnerability to a hostile change of control and enhance the ability of our board of directors to maximize shareholder value in connection with any unsolicited offer to acquire us. However, these anti- takeover provisions, which are summarized below, could also discourage, delay or prevent (1) the merger or acquisition of our company by means of a tender offer, a proxy contest or otherwise, that a shareholder may consider in its best interest and (2) the removal of incumbent officers and directors.
Limited Actions by Shareholders
Our bylaws provide that the chairman of the board of directors, the board of directors, the Chief Executive Officer or the holders of not less than 20% of the voting power of the shares entitled to vote on the matter to be voted at such special meeting may call special meetings of our shareholders and the business transacted at the special meeting is limited to the purposes stated in the notice.
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Accordingly, a shareholder may be prevented from calling a special meeting for shareholder consideration of a proposal over the opposition of our board of directors and shareholder consideration of a proposal may be delayed until the next annual meeting.
Our bylaws provide that shareholders seeking to nominate candidates for election as directors or to bring business before an annual meeting of shareholders must provide timely notice of their proposal in writing. Our bylaws also specify requirements as to the form and content and timeliness of a shareholder’s notice. Generally, to be timely, a shareholder’s notice to our secretary must be delivered to or mailed and received at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary date of the immediately preceding annual meeting of shareholders. These provisions may impede shareholders’ ability to bring matters before an annual meeting of shareholders or make nominations for directors at an annual meeting of shareholders.
Blank Check Preferred Stock
Under the terms of our second amended and restated articles of incorporation, our board of directors has authority, without any further vote or action by our shareholders, to issue up to 100,000,000 shares of blank check preferred stock. Our board of directors may issue shares of preferred stock on terms calculated to discourage, delay or prevent a change of control of our company or the removal of our management.
Election of Directors
Our second amended and restated articles of incorporation and third amended and restated bylaws prohibit cumulative voting in the election of directors. Our bylaws require parties other than our board of directors to give advance written notice of nominations for the election of directors. These provisions may discourage, delay or prevent the removal of incumbent officers and directors.
Certain Marshall Islands Company Considerations
Our corporate affairs are governed by our second amended and restated articles of incorporation, third amended and restated bylaws and the BCA. The provisions of the BCA resemble provisions of the corporation laws of a number of states in the United States, including Delaware. While the BCA also provides that it is to be interpreted according to the laws of the State of Delaware and other states with substantially similar legislative provisions, there have been few court cases interpreting the BCA in the Marshall Islands, and we cannot predict whether Marshall Islands courts would reach the same conclusions as Delaware or other courts in the United States. Accordingly, you may have more difficulty in protecting your interests under Marshall Islands law in the face of actions by our management, directors or controlling shareholders than would shareholders of a corporation incorporated in a U.S. jurisdiction that has developed a substantial body of case law. Furthermore, the Marshall Islands lacks a bankruptcy statute, and in the event of any bankruptcy, insolvency, liquidation, dissolution, reorganization or similar proceeding involving the Company, the bankruptcy laws of the United States or of another country having jurisdiction over the Company would apply. The following table provides a comparison between certain statutory provisions of the BCA and the Delaware General Corporation Law relating to shareholders’ rights.
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Marshall Islands |
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Delaware |
Shareholder Meetings | ||
Held at a time and place as designated in the bylaws. |
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May be held at such time or place as designated in the certificate of incorporation or the bylaws, or if not so designated, as determined by the board of directors. |
Special meetings of the shareholders may be called by the board of directors or by such person or persons as may be authorized by the articles of incorporation or by the bylaws. |
Special meetings of the shareholders may be called by the board of directors or by such person or persons as may be authorized by the certificate of incorporation or by the bylaws. |
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May be held in or outside of the Marshall Islands. |
May be held in or outside of Delaware. |
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Notice: |
Notice: |
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Whenever shareholders are required to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, date and hour of the meeting and, unless it is an annual meeting, indicate that it is being issued by or at the direction of the person calling the meeting. |
Whenever shareholders are required to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, if any, date and hour of the meeting, and the means of remote communication, if any. |
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A copy of the notice of any meeting shall be given personally or sent by mail or electronically not less than 15 nor more than 60 days before the meeting. If sent by electronic transmission, notice given shall be deemed given when directed to a number or electronic mail address at which the shareholder has consented to receive notice. |
Written notice shall be given not less than 10 nor more than 60 days before the meeting. |
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Shareholders’ Voting Rights | ||
Unless otherwise provided in the articles of incorporation, any action required by the BCA to be taken at a meeting of shareholders may be taken without a meeting if a consent or consents in writing, setting forth the action so taken, shall be signed by all the shareholders entitled to vote with respect to the subject matter thereof, or if the articles of incorporation so provide, by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. |
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Any action required to be taken by a meeting of shareholders may be taken without a meeting if a consent for such action is in writing and is signed by shareholders having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. |
Marshall Islands |
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Delaware |
Any person authorized to vote may authorize another person or persons to act for him by proxy. |
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Any person authorized to vote may authorize another person or persons to act for him by proxy. |
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Unless otherwise provided in the articles of incorporation or the bylaws, a majority of shares entitled to vote constitutes a quorum. In no event shall a quorum consist of fewer than one-third of the common shares entitled to vote at a meeting. |
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For stock corporations, the certificate of incorporation or bylaws may specify the number of shares required to constitute a quorum but in no event shall a quorum consist of less than one-third of shares entitled to vote at a meeting. In the absence of such specifications, a majority of shares entitled to vote shall constitute a quorum. |
When a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal of any shareholders. |
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When a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal of any shareholders. |
The articles of incorporation may provide for cumulative voting in the election of directors. |
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The certificate of incorporation may provide for cumulative voting in the election of directors. |
Removal: |
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Removal: |
If the articles of incorporation or the bylaws so provide, any or all of the directors may be removed without cause by vote of the shareholders. Any or all of the directors may be removed for cause by vote of the shareholders. The articles of incorporation or the specific provisions of a bylaw may provide for such removal by action of the board. |
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Any or all of the directors may be removed, with or without cause, by the holders of a majority of the shares entitled to vote except: (1) unless the certificate of incorporation otherwise provides, in the case of a corporation whose board is classified, shareholders may effect such removal only for cause, or (2) if the corporation has cumulative voting, if less than the entire board is to be removed, no director may be removed without cause if the votes cast against such director’s removal would be sufficient to elect such director if then cumulatively voted at an election of the entire board of directors, or, if there be classes of directors, at an election of the class of directors of which such director is a part. |
Directors | ||
Number of board members can be changed by an amendment to the bylaws, by the shareholders, or by action of the board under the specific provisions of a bylaw. |
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Number of board members shall be fixed by, or in a manner provided by, the bylaws, unless the certificate of incorporation fixes the number of directors, in which case a change in the number shall be made only by amendment to the certificate of incorporation. |
The board of directors must consist of at least one member. |
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The board of directors must consist of at least one member. |
If the board of directors is authorized to change the number of directors, it can only do so by a majority of the entire board of directors and so long as no decrease in the number shortens the term of any incumbent director. |
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Dissenter’s Rights of Appraisal | ||
Marshall Islands |
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Delaware |
Shareholders have a right to dissent from any plan of merger, consolidation or sale or exchange of all or substantially all assets not made in the usual and regular course of business, and receive payment of the fair value of their shares. However, the right of a dissenting shareholder under the BCA to receive payment of the appraised fair value of his shares is not available for the shares of any class or series of stock, which shares at the record date fixed to determine the shareholders entitled to receive notice of and to vote at the meeting of the shareholders to act upon the agreement of merger or consolidation or any sale or exchange of all or substantially all property and assets not made in the usual course of business, were either (i) listed on a securities exchange or admitted for trading on an interdealer quotation system or (ii) held of record by more than 2,000 holders. |
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Appraisal rights shall be available for the shares of any class or series of stock of a corporation in a merger or consolidation, subject to limited exceptions, such as a merger or consolidation of corporations listed on a national securities exchange in which listed shares are the offered consideration or if such shares are held of record by more than 2,000 holders. |
A holder of any adversely affected shares who does not vote on or consent in writing to an amendment to the articles of incorporation has the right to dissent and to receive payment for such shares if the amendment: |
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alters or abolishes any preferential right of any outstanding shares having preference; or
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creates, alters or abolishes any provision or right in respect to the redemption of any outstanding shares; or
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alters or abolishes any preemptive right of such holder to acquire shares or other securities; or
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excludes or limits the right of such holder to vote on any matter, except as such right may be limited by the voting rights given to new shares then being authorized of any existing or new class.
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Shareholders’ Derivative Actions | ||
An action may be brought in the right of a corporation to procure a judgment in its favor, by a holder of shares or of voting trust certificates or of a beneficial interest in such shares or certificates. It shall be made to appear that the plaintiff is such a holder at the time the action is brought and that he was such a holder at the time of the transaction of which he complains, or that his shares or his interest therein devolved upon him by operation of law. |
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In any derivative suit instituted by a shareholder or a corporation, it shall be averred in the complaint that the plaintiff was a shareholder of the corporation at the time of the transaction of which he complains or that such shareholder’s stock thereafter devolved upon such shareholder by operation of law. |
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A complaint shall set forth with particularity the efforts of the plaintiff to secure the initiation of such action by the board of directors or the reasons for not making such effort. Such action shall not be discontinued, compromised or settled without the approval of the High Court of the Republic of the Marshall Islands. |
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Marshall Islands |
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Delaware |
Reasonable expenses including attorneys’ fees may be awarded if the action is successful. |
|
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A corporation may require a plaintiff bringing a derivative suit to give security for reasonable expenses if the plaintiff owns less than 5% of any class of stock and the common shares have a value of $50,000 or less. |
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8
Exhibit 4.8
1Dated: 29 January 2024
2 |
MOONSPRITE SHIPPING CORP., a corporation incorporated with Registration Number 96018 and existing under the laws of the Republic of the Marshall Islands with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (Name of sellers), hereinafter called the “Sellers”, have agreed to sell, and |
3 |
SEA 112 LEASING CO. LIMITED, a company incorporated under the laws of Hong Kong with limited liability with its registered office at 46/F, Champion Tower , 3 Garden Road, Central, Hong Kong (Name of buyers), hereinafter called the “Buyers”, have agreed to buy: |
4 |
Name of vessel: NISSOS ANAFI |
5 |
IMO Number: 9856086 |
6 |
Classification Society: :ABS |
7 |
Class Notation: As per Class Certificate |
8Year of Build: 2020 Builder/Yard: Hyundai Heavy Industries Co., Ltd., South Korea
9Flag: Marshall Islands or otherwise agreed Place of Registration: N/A GT/NT: 160,457 / 111,413
10hereinafter called the “Vessel”, on the following terms and conditions:
11Definitions
“Agreement” means this memorandum of agreement which shall for the avoidance of doubt, include the rider provisions from Clauses 19 to 31.
12“Banking Days" are days on which banks are open both in the country of the currency stipulated for
13the Purchase Price in Clause 1 (Purchase Price) and in the place of closing stipulated in Clause 8
14(Documentation) and (add additional jurisdictions as appropriate).
15 |
“Buyers’ Nominated Flag State” means the Republic of the Marshall Islands (state flag state). |
16 |
“Class” means the class notation referred to above. |
17 |
“Classification Society" means the Society referred to above. |
“Dollars” or "$" mean United States dollars, being the lawful currency of the United States of America.
18 |
“Deposit” shall have the meaning given in Clause 2 (Deposit) |
19 |
“Deposit Holder” means (state name and location of Deposit Holder) or, if left blank, the |
20 |
Sellers’ Bank, which shall hold and release the Deposit in accordance with this Agreement. |
21“In writing" or "written" means a letter handed over from the Sellers to the Buyers or vice versa, a
22registered letter, e-mail or telefax.
23“Parties” means the Sellers and the Buyers.
Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
24 |
“Purchase Price” means the price for the Vessel as stated in Clause 1 (Purchase Price). |
25 |
“Sellers’ Account” means (state details of bank account) at the Sellers’ Bank. |
26 |
“Sellers’ Bank” means (state name of bank, branch and details) or, if left blank, the bank |
27 |
notified by the Sellers to the Buyers for receipt of the balance of the Purchase Price. |
28 1. |
Purchase Price - (See Clause 19) |
29 |
The Purchase Price is (state currency and amount both in words and figures). |
30 2.Deposit - intentionally omitted
31As security for the correct fulfilment of this Agreement the Buyers shall lodge a deposit of
32% ( per cent) or, if left blank, 10% (ten per cent), of the Purchase Price (the
33“Deposit”) in an interest bearing account for the Parties with the Deposit Holder within three (3)
34Banking Days after the date that:
35(i) this Agreement has been signed by the Parties and exchanged in original or by
36e-mail or telefax; and
37 |
(ii) the Deposit Holder has confirmed in writing to the Parties that the account has been |
38 |
opened. |
39 |
The Deposit shall be released in accordance with joint written instructions of the Parties. |
40 |
Interest, if any, shall be credited to the Buyers. Any fee charged for holding and releasing the |
41 |
Deposit shall be borne equally by the Parties. The Parties shall provide to the Deposit Holder |
42 |
all necessary documentation to open and maintain the account without delay. |
43 3.Payment (See Clause 19)
44On delivery of the Vessel, but not later than three (3) Banking Days after the date that Notice of
45Readiness has been given in accordance with Clause 5 (Time and place of delivery and
46 |
notices): |
47 |
(i) the Deposit shall be released to the Sellers; and |
48 |
(ii) the balance of the Purchase Price and all other sums payable on delivery by the Buyers |
49 |
to the Sellers under this Agreement shall be paid in full free of bank charges to the |
50 |
Sellers’ Account. |
51 4.Inspection - intentionally omitted
52 |
(a)* The Buyers have inspected and accepted the Vessel's classification records. The Buyers |
53 |
have also inspected the Vessel at/in (state place) on (state date) and have |
54 |
accepted the Vessel following this inspection and the sale is outright and definite, subject only |
55 |
to the terms and conditions of this Agreement. |
56(b)* The Buyers shall have the right to inspect the Vessel's classification records and declare
57whether same are accepted or not within (state date/period).
58The Sellers shall make the Vessel available for inspection at/in (state place/range) within 60The Buyers shall undertake the inspection without undue delay to the Vessel.
59 (state date/period).
Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
Should the
61Buyers cause undue delay they shall compensate the Sellers for the losses thereby incurred.
62The Buyers shall inspect the Vessel without opening up and without cost to the Sellers.
63During the inspection, the Vessel's deck and engine log books shall be made available for
64examination by the Buyers.
65The sale shall become outright and definite, subject only to the terms and conditions of this
66Agreement, provided that the Sellers receive written notice of acceptance of the Vessel from
67the Buyers within seventy-two (72) hours after completion of such inspection or after the
68date/last day of the period stated in Line 59, whichever is earlier.
69Should the Buyers fail to undertake the inspection as scheduled and/or notice of acceptance of
70the Vessel's classification records and/or of the Vessel not be received by the Sellers as
71aforesaid, the Deposit together with interest earned, if any, shall be released immediately to the
72Buyers, whereafter this Agreement shall be null and void.
73*4(a) and 4(b) are alternatives; delete whichever is not applicable. In the absence of deletions,
74alternative 4(a) shall apply.
75 5.Time and place of delivery and notices - (See Clause 24)
76(a) The Vessel shall be delivered and taken over safely afloat at a safe and accessible berth or
77anchorage at/in (state place/range) in the Sellers' option.
78Notice of Readiness shall not be tendered before: (date)
79Cancelling Date (see Clauses 5(c), 6 (a)(i), 6 (a) (iii) and 14):
80(b) The Sellers shall keep the Buyers well informed of the Vessel's itinerary and shall
81provide the Buyers with twenty (20), ten (10), five (5) and three (3) days’ notice of the date the
82Sellers intend to tender Notice of Readiness and of the intended place of delivery.
83When the Vessel is at the place of delivery and physically ready for delivery in accordance with
84this Agreement, the Sellers shall give the Buyers a written Notice of Readiness for delivery.
85(c) If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the
86Vessel will not be ready for delivery by the Cancelling Date they may notify the Buyers in writing
87stating the date when they anticipate that the Vessel will be ready for delivery and proposing a
88new Cancelling Date. Upon receipt of such notification the Buyers shall have the option of
89either cancelling this Agreement in accordance with Clause 14 (Sellers’ Default) within three (3)
90Banking Days of receipt of the notice or of accepting the new date as the new Cancelling Date.
91If the Buyers have not declared their option within three (3) Banking Days of receipt of the
92Sellers' notification or if the Buyers accept the new date, the date proposed in the Sellers'
93notification shall be deemed to be the new Cancelling Date and shall be substituted for the
94Cancelling Date stipulated in line 79.
95If this Agreement is maintained with the new Cancelling Date all other terms and conditions
96hereof including those contained in Clauses 5(b) and 5(d) shall remain unaltered and in full
97 |
force and effect. |
98 |
(d) Cancellation, failure to cancel or acceptance of the new Cancelling Date shall be entirely |
Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
99 |
without prejudice to any claim for damages the Buyers may have under Clause 14 (Sellers’ |
100 |
Default) for the Vessel not being ready by the original Cancelling Date. |
101 |
(e) Should the Vessel become an actual, constructive or compromised total loss before delivery |
102the Deposit together with interest earned, if any, shall be released immediately to the Buyers 103whereafter this Agreement shall be null and void.
104 6.Divers Inspection / Drydocking - intentionally omitted
105 |
(a)* |
106 |
(i) The Buyers shall have the option at their cost and expense to arrange for an underwater |
107 |
inspection by a diver approved by the Classification Society prior to the delivery of the |
108 |
Vessel. Such option shall be declared latest nine (9) days prior to the Vessel’s intended |
109 |
date of readiness for delivery as notified by the Sellers pursuant to Clause 5(b) of this |
110 |
Agreement. The Sellers shall at their cost and expense make the Vessel available for |
111 |
such inspection. This inspection shall be carried out without undue delay and in the |
112 |
presence of a Classification Society surveyor arranged for by the Sellers and paid for by |
113 |
the Buyers. The Buyers’ representative(s) shall have the right to be present at the diver’s |
114 |
inspection as observer(s) only without interfering with the work or decisions of the |
115 |
Classification Society surveyor. The extent of the inspection and the conditions under |
116 |
which it is performed shall be to the satisfaction of the Classification Society. If the |
117 |
conditions at the place of delivery are unsuitable for such inspection, the Sellers shall at |
118 |
their cost and expense make the Vessel available at a suitable alternative place near to |
119 |
the delivery port, in which event the Cancelling Date shall be extended by the additional |
120 |
time required for such positioning and the subsequent re-positioning. The Sellers may |
121 |
not tender Notice of Readiness prior to completion of the underwater inspection. |
122 |
(ii) If the rudder, propeller, bottom or other underwater parts below the deepest load line are |
123 |
found broken, damaged or defective so as to affect the Vessel's class, then (1) unless |
124 |
repairs can be carried out afloat to the satisfaction of the Classification Society, the |
125 |
Sellers shall arrange for the Vessel to be drydocked at their expense for inspection by |
126 |
the Classification Society of the Vessel's underwater parts below the deepest load line, |
127 |
the extent of the inspection being in accordance with the Classification Society's rules (2) |
128 |
such defects shall be made good by the Sellers at their cost and expense to the |
129 |
satisfaction of the Classification Society without condition/recommendation** and (3) the |
130 |
Sellers shall pay for the underwater inspection and the Classification Society's |
131 |
attendance. |
132 |
Notwithstanding anything to the contrary in this Agreement, if the Classification Society |
133 |
do not require the aforementioned defects to be rectified before the next class |
134 |
drydocking survey, the Sellers shall be entitled to deliver the Vessel with these defects |
135 |
against a deduction from the Purchase Price of the estimated direct cost (of labour and |
136 |
materials) of carrying out the repairs to the satisfaction of the Classification Society, |
137 |
whereafter the Buyers shall have no further rights whatsoever in respect of the defects |
138 |
and/or repairs. The estimated direct cost of the repairs shall be the average of quotes |
139 |
for the repair work obtained from two reputable independent shipyards at or in the |
140 |
vicinity of the port of delivery, one to be obtained by each of the Parties within two (2) |
141 |
Banking Days from the date of the imposition of the condition/recommendation, unless |
142 |
the Parties agree otherwise. Should either of the Parties fail to obtain such a quote within |
143 |
the stipulated time then the quote duly obtained by the other Party shall be the sole basis |
144 |
for the estimate of the direct repair costs. The Sellers may not tender Notice of |
145 |
Readiness prior to such estimate having been established. |
Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
146 |
(iii) If the Vessel is to be drydocked pursuant to Clause 6(a)(ii) and no suitable dry-docking |
147 |
facilities are available at the port of delivery, the Sellers shall take the Vessel to a port |
148 |
where suitable drydocking facilities are available, whether within or outside the delivery |
149 |
range as per Clause 5(a). Once drydocking has taken place the Sellers shall deliver the |
150 |
Vessel at a port within the delivery range as per Clause 5(a) which shall, for the purpose |
151 |
of this Clause, become the new port of delivery. In such event the Cancelling Date shall |
152 |
be extended by the additional time required for the drydocking and extra steaming, but |
153 |
limited to a maximum of fourteen (14) days. |
154 |
(b)* The Sellers shall place the Vessel in drydock at the port of delivery for inspection by the |
155 |
Classification Society of the Vessel's underwater parts below the deepest load line, the extent |
156 |
of the inspection being in accordance with the Classification Society's rules. If the rudder, |
157 |
propeller, bottom or other underwater parts below the deepest load line are found broken, |
158 |
damaged or defective so as to affect the Vessel's class, such defects shall be made good at the |
159 |
Sellers' cost and expense to the satisfaction of the Classification Society without |
160 |
condition/recommendation**. In such event the Sellers are also to pay for the costs and |
161 |
expenses in connection with putting the Vessel in and taking her out of drydock, including the |
162 |
drydock dues and the Classification Society's fees. The Sellers shall also pay for these costs |
163 |
and expenses if parts of the tailshaft system are condemned or found defective or broken so as |
164 |
to affect the Vessel's class. In all other cases, the Buyers shall pay the aforesaid costs and |
165 |
expenses, dues and fees. |
166 |
(c) If the Vessel is drydocked pursuant to Clause 6 (a)(ii) or 6 (b) above: |
167 |
(i) The Classification Society may require survey of the tailshaft system, the extent of the |
168 |
survey being to the satisfaction of the Classification surveyor. If such survey is |
169 |
not required by the Classification Society, the Buyers shall have the option to require the |
170 |
tailshaft to be drawn and surveyed by the Classification Society, the extent of the survey |
171 |
being in accordance with the Classification Society's rules for tailshaft survey and |
172 |
consistent with the current stage of the Vessel's survey cycle. The Buyers shall declare |
173 |
whether they require the tailshaft to be drawn and surveyed not later than by the |
174 |
completion of the inspection by the Classification Society. The drawing and refitting of |
175 |
the tailshaft shall be arranged by the Sellers. Should any parts of the tailshaft system be |
176 |
condemned or found defective so as to affect the Vessel's class, those parts shall be |
177 |
renewed or made good at the Sellers' cost and expense to the satisfaction of |
178 |
Classification Society without condition/recommendation**. |
179 |
(ii) The costs and expenses relating to the survey of the tailshaft system shall be borne by |
180 |
the Buyers unless the Classification Society requires such survey to be carried out or if |
181 |
parts of the system are condemned or found defective or broken so as to affect the |
182 |
Vessel's class, in which case the Sellers shall pay these costs and expenses. |
183 |
(iii) The Buyers' representative(s) shall have the right to be present in the drydock, as |
184 |
observer(s) only without interfering with the work or decisions of the Classification |
185 |
Society surveyor. |
186 |
(iv) The Buyers shall have the right to have the underwater parts of the Vessel cleaned |
187 |
and painted at their risk, cost and expense without interfering with the Sellers' or the |
188 |
Classification Society surveyor's work, if any, and without affecting the Vessel's timely |
189 |
delivery. If, however, the Buyers' work in drydock is still in progress when the |
190 |
Sellers have completed the work which the Sellers are required to do, the additional |
191 |
docking time needed to complete the Buyers' work shall be for the Buyers' risk, cost and |
192 |
expense. In the event that the Buyers' work requires such additional time, the Sellers |
Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
193 |
may upon completion of the Sellers' work tender Notice of Readiness for delivery whilst |
194 |
the Vessel is still in drydock and, notwithstanding Clause 5(a), the Buyers shall be |
195 |
obliged to take delivery in accordance with Clause 3 (Payment), whether the Vessel is in |
196 |
drydock or not. |
197 |
*6 (a) and 6 (b) are alternatives; delete whichever is not applicable. In the absence of deletions, |
198 |
alternative 6 (a) shall apply. |
199**Notes or memoranda, if any, in the surveyor's report which are accepted by the Classification
200Society without condition/recommendation are not to be taken into account.
201 7.Spares, bunkers and other items
202The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board
203and on shore. All spare parts and spare equipment including spare tail-end shaft(s) and/or
204spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of delivery inspection
205used or unused, whether on board or not shall become the Buyers' property, but spares on
206order are excluded. Forwarding charges, if any, shall be for the Buyers' account. The Sellers
207are not required to replace spare parts including spare tail-end shaft(s) and spare
208propeller(s)/propeller blade(s) which are taken out of spare and used as replacement prior to
209delivery, but the replaced items shall be the property of the Buyers. Unused Sstores and
210provisions shall be included in the sale and be taken over by the Buyers without extra payment. and any bunkers, lubricating oils and greases on board the Vessel at the time of Delivery shall be taken over by the Buyers at no cost to the Buyersbe excluded from the sale and remain the property of the Sellers (or any sub-charterer as the case may be).
211Library and forms exclusively for use in the Sellers' vessel(s) and captain's, officers’ and crew's
212personal belongings including the slop chest are excluded from the sale without compensation,
213as well as the following additional items: (include list)
214Items on board which are on hire or owned by third parties, listed as follows, are excluded from
215the sale without compensation: (include list)
216Items on board at the time of inspection which are on hire or owned by third parties, not listed
217above, shall be replaced or procured by the Sellers prior to delivery at their cost and expense.
218The Buyers shall take over remaining bunkers and unused lubricating and hydraulic oils and
219greases in storage tanks and unopened drums and pay either:
220(a) *the actual net price (excluding barging expenses) as evidenced by invoices or vouchers; or
221(b) *the current net market price (excluding barging expenses) at the port and date of delivery
222of the Vessel or, if unavailable, at the nearest bunkering port,
223for the quantities taken over.
224Payment under this Clause shall be made at the same time and place and in the same
225currency as the Purchase Price.
226"inspection" in this Clause 7, shall mean the Buyers' inspection according to Clause 4(a) or 4(b)
227(Inspection), if applicable. If the Vessel is taken over without inspection, the date of this
228Agreement shall be the relevant date.
229*(a) and (b) are alternatives, delete whichever is not applicable. In the absence of deletions 230alternative (a) shall apply.
Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
231 8. |
Documentation - Intentionally omitted |
At the time of delivery, the Buyers shall provide the Sellers with the following documents:
(i) a copy of Certificate of Registration of the Buyers;
(ii) a copy of resolutions or minutes of the meetings of the board of directors of the Buyers according to which they agree to purchase the Vessel and approving the execution of all documents and the doing of all things necessary to give effect to that; and
(iii) a copy of power of attorney of the Buyers appointing one or more representatives to act on behalf of the Buyers in the performance of this Agreement.
232The place of closing:
233(a) In exchange for payment of the Purchase Price the Sellers shall provide the Buyers with the
234following delivery documents:
235(i) Legal Bill(s) of Sale in a form recordable in the Buyers’ Nominated Flag State,
236transferring title of the Vessel and stating that the Vessel is free from all mortgages,
237encumbrances and maritime liens or any other debts whatsoever, duly notarially attested
238and legalised or apostilled, as required by the Buyers’ Nominated Flag State;
239(ii) Evidence that all necessary corporate, shareholder and other action has been taken by
240the Sellers to authorise the execution, delivery and performance of this Agreement;
241(iii) Power of Attorney of the Sellers appointing one or more representatives to act on behalf
242of the Sellers in the performance of this Agreement, duly notarially attested and legalised
243or apostilled (as appropriate);
244(iv) Certificate or Transcript of Registry issued by the competent authorities of the flag state
245on the date of delivery evidencing the Sellers’ ownership of the Vessel and that the
246Vessel is free from registered encumbrances and mortgages, to be faxed or e-mailed by
247such authority to the closing meeting with the original to be sent to the Buyers as soon as
248possible after delivery of the Vessel;
249(v) Declaration of Class or (depending on the Classification Society) a Class Maintenance
250Certificate issued within three (3) Banking Days prior to delivery confirming that the
251Vessel is in Class free of condition/recommendation;
252(vi) Certificate of Deletion of the Vessel from the Vessel's registry or other official evidence of
253deletion appropriate to the Vessel's registry at the time of delivery, or, in the event that
254the registry does not as a matter of practice issue such documentation immediately, a
255written undertaking by the Sellers to effect deletion from the Vessel's registry forthwith
256and provide a certificate or other official evidence of deletion to the Buyers promptly and
257latest within four (4) weeks after the Purchase Price has been paid and the Vessel has
258been delivered;
259(vii) A copy of the Vessel's Continuous Synopsis Record certifying the date on which the
260Vessel ceased to be registered with the Vessel's registry, or, in the event that the registry
261does not as a matter of practice issue such certificate immediately, a written undertaking
262from the Sellers to provide the copy of this certificate promptly upon it being issued
263together with evidence of submission by the Sellers of a duly executed Form 2 stating 264the date on which the Vessel shall cease to be registered with the Vessel's registry;
Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
265(viii) Commercial Invoice for the Vessel;
266(ix) Commercial Invoice(s) for bunkers, lubricating and hydraulic oils and greases;
267(x) A copy of the Sellers’ letter to their satellite communication provider cancelling the
268Vessel’s communications contract which is to be sent immediately after delivery of the
269Vessel;
270(xi) Any additional documents as may reasonably be required by the competent authorities of
271the Buyers’ Nominated Flag State for the purpose of registering the Vessel, provided the
272Buyers notify the Sellers of any such documents as soon as possible after the date of
273this Agreement; and
274(xii) The Sellers’ letter of confirmation that to the best of their knowledge, the Vessel is not
275black listed by any nation or international organisation.
276(b) At the time of delivery the Buyers shall provide the Sellers with:
277(i) Evidence that all necessary corporate, shareholder and other action has been taken by
278the Buyers to authorise the execution, delivery and performance of this Agreement; and
279(ii) Power of Attorney of the Buyers appointing one or more representatives to act on behalf
280of the Buyers in the performance of this Agreement, duly notarially attested and legalised
281or apostilled (as appropriate).
282(c) If any of the documents listed in Sub-clauses (a) and (b) above are not in the English
283language they shall be accompanied by an English translation by an authorised translator or
284certified by a lawyer qualified to practice in the country of the translated language.
285(d) The Parties shall to the extent possible exchange copies, drafts or samples of the
286documents listed in Sub-clause (a) and Sub-clause (b) above for review and comment by the
287other party not later than (state number of days), or if left blank, nine (9) days prior to the
288Vessel’s intended date of readiness for delivery as notified by the Sellers pursuant to
289Clause 5(b) of this Agreement.
290(e) Concurrent with the exchange of documents in Sub-clause (a) and Sub-clause (b) above,
291the Sellers shall also hand to the Buyers the classification certificate(s) as well as all plans,
292drawings and manuals, (excluding ISM/ISPS manuals), which are on board the Vessel. Other
293certificates which are on board the Vessel shall also be handed over to the Buyers unless
294the Sellers are required to retain same, in which case the Buyers have the right to take copies.
295(f) Other technical documentation which may be in the Sellers' possession shall promptly after
296delivery be forwarded to the Buyers at their expense, if they so request. The Sellers may keep
297the Vessel's log books but the Buyers have the right to take copies of same.
298(g) The Parties shall sign and deliver to each other a Protocol of Delivery and Acceptance
299confirming the date and time of delivery of the Vessel from the Sellers to the Buyers.
300 9.Encumbrances
Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
301 |
The Sellers warrant that the Vessel, at the time of deliveryDelivery, is free from all charters (other than the Bareboat Charterr and ), |
302 |
encumbrances, mortgages and maritime liens or any other debts whatsoever, and is not subject |
303 |
to Port State or other administrative detentions. The Sellers hereby undertake to indemnify the |
304 |
Buyers against all consequences of claims made against the Vessel which have been incurred |
305 |
prior to the time of deliveryDelivery. |
306 10.Taxes, fees and expenses
307Any taxes, fees and expenses in connection with the purchase of the Vessel and registration in the Buyers'
308 |
Nominated Flag State and in connection with the closing of the Sellers' register and shall be for the Buyers' account, whereas similar charges in connection |
309 |
with the closing of the Sellers' register shall be for the Sellers' account. |
310 11. |
Condition on delivery |
311The Vessel with everything belonging to her shall be at the Sellers' risk and expense until she is
312 |
delivered to the Buyers but subject to the terms and conditions of this Agreement she shall be delivered and taken over as she was. , but subject to the terms and conditions of this Agreement she shall be |
313 |
delivered and taken over as she was at the time of inspection, fair wear and tear excepted. |
314 |
However, the Vessel shall be delivered free of cargo and free of stowaways with her Class |
315 |
maintained without condition/recommendation*, free of average damage affecting the Vessel's |
316 |
class, and with her classification certificates and national certificates, as well as all other |
317 |
certificates the Vessel had at the time of inspection, valid and unextended without |
318 |
condition/recommendation* by the Classification Society or the relevant authorities at the time |
319 |
of deliveryDelivery. |
320 |
"inspection" in this Clause 11, shall mean the Buyers' inspection according to Clause 4(a) or |
321 |
4(b) (Inspections), if applicable. If the Vessel is taken over without inspection, the date of this |
322 |
Agreement shall be the relevant date. |
323 |
*Notes and memoranda, if any, in the surveyor's report which are accepted by the Classification |
324 |
Society without condition/recommendation are not to be taken into account. |
325 12. |
Name/markings - intentionally omitted |
326 |
Upon delivery the Buyers undertake to change the name of the Vessel and alter funnel |
327 |
markings. |
328 13. |
Buyers' default- intentionally omitted |
329 |
Should the Deposit not be lodged in accordance with Clause 2 (Deposit), the Sellers have the |
330 |
right to cancel this Agreement, and they shall be entitled to claim compensation for their losses |
331 |
and for all expenses incurred together with interest. |
332Should the Purchase Price not be paid in accordance with Clause 3 (Payment), the Sellers
333have the right to cancel this Agreement, in which case the Deposit together with interest
334earned, if any, shall be released to the Sellers. If the Deposit does not cover their loss, the
335Sellers shall be entitled to claim further compensation for their losses and for all expenses
336incurred together with interest.
337 14.Sellers' default
338 |
Should the Sellers fail to give Notice of Readiness in accordancenotice of the Scheduled Delivery Date by serving a Payment Notice under with Clause 24 Clause 5(b) or fail to be |
Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
339 |
ready to validly complete a legal transfer by the Cancelling Date the Buyers shall have the |
340 |
option of cancelling this Agreement. If after Notice of Readinessa Payment Notice has been given but before |
341 |
the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not |
342 |
made physically ready again by the Cancelling Date and new Notice of ReadinessPayment Notice given, the |
343Buyers shall retain their option to cancel. In the event that the Buyers elect to cancel this
344Agreement, the Deposit together with interest earned, if any, shall be released to them
345immediately.
346Should the Sellers fail to give Notice of Readinessa Payment Notice by the Cancelling Date or fail to be ready to
347validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers 348for their loss and for all expenses together with interest if their failure is due to proven
349 |
negligence and whether or not the Buyers cancel this Agreement., and this Agreement shall immediately terminate and be cancelled without the need for either Buyers or Sellers to take any action whatsoever. |
350 15.Buyers' representatives - intentionally omitted
351After this Agreement has been signed by the Parties and the Deposit has been lodged, the
352Buyers have the right to place two (2) representatives on board the Vessel at their sole risk and
353expense.
354These representatives are on board for the purpose of familiarisation and in the capacity of
355observers only, and they shall not interfere in any respect with the operation of the Vessel. The
356Buyers and the Buyers’ representatives shall sign the Sellers' P&I Club’s standard letter of
357indemnity prior to their embarkation.
358 16.Law and Arbitration (See Clause 30)
359(a) *This Agreement shall be governed by and construed in accordance with English law and
360any dispute arising out of or in connection with this Agreement shall be referred to arbitration in
361London in accordance with the Arbitration Act 1996 or any statutory modification or re
362enactment thereof save to the extent necessary to give effect to the provisions of this Clause.
363The arbitration shall be conducted in accordance with the London Maritime Arbitrators
364Association (LMAA) Terms current at the time when the arbitration proceedings are
365commenced.
366The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall
367appoint its arbitrator and send notice of such appointment in writing to the other party requiring
368the other party to appoint its own arbitrator within fourteen (14) calendar days of that notice and
369stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own
370arbitrator and gives notice that it has done so within the fourteen (14) days specified. If the
371other party does not appoint its own arbitrator and give notice that it has done so within the
372fourteen (14) days specified, the party referring a dispute to arbitration may, without the
373requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator
374and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on
375both Parties as if the sole arbitrator had been appointed by agreement.
376In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 the
377arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at
378the time when the arbitration proceedings are commenced.
379(b) *This Agreement shall be governed by and construed in accordance with Title 9 of the 380United States Code and the substantive law (not including the choice of law rules) of the State
Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
381of New York and any dispute arising out of or in connection with this Agreement shall be
382referred to three (3) persons at New York, one to be appointed by each of the parties hereto,
383and the third by the two so chosen; their decision or that of any two of them shall be final, and
384for the purposes of enforcing any award, judgment may be entered on an award by any court of
385competent jurisdiction. The proceedings shall be conducted in accordance with the rules of the
386Society of Maritime Arbitrators, Inc.
387In cases where neither the claim nor any counterclaim exceeds the sum of US$ 100,000 the
388arbitration shall be conducted in accordance with the Shortened Arbitration Procedure of the
389Society of Maritime Arbitrators, Inc.
390(c) This Agreement shall be governed by and construed in accordance with the laws of
391(state place) and any dispute arising out of or in connection with this Agreement shall be
392referred to arbitration at (state place), subject to the procedures applicable there.
393*16(a), 16(b) and 16(c) are alternatives; delete whichever is not applicable. In the absence of
394deletions, alternative 16(a) shall apply.
395 17.Notices - (See Clause 25)
396All notices to be provided under this Agreement shall be in writing.
397Contact details for recipients of notices are as follows:
398For the Buyers:
399For the Sellers:
400 18.Entire Agreement
401 |
The written terms of this Agreement, its Rider Clauses and the Bareboat Charter comprise the entire agreement between the Buyers and |
402 |
the Sellers in relation to the sale and purchase of the Vessel and supersede all previous |
403 |
agreements whether oral or written between the Parties in relation thereto. |
404 |
Each of the Parties acknowledges that in entering into this Agreement it has not relied on and |
405 |
shall have no right or remedy in respect of any statement, representation, assurance or |
406 |
warranty (whether or not made negligently) other than as is expressly set out in this Agreement. |
407 |
Any terms implied into this Agreement by any applicable statute or law are hereby excluded to |
408 |
the extent that such exclusion can legally be made. Nothing in this Clause shall limit or exclude |
409 |
any liability for fraud. |
For and on behalf of the Sellers |
|
For and on behalf of the Buyers |
|
|
|
|
|
/s/ Thaleia Kalafati |
|
/s/ Lam Wing Kaylee |
|
|
|
|
|
Moonsprite Shipping Corp. |
|
Sea 112 Leasing Co. Limited |
|
|
|
|
|
Name: Thaleia Kalafati |
|
Name: |
/s/ Lam Wing Kaylee |
|
|
|
|
Title: Attorney in fact |
|
Title: Attorney-in-Fact |
Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
EXECUTION VERSION
RIDER CLAUSES TO MEMORANDUM OF AGREEMENT
DATED 29 January 2024
CLAUSE 19 – PAYMENT OF PURCHASE PRICE BY BUYERS
(a) |
Subject to the provisions of this Agreement, in consideration of the Buyers agreeing to pay the Purchase Price of the Vessel to the Sellers, the Sellers hereby agree to sell and transfer all rights, title and interest in the Vessel absolutely, with full title guarantee, on the Delivery Date. |
(b) |
Subject to the provision of a duly completed Payment Notice to be received by the Buyers not later than three (3) Business Days prior to the Prepositioning Date (as hereinafter defined) and fulfilment of the Remittance Conditions Precedent at least one (1) Business Days prior to the Prepositioning Date, the Purchase Price shall be paid in full by the Buyers to the Sellers as follows: |
(i) |
on the Delivery Date, an amount corresponding to the amount of the Advance Charterhire payable by the Sellers as bareboat charterers of the Vessel to the Buyers as owners under the Bareboat Charter shall be set off against a corresponding amount of the Purchase Price payable under this Agreement; and |
(ii) |
the balance of the Purchase Price in an amount equal to the Opening Capital Balance shall be paid as follows: |
(A) |
the Buyers shall, no later than one (1) Business Day prior to the Vessel’s Scheduled Delivery Date (the “Prepositioning Date”) deposit with the Outgoing Financier the Delivery Payment (Outgoing Financier) on an unallocated basis in a suspense account with SWIFT MT 103 and a SWIFT MT 199 irrevocable conditional release instruction in a form to be reasonably agreed (each such release instruction, the “SWIFT Payment Instructions”). The amount so deposited under the Delivery Payment (Outgoing Financier) shall be released upon the presentation to the Outgoing Financier of a dated copy of the release letter duly executed by the Buyers as set out in the SWIFT Payment Instructions and the fulfilment of the Delivery Conditions Precedent and otherwise in accordance with the terms set out in the SWIFT Payment Instructions; and |
(B) |
the Buyers shall, by way of a SWIFT MT 103 pay the Delivery Payment (Sellers) to the Sellers’ Account promptly after and in any case within one (1) Business Day of the release of the Delivery Payment (Outgoing Financier). |
(c) |
Interest shall accrue on a daily basis on the Daily Payment (Outgoing Financier) at the rate which is the aggregate of SOFR as of two (2) US Government Securities Business Days before the Prepositioning Date and 190 basis points (the “Remittance Interest”) shall: |
(i) |
in the event that the Vessel is delivered to the Buyers on the Delivery Date, accrue as of the Prepositioning Date (inclusive) until the Delivery Date (exclusive); and |
(ii) |
in the event that the Vessel is not delivered to the Buyers on the Delivery Date, accrue as of the Prepositioning Date until the Delivery Payment (Outgoing |
Financier) is returned by the Outgoing Financier to the Buyers in accordance with the SWIFT Payment Instructions (both dates inclusive),
and the Sellers shall pay to the Buyers the applicable amount of Remittance Interest as notified by the Buyers to the Sellers within three (3) Business Days of the Buyers’ demand.
CLAUSE 20 – FURTHER CONDITIONS
The Buyers’ obligation to purchase the Vessel and the Sellers’ obligation to sell the Vessel are further conditional upon:
(a) |
the Delivery taking place on a Business Day on or before the Cancelling Date; |
(b) |
the simultaneous delivery to and acceptance by the Sellers as bareboat charterer of the Vessel in accordance with the terms of the Bareboat Charter; and |
(c) |
no Potential Termination Event or Termination Event having occurred on the Prepositioning Date or the Delivery Date or which would occur on either such date as a result of the performance by the Sellers or Buyers of their respective obligations under this Agreement. |
CLAUSE 21 – REPRESENTATIONS AND WARRANTIES OF SELLERS
(a) |
The Sellers represent and warrant to the Buyers on the date hereof, the Prepositioning Date and on the Delivery Date that: |
(i) |
none of the Sellers or any member of the Group: |
(A) |
is a Prohibited Person; |
(B) |
is owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person; |
(C) |
owns or controls a Prohibited Person; nor |
(D) |
has a Prohibited Person serving as a director, officer or, to the best of the Sellers’ knowledge, employee; |
(ii) |
no part of the Purchase Price nor the Vessel shall be made available, directly or indirectly, to or for the benefit of a Prohibited Person nor shall they be otherwise directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions, or to fund any activity in a Prohibited Country ; |
(iii) |
they are not in breach of any Anti-Money Laundering Laws and they have instituted and maintained systems, controls, policies and procedures designed to: |
(AA) |
prevent and detect incidences of bribery and corruption, money laundering and terrorism financing; and |
(BB) |
promote and achieve compliance with Anti-Money Laundering Laws including, but not limited to, ensuring thorough and accurate books and |
2
records, and utilisation of commercially reasonable efforts to ensure that Affiliates acting on behalf of the Sellers shall act in compliance with Anti-Money Laundering Laws.
CLAUSE 22 – PHYSICAL PRESENCE
If there is any change in the flag state from the Flag State at the date of this Agreement and such new Flag State require the Buyers to have a physical presence or office in the jurisdiction of such Flag State, all documented fees, costs and expense arising out of or in connection with the establishment and maintenance of such physical presence or office by the Buyers shall be borne by the Sellers.
CLAUSE 23 – INDEMNITIES
(a) |
The Sellers shall indemnify and pay such amounts to the Buyers in respect of all documented costs, claims, expenses, liabilities, losses, taxes, damages and fees (including but not limited to any legal fees, vessel registration and tonnage fees) suffered or incurred by or imposed on the Buyers arising from this Agreement or in connection with the Delivery, registration (including any fees pertaining to the registration of the owners as foreign maritime entities pursuant to the requirements of the Flag State), purchase and inspection of the Vessel by the Buyers or the funding of all or any portion of the Purchase Price (including but not limited to the event that the Delivery Payments have been deposited in accordance with Clause 19(b)(ii) but not released or returned in accordance with the SWIFT Payment Instructions) for any reason whatsoever), and whether or not the Vessel is in the possession of or the control of the Sellers or otherwise. |
(b) |
Notwithstanding anything to the contrary herein, the indemnities provided by the Sellers under paragraph (a) above shall continue in full force and effect notwithstanding any breach of the terms of this Agreement or termination of this Agreement pursuant to the terms hereof. |
CLAUSE 24 – NOTICE, TIME AND PLACE OF DELIVERY
(a) |
The Sellers shall keep the Buyers well informed of the proposed Delivery Date of the Vessel and shall in any event specify the Scheduled Delivery Date and proposed place of delivery in the Payment Notice. |
(b) |
The Vessel shall be delivered and taken over safely afloat at a safe and accessible berth or anchorage or at sea worldwide (subject to the trading limits in the Bareboat Charter) at the Sellers’ option provided that the Vessel shall not be delivered in a place that causes the Buyers to incur additional tax liabilities that the Buyers would not have incurred had the sale been completed in international waters. |
(c) |
The Protocol of Delivery and Acceptance will be signed, dated and timed between Parties confirming the date and time of delivery of the Vessel from the Sellers to the Buyers. |
CLAUSE 25 – NOTICES
(a) |
Any notice, certificate, demand or other communication to be served, given, made or sent under or in relation to this Agreement shall be in English and in writing and (without prejudice to any other valid method or giving, making or sending the same) shall be |
3
deemed sufficiently given or made or sent if sent by registered post or by email to the following respective address:
(A) |
to the Buyers: |
c/o CMB Financial Leasing Co., Ltd. 21F, China Merchants Bank Building No. 1088 Lujiazui Ring Road Shanghai 200120 The People’s Republic of China Attention: Email: Tel: |
(B) |
to the Sellers: |
c/o OET CHARTERING INC. Ethnarchou Makariou & D. Falireos Str. 2 185 47, Neo Faliro, Piraeus, Greece Attention: Email: Tel: |
or, if a party hereto changes its address or email address, to such other address (or email address) as that party may notify to the other.
(b) |
Any such communication shall be deemed to have reached the party to whom it was addressed (a) when delivered (in case of a registered letter), or (b) when actually received in readable form (in case of an email). A notice or other such communication received on a non-working day or after 5.00 p.m. in the place of receipt shall be deemed to be served on the next following working day in such place. |
CLAUSE 26 – NO WAIVER OF RIGHTS
(a) |
No neglect, delay, omission or indulgence on the part of the Buyers in enforcing the terms and conditions of this Agreement shall prejudice the strict rights of the Buyers or be construed as a waiver thereof nor shall any single or partial exercise of any right of either party preclude any other or further exercise thereof. |
(b) |
No right or remedy conferred upon the Buyers by this Agreement shall be exclusive of any other right or remedy provided for herein or by law and all such rights and remedies shall be cumulative. |
CLAUSE 27 – NO SET-OFF OR TAX DEDUCTION
(a) |
Any payment made by the Sellers to the Buyers under this Agreement shall be paid: |
(i) |
without any form of set-off, cross-claim or condition; and |
(ii) |
free and clear of any tax deduction (other than a FATCA Deduction) or withholding unless required by law. |
4
(b) |
Without prejudice to paragraph (a) of this Clause, if the Sellers are required by law to make a tax deduction from any payment: |
(i) |
the Sellers shall notify the Buyers as soon as they become aware of the requirement; and |
(ii) |
the amount due in respect of the payment shall be increased by the amount necessary to ensure that the Buyers receive and retain (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which they would otherwise have received. |
(c) |
In this Clause, “tax deduction” means any deduction or withholding for or on account of any present or future tax. |
CLAUSE 28 – ASSIGNMENT AND TRANSFER
(a) |
The Sellers shall not assign or transfer (whether by novation or otherwise) their rights and/or obligations under this Agreement except with the Buyers’ prior written consent. |
(b) |
The Buyers may assign or transfer (whether by novation or otherwise) any of their rights under this Agreement in the same way as it may assign or transfer any of their rights under the Bareboat Charter, following which the Sellers shall execute such documents and do all such things as reasonably required by the Buyers to facilitate or effect such assignment or transfer. |
(c) |
Each of the Sellers and Buyers shall bear their own costs arising from any assignment or transfer as permitted under this Clause. |
CLAUSE 29 – MISCELLANEOUS
(a) |
Unless otherwise expressly stated to the contrary in this Agreement, any payment which is due to be made on a day which is not a Business Day shall be made on the preceding Business Day instead. |
(b) |
If, at any time, any provision of this Agreement is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions under the law of that jurisdiction nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired. |
(c) |
The Sellers waive any rights of sovereign immunity which they or any of their properties may enjoy in any jurisdiction and subjects itself to civil and commercial law with respect to their obligations under this Agreement. |
(d) |
No term of this Agreement is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Agreement. |
(e) |
This Agreement may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Agreement or that Leasing Document, as the case may be. |
5
CLAUSE 30 – GOVERNING LAW AND JURISDICTION
(a) |
This Agreement, and any non-contractual obligations arising out of or in connection with it, are governed by English law. |
(b) |
Any dispute arising out of or in connection with this Agreement (including a dispute regarding the existence, validity or termination of this Agreement or any non-contractual obligation arising out of or in connection with this Agreement) (a “Dispute”) shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause. |
(c) |
The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. The reference shall be to three (3) arbitrators. A Party wishing to refer a Dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other Party requiring the other Party to appoint its own arbitrator within fourteen (14) calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other Party appoints its own arbitrator and give notice that it has done so within the fourteen (14) days specified. If the other Party does not appoint its own arbitrator and give notice that it has done so within the fourteen (14) days specified, the Party referring a Dispute to arbitration may, without the requirement of any further prior notice to the other Party, appoint its arbitrator as sole arbitrator and shall advise the other Party accordingly. The award of a sole arbitrator shall be binding on both Parties as if he had been appointed by agreement. Nothing herein shall prevent the Parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. |
(d) |
In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 (or such other sum as the Parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. |
CLAUSE 31 – DEFINITIONS
Unless otherwise specified hereunder, capitalised terms in this Agreement shall have the same meaning as in the Bareboat Charter:
“Approved Valuer” means Clarksons Platou, Simpson Spence Young, Braemar ACM, Arrow, Fearnleys, Maersk Brokers or such other independent and reputable shipbroker nominated by the Sellers and approved by the Buyers.
“Bareboat Charter” means the bareboat charterparty in respect of the Vessel dated on or about the date hereof and entered into between the Buyers as owner and the Sellers as bareboat charterer.
“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for business in the principal business centres of Shanghai, Singapore, Amsterdam , Paris and Piraeus and/or:
6
(a) |
in respect of a day on which a payment is required to be made or other dealing is due to take place under this Agreement in Dollars, also a day on which commercial banks are open in New York City; and/or |
(b) |
in relation to the calculation of any interest accruing in accordance with Clause 19(c), a US Government Securities Business Day. |
“Cancelling Date” means 6 June 2024 or such later date as may be agreed by the Buyers in their discretion.
“Delivery” means the passing of the legal and beneficial interest in the Vessel from the Sellers to the Buyers pursuant to the terms of this Agreement.
“Delivery Conditions Precedent” means the conditions precedent detailed in Clause 34.2(e)(ii) of the Bareboat Charter.
“Delivery Date” means the date on which Delivery occurs.
“Delivery Payment (Outgoing Financier)” means the portion of the Opening Capital Balance to be remitted to the Outgoing Financier as specified by the Sellers in the Payment Notice.
“Delivery Payment (Sellers)” means the portion of the Opening Capital Balance less the Delivery Payment (Outgoing Financier) as set out in the Payment Notice.
“Delivery Payments” means the Delivery Payment (Outgoing Financier) and the Delivery Payment (Sellers) and each, as the case may be, the “Delivery Payment”.
“Dispute” shall have the meaning ascribed thereto under Clause 30(b).
“Dollars” and “US$” mean the lawful currency, for the time being, of the United States of America.
“Initial Market Value” means, in relation to the Vessel:
(a) |
subject to paragraph (b) below, the arithmetic mean of the valuations shown by two (2) valuation reports each addressed to the Buyers and prepared at the Sellers’ cost: |
(i) |
on a date no earlier than thirty (30) days prior to the Delivery Date; |
(ii) |
by Approved Valuers one nominated by the Buyers and the other nominated by the Sellers (but with the report addressed to Buyers); |
(iii) |
without physical inspection of the Vessel; and |
(iv) |
on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, without taking into account any charter; and |
(b) |
if there is a discrepancy of five per cent (5%) or more between the market valuations shown on the two (2) valuation reports obtained pursuant to paragraph (a) above (using the lower valuation figure as the denominator), then a third valuation shall be obtained and prepared on the same terms and conditions as set out under paragraph (a) above (except that the third valuation report additionally required under this sub-paragraph (b) |
7
shall be prepared by an Approved Valuer nominated by the Buyers), with the arithmetic mean taken from the valuations shown by such three (3) valuation reports.
“Opening Capital Balance” means an amount which is equal to sixty five per cent. (65%) of the Purchase Price.
“Outgoing Financier” means CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK, a société anonyme incorporated under the laws of France and registered in Nanterre with NO. B304 187 701, having its siège social at 12, Place des Etats-Unis, CS 70052, 92547 Montrouge Cedex, Paris, France.
“Payment Notice” means the payment notice to be submitted by the Sellers to the Buyers to request for the Buyers’ payment of the Purchase Price, which shall be in the form set out in Schedule 1 (Form of Payment Notice) and which shall be signed by at least one officer or authorised attorney of the Sellers.
“Prepositioning Date” shall have the meaning ascribed thereto under Clause 19(b)(ii).
“Protocol of Delivery and Acceptance” means the protocol of delivery and acceptance recording the time and date of the Delivery of the Vessel under this Agreement to be signed by the Buyers and the Sellers in substantially the form attached as Schedule 2 (Form of Protocol of Delivery and Acceptance).
“Purchase Price” means an amount equal to the lowest of:
(a) |
the Initial Market Value; and |
(b) |
$113,000,000. |
“Remittance Conditions Precedent” means the conditions precedent detailed in Clause 34.2(e)(i) of the Bareboat Charter.
“Remittance Interest” shall have the meaning ascribed thereto under Clause 19(c).
“Scheduled Delivery Date” means the date of delivery of the Vessel set out in the Payment Notice.
“Sellers’ Account” means an account of the Sellers at the Sellers’ Bank as set out in the Payment Notice.
“Sellers’ Bank” means a bank designated by the Sellers, details of which are notified to the Buyers not less than five (5) Business Days prior to the Prepositioning Date and the identity of which is acceptable to the Buyers.
“SWIFT Payment Instructions” shall have the meaning ascribed thereto under Clause 19(b)(ii).
“US Government Securities Business Day” means any day other than:
(a) |
a Saturday or a Sunday; and |
(b) |
a day on which the Securities Industry and Financial Markets Association (or any successor organisation) recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in US Government securities. |
8
SCHEDULE 1
FORM OF PAYMENT NOTICE
9
SCHEDULE 2
FORM OF PROTOCOL OF DELIVERY AND ACCEPTANCE
10
EXECUTION PAGE
BUYERS |
|
|
|
SIGNED BY Lam Wing Kaylee |
) /s/ Lam Wing Kaylee |
for and on behalf of |
) |
SEA 112 LEASING CO. LIMITED |
) |
as attorney-in-fact |
) |
in the presence of |
) |
|
|
Witness’ signature: /s/ CHAN Wei Yan Regina |
) |
Witness’ name: CHAN Wei Yan Regina |
) |
Witness’ address: Suites 4610-4619, Jardine House |
) |
1 Connaught Place, Hong Kong |
|
|
|
SELLERS |
|
|
|
SIGNED BY Thaleia Kalafati |
) /s/ Thaleia Kalafati |
for and on behalf of |
) |
MOONSPRITE SHIPPING CORP. |
|
|
) |
as attorney-in-fact |
) |
in the presence of |
) |
|
|
Witness’ signature: /s/ Eirini Chaidemenou |
) |
Witness’ name: Eirini Chaidemenou |
) |
Witness’ address: Attorney at Law |
) |
Athens Bar Association |
|
Athens - Greece |
|
11
1. |
Shipbroker N/A |
2. Place and date 29 January 2024 |
|
3. |
Owners/Place of business (Cl. 1) SEA 112 LEASING CO. LIMITED, a company incorporated under the laws of Hong Kong with limited liability whose registered office is at 46/F, Champion Tower, 3 Garden Road, Central, Hong Kong. |
4. Bareboat Charterers/Place of business (Cl. 1) MOONSPRITE SHIPPING CORP., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with Registration Number 96018 and with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 |
|
5. |
Vessel’s name, call sign and flag (Cl. 1 and 3) NISSOS ANAFI IMO number: 9856086 Flag: Marshall Islands or otherwise agreed between Parties |
||
6. |
Type of Vessel Tanker |
7. GT/NT 160,457/111,413 |
|
8. |
When/Where built 2020 Hyundai Heavy Industries, South Korea |
9. Total DWT (abt.) in metric tons on summer freeboard TBA |
|
10. |
Classification Society (Cl. 3) ABS |
11. Date of last special survey by the Vessel’s classification society N/A |
|
12 |
Further particulars of Vessel (also indicate minimum number of months’ validity of class certificates agreed acc. to Cl. 3) N/A |
||
13. |
Port or Place of delivery (Cl. 3) Back to back with MOA delivery |
14. Time for delivery (Cl. 4) See Clause 34, back to back with MOA delivery |
15.Cancelling date (Cl. 5) See definition of "Cancelling Date" and Clause 33 |
16. |
Port or Place of redelivery (Cl. 15) See Clauses 41 and 42 |
17. No. of months' validity of trading and class certificates upon redelivery (Cl. 15) Six (6) months |
|
18. |
Running days’ notice if other than stated in Cl. 4 |
19. Frequency of dry-docking (Cl. 10(g)) In accordance with Approved Classification Society or requirements of Flag State |
|
20. |
Trading limits (Cl. 6) Worldwide via safe ports/berth/anchorage within International Navigating Limits and always subject to Clause 39 (Insurance) and Clause 53 (Vessel Undertaking) |
||
21. |
Charter period (Cl. 2) See Clause 32 |
22. Charter hire (Cl. 11) See Clause 36 |
|
23. |
New class and other safety requirements (state percentage of Vessel's insurance value acc. to Box 29)(Cl. 10(a)(ii)) N/A |
||
24. |
Rate of interest payable acc. to Cl. 11 (f) and, if applicable, acc. to PART IV See Clause 37 |
25. Currency and method of payment (Cl. 11) Dollars/Bank transfer |
|
26. |
Place of payment; also state beneficiary and bank account (Cl. 11) See Clause 36 |
27. Bank guarantee/bond (sum and place) (Cl. 24) (optional) N/A |
|
28. |
Mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) applies state date of Financial Instrument and name of Mortgagee(s)/Place of business) (Cl. 12) N/A |
29. Insurance (hull and machinery and war risks) (state value acc. to Cl. 13(f) or, if applicable, acc. to Cl. 14(k)) (also state if Cl. 14 applies) See Clause 39 |
|
30. |
Additional insurance cover, if any, for Owners’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) See Clause 39 |
31. Additional insurance cover, if any, for Charterers’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) See Clause 39 |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
32. |
Latent defects (only to be filled in if period other than stated in Cl. 3) N/A |
33. |
Brokerage commission and to whom payable (Cl. 27) N/A |
34. |
Grace period (state number of clear banking days) (Cl. 28) N/A |
35. |
Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed Place of Arbitration must be stated (Cl. 30) (c) Clause 30 not applicable. See Clause 65 |
36. |
War cancellation (indicate countries agreed) (Cl. 26(f)) N/A |
|
|
37. |
Newbuilding Vessel (indicate with “yes” or “no” whether PART III applies) (optional) Yes, Part III does not apply |
38. |
Name and place of Builders (only to be filled in if PART III applies) N/A |
39. |
Vessel’s Yard Building No. (only to be filled in if PART III applies) N/A |
40. |
Date of Building Contract (only to be filled in if PART III applies) N/A |
41. |
Liquidated damages and costs shall accrue to (state party acc. to Cl. 1) a) N/A b) N/A c) N/A |
||
42. |
Hire/Purchase agreement (indicate with “yes” or “no” whether PART IV applies) (optional) No, Part IV does not apply |
43. |
Bareboat Charter Registry (indicate with “yes” or “no” whether PART V applies) (optional) No |
44. |
Flag and Country of the Bareboat Charter Registry (only to be filled in if PART V applies) N/A |
45. |
Country of the Underlying Registry (only to be filled in if PART V applies) N/A |
46. |
Number of additional clauses covering special provisions, if agreed Clause 32 to Clause 66 |
PREAMBLE - It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter if expressly agreed and stated in Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further. It is further agreed that the Additional Clauses as indicated in Box 46 above, appended to and integrated in this Charter supplement Part I and II of this Charter. In the event of a conflict, the Additional Clauses shall prevail.
Signature (Owners) |
|
Signature (Charterers) |
|
|
|
/s/ Lam Wing Kaylee |
|
/s/ Thaleia Kalafati |
Lam Wing Kaylee |
|
Thaleia Kalafati |
Attorney-in-fact |
|
Attorney-in-fact |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
11. Definitions
2In this Charter, the following terms shall have the
3meanings hereby assigned to them:
4“The Owners” shall mean the party identified in Box 3;
5“The Charterers” shall mean the party identified in Box 4;
6“The Vessel” shall mean the vessel named in Box 5 and
7with particulars as stated in Boxes 6 to 12.
8“Financial Instrument” has the meaning ascribed to it in Clause 66.1. means the mortgage, deed of
9covenant or other such financial security instrument as
10annexed to this Charter and stated in Box 28.
11 |
2 Charter Period |
12 |
In consideration of the hire detailed in Box 22, |
13 |
the Owners have agreed to let and the Charterers have |
14 |
agreed to hire the Vessel for the period stated in Box 21 |
15 |
(“The Charter Period”). See also Clause 32. |
16 |
3. Delivery |
17 |
(not applicable when Part III applies, as indicated in Box 37) |
18 |
(a) The Owners shall before and at the time of delivery |
19 |
exercise due diligence to make the Vessel seaworthy |
20 |
And in every respect ready in hull, machinery and |
21 |
equipment for service under this Charter. |
22 |
The Vessel shall be delivered by the Owners and taken |
23 |
over by the Charterers at the port or place indicated in |
24 |
Box 13. in such ready safe berth as the Charterers may |
25 |
direct. |
26 |
(b) The Vessel shall be properly documented on |
27 |
delivery in accordance with the laws of the flag State |
28 |
indicated in Box 5 and the requirements of the |
29 |
classification society stated in Box 10. The Vessel upon |
30 |
delivery shall have her survey cycles up to date and |
31 |
trading and class certificates valid for at least the number |
32 |
of months agreed in Box 12. |
33 |
(c) The delivery of the Vessel by the Owners and the |
34 |
taking over of the Vessel by the Charterers shall |
35 |
constitute a full performance by the Owners of all the |
36 |
Owners’ obligations under this Clause 3, and thereafter |
37 |
the Charterers shall not be entitled to make or assert |
38 |
any claim against the Owners on account of any |
39 |
conditions, representations or warranties expressed or |
40 |
implied with respect to the Vessel. but the Owners shall |
41 |
be liable for the cost of but not the time for repairs or |
42 |
renewals occasioned by latent defects in the Vessel, |
43 |
her machinery or appurtenances, existing at the time of |
44 |
delivery under this Charter, provided such defects have |
45 |
manifested themselves within twelve (12) months after |
46 |
delivery unless otherwise provided in Box 32. |
47 |
4. Time for Delivery (See Clause 34) |
48 |
(not applicable when Part III applies, as indicated in Box 37) |
49 |
The Vessel shall not be delivered before the date |
50 |
indicated in Box 14 without the Charterers’ consent and |
51 |
the Owners shall exercise due diligence to deliver the |
52 |
Vessel not later than the date indicated in Box 15. |
53 |
Unless otherwise agreed in Box 18, the Owners shall |
54 |
give the Charterers not less than thirty (30) running days’ |
55 |
preliminary and not less than fourteen (14) running days’ |
56 |
definite notice of the date on which the Vessel is |
57 |
expected to be ready for delivery. |
58 |
The Owners shall keep the Charterers closely advised |
59 |
of possible changes in the Vessel’s position. |
60 |
5. Cancelling (See Clause33) |
61(not applicable when Part III applies, as indicated in Box 37)
62(a) Should the Vessel not be delivered latest by the
63 |
cancelling date indicated in Box 15, the Charterers shall |
64 |
have the option of cancelling this Charter by giving the |
65 |
Owners notice of cancellation within thirty-six (36) |
66 |
running hours after the cancelling date stated in Box |
67 |
15, failing which this Charter shall remain in full force |
68 |
and effect. |
69 |
(b) If it appears that the Vessel will be delayed beyond |
70 |
the cancelling date, the Owners may, as soon as they |
71 |
are in a position to state with reasonable certainty the |
72 |
day on which the Vessel should be ready, give notice |
73 |
thereof to the Charterers asking whether they will |
74 |
exercise their option of cancelling, and the option must |
75 |
then be declared within one hundred and sixty-eight |
76 |
(168) running hours of the receipt by the Charterers of |
77 |
such notice or within thirty-six (36) running hours after |
78 |
the cancelling date, whichever is the earlier. If the |
79 |
Charterers do not then exercise their option of cancelling, |
80 |
the seventh day after the readiness date stated in the |
81 |
Owners’ notice shall be substituted for the cancelling |
82 |
date indicated in Box 15 for the purpose of this Clause 5. |
83 |
(c) Cancellation under this Clause 5 shall be without |
84 |
prejudice to any claim the Charterers may otherwise |
85 |
have on the Owners under this Charter. |
86 |
6. Trading Restrictions (See also Clauses 39.9(d) and 53.1(c)) |
87 |
The Vessel shall be employed in lawful trades for the |
88 |
carriage of suitable lawful merchandise within the trading |
89 |
limits indicated in Box 20. |
90 |
The Charterers undertake not to employ the Vessel or |
91 |
suffer the Vessel to be employed otherwise than in |
92 |
conformity with the terms of the contracts of insurance |
93 |
(including any warranties expressed or implied therein) |
94 |
without first obtaining the consent of the insurers to such |
95 |
employment and complying with such requirements as |
96 |
to extra premium or otherwise as the insurers may |
97 |
prescribe. |
98 |
The Charterers also undertake not to employ the Vessel |
99 |
or suffer her employment in any trade or business which |
100 |
is forbidden by the law of any country to which the Vessel |
101 |
may sail or is otherwise illicit or in carrying illicit or |
102 |
prohibited goods or in any manner whatsoever which |
103 |
may render her liable to condemnation, destruction, |
104 |
seizure or confiscation. |
105 |
Notwithstanding any other provisions contained in this |
106 |
Charter it is agreed that nuclear fuels or radioactive |
107 |
products or waste are specifically excluded from the |
108 |
cargo permitted to be loaded or carried under this |
109 |
Charter. This exclusion does not apply to radio-isotopes |
110 |
used or intended to be used for any industrial, |
111 |
commercial, agricultural, medical or scientific purposes |
112 |
provided the Owners’ prior approval has been obtained |
113 |
to loading thereof. |
114 |
7. Surveys on Delivery and Redelivery (See Clauses 41.8 and 41.9) |
115 |
(not applicable when Part III applies, as indicated in Box 37) |
116 |
The Owners and Charterers shall each appoint |
117 |
surveyors for the purpose of determining and agreeing |
118 |
in writing the condition of the Vessel at the time of |
119 |
delivery and redelivery hereunder (if applicable). The |
Owners shall
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
120 |
bear all expenses of the On-hire Survey including loss |
121 |
of time, if any, and the Charterers shall bear all expenses |
122 |
of the Off-hire Survey including loss of time, if any, at |
123 |
the daily equivalent to the rate of hire or pro rata thereof. |
124 |
8. Inspection (See Clause 54) |
125 |
The Owners shall have the right at any time after giving |
126 |
reasonable notice to the Charterers to inspect or survey |
127 |
the Vessel or instruct a duly authorised surveyor to carry |
128 |
out such survey on their behalf:- |
129 |
(a) to ascertain the condition of the Vessel and satisfy |
130 |
themselves that the Vessel is being properly repaired |
131 |
and maintained. The costs and fees for such inspection |
132 |
or survey shall be paid by the Owners unless the Vessel |
133 |
is found to require repairs or maintenance in order to |
134 |
achieve the condition so provided; |
135 |
(b) in dry-dock if the Charterers have not dry-docked |
136 |
Her in accordance with Clause 10(g). The costs and fees |
137 |
for such inspection or survey shall be paid by the |
138 |
Charterers; and |
139 |
(c) for any other commercial reason they consider |
140 |
necessary (provided it does not unduly interfere with |
141 |
the commercial operation of the Vessel). The costs and |
142 |
fees for such inspection and survey shall be paid by the |
143 |
Owners. |
144 |
All time used in respect of inspection, survey or repairs |
145 |
shall be for the Charterers’ account and form part of the |
146 |
Charter Period. |
147 |
The Charterers shall also permit the Owners to inspect |
148 |
the Vessel’s log books whenever requested and shall |
149 |
whenever required by the Owners furnish them with full |
150 |
information regarding any casualties or other accidents |
151 |
or damage to the Vessel. |
152 |
9. Inventories, Oil and Stores |
153 |
A complete inventory of the Vessel’s entire equipment, |
154 |
outfit including spare parts, appliances and of all |
155 |
consumable stores on board the Vessel shall be made |
156 |
by the Charterers in conjunction with the Owners on |
157 |
delivery and again on redelivery of the Vessel. The |
158 |
Charterers and the Owners, respectively, shall at the |
159 |
time of delivery and redelivery take over and pay for all |
160 |
bunkers, lubricating oil, unbroached provisions, paints, |
161 |
ropes and other consumable stores (excluding spare |
162 |
parts) in the said Vessel at the then current market prices |
163 |
at the ports of delivery and redelivery, respectively. The |
164 |
Charterers shall ensure that all spare parts listed in the |
165 |
inventory and used during the Charter Period are |
166 |
replaced at their expense prior to redelivery of the |
167 |
Vessel. |
168 |
10. Maintenance and Operation |
169 |
(a)(i)Maintenance and Repairs - During the Charter |
170 |
Period the Vessel shall be in the full possession |
171 |
and at the absolute disposal for all purposes of the |
172 |
Charterers and under their complete control in |
173 |
every respect. The Charterers shall maintain the |
174 |
Vessel, her machinery, boilers, appurtenances and |
175 |
spare parts in a good state of repair, in efficient |
176 |
operating condition and in accordance with good |
177 |
commercial maintenance practice and, except as |
178 |
provided for in Clause 14(l), if applicable, at their |
179 |
own expense they shall at all times keep the |
180 |
Vessel’s Classification Class fully up to date with the |
Classification
181 |
Society indicated in Box 10 and maintain all other |
182 |
necessary certificates in force at all times. |
183 |
(ii) New Class and Other Safety Requirements - In the |
184 |
event of any improvement, structural changes or |
185 |
new equipment becoming necessary for the |
186 |
continued operation of the Vessel by reason of new |
187 |
class requirements or by compulsory legislation, the costs of compliance shall be for the Charterers' account. |
188 |
costing (excluding the Charterers’ loss of time) |
189 |
more than the percentage stated in Box 23, or if |
190 |
Box 23 is left blank, 5 per cent. of the Vessel’s |
191 |
insurance value as stated in Box 29, then the |
192 |
extent, if any, to which the rate of hire shall be varied |
193 |
and the ratio in which the cost of compliance shall |
194 |
be shared between the parties concerned in order |
195 |
to achieve a reasonable distribution thereof as |
196 |
between the Owners and the Charterers having |
197 |
regard, inter alia, to the length of the period |
198 |
remaining under this Charter shall, in the absence |
199 |
of agreement, be referred to the dispute resolution |
200 |
method agreed in Clause 30. |
201 |
(iii) Financial Security - The Charterers shall maintain |
202 |
financial security or responsibility in respect of third |
203 |
party liabilities as required by any government, |
204 |
including federal, state or municipal or other division |
205 |
or authority thereof, to enable the Vessel, without |
206 |
penalty or charge, lawfully to enter, remain at, or |
207 |
leave any port, place, territorial or contiguous |
208 |
waters of any country, state or municipality in |
209 |
performance of this Charter without any delay. This |
210 |
obligation shall apply whether or not such |
211 |
requirements have been lawfully imposed by such |
212 |
government or division or authority thereof. |
213 |
The Charterers shall make and maintain all arrange- |
214 |
ments by bond or otherwise as may be necessary to |
215 |
satisfy such requirements at the Charterers’ sole |
216 |
expense and the Charterers shall indemnify the Owners |
217 |
against all consequences whatsoever (including loss of |
218 |
time) for any failure or inability to do so. |
219 |
(b) Operation of the Vessel - The Charterers shall at |
220 |
their own expense and by their own procurement man, |
221 |
victual, navigate, operate, supply, fuel and, whenever |
222 |
required, repair the Vessel during the Charter Period |
223 |
and they shall pay all charges and expenses of every |
224 |
kind and nature whatsoever incidental to their use and |
225 |
operation of the Vessel under this Charter, including |
226 |
annual flag State fees of the Flag State and any foreign general |
227 |
municipality and/or state taxes. The Master, officers |
228 |
and crew of the Vessel shall be the servants of the Charterers |
229 |
for all purposes whatsoever, even if for any reason |
230 |
appointed by the Owners. |
231 |
Charterers shall comply with the regulations regarding |
232 |
officers and crew in force in the country of the Vessel’s |
233 |
flag or any other applicable law. |
234 |
(c) The Charterers shall keep the Owners and the |
235 |
mortgagee(s) advised of the intended employment, |
236 |
planned dry-docking and major repairs of the Vessel, |
237 |
as reasonably required. |
238 |
(d) Flag and Name of Vessel – During the Charter |
239 |
Period, the Charterers shall have the liberty to paint the |
240 |
Vessel in their own colours, install and display their |
241 |
funnel insignia and fly their own house flag. The |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
242 |
Charterers shall also have the liberty, with the Owners’ |
243 |
consent, which shall not be unreasonably withheld or delayed, to |
244 |
change the flag and/or the name of the Vessel during |
245 |
the Charter Period (with all fees, costs and expenses arising in relation thereto for the Charterers' account). Painting and re-painting, instalment |
246 |
and re-instalment, registration and re-registration, if |
247 |
required by the Owners, shall be at the Charterers’ |
248 |
expense and time. |
249 |
(e) Changes to the Vessel – See Clause 53.1(j). Subject to Clause 10(a)(ii), |
250 |
the Charterers shall make no structural changes in the |
251 |
Vessel or changes in the machinery, boilers, appurten- |
252 |
ances or spare parts thereof without in each instance |
253 |
first securing the Owners’ approval thereof. If the Owners |
254 |
so agree, the Charterers shall, if the Owners so require, |
255 |
restore the Vessel to its former condition before the |
256 |
termination of this Charter. |
257 |
(f) Use of the Vessel’s Outfit, Equipment and |
258 |
Appliances - The Charterers shall have the use of all |
259 |
outfit, equipment, and appliances on board the Vessel |
260 |
at the time of delivery, provided the same or their |
261 |
substantial equivalent shall be returned to the Owners |
262 |
on redelivery in the same good order and condition as |
263 |
when received, ordinary wear and tear excepted. The |
264 |
Charterers shall from time to time during the Charter |
265 |
Period replace, renew or substitute such items of equipment as shall be so |
266 |
damaged or worn as to be unfit for use. The Charterers |
267 |
are to procure that all repairs to or replacement of any |
268 |
damaged, worn or lost parts or equipment be effected |
269 |
in such manner (both as regards workmanship and |
270 |
quality of materials) as not to diminish the value of the |
271 |
Vessel provided that the Vessel's value not to be diminished if the repairs or replacement are effected in accordance with the Classification Society and/or the respective makers' recommendations. Title of any equipment so replaced, renewed or substituted shall vest in and remain with the Owners. The Charterers have the right to fit additional |
272 |
equipment at their expense and risk but the Charterers |
273 |
shall remove such equipment at the end of the period if |
274 |
requested by the Owners. See also Clause 53.1(j). Any equipment including radio |
275 |
equipment on hire on the Vessel at time of delivery shall |
276 |
be kept and maintained by the Charterers and the |
277 |
Charterers shall assume the obligations and liabilities |
278 |
of the Owners under any lease contracts in connection |
279 |
therewith and shall reimburse the Owners for all |
280 |
expenses incurred in connection therewith, also for any |
281 |
new equipment required in order to comply with radio |
282 |
regulations. |
283 |
(g) Periodical Dry-Docking - The Charterers shall dry- |
284 |
dock the Vessel and clean and paint her underwater |
285 |
parts whenever the same may be necessary, but not |
286 |
less than once during the period stated in Box 19 or, if |
287 |
Box 19 has been left blank, every sixty (60) calendar |
288 |
months after delivery or such other period as may be |
289 |
required by the Classification Society or flag State. |
290 |
11. Hire (See Clause 36) |
291 |
(a) The Charterers shall pay hire due to the Owners |
292 |
punctually in accordance with the terms of this Charter |
293 |
in respect of which time shall be of the essence. |
294 |
(b) The Charterers shall pay to the Owners for the hire |
295 |
of the Vessel a lump sum in the amount indicated in |
296 |
Box 22 which shall be payable not later than every thirty |
297 |
(30) running days in advance, the first lump sum being |
298 |
payable on the date and hour of the Vessel’s delivery to |
299 |
the Charterers. Hire shall be paid continuously |
300 |
throughout the Charter Period. |
301 |
(c) Payment of hire shall be made in cash without |
302 |
discount in the currency and in the manner indicated in |
303 |
Box 25 and at the place mentioned in Box 26. |
304 |
(d) Final payment of hire, if for a period of less than |
305 |
thirty (30) running days, shall be calculated proportionally |
306 |
according to the number of days and hours remaining |
307 |
before redelivery and advance payment to be effected |
308 |
accordingly. |
309 |
(e) Should the Vessel be lost or missing, hire shall |
310 |
cease from the date and time when she was lost or last |
311 |
heard of. The date upon which the Vessel is to be treated |
312 |
as lost or missing shall be ten (10) days after the Vessel |
313 |
was last reported or when the Vessel is posted as |
314 |
missing by Lloyd’s, whichever occurs first. Any hire paid |
315 |
in advance to be adjusted accordingly. |
316 |
(f) Any delay in payment of hire shall entitle the |
317 |
Owners to interest at the rate per annum as agreed |
318 |
in Box 24. If Box 24 has not been filled in, the three months |
319 |
Interbank offered rate in London (LIBOR or its successor) |
320 |
for the currency stated in Box 25, as quoted by the British |
321 |
Bankers’ Association (BBA) on the date when the hire |
322 |
fell due, increased by 2 per cent., shall apply. |
323 |
(g) Payment of interest due under sub-clause 11(f) |
324 |
shall be made within seven (7) running days of the date |
325 |
of the Owners’ invoice specifying the amount payable |
326 |
or, in the absence of an invoice, at the time of the next |
327 |
hire payment date. |
328 |
12. Mortgage (See Clause 62) |
329 |
(only to apply if Box 28 has been appropriately filled in) |
330*)(a) The Owners warrant that they have not effected
331 |
any mortgage(s) of the Vessel and that they shall not |
332 |
effect any mortgage(s) without the prior consent of the |
333 |
Charterers, which shall not be unreasonably withheld. |
334*)(b) The Vessel chartered under this Charter is financed
335 |
by a mortgage according to the Financial Instrument. |
336 |
The Charterers undertake to comply, and provide such |
337 |
information and documents to enable the Owners to |
338 |
comply, with all such instructions or directions in regard |
339 |
to the employment, insurances, operation, repairs and |
340 |
maintenance of the Vessel as laid down in the Financial |
341 |
Instrument or as may be directed from time to time during |
342 |
the currency of the Charter by the mortgagee(s) in |
343 |
conformity with the Financial Instrument. The Charterers |
344 |
confirm that, for this purpose, they have acquainted |
345 |
themselves with all relevant terms, conditions and |
346 |
provisions of the Financial Instrument and agree to |
347 |
acknowledge this in writing in any form that may be |
348 |
required by the mortgagee(s). The Owners warrant that |
349 |
they have not effected any mortgage(s) other than stated |
350 |
in Box 28 and that they shall not agree to any |
351 |
amendment of the mortgage(s) referred to in Box 28 or |
352 |
effect any other mortgage(s) without the prior consent |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
353 |
of the Charterers, which shall not be unreasonably |
354 |
withheld. |
355 |
*) (Optional, Clauses 12(a) and 12(b) are alternatives; |
356 |
indicate alternative agreed in Box 28). |
357 |
13. Insurance and Repairs (See also Clause 39) |
358 |
(a) During the Charter Period the Vessel shall be kept |
359 |
insured in accordance with Clause39 andby the Charterers at their expense against hull |
360 |
and machinery, war and Protection and Indemnity risks |
361 |
(and any risks against which it is compulsory to insure |
362 |
for the operation of the Vessel, including but not limited to maintaining |
363 |
financial security in accordance with sub-clause |
364 |
10(a)(iii)) in such form as the Owners shall in writing |
365 |
approve, which approval shall not be un-reasonably |
366 |
withheld. Such insurances shall be arranged by the |
367 |
Charterers to protect the interests of both the Owners |
368 |
and the Charterers and the Owners' Financiers mortgagee(s) (if any), and |
369 |
The Charterers shall be at liberty to protect under such |
370 |
insurances the interests of any managers they may |
371 |
appoint provided such manager has entered into a manager's undertaking in form and substance acceptable to the Owners and the Owners' Financiers |
(if any). Insurance policies shall cover the Owners, the mortgagee(s) (if any), and
372 |
the Charterers according to their respective interests. |
373 |
Subject to the provisions of the agreed loss payable clauses, Financial Instrument, if |
374 |
any, and the approval of the Owners and the insurers, |
375 |
the Charterers shall effect all insured repairs and shall |
376 |
undertake settlement and reimbursement from the |
377 |
insurers of all costs in connection with such repairs as |
378 |
well as insured charges, expenses and liabilities to the |
379 |
extent of coverage under the insurances herein provided |
380 |
for. |
381 |
The Charterers also to remain responsible for and to |
382 |
effect repairs and settlement of costs and expenses |
383 |
incurred thereby in respect of all other repairs not |
384 |
covered by the insurances and/or not exceeding any |
385 |
possible franchise(s) or deductibles provided for in the |
386 |
insurances. |
387 |
All time used for repairs under the provisions of sub- |
388 |
clause 13(a) and for repairs of latent defects according |
389 |
to Clause 3(c) above, including any deviation, shall be |
390 |
for the Charterers’ account. |
391 |
(b) If the conditions of the above insurances permit |
392 |
additional insurance to be placed by the parties, such |
393 |
cover shall be limited to the amount for each party set |
394 |
out in Box 30 and Box 31, respectively. The Owners or |
395 |
the Charterers as the case may be shall immediately |
396 |
furnish the other partyOwners with particulars of any additional |
397 |
insurance effected, including copies of any cover notes |
398 |
or policies and the written consent of the insurers of |
399 |
any such required insurance in any case where the |
400 |
consent of such insurers is necessary. |
401 |
(c) The Charterers shall upon the request of the |
402 |
Owners, provide information and promptly execute such |
403 |
documents as may be required to enable the Owners to |
404 |
comply with the insurance provisions of the Financial |
405 |
Instrument (if any). |
406 |
(d) Subject to the provisions of the Financial Instru- |
407 |
ments and Clause 43, if any, should the Vessel become a Total Loss, an actual, |
408 |
constructive, compromised or agreed total loss under |
409 |
the insurances required under sub-clause 13(a), all |
410 |
insurance payments for such loss shall be paid to the |
411 |
Owners (or, if applicable, the Owners' Financiers) in accordance with the agreed loss payable clauses. who shall distribute the moneys between the |
412 |
Owners and the Charterers according to their respective |
413 |
interests. The Charterers undertake to notify the Owners and the Owners' Financiers, |
414 |
and the mortgagee(s), if any, of any occurrences in |
415 |
consequence of which the Vessel is likely to become a |
416 |
tTotal lLoss. as defined in this Clause. |
417 |
(e) The Owners shall upon the request of the |
418 |
Charterers, promptly execute such documents as may |
419 |
be required to enable the Charterers to abandon the |
420 |
Vessel to insurers and claim a constructive total loss. |
421 |
(f) For the purpose of insurance coverage against hull |
422 |
and machinery and war risks under the provisions of |
423 |
sub-clause 13(a), the value of the Vessel is the sum |
424 |
indicated in Clause 39.Box 29. |
425 |
14. Insurance, Repairs and Classification |
426 |
(Optional, only to apply if expressly agreed and stated |
427 |
in Box 29, in which event Clause 13 shall be considered |
428 |
deleted). |
429 |
(a) During the Charter Period the Vessel shall be kept |
430 |
insured by the Owners at their expense against hull and |
431 |
machinery and war risks under the form of policy or |
432 |
policies attached hereto. The Owners and/or insurers |
433 |
shall not have any right of recovery or subrogation |
434 |
against the Charterers on account of loss of or any |
435 |
damage to the Vessel or her machinery or appurt- |
436 |
enances covered by such insurance, or on account of |
437 |
payments made to discharge claims against or liabilities |
438 |
of the Vessel or the Owners covered by such insurance. |
439 |
Insurance policies shall cover the Owners and the |
440 |
Charterers according to their respective interests. |
441 |
(b) During the Charter Period the Vessel shall be kept |
442 |
insured by the Charterers at their expense against |
443 |
Protection and Indemnity risks (and any risks against |
444 |
which it is compulsory to insure for the operation of the |
445 |
Vessel, including maintaining financial security in |
446 |
accordance with sub-clause 10(a)(iii)) in such form as |
447 |
the Owners shall in writing approve which approval shall |
448 |
not be unreasonably withheld. |
449 |
(c) In the event that any act or negligence of the |
450 |
Charterers shall vitiate any of the insurance herein |
451 |
provided, the Charterers shall pay to the Owners all |
452 |
losses and indemnify the Owners against all claims and |
453 |
demands which would otherwise have been covered by |
454 |
such insurance. |
455 |
(d) The Charterers shall, subject to the approval of the |
456 |
Owners or Owners’ Underwriters, effect all insured |
457 |
repairs, and the Charterers shall undertake settlement |
458 |
of all miscellaneous expenses in connection with such |
459 |
repairs as well as all insured charges, expenses and |
460 |
liabilities, to the extent of coverage under the insurances |
461 |
provided for under the provisions of sub-clause 14(a). |
462 |
The Charterers to be secured reimbursement through |
463 |
the Owners’ Underwriters for such expenditures upon |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
464 |
presentation of accounts. |
465 |
(e) The Charterers to remain responsible for and to |
466 |
effect repairs and settlement of costs and expenses |
467 |
incurred thereby in respect of all other repairs not |
468 |
covered by the insurances and/or not exceeding any |
469 |
possible franchise(s) or deductibles provided for in the |
470 |
insurances. |
471 |
(f) All time used for repairs under the provisions of |
472 |
sub-clauses 14(d) and 14(e) and for repairs of latent |
473 |
defects according to Clause 3 above, including any |
474 |
deviation, shall be for the Charterers’ account and shall |
475 |
form part of the Charter Period. |
476 |
The Owners shall not be responsible for any expenses |
477 |
as are incident to the use and operation of the Vessel |
478 |
for such time as may be required to make such repairs. |
479 |
(g) If the conditions of the above insurances permit |
480 |
additional insurance to be placed by the parties such |
481 |
cover shall be limited to the amount for each party set |
482 |
out in Box 30 and Box 31, respectively. The Owners or |
483 |
the Charterers as the case may be shall immediately |
484 |
furnish the other party with particulars of any additional |
485 |
insurance effected, including copies of any cover notes |
486 |
or policies and the written consent of the insurers of |
487 |
any such required insurance in any case where the |
488 |
consent of such insurers is necessary. |
489 |
(h) Should the Vessel become an actual, constructive, |
490 |
compromised or agreed total loss under the insurances |
491 |
required under sub-clause 14(a), all insurance payments |
492 |
for such loss shall be paid to the Owners, who shall |
493 |
distribute the moneys between themselves and the |
494 |
Charterers according to their respective interests. |
495 |
(i) If the Vessel becomes an actual, constructive, |
496 |
compromised or agreed total loss under the insurances |
497 |
arranged by the Owners in accordance with sub-clause |
498 |
14(a), this Charter shall terminate as of the date of such |
499 |
loss. |
500 |
(j) The Charterers shall upon the request of the |
501 |
Owners, promptly execute such documents as may be |
502 |
required to enable the Owners to abandon the Vessel |
503 |
to the insurers and claim a constructive total loss. |
504 |
(k) For the purpose of insurance coverage against hull |
505 |
and machinery and war risks under the provisions of |
506 |
sub-clause 14(a), the value of the Vessel is the sum |
507 |
indicated in Box 29. |
508 |
(l) Notwithstanding anything contained in sub-clause |
509 |
10(a), it is agreed that under the provisions of Clause |
510 |
14, if applicable, the Owners shall keep the Vessel’s |
511 |
Class fully up to date with the Classification Society |
512 |
indicated in Box 10 and maintain all other necessary |
513 |
certificates in force at all times. |
514 |
15. Redelivery (See Clauses 41 and 42) |
515 |
At the expiration of the Charter Period the Vessel shall |
516 |
be redelivered by the Charterers to the Owners at a |
517 |
safe and ice-free port or place as indicated in Box 16, in |
518 |
such ready safe berth as the Owners may direct. The |
519 |
Charterers shall give the Owners not less than thirty |
520 |
(30) running days’ preliminary notice of expected date, |
521 |
range of ports of redelivery or port or place of redelivery |
522 |
and not less than fourteen (14) running days’ definite |
523 |
notice of expected date and port or place of redelivery. |
524 |
Any changes thereafter in the Vessel’s position shall be |
525 |
notified immediately to the Owners. |
526 |
The Charterers warrant that they will not permit the |
527 |
Vessel to commence a voyage (including any preceding |
528 |
ballast voyage) which cannot reasonably be expected |
529 |
to be completed in time to allow redelivery of the Vessel |
530 |
within the Charter Period. Notwithstanding the above, |
531 |
should the Charterers fail to redeliver the Vessel within |
532 |
The Charter Period, the Charterers shall pay the daily |
533 |
equivalent to the rate of hire stated in Box 22 plus 10 |
534 |
per cent. or to the market rate, whichever is the higher, |
535 |
for the number of days by which the Charter Period is |
536 |
exceeded. All other terms, conditions and provisions of |
537 |
this Charter shall continue to apply. |
538 |
Subject to the provisions of Clause 10, the Vessel shall |
539 |
be redelivered to the Owners in the same or as good |
540 |
structure, state, condition and class as that in which she |
541 |
was delivered, fair wear and tear not affecting class |
542 |
excepted. |
543 |
The Vessel upon redelivery shall have her survey cycles |
544 |
up to date and trading and class certificates valid for at |
545 |
least the number of months agreed in Box 17. |
546 |
16. Non-Lien |
547 |
The Charterers will not suffer, nor permit to be continued, |
548 |
any lien or encumbrance incurred by them or their |
549 |
agents, which might have priority over the title and |
550 |
interest of the Owners in the Vessel. The Charterers |
551 |
further agree to fasten to the Vessel in a conspicuous |
552 |
place and to keep so fastened during the Charter Period |
553 |
a notice reading as follows: |
554 |
“This Vessel is the property of (name of Owners). It is |
555 |
under charter to (name of Charterers) and by the terms |
556 |
of the Charter Party neither the Charterers nor the |
557 |
Master have any right, power or authority to create, incur |
558 |
or permit to be imposed on the Vessel any lien |
559 |
whatsoever.” |
560 |
17. Indemnity (See indemnity clauses in Additional Clauses) |
561 |
(a) The Charterers shall indemnify the Owners against |
562 |
any loss, damage or expense incurred by the Owners |
563 |
arising out of or in relation to the operation of the Vessel |
564 |
by the Charterers, and against any lien of whatsoever |
565 |
nature arising out of an event occurring during the |
566 |
Charter Period. If the Vessel be arrested or otherwise |
567 |
detained by reason of claims or liens arising out of her |
568 |
operation hereunder by the Charterers, the Charterers |
569 |
shall at their own expense take all reasonable steps to |
570 |
secure that within a reasonable time the Vessel is |
571 |
released, including the provision of bail. |
572 |
Without prejudice to the generality of the foregoing, the |
573 |
Charterers agree to indemnify the Owners against all |
574 |
consequences or liabilities arising from the Master, |
575 |
officers or agents signing Bills of Lading or other |
576 |
documents. |
577 |
(b) If the Vessel be arrested or otherwise detained by |
578 |
reason of a claim or claims against the Owners, the |
579 |
Owners shall at their own expense take all reasonable |
580 |
steps to secure that within a reasonable time the Vessel |
581 |
is released, including the provision of bail. |
582 |
In such circumstances the Owners shall indemnify the |
583 |
Charterers against any loss, damage or expense |
584 |
incurred by the Charterers (including hire paid under |
585 |
this Charter) as a direct consequence of such arrest or |
586 |
detention. |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
587 |
18. Lien |
588 |
The Owners to shall have a lien upon all cargoes, sub-hires |
589 |
and sub-freights belonging or due to the Charterers or |
590 |
any sub-charterers and any Bill of Lading freight for all |
591 |
claims under this Charter., and the Charterers to have a |
592 |
lien on the Vessel for all moneys paid in advance and |
593 |
not earned. |
594 |
19. Salvage |
595 |
All salvage and towage performed by the Vessel shall |
596 |
be for the Charterers’ benefit and the cost of repairing |
597 |
damage occasioned thereby shall be borne by the |
598 |
Charterers. |
599 |
20. Wreck Removal |
600 |
In the event of the Vessel becoming a wreck or |
601 |
obstruction to navigation the Charterers shall indemnify |
602 |
the Owners against any sums whatsoever which the |
603 |
Owners shall become liable to pay and shall pay in |
604 |
consequence of the Vessel becoming a wreck or |
605 |
obstruction to navigation. |
606 |
21. General Average |
607 |
The Owners shall not contribute to General Average. |
608 |
22. Assignment, Sub-Charter and Sale (See Clause 62) |
609 |
(a) The Charterers shall not assign this Charter nor |
610 |
sub-charter the Vessel on a bareboat basis except with |
611 |
the prior consent in writing of the Owners, which shall |
612 |
not be unreasonably withheld, and subject to such terms |
613 |
and conditions as the Owners shall approve. |
614 |
(b) The Owners shall not sell the Vessel during the |
615 |
currency of this Charter except with the prior written |
616 |
consent of the Charterers, which shall not be unreason- |
617 |
ably withheld, and subject to the buyer accepting an |
618 |
assignment of this Charter. |
619 |
23. Contracts of Carriage |
620*)(a) The Charterers are to procure that all documents
621 |
issued during the Charter Period evidencing the terms |
622 |
and conditions agreed in respect of carriage of goods |
623 |
shall contain a paramount clause incorporating any |
624 |
legislation relating to carrier’s liability for cargo |
625 |
compulsorily applicable in the trade; if no such legislation |
626 |
exists, the documents shall incorporate the Hague-Visby |
627 |
Rules. The documents shall also contain the New Jason |
628 |
Clause and the Both-to-Blame Collision Clause. |
629 |
*) (b) The Charterers are to procure that all passenger |
630 |
tickets issued during the Charter Period for the carriage |
631 |
of passengers and their luggage under this Charter shall |
632 |
contain a paramount clause incorporating any legislation |
633 |
relating to carrier’s liability for passengers and their |
634 |
luggage compulsorily applicable in the trade; if no such |
635 |
legislation exists, the passenger tickets shall incorporate |
636 |
the Athens Convention Relating to the Carriage of |
637 |
Passengers and their Luggage by Sea, 1974, and any |
638 |
protocol thereto. |
639 |
*) Delete as applicable. |
640 |
24. Bank Guarantee |
641 |
(Optional, only to apply if Box 27 filled in) |
642 |
The Charterers undertake to furnish, before delivery of |
643 |
the Vessel, a first class bank guarantee or bond in the |
644 |
sum and at the place as indicated in Box 27 as guarantee |
645 |
for full performance of their obligations under this |
646 |
Charter. |
647 |
25. Requisition/Acquisition |
648 |
(a) In the event of the Requisition for Hire of the Vessel |
649 |
by any governmental or other competent authority |
650 |
(hereinafter referred to as “Requisition for Hire”) |
651 |
irrespective of the date during the Charter Period when |
652 |
“Requisition for Hire” may occur and irrespective of the |
653 |
length thereof and whether or not it be for an indefinite |
654 |
or a limited period of time, and irrespective of whether it |
655 |
may or will remain in force for the remainder of the |
656 |
Charter Period, this Charter shall not be deemed thereby |
657 |
or thereupon to be frustrated or otherwise terminated |
658 |
and the Charterers shall continue to pay the stipulated |
659 |
hire in the manner provided by this Charter until the time |
660 |
when the Charter would have terminated pursuant to |
661 |
any of the provisions hereof. always provided however |
662 |
that in the event of “Requisition for Hire” any Requisition |
663 |
Hire or compensation received or receivable by the |
664 |
Owners shall be payable to the Charterers during the |
665 |
remainder of the Charter Period or the period of the |
666 |
“Requisition for Hire” whichever be the shorter. |
667 |
(b) In the event of the Owners being deprived of their |
668 |
ownership in the Vessel by any Compulsory Acquisition |
669 |
of the Vessel or requisition for title by any governmental |
670 |
or other competent authority (hereinafter referred to as |
671 |
“Compulsory Acquisition”), then, irrespective of the date |
672 |
during the Charter Period when “Compulsory Acqui- |
673 |
sition” may occur, this Charter shall be deemed |
674 |
terminated as of the date of such “Compulsory |
675 |
Acquisition”. In such event Charter Hire to be considered |
676 |
as earned and to be paid up to the date and time of |
677 |
such “Compulsory Acquisition”. |
678 |
26. War |
679 |
(a) Subject to the provisions of the Financial Instruments (if any) FfFor the purpose of this Clause, the words “War |
680 |
Risks” shall include any war (whether actual or |
681 |
threatened), act of war, civil war, hostilities, revolution, |
682 |
rebellion, civil commotion, warlike operations, the laying |
683 |
of mines (whether actual or reported), acts of piracy, |
684 |
acts of terrorists, acts of hostility or malicious damage, |
685 |
blockades (whether imposed against all vessels or |
686 |
imposed selectively against vessels of certain flags or |
687 |
ownership, or against certain cargoes or crews or |
688 |
otherwise howsoever), by any person, body, terrorist or |
689 |
political group, or the Government of any state |
690 |
whatsoever, which may be dangerous or are likely to be |
691 |
or to become dangerous to the Vessel, her cargo, crew |
692 |
or other persons on board the Vessel. |
693 |
(b) The Vessel, unless the written consent of the |
694 |
Owners be first obtained and adequate insurances are in place (and the Charterers may be required to effect special, modified or additional insurance in order to ensure such adequacy at the Charterers' costs) , shall not continue to or go |
695 |
through any port, place, area or zone (whether of land |
696 |
or sea), or any waterway or canal, where it reasonably |
697 |
appears that the Vessel, her cargo, crew or other |
698 |
persons on board the Vessel, in the reasonable |
699 |
judgement of the Owners, may be, or are likely to be, |
700 |
exposed to War Risks. The Charterers shall provide the owners with evidence satisfactory in respect of the adequacy of such insurances immediately thereafter. Should the Vessel be within any |
701 |
such place as aforesaid, which only becomes danger- |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
702 |
ous, or is likely to be or to become dangerous, after her |
703 |
entry into it, the Owners shall have the right to require |
704 |
the Vessel to leave such area. |
705 |
(c) The Vessel shall not load contraband cargo, or to |
706 |
pass through any blockade, whether such blockade be |
707 |
imposed on all vessels, or is imposed selectively in any |
708 |
way whatsoever against vessels of certain flags or |
709 |
ownership, or against certain cargoes or crews or |
710 |
otherwise howsoever, or to proceed to an area where |
711 |
she shall be subject, or is likely to be subject to |
712 |
a belligerent’s right of search and/or confiscation. |
713 |
(d) If the insurers of the war risks insurance, when |
714 |
Clause 14 is applicable, should require payment of |
715 |
premiums and/or calls because, pursuant to the |
716 |
Charterers’ orders, the Vessel is within, or is due to enter |
717 |
and remain within, any area or areas which are specified |
718 |
by such insurers as being subject to additional premiums |
719 |
because of War Risks, then such premiums and/or calls |
720 |
shall be reimbursed by the Charterers to the Owners at |
721 |
the same time as the next payment of hire is due. |
722 |
(e) The Charterers shall have the liberty: |
723 |
(i) to comply with all orders, directions, recommend- |
724 |
ations or advice as to departure, arrival, routes, |
725 |
sailing in convoy, ports of call, stoppages, |
726 |
destinations, discharge of cargo, delivery, or in any |
727 |
other way whatsoever, which are given by the |
728 |
Government of the Nation under whose flag the |
729 |
Vessel sails, or any other Government, body or |
730 |
group whatsoever acting with the power to compel |
731 |
compliance with their orders or directions; |
732 |
(ii) to comply with the orders, directions or recom- |
733 |
mendations of any war risks underwriters who have |
734 |
the authority to give the same under the terms of |
735 |
the war risks insurance; |
736 |
(iii) to comply with the terms of any resolution of the |
737 |
Security Council of the United Nations, any |
738 |
directives of the European Community, the effective |
739 |
orders of any other Supranational body which has |
740 |
the right to issue and give the same, and with |
741 |
national laws aimed at enforcing the same to which |
742 |
the Owners are subject, and to obey the orders |
743 |
and directions of those who are charged with their |
744 |
enforcement. |
745 |
(f) In the event of outbreak of war (whether there be a |
746 |
declaration of war or not) (i) between any two or more |
747 |
of the following countries: the United States of America; |
748 |
Russia; the United Kingdom; France; and the People’s |
749 |
Republic of China, (ii) between any two or more of the |
750 |
countries stated in Box 36, both the Owners and the |
751 |
Charterers shall have the right to cancel this Charter, |
752 |
whereupon the Charterers shall redeliver the Vessel to |
753 |
the Owners in accordance with Clause 15, if the Vessel |
754 |
has cargo on board after discharge thereof at |
755 |
destination, or if debarred under this Clause from |
756 |
reaching or entering it at a near, open and safe port as |
757 |
directed by the Owners, or if the Vessel has no cargo |
758 |
on board, at the port at which the Vessel then is or if at |
759 |
sea at a near, open and safe port as directed by the |
760 |
Owners. In all cases hire shall continue to be paid in |
761 |
accordance with Clause 11 and except as aforesaid all |
762 |
other provisions of this Charter shall apply until |
763 |
redelivery the end of the Charter Period. |
764 |
27. Commission |
765 |
The Owners to pay a commission at the rate indicated |
766 |
in Box 33 to the Brokers named in Box 33 on any hire |
767 |
paid under the Charter. If no rate is indicated in Box 33, |
768 |
the commission to be paid by the Owners shall cover |
769 |
the actual expenses of the Brokers and a reasonable |
770 |
fee for their work. |
771 |
If the full hire is not paid owing to breach of the Charter |
772 |
by either of the parties the party liable therefor shall |
773 |
indemnify the Brokers against their loss of commission. |
774 |
Should the parties agree to cancel the Charter, the |
775 |
Owners shall indemnify the Brokers against any loss of |
776 |
commission but in such case the commission shall not |
777 |
exceed the brokerage on one year’s hire. |
778 |
28. Termination (See Clauses 41, 42 and 47) |
779 |
(a) Charterers’ Default |
780 |
The Owners shall be entitled to withdraw the Vessel from |
781 |
the service of the Charterers and terminate the Charter |
782 |
with immediate effect by written notice to the Charterers if: |
783 |
(i) the Charterers fail to pay hire in accordance with |
784 |
Clause 11. However, where there is a failure to |
785 |
make punctual payment of hire due to oversight, |
786 |
negligence, errors or omissions on the part of the |
787 |
Charterers or their bankers, the Owners shall give |
788 |
the Charterers written notice of the number of clear |
789 |
banking days stated in Box 34 (as recognised at |
790 |
the agreed place of payment) in which to rectify |
791 |
the failure, and when so rectified within such |
792 |
number of days following the Owners’ notice, the |
793 |
payment shall stand as regular and punctual. |
794 |
Failure by the Charterers to pay hire within the |
795 |
number of days stated in Box 34 of their receiving |
796 |
the Owners’ notice as provided herein, shall entitle |
797 |
the Owners to withdraw the Vessel from the service |
798 |
of the Charterers and terminate the Charter without |
799 |
further notice; |
800 |
(ii) the Charterers fail to comply with the requirements of: |
801 |
(1) Clause 6 (Trading Restrictions) |
802 |
(2) Clause 13(a) (Insurance and Repairs) |
803 |
provided that the Owners shall have the option, by |
804 |
written notice to the Charterers, to give the |
805 |
Charterers a specified number of days grace within |
806 |
which to rectify the failure without prejudice to the |
807 |
Owners’ right to withdraw and terminate under this |
808 |
Clause if the Charterers fail to comply with such |
809 |
notice; |
810 |
(iii) the Charterers fail to rectify any failure to comply |
811 |
with the requirements of sub-clause 10(a)(i) |
812 |
(Maintenance and Repairs) as soon as practically |
813 |
possible after the Owners have requested them in |
814 |
writing so to do and in any event so that the Vessel’s |
815 |
insurance cover is not prejudiced. |
816 |
(b) Owners’ Default |
817 |
If the Owners shall by any act or omission be in breach |
818 |
of their obligations under this Charter to the extent that |
819 |
the Charterers are deprived of the use of the Vessel |
820 |
and such breach continues for a period of fourteen (14) |
821 |
running days after written notice thereof has been given |
822 |
by the Charterers to the Owners, the Charterers shall |
823 |
be entitled to terminate this Charter with immediate effect |
824 |
by written notice to the Owners. |
825 |
(c) Loss of Vessel |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
826 |
This Charter shall be deemed to be terminated if the |
827 |
Vessel becomes a total loss or is declared as a |
828 |
constructive or compromised or arranged total loss. For |
829 |
the purpose of this sub-clause, the Vessel shall not be |
830 |
deemed to be lost unless she has either become an |
831 |
actual total loss or agreement has been reached with |
832 |
her underwriters in respect of her constructive, |
833 |
compromised or arranged total loss or if such agreement |
834 |
with her underwriters is not reached it is adjudged by a |
835 |
competent tribunal that a constructive loss of the Vessel |
836 |
has occurred. |
837 |
(d) Either party shall be entitled to terminate this |
838 |
Charter with immediate effect by written notice to the |
839 |
other party in the event of an order being made or |
840 |
resolution passed for the winding up, dissolution, |
841 |
liquidation or bankruptcy of the other party (otherwise |
842 |
than for the purpose of reconstruction or amalgamation) |
843 |
or if a receiver is appointed, or if it suspends payment, |
844 |
ceases to carry on business or makes any special |
845 |
arrangement or composition with its creditors. |
846 |
(e) The termination of this Charter shall be without |
847 |
prejudice to all rights accrued due between the parties |
848 |
prior to the date of termination and to any claim that |
849 |
either party might have. |
850 |
29. Repossession (See also Clauses 41, 42 and 47) In the event the Vessel is due for redelivery pursuant to Clause 41 or Owners have made a request for redelivery of the Vessel in accordance with the applicable provisions of Clause 42.1, |
851 |
In the event of the termination of this Charter in |
852 |
accordance with the applicable provisions of Clause 28, |
853 |
the Owners shall have the right to repossess the Vessel |
854 |
from the Charterers at her current or next port of call, or |
855 |
at a port or place convenient to them without hindrance |
856 |
or interference by the Charterers, courts or local |
857 |
authorities. Pending physical repossession of the Vessel |
858 |
in accordance with this Clause 29, the Charterers shall |
859 |
hold the Vessel as gratuitous bailee only to the Owners and the Charterers shall procure that the master and crew follow the directions of the Owners . |
860 |
The Owners shall arrange for an authorised represent- |
861 |
ative to board the Vessel as soon as reasonably |
862 |
practicable following the termination of the Charter. The |
863 |
Vessel shall be deemed to be repossessed by the |
864 |
Owners from the Charterers upon the boarding of the |
865 |
Vessel by the Owners’ representative. All arrangements |
866 |
and expenses relating to the settling of wages, |
867 |
disembarkation and repatriation of the Charterers’ |
868 |
Master, officers and crew shall be the sole responsibility |
869 |
of the Charterers. |
870 |
30. Dispute Resolution (See Clause 65) |
871*)(a) This Contract shall be governed by and construed
872 |
in accordance with English law and any dispute arising |
873 |
out of or in connection with this Contract shall be referred |
874 |
to arbitration in London in accordance with the Arbitration |
875 |
Act 1996 or any statutory modification or re-enactment |
876 |
thereof save to the extent necessary to give effect to |
877 |
the provisions of this Clause. |
878 |
The arbitration shall be conducted in accordance with |
879 |
the London Maritime Arbitrators Association (LMAA) |
880 |
Terms current at the time when the arbitration proceed- |
881 |
ings are commenced. |
882 |
The reference shall be to three arbitrators. A party |
883 |
wishing to refer a dispute to arbitration shall appoint its |
884 |
arbitrator and send notice of such appointment in writing |
885 |
to the other party requiring the other party to appoint its |
886 |
own arbitrator within 14 calendar days of that notice and |
887 |
stating that it will appoint its arbitrator as sole arbitrator |
888 |
unless the other party appoints its own arbitrator and |
889 |
gives notice that it has done so within the 14 days |
890 |
specified. If the other party does not appoint its own |
891 |
arbitrator and give notice that it has done so within the |
892 |
14 days specified, the party referring a dispute to |
893 |
arbitration may, without the requirement of any further |
894 |
prior notice to the other party, appoint its arbitrator as |
895 |
sole arbitrator and shall advise the other party |
896 |
accordingly. The award of a sole arbitrator shall be |
897 |
binding on both parties as if he had been appointed by |
898 |
agreement. |
899 |
Nothing herein shall prevent the parties agreeing in |
900 |
writing to vary these provisions to provide for the |
901 |
appointment of a sole arbitrator. |
902 |
In cases where neither the claim nor any counterclaim |
903 |
exceeds the sum of US$50,000 (or such other sum as |
904 |
the parties may agree) the arbitration shall be conducted |
905 |
in accordance with the LMAA Small Claims Procedure |
906 |
current at the time when the arbitration proceedings are |
907 |
commenced. |
908 |
*) (b) This Contract shall be governed by and construed |
909 |
in accordance with Title 9 of the United States Code |
910 |
and the Maritime Law of the United States and any |
911 |
dispute arising out of or in connection with this Contract |
912 |
shall be referred to three persons at New York, one to |
913 |
be appointed by each of the parties hereto, and the third |
914 |
by the two so chosen; their decision or that of any two |
915 |
of them shall be final, and for the purposes of enforcing |
916 |
any award, judgement may be entered on an award by |
917 |
any court of competent jurisdiction. The proceedings |
918 |
shall be conducted in accordance with the rules of the |
919 |
Society of Maritime Arbitrators, Inc. |
920 |
In cases where neither the claim nor any counterclaim |
921 |
exceeds the sum of US$50,000 (or such other sum as |
922 |
the parties may agree) the arbitration shall be conducted |
923 |
in accordance with the Shortened Arbitration Procedure |
924 |
of the Society of Maritime Arbitrators, Inc. current at |
925 |
the time when the arbitration proceedings are commenced. |
926*)(c) This Contract shall be governed by and construed
927 |
in accordance with the laws of the place mutually agreed |
928 |
by the parties and any dispute arising out of or in |
929 |
connection with this Contract shall be referred to |
930 |
arbitration at a mutually agreed place, subject to the |
931 |
procedures applicable there. |
932 |
(d) Notwithstanding (a), (b) or (c) above, the parties |
933 |
may agree at any time to refer to mediation any |
934 |
difference and/or dispute arising out of or in connection |
935 |
with this Contract. |
936 |
In the case of a dispute in respect of which arbitration |
937 |
has been commenced under (a), (b) or (c) above, the |
938 |
following shall apply:- |
939 |
(i) Either party may at any time and from time to time |
940 |
elect to refer the dispute or part of the dispute to |
941 |
mediation by service on the other party of a written |
942 |
notice (the “Mediation Notice”) calling on the other |
943 |
party to agree to mediation. |
944 |
(ii) The other party shall thereupon within 14 calendar |
945 |
days of receipt of the Mediation Notice confirm that |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
946 |
they agree to mediation, in which case the parties |
947 |
shall thereafter agree a mediator within a further |
948 |
14 calendar days, failing which on the application |
949 |
of either party a mediator will be appointed promptly |
950 |
by the Arbitration Tribunal (“the Tribunal”) or such |
951 |
person as the Tribunal may designate for that |
952 |
purpose. The mediation shall be conducted in such |
953 |
place and in accordance with such procedure and |
954 |
on such terms as the parties may agree or, in the |
955 |
event of disagreement, as may be set by the |
956 |
mediator. |
957 |
(iii) If the other party does not agree to mediate, that |
958 |
fact may be brought to the attention of the Tribunal |
959 |
and may be taken into account by the Tribunal when |
960 |
allocating the costs of the arbitration as between 961 the parties. |
962 |
(iv) The mediation shall not affect the right of either |
963 |
party to seek such relief or take such steps as it |
964 |
considers necessary to protect its interest. |
965 |
(v) Either party may advise the Tribunal that they have |
966 |
agreed to mediation. The arbitration procedure shall |
967 |
continue during the conduct of the mediation but |
968 |
the Tribunal may take the mediation timetable into |
969 |
account when setting the timetable for steps in the |
970 |
arbitration. |
971 |
(vi) Unless otherwise agreed or specified in the |
972 |
mediation terms, each party shall bear its own costs |
973 |
incurred in the mediation and the parties shall share |
974 |
equally the mediator’s costs and expenses. |
975 |
(vii) The mediation process shall be without prejudice |
976 |
and confidential and no information or documents |
977 |
disclosed during it shall be revealed to the Tribunal |
978 |
except to the extent that they are disclosable under |
979 |
the law and procedure governing the arbitration. |
980 |
(Note: The parties should be aware that the mediation |
981 |
process may not necessarily interrupt time limits.) |
982 |
(e) If Box 35 in Part I is not appropriately filled in, sub-clause |
983 |
30(a) of this Clause shall apply. Sub-clause 30(d) shall |
984 |
apply in all cases. |
985 |
*) Sub-clauses 30(a), 30(b) and 30(c) are alternatives; |
986 |
indicate alternative agreed in Box 35. |
987 |
31. Notices (See Clause 46) |
988 |
(a) Any notice to be given by either party to the other |
989 |
party shall be in writing and may be sent by fax, telex, |
990 |
registered or recorded mail or by personal service. |
991 |
(b) The address of the Parties for service of such |
992 |
communication shall be as stated in Boxes 3 and 4 |
993 |
respectively. |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART III
PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY
(Optional, only to apply if expressly agreed and stated in Box 37)
1.Specifications and Building Contract
2(a) The Vessel shall be constructed in accordance with
3the Building Contract (hereafter called “the Building
4Contract”) as annexed to this Charter, made between the
5Builders and the Owners and in accordance with the
6specifications and plans annexed thereto, such Building
7Contract, specifications and plans having been counter-
8signed as approved by the Charterers.
9(b) No change shall be made in the Building Contract or
10in the specifications or plans of the Vessel as approved by
11the Charterers as aforesaid, without the Charterers’
12consent.
13(c) The Charterers shall have the right to send their
14representative to the Builders’ Yard to inspect the Vessel
15during the course of her construction to satisfy themselves
16that construction is in accordance with such approved
17specifications and plans as referred to under sub-clause
18(a) of this Clause.
19(d) The Vessel shall be built in accordance with the
20Building Contract and shall be of the description set out
21therein. Subject to the provisions of sub-clause 2(c)(ii)
22hereunder, the Charterers shall be bound to accept the
23Vessel from the Owners, completed and constructed in
24accordance with the Building Contract, on the date of
25delivery by the Builders. The Charterers undertake that
26having accepted the Vessel they will not thereafter raise
27any claims against the Owners in respect of the Vessel’s
28performance or specification or defects, if any.
29Nevertheless, in respect of any repairs, replacements or
30defects which appear within the first 12 months from
31delivery by the Builders, the Owners shall endeavour to
32compel the Builders to repair, replace or remedy any defects
33or to recover from the Builders any expenditure incurred in
34carrying out such repairs, replacements or remedies.
35However, the Owners’ liability to the Charterers shall be
36limited to the extent the Owners have a valid claim against
37the Builders under the guarantee clause of the Building
38Contract (a copy whereof has been supplied to the
39Charterers). The Charterers shall be bound to accept such
40sums as the Owners are reasonably able to recover under
41this Clause and shall make no further claim on the Owners
42for the difference between the amount(s) so recovered and
43the actual expenditure on repairs, replacement or
44remedying defects or for any loss of time incurred.
45Any liquidated damages for physical defects or deficiencies
46shall accrue to the account of the party stated in Box 41(a)
47or if not filled in shall be shared equally between the parties.
48The costs of pursuing a claim or claims against the Builders
49under this Clause (including any liability to the Builders)
50shall be borne by the party stated in Box 41(b) or if not
51filled in shall be shared equally between the parties.
522. Time and Place of Delivery
53(a) Subject to the Vessel having completed her
54acceptance trials including trials of cargo equipment in
55accordance with the Building Contract and specifications
56to the satisfaction of the Charterers, the Owners shall give
57and the Charterers shall take delivery of the Vessel afloat
58when ready for delivery and properly documented at the
59Builders’ Yard or some other safe and readily accessible
60dock, wharf or place as may be agreed between the parties
61hereto and the Builders. Under the Building Contract the
62Builders have estimated that the Vessel will be ready for
63delivery to the Owners as therein provided but the delivery
64date for the purpose of this Charter shall be the date when
65the Vessel is in fact ready for delivery by the Builders after
66completion of trials whether that be before or after as
67indicated in the Building Contract. The Charterers shall not
68be entitled to refuse acceptance of delivery of the Vessel
69and upon and after such acceptance, subject to Clause
701(d), the Charterers shall not be entitled to make any claim
71against the Owners in respect of any conditions,
72representations or warranties, whether express or implied,
73as to the seaworthiness of the Vessel or in respect of delay
74in delivery.
75(b) If for any reason other than a default by the Owners
76under the Building Contract, the Builders become entitled
77under that Contract not to deliver the Vessel to the Owners,
78the Owners shall upon giving to the Charterers written
79notice of Builders becoming so entitled, be excused from
80giving delivery of the Vessel to the Charterers and upon
81receipt of such notice by the Charterers this Charter shall
82cease to have effect.
83(c) If for any reason the Owners become entitled under
84the Building Contract to reject the Vessel the Owners shall,
85before exercising such right of rejection, consult the
86Charterers and thereupon
87(i) if the Charterers do not wish to take delivery of the Vessel
88they shall inform the Owners within seven (7) running days
89by notice in writing and upon receipt by the Owners of such
90notice this Charter shall cease to have effect; or
91(ii) if the Charterers wish to take delivery of the Vessel
92they may by notice in writing within seven (7) running days
93require the Owners to negotiate with the Builders as to the
94terms on which delivery should be taken and/or refrain from
95exercising their right to rejection and upon receipt of such
96notice the Owners shall commence such negotiations and/
97or take delivery of the Vessel from the Builders and deliver
98her to the Charterers;
99(iii) in no circumstances shall the Charterers be entitled to
100reject the Vessel unless the Owners are able to reject the
101Vessel from the Builders;
102(iv) if this Charter terminates under sub-clause (b) or (c) of
103this Clause, the Owners shall thereafter not be liable to the
104Charterers for any claim under or arising out of this Charter
105or its termination.
106(d) Any liquidated damages for delay in delivery under the
107Building Contract and any costs incurred in pursuing a claim
108therefor shall accrue to the account of the party stated in
109Box 41(c) or if not filled in shall be shared equally between
110the parties.
1113. Guarantee Works
112If not otherwise agreed, the Owners authorise the
113Charterers to arrange for the guarantee works to be
114performed in accordance with the building contract terms,
115and hire to continue during the period of guarantee works.
116The Charterers have to advise the Owners about the
117performance to the extent the Owners may request.
1184. Name of Vessel
119The name of the Vessel shall be mutually agreed between
120the Owners and the Charterers and the Vessel shall be
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART III
PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY
(Optional, only to apply if expressly agreed and stated in Box 37)
121painted in the colours, display the funnel insignia and fly
122the house flag as required by the Charterers.
1235. Survey on Redelivery
124The Owners and the Charterers shall appoint surveyors
125for the purpose of determining and agreeing in writing the
126condition of the Vessel at the time of re-delivery.
127Without prejudice to Clause 15 (Part II), the Charterers
128shall bear all survey expenses and all other costs, if any,
129including the cost of docking and undocking, if required,
130as well as all repair costs incurred. The Charterers shall
131also bear all loss of time spent in connection with any
132docking and undocking as well as repairs, which shall be
133paid at the rate of hire per day or pro rata.
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART III
PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY
(Optional, only to apply if expressly agreed and stated in Box 37)
1On expiration of this Charter and provided the Charterers
2have fulfilled their obligations according to Part I and II
3as well as Part III, if applicable, it is agreed, that on
4payment of the final payment of hire as per Clause 11
5the Charterers have purchased the Vessel with
6everything belonging to her and the Vessel is fully paid
7for.
8In the following paragraphs the Owners are referred to
9as the Sellers and the Charterers as the Buyers.
10The Vessel shall be delivered by the Sellers and taken
11over by the Buyers on expiration of the Charter.
12The Sellers guarantee that the Vessel, at the time of
13delivery, is free from all encumbrances and maritime
14liens or any debts whatsoever other than those arising
15from anything done or not done by the Buyers or any
16existing mortgage agreed not to be paid off by the time
17of delivery. Should any claims, which have been incurred
18prior to the time of delivery be made against the Vessel,
19the Sellers hereby undertake to indemnify the Buyers
20against all consequences of such claims to the extent it
21can be proved that the Sellers are responsible for such
22claims. Any taxes, notarial, consular and other charges
23and expenses connected with the purchase and
24registration under Buyers’ flag, shall be for Buyers’
25account. Any taxes, consular and other charges and
26expenses connected with closing of the Sellers’ register,
27shall be for Sellers’ account.
28In exchange for payment of the last month’s hire
29instalment the Sellers shall furnish the Buyers with a
30Bill of Sale duly attested and legalized, together with a
31certificate setting out the registered encumbrances, if
32any. On delivery of the Vessel the Sellers shall provide
33for deletion of the Vessel from the Ship’s Register and
34deliver a certificate of deletion to the Buyers.
35The Sellers shall, at the time of delivery, hand to the
36Buyers all classification certificates (for hull, engines,
37anchors, chains, etc.), as well as all plans which may
38be in Sellers’ possession.
39The Wireless Installation and Nautical Instruments,
40unless on hire, shall be included in the sale without any
41extra payment.
42The Vessel with everything belonging to her shall be at
43Sellers’ risk and expense until she is delivered to the
44Buyers, subject to the conditions of this Contract and
45the Vessel with everything belonging to her shall be
46delivered and taken over as she is at the time of delivery,
47after which the Sellers shall have no responsibility for
48possible faults or deficiencies of any description.
49The Buyers undertake to pay for the repatriation of the
50Master, officers and other personnel if appointed by the
51Sellers to the port where the Vessel entered the Bareboat
52Charter as per Clause 3 (Part II) or to pay the equivalent
53cost for their journey to any other place.
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART IV
HIRE/PURCHASE AGREEMENT
(Optional, only to apply if expressly agreed and stated in Box 42)
11.Definitions
2For the purpose of this PART V, the following terms shall
3have the meanings hereby assigned to them:
4“The Bareboat Charter Registry” shall mean the registry
5of the State whose flag the Vessel will fly and in which
6the Charterers are registered as the bareboat charterers
7during the period of the Bareboat Charter.
8“The Underlying Registry” shall mean the registry of the
9state in which the Owners of the Vessel are registered
10as Owners and to which jurisdiction and control of the
11Vessel will revert upon termination of the Bareboat
12Charter Registration.
132.Mortgage
14The Vessel chartered under this Charter is financed by
15a mortgage and the provisions of Clause 12(b) (Part II)
16shall apply.
173.Termination of Charter by Default
18If the Vessel chartered under this Charter is registered
19in a Bareboat Charter Registry as stated in Box 44, and
20if the Owners shall default in the payment of any amounts
21due under the mortgage(s) specified in Box 28, the
22Charterers shall, if so required by the mortgagee, direct
23the Owners to re-register the Vessel in the Underlying
24Registry as shown in Box 45.
25In the event of the Vessel being deleted from the
26Bareboat Charter Registry as stated in Box 44, due to a
27default by the Owners in the payment of any amounts
28due under the mortgage(s), the Charterers shall have
29the right to terminate this Charter forthwith and without
30prejudice to any other claim they may have against the
31Owners under this Charter.
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
EXECUTION VERSION
ADDITIONAL CLAUSES TO BARECON 2001
CLAUSE 32 – CHARTER PERIOD
32.1 |
The period of this Charter (the “Charter Period”) shall, subject to the terms of this Charter, start from the Commencement Date and end on the date falling eighty-four (84) months from the Commencement Date. |
32.2 |
Notwithstanding the fact that the Charter Period shall commence on the Commencement Date, this Charter shall be: |
(a) |
in full force and effect; and |
(b) |
valid, binding and enforceable against the parties hereto, |
with effect from the date hereof until the end of the Charter Period (subject to the terms of this Charter).
CLAUSE 33 – CANCELLATION
33.1 |
If: |
(a) |
the Vessel is not delivered by the Charterers as sellers to the Owners as buyers under the MOA by the Cancelling Date (or such later date as the parties to the MOA may agree); |
(b) |
it becomes unlawful for the Charterers as sellers and the Owners as buyers to perform or comply with any or all of their obligations under the MOA; or |
(c) |
the MOA expires, is cancelled, terminated, rescinded or suspended or otherwise ceases to remain in full force and effect for any reason (in whole or in part), |
then this Charter shall immediately terminate and be cancelled (without prejudice to Clause 57 (Indemnities) and without the need for either the Owners or the Charterers to take any action whatsoever), provided that the Owners shall be entitled to retain all fees and expenses paid by the Charterers pursuant to Clause 44 (Fees and Expenses) (and without prejudice to Clause 44 (Fees and Expenses) and any clause of the MOA, if such fees have not been paid, the Charterers shall forthwith pay such fees and expenses to the Owners in accordance with Clause 44 (Fees and Expenses)) and such payment shall be irrevocable and unconditional and is acknowledged by the Charterers to be proportionate as to amount, having regard to the legitimate interest of the Owners, in protecting against the Owners’ risk of the Charterers failing to perform its obligations under this Charter. For the avoidance of doubt, the termination of the Charter shall not prejudice the operation of any provision of any Leasing Document which is expressed to survive the termination or cancellation of this Charter.
CLAUSE 34 – DELIVERY AND CHARTER OF VESSEL
34.1 |
This Charter is part of a transaction involving the sale, purchase and charter back of the Vessel and constitutes one of the Leasing Documents. |
34.2 |
The obligation of the Owners to charter the Vessel to the Charterers hereunder is subject to and conditional upon: |
(a) |
no Termination Event or Potential Termination Event having occurred on the date of this Charter and on the Commencement Date; |
(b) |
the representations and warranties contained in Clause 48 (Representations and Warranties) being true and correct on the date hereof and on the Commencement Date; |
(c) |
the Vessel being delivered to the Owners pursuant to the MOA; |
(d) |
the Delivery occurring on or before the Cancelling Date; and |
(e) |
the Owners having received from the Charterers: |
(i) |
on or before the date falling one (1) Business Day prior to the Prepositioning Date (or such other period as the Owners may otherwise agree), the documents or evidence set out in Part A of Schedule 2 (Conditions Precedent) in form and substance satisfactory to them; and |
(ii) |
on the Commencement Date and prior to or simultaneously with the Owners executing a dated and timed copy of the protocol of delivery and acceptance evidencing delivery of the Vessel under the MOA and a dated and timed copy of the Acceptance Certificate, the documents or evidence set out in Part B of Schedule 2 (Conditions Precedent) in form and substance satisfactory to them, |
and if any of the documents listed in sub-paragraph (g) above are not in the English language then they shall be accompanied by an English translation where required by the Owners.
34.3 |
On delivery to and acceptance by the Owners (in their capacity as buyers) of the Vessel from the Charterers (in their capacity as sellers) under the MOA, the Vessel shall be deemed to have been delivered to, and accepted without reservation by, the Charterers under this Charter and the Charterers shall become and be entitled to the possession and use of the Vessel on and subject to the terms and conditions of this Charter on the same day as the delivery date of the Vessel under the MOA. |
34.4 |
On Delivery, as evidence of the commencement of the Charter Period, the Charterers shall sign and deliver to the Owners, the Acceptance Certificate. The Charterers shall be deemed to have accepted the Vessel under this Charter, and the commencement of the Charter Period having started, on Delivery even if, for whatever reason, the Acceptance Certificate is not signed. |
34.5 |
The Charterers shall not be entitled for any reason whatsoever to refuse to accept delivery of the Vessel under this Charter once the Vessel has been delivered to and accepted by the Owners (in their capacity as buyers) from the Charterers (in their capacity as sellers) under the MOA, and the Owners shall not be liable for any losses, costs or expenses whatsoever or howsoever arising including without limitation, any loss of profit or any loss or otherwise: |
(a) |
resulting directly or indirectly from any defect or alleged defect in the Vessel or any failure of the Vessel; or |
(b) |
arising from any delay in the commencement of the Charter Period or any failure of the Charter Period to commence. |
34.6 |
The Owners shall not be obliged to deliver the Vessel to the Charterers with any bunkers and unused lubricating oils and hydraulic oils and greases in storage tanks and unopened drums of the Vessel except for such items which are already on the Vessel on Delivery. The Owners shall |
2
not be responsible for the fitness, quality or quantity of any such bunkers and unused lubricating oils and hydraulic oils and greases and the Charterers shall make no claim against Owners in respect of the same.
34.7 |
The Charterers shall procure receipt by the Owners of the conditions subsequent set out in Part C of Schedule 2 in a form and substance satisfactory to the Owners within the time periods permitted therein. |
CLAUSE 35 – QUIET ENJOYMENT
35.1 |
Subject to the terms of any QEL and provided that: |
(a) |
the Charterers do not breach any term of this Charter or any other Leasing Document to which they are a party; and |
(b) |
no Termination Event or Total Loss has occurred, |
the Owners hereby agree not to disturb or interfere with the Charterers’ lawful use, possession and quiet enjoyment of the Vessel during the Charter Period.
CLAUSE 36 – CHARTERHIRE AND ADVANCE CHARTERHIRE
36.1 |
In consideration of the Owners agreeing to charter the Vessel to the Charterers under this Charter at the request of the Charterers, the Charterers hereby irrevocably and unconditionally agree to pay to the Owners the Charterhire, the Advance Charterhire and all other amounts payable under this Charter in accordance with the terms of this Charter. |
36.2 |
The Charterers shall pay to the Owners on the Commencement Date, an amount which is equal to the difference between the Purchase Price and the Owners’ Costs as of the Commencement Date (the “Advance Charterhire”). The Charterers shall be deemed to have paid the Advance Charterhire to the Owners on the Commencement Date by the Owners (as buyers under the MOA) setting off an amount equal to the Advance Charterhire against a corresponding amount of the Purchase Price payable by the Owners to the Charterers (as sellers) under the MOA. |
36.3 |
The Advance Charterhire shall not bear interest and shall be non-refundable. |
36.4 |
Following Delivery and commencing from the Commencement Date, the Charterers shall pay Charterhire in arrears in quarterly instalments on each Payment Date. Each instalment shall consist of: |
(a) |
a capital element of Charterhire (the “Fixed Charterhire”) which shall be in an amount equivalent to 1/28 of the difference between the Opening Capital Balance and the Expiry Owners’ Costs; and |
(b) |
a variable element of Charterhire (the “Variable Charterhire”) which shall be calculated by applying the aggregate of: |
(i) |
the applicable Interest Rate for the relevant Hire Period; and |
(ii) |
the Margin, |
3
to the Owners’ Costs on the immediately preceding Payment Date (or, in the case of the First Payment Date only, on the Commencement Date) for the Hire Period ending on the relevant Payment Date by reference to the actual number of days elapsed.
36.5 |
Charterhire shall be payable in arrears on the following dates (each a “Payment Date”): |
(a) |
the first instalment of Charterhire shall be payable on the date falling three (3) months after the Commencement Date (the “First Payment Date”); and |
(b) |
each subsequent instalment of Charterhire (other than the last instalment of Charterhire) shall be payable quarterly thereafter, with the final instalment of Charterhire payable on the last day of the Charter Period, |
such that there are a total of twenty eight (28) Payment Dates during the Charter Period.
36.6 |
Payment of Charterhire on any Payment Date shall be made in same day available funds and received by the Owners by not later than 5.00 pm (Shanghai time). Any payment of Charterhire which is due to be made on a Payment Date which is not also a Business Day shall be made on the previous Business Day instead. |
36.7 |
Time of payment of the Charterhire and any other payments by the Charterers under this Charter shall be of the essence. |
36.8 |
All payments of the Charterhire and any other moneys payable hereunder shall be made in Dollars. |
36.9 |
All payments of the Charterhire and any other moneys payable hereunder shall be payable by the Charterers to the Owners’ designated bank account as the Owners may notify the Charterers in writing from time to time. |
36.10 |
Payment of the Charterhire and any other amounts under this Charter shall be at the Charterers’ risk until receipt by the Owners. |
36.11 |
The Vessel shall not at any time be deemed off-hire and the Charterers’ obligation to pay the Charterhire and any other amounts payable under this Charter (including but not limited to the Termination Sum or the Total Loss Termination Sum) in Dollars shall be absolute and unconditional under any and all circumstances and shall not be affected by any circumstances of any nature whatsoever including but not limited to: |
(a) |
(except in the case of the Advance Charterhire) any set off, counterclaim, recoupment, defence, claim or other right which the Charterers may at any time have against the Owners or any other person for any reason whatsoever including, without limitation, any act, omission or breach on the part of the Owners under this Charter or any other agreement at any time existing between the Owners and the Charterers; |
(b) |
any change, extension, indulgence or other act or omission in respect of any indebtedness or obligation of the Charterers, or any sale, exchange, release or surrender of, or other dealing in, any security for any such indebtedness or obligation; |
(c) |
any title defect or encumbrance or any dispossession of the Vessel by title paramount or otherwise; |
4
(d) |
any defect in the seaworthiness, condition, value, design, merchantability, operation or fitness for use of the Vessel or the ineligibility of the Vessel for any particular trade or for registration or documentation under the laws of any relevant jurisdiction; |
(e) |
the Total Loss or any damage to or forfeiture or court marshall’s or other sale of the Vessel if the Termination Sum, Total Loss Termination Sum or any part thereof remains due; |
(f) |
any libel, attachment, levy, detention, sequestration or taking into custody of the Vessel or any restriction or prevention of or interference with or interruption or cessation in, the use or possession thereof by the Charterers; |
(g) |
any insolvency, bankruptcy, reorganization, arrangement, readjustment, dissolution, liquidation or similar proceedings by or against the Charterers and any other Obligors; |
(h) |
any invalidity, unenforceability, lack of due authorization or other defects, or any failure or delay in performing or complying with any of the terms and provisions of this Charter or any of the Leasing Documents by any party to this Charter or any other person; |
(i) |
any enforcement or attempted enforcement by the Owners of their rights under this Charter or any of the Leasing Documents executed or to be executed pursuant to this Charter; |
(j) |
any loss of use of the Vessel due to deficiency or default or strike of officers or crew, fire, breakdown, damage, accident, defective cargo or any other cause which would or might but for this provision have the effect of terminating or in any way affecting any obligation of the Charterers under this Charter; or |
(k) |
any prevention, delay, deviation or disruption in the use of the Vessel resulting from the wide outbreak of any viruses (including the 2019 novel coronavirus), including but not limited to those caused by: |
(i) |
closure of ports; |
(ii) |
prohibitions or restrictions against the Vessel calling at or passing through certain ports; |
(iii) |
restriction in the movement of personnel and/or shortage of labour affecting the operation of the Vessel or the operation of the ports (including stevedoring operations); |
(iv) |
quarantine regulations affecting the Vessel, its cargo, the crew members or relevant port personnel; |
(v) |
fumigation or cleaning of the Vessel; or |
(vi) |
any claims raised by any sub-charterer or manager of the Vessel that a force majeure event or termination event (or any other analogous event howsoever called) has occurred under the relevant charter agreement or management agreement (as the case may be) of the Vessel as a result of the outbreak of such viruses. |
36.12 |
All stamp duty, value added tax (for the avoidance of doubt, including without limitation, goods and services tax), withholding or other taxes and import and export duties and all other similar types of charges (for the avoidance of doubt any Owner’s income tax liabilities) which may be levied or assessed on or in connection with: |
5
(a) |
the operation of this Charter in respect of the hire and all other payments to be made pursuant to this Charter and the remittance thereof to the Owners; and |
(b) |
the import, export, purchase, delivery and re-delivery of the Vessel, |
shall be borne by the Charterers. The Charterers shall pay, if applicable, value added tax and other similar tax levied on any Charterhire and other payments payable under this Charter by addition to, and at the time of payment of, such amounts.
CLAUSE 37 – CHANGES TO INTEREST RATE, DEFAULT INTEREST
37.1
(a) |
Interpolated Term SOFR: If, in relation to any determination of the Interest Rate prior to a Published Rate Replacement Event, the Owners determine (which determination shall be conclusive and binding) that Term SOFR is not available for a Hire Period, the applicable Interest Rate shall be the Interpolated Term SOFR. |
(b) |
Historic Term SOFR: If paragraph (a) above applies but it is not possible to calculate the Interpolated Term SOFR for the relevant Hire Period, the applicable Interest Rate shall be the Historic Term SOFR. |
(c) |
Interpolated Historic Term SOFR: if paragraph (b) above applies but no Historic Term SOFR is available for the relevant Hire Period, the applicable Interest Rate shall be the Interpolated Historic Term SOFR. |
(d) |
Cost of Funds: if paragraph (c) above applies but it is not possible to calculate the Interpolated Historic Term SOFR, Clause 37.2 below shall apply. |
37.2 |
(i) If this Clause 37.2 applies to any Hire Period pursuant to Clause 37.1(d) above; or (ii) after the occurrence of a Published Rate Replacement Event but prior to the making of any necessary amendment or waiver in accordance with Clause 37.3 below; or (iii) if the Charterers receive notification from the Owners that the costs of funding of the Owners would be in excess of the Market Disruption Rate, the Interest Rate shall be the rate per annum which is the cost certified by the Owners (expressed as an annual rate of interest) of funding the Owners’ Costs during the relevant Hire Period (as reasonably determined by the Owners). |
37.3 |
If a Published Rate Replacement Event has occurred in relation to the Published Rate, the Owners are entitled to make any amendment or waiver to the terms of the Leasing Documents with the consent of the Charterers (at the Charterers’ cost) which relates to: |
(a) |
providing for the use of a Replacement Reference Rate in place of (or in addition to) that Published Rate; and |
(b)
(i) |
aligning any provision of any Leasing Document to the use of that Replacement Reference Rate; |
(ii) |
enabling that Replacement Reference Rate to be used for the calculation of the Interest Rate under this Charter (including, without limitation, any consequential changes required to enable that Replacement Reference Rate to be used for the purposes of this Charter); |
6
(iii) |
implementing market conventions applicable to that Replacement Reference Rate; |
(iv) |
providing for appropriate fallback (and market disruption) provisions for that Replacement Reference Rate; |
(v) |
adjusting the pricing to reduce or eliminate, to the extent reasonably practicable, any transfer of economic value from one Party to another as a result of the application of that Replacement Reference Rate (and if any adjustment or method for calculating any adjustment has been formally designated, nominated or recommended by the Relevant Nominating Body, the adjustment shall be determined on the basis of that designation, nomination or recommendation), |
and pending any such amendment or waiver and the Replacement Reference Rate being utilised under the Leasing Documents to calculate the Interest Rate, Clause 37.2 shall apply to the calculation of the Interest Rate.
37.4 |
If the Charterers fail to make any payment due under this Charter on the due date, they shall pay additional interest on such late payment at a rate which is equal to two per cent. (2%) per annum above the applicable Interest Rate for the relevant Hire Period and the Margin which shall apply prior to, during or following Delivery and shall accrue on a daily basis from the date on which payment became due up to and excluding the date of payment thereof and the Charterers and the Owners agree that such default rate is proportionate as to amount, having regard to the legitimate interest of the Owners, in protecting against the Owners’ risk of the Charterers failing to perform its obligations under this Charter. |
37.5 |
All interest (including default interest) and any other payments under this Charter which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a three hundred and sixty (360) days’ year. |
CLAUSE 38 – POSSESSION OF VESSEL
38.1 |
The Charterers shall not, without the prior written consent of the Owners, assign, mortgage or pledge the Vessel or any interest therein and shall not permit the creation or existence of any Security Interest thereon (including for any monies paid in advance and not earned, and for any claims for damages arising from any breach by the Owners of this Charter and other amounts due to the Charterers under this Charter) except for the Permitted Security Interests. |
38.2 |
The Charterers shall promptly notify any party (including without limitation, any sub-charterer) (as the Owners may request) in writing that the Vessel is the property of the Owners and the Charterers shall provide the Owners with a copy of such written notification and evidence that such party has received such written notification. |
38.3 |
If the Vessel is arrested, seized, impounded, forfeited, detained or taken out of their possession or control (whether or not pursuant to any distress, execution or other legal process), the Charterers shall procure the immediate release of the Vessel (whether by providing bail or procuring the provision of security or otherwise do such lawful things as the circumstances may require) and shall immediately notify the Owners of such event and shall indemnify the Owners against all losses, costs or charges incurred by the Owners by reason thereof in re-taking possession or otherwise in re-acquiring the Vessel. |
38.4 |
The Charterers shall pay and discharge or cause any sub-charterer of the Vessel to pay and discharge all obligations and liabilities whatsoever which have given or may give rise to liens |
7
on or claims enforceable against the Vessel. The Charterers shall take all reasonable steps to prevent (and shall procure that a sub-charterer shall take all reasonable steps to prevent) an arrest of the Vessel.
CLAUSE 39 – INSURANCE
39.1 |
The Charterers shall procure that insurances for the Vessel are effected: |
(a) |
in Dollars; |
(b) |
in the case of fire and usual hull and machinery, marine risks and war risks (including blocking and trapping), on an agreed value basis of at least the higher of (i) one hundred per cent (100%) of then applicable Fair Market Value of the Vessel and (ii) one hundred and twenty per cent (120%) of the then prevailing Owners’ Costs ; |
(c) |
in the case of oil pollution liability risks, for an aggregate amount equal to the higher of (i) US$1,000,000,000 or (ii) the highest level of cover from time to time available under basic protection and indemnity club entry and in the international marine insurance market; |
(d) |
in the case of protection and indemnity risks, in respect of the full tonnage of the Vessel and with a protection and indemnity club which is a member of the International Group of Protection and Indemnity Clubs; |
(e) |
through brokers approved by the Owners and with first class international insurers and/or underwriters acceptable to the Owners and having a Standard & Poor’s rating of BBB+ or above, a Moody’s rating of A or above or an AM Best rating of A- or above or otherwise acceptable to the Owners; and |
(f) |
otherwise on terms and in form acceptable to the Owners. |
39.2 |
In addition to the terms set out in Clause 13(a) (Insurance and Repairs), the Charterers shall procure that the Obligatory Insurances shall: |
(a) |
subject always to paragraph (b), name the Owners, the Charterers and the Approved Technical Manager as the only named assureds unless the interest of every other named assured or co-assured is limited: |
(i) |
in respect of any Obligatory Insurances for hull and machinery and war risks; |
(A) |
to any provable out-of-pocket expenses that they have incurred and which form part of any recoverable claim on underwriters; and |
(B) |
to any third party liability claims where cover for such claims is provided by the policy (and then only in respect of discharge of any claims made against them); and |
(ii) |
in respect of any Obligatory Insurances for protection and indemnity risks, to any recoveries they are entitled to make by way of reimbursement following discharge of any third party liability claims made specifically against them, |
and every other named assured or co-assured has undertaken in writing to the Owners or the Owners’ Financiers (if any) (in such form as they may require) that any deductible shall be apportioned between the Charterers and every other named assured or co-assured (save for the Owners or the Owners’ Financiers (if any)) in proportion to the gross claims made by or paid to each of them and that they shall do all things necessary and provide all documents, evidence and information to enable the Owners and the Owners’ Financiers (if any) in accordance with the terms of the loss payable clause, to collect or recover any moneys which at any time become payable in respect of the Obligatory Insurances;
8
(b) |
whenever the Owners require in respect of any Owners’ Financiers: |
(i) |
in respect of fire and other usual marine risks and war risks, name (or be amended to name) the same as additional named assured for their rights and interests, warranted no operational interest and with full waiver of rights of subrogation against such Owners’ Financier, but without such financiers thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance; |
(ii) |
in relation to protection and indemnity risks, name (or be amended to name) the same as additional insured or co-assured for their rights and interests to the extent permissible under the relevant protection and indemnity club rules; and |
(iii) |
name the Owners’ Financiers (if any) and the Owners as respectively the first ranking loss payee and the second ranking loss payee (and in the absence of any Owners’ Financiers, the Owners as first ranking loss payee) in accordance with the terms of the relevant loss payable clauses approved by the Owners’ Financiers and the Owners with such directions for payment in accordance with the terms of such relevant loss payable clause, as the Owners and the Owners’ Financiers (if any) may specify; |
(c) |
provide that all payments by or on behalf of the insurers under the Obligatory Insurances to the Owners and/or the Owners’ Financiers (as applicable) shall be made without set-off, counterclaim, deduction or condition whatsoever; |
(d) |
provide that such Obligatory Insurances shall be primary without right of contribution from other insurances which may be carried by the Owners or the Owners’ Financiers (if any); |
(e) |
provide that the Owners and/or the Owners’ Financiers (if any) may make proof of loss if the Charterers fail to do so; and |
(f) |
provide that if any Obligatory Insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of the Owners and/or the Owners’ Financiers (if any), or if any Obligatory Insurance is allowed to lapse for non-payment of premium, such cancellation, change or lapse shall not be effective with respect to the Owners and/or the Owners’ Financiers (if any) for thirty (30) days after receipt by the Owners and/or the Owners’ Financiers (if any) of prior written notice from the insurers of such cancellation, change or lapse. |
39.3 |
The Charterers shall: |
(a) |
At least fourteen (14) days prior to Delivery (or such shorter period agreed by the parties), notify in writing the Owners of the terms and conditions of all Insurances; |
(b) |
at least fourteen (14) days before the expiry of any Obligatory Insurance or otherwise before the change of appointment of any brokers (or other insurers) and any protection and indemnity or war risks association through which Obligatory Insurances are taken from time to time pursuant to this Clause 39 (Insurance), notify the Owners of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom the |
9
Charterers propose to renew or obtain that Obligatory Insurance and of the proposed terms of such renewed or new insurance cover and obtain the Owners’ approval to such matters;
(c) |
at least seven (7) days before the expiry of any Obligatory Insurance, procure that such Obligatory Insurance is renewed or to be renewed on its expiry date in accordance with the provisions of this Charter; |
(d) |
procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal or the effective date of the new insurance and protection and indemnity cover notify the Owners in writing of the terms and conditions of the renewal; and |
(e) |
as soon as practicable after the expiry of any Obligatory Insurance and within thirty (30) days after such expiry, deliver to the Owners a letter of undertaking as required by this Charter in respect of such Insurances for the Vessel as renewed pursuant to Clause 39.3 together with copies of the relevant policies or cover notes or entry certificates duly endorsed with the interest of the Owners and/or the Owners’ Financiers (if any). |
39.4 |
The Charterers shall ensure that all insurance companies and/or underwriters, and/or insurance brokers (if any) provide the Owners with copies (or upon the Owners’ request, originals) of policies, cover notes and certificates of entry relating to the Obligatory Insurances which they are to effect or renew and letter or letters of undertaking in a form required by the Owners or the Owners’ Financiers (if any) and including undertakings by the insurance companies and/or underwriters that: |
(a) |
they will have endorsed on each policy, immediately upon issuance, a loss payable clause and a notice of assignment complying with the provisions of this Charter and the Financial Instruments; |
(b) |
they will hold the benefit of such policies and such insurances, to the order of the Owners and/or the Owners’ Financiers (if any) and/or such other party in accordance with the said loss payable clause; |
(c) |
they will advise the Owners and the Owners’ Financiers (if any) promptly of any material change to the terms of the Obligatory Insurances of which they are aware; |
(d) |
they will notify the Owners and the Owners’ Financiers (if any) not less than fourteen (14) days before the expiry of the Obligatory Insurances, in the event of their not having received notice of renewal instructions from the Charterers and, in the event of their receiving instructions to renew, they will promptly notify the Owners and the Owners’ Financiers (if any) of the terms of the instructions; and |
(e) |
if any of the Obligatory Insurances form part of any fleet cover, the Charterers shall procure that the insurance broker(s), or leading insurer, as the case may be, undertakes to the Owners and the Owners’ Financiers (if any) that such insurance broker or insurer will not set off against any sum recoverable in respect of a claim relating to the Vessel under such Obligatory Insurances any premiums due in respect of any other vessel under any fleet cover of which the Vessel forms a part or any premium due for other insurances, they waive any lien on the policies, or any sums received under them, which they might have in respect of such premiums, and they will not cancel such Obligatory Insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of |
10
the Vessel forthwith upon being so requested by the Owners or the Owners’ Financiers (if any) and where practicable.
39.5 |
The Charterers shall ensure that any protection and indemnity and/or war risks associations in which the Vessel is entered provides the Owners and the Owners’ Financiers (if any) with: |
(a) |
a copy of the certificate of entry for the Vessel as soon as such certificate of entry is issued; |
(b) |
a letter or letters of undertaking in such form as may be required by the Owners or the Owners’ Financiers (if any) or in such association’s standard form; and |
(c) |
a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to the Vessel. |
39.6 |
The Charterers shall ensure that all policies relating to the Obligatory Insurances are deposited with the approved brokers (if any) through which the insurances are effected or renewed. |
39.7 |
The Charterers shall procure that all premiums or other sums payable in respect of the Obligatory Insurances are punctually paid and produce all relevant receipts when so required by the Owners. |
39.8 |
The Charterers shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect. |
39.9 |
The Charterers shall neither do nor omit to do (nor permit to be done or not to be done) any act or thing which would or might render any Obligatory Insurance invalid, void, voidable or unenforceable or render any sum payable under an Obligatory Insurance repayable in whole or in part and, in particular: |
(a) |
the Charterers shall procure that all necessary action is taken and all requirements are complied with which may from time to time be applicable to the Obligatory Insurances, and (without limiting the obligations contained in this Clause) ensure that the Obligatory Insurances are not made subject to any exclusions or qualifications to which the Owners have not given their prior approval (unless such exclusions or qualifications are made in accordance with the rules of a protection and indemnity association which is a member of the International Group of Protection and Indemnity Clubs); |
(b) |
the Charterers shall not make or permit any changes relating to the classification or the classification society of the Vessel or, subject to procuring the provision of a replacement manager’s undertaking in substantially the same form as the Manager’s Undertaking, any changes to the manager or operator of the Vessel unless such changes have, if required, first been approved by the underwriters of the Obligatory Insurances and the Owners or the Owners’ Financiers (if any); |
(c) |
the Charterers shall procure that all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Vessel is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation) are made and the Charterers shall promptly provide the Owners with copies of such declarations and a copy of its valid certificate of financial responsibility; and |
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(d) |
the Charterers shall not employ the Vessel, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the Obligatory Insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify. |
39.10 |
The Charterers shall not make or agree to any material alteration to the terms of any Obligatory Insurance nor waive any right relating to any Obligatory Insurance without the prior written consent of the Owners. |
39.11 |
The Charterers shall not settle, compromise or abandon any claim under any Obligatory Insurance for Total Loss or for a Major Casualty, and shall do all things necessary and provide all documents, evidence and information to enable the Owners to collect or recover any moneys which at any time become payable in respect of the Obligatory Insurances. |
39.12 |
The Charterers shall provide the Owners upon written request, copies of all material communications between the Charterers and: |
(a) |
the approved brokers; |
(b) |
the approved protection and indemnity and/or war risks associations; and |
(c) |
the approved insurers and/or underwriters, |
which relate directly or indirectly to:
(i) |
the Charterers’ obligations relating to the Obligatory Insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and |
(ii) |
any credit arrangements made between the Charterers and any of the persons referred to in paragraphs (a) or (b) above relating wholly or partly to the effecting or maintenance of the Obligatory Insurances; and |
(iii) |
any communication with any party involved in case of a claim under any of the Vessel’s insurances. |
39.13 |
The Charterers shall promptly provide the Owners (or any persons which they may designate) with any information which the Owners may request for the purpose of: |
(a) |
obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the Insurances (including but not limited to the report obtained under Clause 39.16); or |
(b) |
effecting, maintaining or renewing any such insurances as are referred to in Clause 13(a) (Insurance and Repairs) or this Clause 39 (Insurance) or dealing with or considering any matters relating to any such insurances; |
39.14 |
The Charterers shall upon demand fully indemnify the Owners (including if requested by the Owners, make direct payment to the relevant insurer or broker for the same) in respect of all premiums and other expenses which are incurred by: |
(a) |
the Owners in connection with or with a view to effecting, maintaining or renewing an innocent owners interest insurance and an innocent owners additional perils insurance or any similar protective shipowner insurance that is taken out in respect of the Vessel; and/or |
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(b) |
the Owners’ Financiers (if any) in connection with or with a view to effecting, maintaining or renewing a mortgagee’s interest insurance, a mortgagee’s additional perils insurance, all protection and indemnity insurance that is taken out in respect of the Vessel, |
in each case as referred to in paragraphs (a) and (b) above, in an amount not exceeding one hundred and twenty per cent (120%) of the Owners’ Costs from time to time and on such other terms, through such insurers and generally in such manner as the Owners or the Owners’ Financiers (as the case may be) may from time to time consider appropriate.
39.15 |
The Charterers shall be solely responsible for and indemnify the Owners in respect of all loss or damage to the Vessel (insofar as the Owners shall not be reimbursed by the proceeds of any insurance in respect thereof) however caused occurring at any time or times before physical possession thereof is retaken by the Owners, with only reasonable wear and tear to the Vessel excepted. |
39.16 |
The Charterers shall reimburse or indemnify the Owners for any expenses incurred or to be incurred by the Owners in obtaining a detailed report signed by an independent firm of marine insurance brokers approved by the Owners dealing with the Obligatory Insurances and stating the opinion of such firm as to the adequacy of the Obligatory Insurances: |
(a) |
when an agreed form of such detailed report satisfactory to the Owners is obtained as a condition precedent requirement under Part A of Schedule 2 (Conditions Precedent) of this Charter; |
(b) |
when the Owners procure the issuance of such detailed report no more than once every calendar year, unless a Termination Event has occurred in which case such reports may be procured at the Charterer’s cost at any such time; and |
(c) |
further from time to time upon the Owners’ demand where, in the Owners’ opinion, at any time during the Charter Period there has been a material change in the terms of the Insurances and/or a change in the circumstances which would materially adversely affect the adequacy of the Obligatory Insurances. |
39.17 |
The Charterers shall: |
(a) |
keep the Vessel insured at their expense against such other risks (not including loss of hire or earnings risks) which the Owners and the Owners’ Financiers (if any) consider reasonable for a prudent shipowner or operator to insure against for trading, management, operational and/or safety purposes at the relevant time (as notified by the Owners) and which risks are, at that time, generally insured against as market practice by owners or operators of vessels similar to the Vessel and having regard to the availability of such cover in the insurance market at that time; and |
(b) |
upon demand fully indemnify the Owners in respect of all premiums and other expenses incurred by the Owners in respect of any other insurances which the Owners deem necessary and takes out in respect of the Vessel. |
CLAUSE 40 – WARRANTIES RELATING TO VESSEL
40.1 |
It is expressly agreed and acknowledged that the Owners are not the manufacturer or original supplier of the Vessel but that the Owners (in their capacity as buyers) have purchased the Vessel from the Charterers (in their capacity as sellers) pursuant to the MOA at the request of |
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the Charterers, for the purpose of then chartering the Vessel to the Charterers hereunder and that no condition, term, warranty or representation of any kind is or has been given to the Charterers by or on behalf of the Owners in respect of the Vessel (or any part thereof).
40.2 |
All conditions, terms or warranties express or implied by the law relating to the specifications, quality, description, merchantability or fitness for any purpose of the Vessel (or any part thereof) or otherwise are hereby expressly excluded. |
40.3 |
The Charterers agree and acknowledge that the Owners shall not be liable for any claim, loss, damage, expense or other liability of any kind or nature caused directly or indirectly by the Vessel or by any inadequacy thereof or the use or performance thereof or any repairs thereto or servicing thereof and the Charterers shall not by reason thereof be released from any liability to pay any Charterhire or other payment due under this Charter. |
40.4 |
The Charterers further agree and acknowledge that the Owners are not operating the Vessel and the liability to surrender any Emission Allowances in respect of the Vessel under any applicable Emission Scheme shall lie with the Charterers and/or any other organisation or person whom the Charterers have contractually agreed to take over all duties and responsibilities (including any sub-charterer of the Vessel or the Approved Manager) imposed by the ISM Code, and the Charterers hereby agree that they shall promptly upon the Owners’ request, provide and submit a signed mandate letter in the form acceptable to the Owners and the relevant authority and any other information and documents as required by the Owners and/or the relevant authority. |
40.5 |
Without prejudice to Clause 40.4, in relation to EU ETS: |
(a) |
the Charterers acknowledge that if the Vessel stops at ports in the European Union, they will incur liabilities under EU ETS and Fuel EU Maritime; |
(b) |
the Charterers acknowledge and agree that if they intend to sail the Vessel into ports in the European Union, the Charterers shall register the Vessel as part of a Shipping Company (as defined under the EU ETS) as required under the EU ETS and shall comply in all respects with the EU ETS and Fuel EU Maritime; |
(c) |
if required by the Owners, the Charterers shall provide a letter in a format to be agreed by the Owners confirming that they have assumed responsibility for the operation of the Vessel from the Owners (the “ETS and Fuel EU Maritime Letter”); and |
(d) |
the Charterers shall submit the ETS and Fuel EU Maritime Letter to the relevant administering authority upon registration of the Vessel pursuant to the EU ETS and shall provide the Owners with evidence of such registration within fourteen (14) days. |
CLAUSE 41 – TERMINATION AND REDELIVERY
41.1 |
Upon termination of the leasing of the Vessel under this Charter pursuant to Clause 47.2, the Charterers shall be obliged to pay the Owners the Termination Sum on the Termination Date and it is hereby agreed by the parties hereto that: |
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(a) |
without prejudice to Clause 42.2, the obligation to pay the Termination Sum is a continuing obligation and shall survive the termination of the leasing of the Vessel under this Charter and shall continue in full force and effect until irrevocably and unconditionally paid in full; |
(b) |
payment of the Termination Sum is deemed to be proportionate as to amount, having regard to the legitimate interest of the Owners, in protecting against the Owners’ risk of the Charterers failing to perform its obligations under this Charter; and |
(c) |
the Termination Sum shall, depending on the nature of the Termination Event(s) on the basis of which the Owners serve a Termination Notice, be either an obligation to pay damages following acceptance by the Owners of a breach of condition by the Charterers or an obligation to pay an agreed sum in specified circumstances which do not involve a breach of contract by the Charterers. |
41.2 |
If the Charterers fail to make any payment of the Termination Sum on the Termination Date, Clause 37.4 shall apply and the Owners shall be entitled to exercise their rights under Clause 42 (Sale of Vessel by the Owners in the event of Non-Payment of Termination Sum). |
41.3 |
Concurrently with the unconditional and irrevocable payment of the Termination Sum in full pursuant to the terms of this Charter, this Charter shall terminate and the Owners shall (save in the event of Total Loss or in the event that the Vessel has been sold or contracted to be sold pursuant to Clause 42 (Sale of Vessel by the Owners in the event of Non-Payment of Termination Sum)), at the cost of the Charterers, transfer the legal and beneficial ownership of the Vessel on an “as is where is” basis to the Charterers or their nominees free from any registered mortgages, encumbrances, liens, debts or claims incurred or permitted by the Owners (save for those liens, encumbrances and debts incurred by the Charterers or arising out of or in connection with this Charter), and shall execute a bill of sale and a protocol of delivery and acceptance evidencing the same and such sale shall be completed otherwise in accordance with Clause 56.1(a) and 56.1(b). |
41.4 |
The Charterers hereby undertake to indemnify the Owners against any claims incurred in relation to the Vessel prior to such transfer of ownership. Any taxes, notarial, consular and other costs, charges and expenses connected with closing of the Owners’ register shall be for the Charterers’ account. |
41.5 |
On natural expiration of this Charter, unless the Purchase Option Price is paid by the Charterers in accordance with Clause 56 (Sale of the Vessel), the Charterers shall re-deliver the Vessel to the Owners in accordance with Clause 41.6 and shall ensure that they have fulfilled their obligations under this Charter and made payment of all Charterhire and all other moneys pursuant to the terms of this Charter. In such case, the Charterers shall give the Owners not less than 30/20/10/5 running days’ preliminary notice of expected date and range of ports or places of redelivery not less than 5/3/2/1/ running days’ definite notice of expected date and port or place of redelivery. Any changes thereafter in the Vessel’s position shall be notified immediately to the Owners. |
41.6 |
If the Charterers are required to redeliver the Vessel to the Owners pursuant to the terms of this Charter, the Vessel shall be redelivered and taken over safely afloat at a safe and accessible berth or anchorage in such location as the Owners may reasonably require (which, for the avoidance of doubt, shall exclude any war listed area declared by the Joint War Committee). The Charterers shall ensure that, at the time of redelivery to the Owners, the Vessel: |
15
(a) |
be in an equivalent class as she was as at the Commencement Date and without any recommendations or conditions and with valid certificates for not less than six (6) months and free of average damage affecting the Vessel’s classification and in the same or as good structure, state, condition and classification as that in which she was deemed on the Commencement Date, fair wear and tear not affecting the Vessel’s classification excepted; |
(b) |
has passed her 5-year special survey (if applicable), and subsequent second intermediate surveys and drydock at the Charterers’ time and expense without any overdue recommendations or conditions to the satisfaction of the Approved Classification Society; |
(c) |
has her survey cycles up-to-date and trading and class certificate valid for at least the number of months agreed in Box 17; |
(d) |
be re-delivered to the Owners together with all spare parts and spare equipment as were on board at the time of Delivery, and any such spare parts and spare equipment on board at the time of re-delivery shall be taken over by the Owners free of charge; |
(e) |
be free of any cargo and Security Interest (save for the Security Interests granted pursuant to the Financial Instruments, if any) subject to the terms of any sub-charter which the Owners have approved pursuant to the terms of this Charter; |
(f) |
be free of any crew and officers unless otherwise instructed by the Owners; |
(g) |
be free of any charter or other employment (unless the Owners wish to retain the continuance of any prevailing charter or as otherwise agreed by the Owners in their absolute discretion or unless such sub-charter has been approved by the Owners pursuant to the terms of this Charter); and |
(h) |
have such amount of bunkers on board the Vessel as would be sufficient to enable the Vessel to sail to the nearest bunker port in compliance with all bunkering fuel content regulations then applicable in such place of redelivery. |
41.7 |
The Charterers warrant that they will not permit (or request any sub-charterer not to) the Vessel to commence a voyage (including any preceding ballast voyage) which cannot reasonably be expected to be completed in time to allow redelivery of the Vessel within any time period required by this Clause 41 (Termination and Redelivery). Notwithstanding the above, should the Charterers fail to redeliver the Vessel within any time period required by this Clause 41 (Termination and Redelivery), the Charterers shall pay the daily equivalent to the rate of Charterhire plus ten per cent. (10%) or to the market rate, whichever is the higher, for the number of days by which the Charter Period is exceeded. |
41.8 |
If the Charterers are required to redeliver the Vessel to the Owners pursuant to the terms of this Charter other than pursuant to Clause 42.1(a), the Owners and Charterers shall mutually appoint a surveyor (the “Joint Surveyor”) for the purpose of determining and agreeing in writing the condition of the Vessel at the time of such redelivery. The Charterers shall provide the Joint Surveyor with all such facilities and access to the Vessel as may be required to enable the Joint Surveyor to conduct its survey of the Vessel and shall take all such actions as may be reasonably recommended by the Joint Surveyor to ensure that the Vessel shall be redelivered in accordance with Clause 41.6. |
41.9 |
If the Charterers are required to redeliver the Vessel to the Owners pursuant to Clause 42.1(a), the Owners shall appoint surveyors (the “Owners’ Surveyor”) for the purpose of determining |
16
and agreeing in writing the condition of the Vessel at the time of such redelivery. The Charterers shall provide the Owners’ Surveyor with all such facilities and access to the Vessel as may be required to enable the Owners’ Surveyor to conduct its survey of the Vessel and shall take all such actions as may be reasonably recommended by the Owners’ Surveyor to ensure that the Vessel shall be redelivered in accordance with Clause 41.6.
41.10 |
The Owners shall not be obliged to accept redelivery of the Vessel until the Owners are reasonably satisfied that all conditions for the redelivery of the Vessel under this Charter (including without limitation, Clause 41.6) are met, and the Vessel shall (if the redelivery is at the end of the Charter Period) continue to be on-hire under the terms of this Charter until such redelivery. The Owners reserve all rights to recover from the Charterers any costs, expense and/or liabilities incurred or suffered by them (including without limitation, the costs of any repairs which may be required to restore the Vessel to the condition required by Clause 41.6 as a result of the Vessel not being redelivered in accordance with the terms of this Charter. |
41.11 |
The Owners shall, at the time of the redelivery of the Vessel, take over all bunkers, lubricating oil, unbroached provisions, paints, ropes, other consumable stores and spare parts in the Vessel at no cost to the Owners. |
CLAUSE 42 – SALE OF VESSEL BY THE OWNERS IN THE EVENT OF NON-PAYMENT OF TERMINATION SUM
42.1 |
The Charterers agree that should the Termination Sum not be paid on the Termination Date: |
(a) |
save as required to comply with this Clause 42.1, the Charterers’ right to possess and operate the Vessel shall immediately cease and (without in any way affecting the Charterers’ obligation to pay the Charterer the Termination Sum and comply with its other obligations under this Charter) the Charterers shall hold the Vessel as gratuitous bailee only to the Owners, the Charterers shall procure that the master and crew follow the orders and directions of the Owners and the Charterers shall, upon the Owners’ request (at Owners’ sole discretion), be obliged to immediately (and at the Charterers’ own cost) redeliver the Vessel to the Owners at such ready and nearest safe port or location as the Owners may require and for the avoidance of doubt, any such redelivery shall not extinguish the Owners’ right to recover the Termination Sum from the Charterers under this Charter; |
(b) |
the Owners shall be entitled (at Owners’ sole discretion) to operate the Vessel as they may require and may create whatsoever interests thereon, including without limitation charterparties or any other form of employment contracts provided that the Earnings of the Vessel during such period less its operational expenses (the “Net Trading Proceeds”) shall be applied against the Termination Sum and any other amounts payable under the Leasing Documents pursuant to Clause 64 (General Application of Proceeds) provided, that if such use of the Vessel results in the Owners suffering a loss then such losses shall be included in the indemnities contained in Clause 57 (Indemnities) and be added to the Termination Sum; and |
(c) |
the Owners shall be entitled (at Owners’ sole discretion) to immediately thereafter sell the Vessel to any person on such terms as they deem fit, save that if required by the Charterers or the Guarantor and if agreed by the Owners, the Charterers or the Guarantor may within such reasonable time as specified by the Owners (the “Nomination Period”) first nominate or identify a purchaser for the Vessel (a “Nominated Purchaser”) and the Owners may sell the Vessel to such Nominated Purchaser subject to all the following conditions being satisfied: |
(i)the Nominated Purchaser is acceptable to the Owners; and
17
(ii) |
the price to be paid by the Nominated Purchaser (after deducting any commissions, taxes and other costs of sale) is equal to or more than the applicable Termination Sum (unless otherwise agreed by the Owners in their absolute discretion) unless the shortfall is paid by any Obligor or member of the Group on or before such sale, |
and any net sale proceeds (after deducting all fees, taxes, disbursements and any other costs and expenses incurred by the Owners in connection with such sale) (the “Net Sales Proceeds”) derived from any such sale to a Nominated Purchaser or any other person shall be applied towards reduction of the Termination Sum in accordance with Clause 64 (General Application of Proceeds). If the Net Sales Proceeds are not sufficient to settle the Termination Sum in full, the Charterers shall remain liable to pay the shortfall and default interest shall continue to accrue on the unpaid portion of the Termination Sum in accordance with Clause 37.4. The above is without prejudice to all of the Owners’ rights under the Leasing Documents (including to sell the Vessel to any person they deem fit) should there be no agreement as to the Nominated Purchaser.
42.2 |
Notwithstanding Clause 42.1, the Owners may, by written notice to the Charterers at any time after the expiry of the Nomination Period (if applicable pursuant to Clause 42.1(c) above), elect to retain the Vessel instead of selling the Vessel under Clause 42.1(c) above (with such option to elect to retain the Vessel to take effect from such date as they may nominate after the expiry of the Nomination Period (if applicable pursuant to Clause 42.1(c) above) (regardless of date of the notice)), and in doing so, the Owners shall first obtain the Fair Market Value of the Vessel (after deducting any commissions, taxes and costs which would be likely to be incurred in connection with a sale of the Vessel) not later than ten (10) days after the date of such nomination and if the Fair Market Value (less such deductions) of the Vessel is less than the Termination Sum as of the date of the determination of the Fair Market Value, the Charterers shall immediately pay the difference to the Owners upon the Owners’ demand. If the Fair Market Value of the Vessel (subject to the aforesaid deductions) exceeds the Termination Sum as at such date, the Owners shall within thirty (30) days (of the date of the notice) pay the difference to the Charterers. |
CLAUSE 43 – TOTAL LOSS
43.1 |
Throughout the Charter Period, the Charterer shall bear the full risk of any Total Loss of or any other damage to the Vessel howsoever arising. If the Vessel becomes a Total Loss after Delivery, the Charterer shall, subject to Clause 43.2, pay the Total Loss Termination Sum to the Owners on the Total Loss Payment Date. Upon such receipt by the Owners of the Total Loss Termination Sum, this Charter shall terminate (without prejudice to any provision of this Charter expressed to survive termination) but until such receipt, the Charterers shall remain liable to make all payments of Charterhire and all other amounts to the Owners under this Charter, notwithstanding that the Vessel has become a Total Loss. |
43.2 |
Any Total Loss Proceeds unconditionally received by the Owners (or the Owners’ Financiers in accordance with the terms of the relevant loss payable clause) shall be applied in accordance with Clause 64 (General Application of Proceeds) and shall satisfy the obligation of the Charterers to pay the Total Loss Termination Sum to the extent received by the Owners or the Owners’ Financiers in accordance with the terms of the relevant loss payable clause). The obligation of the Charterers to pay the Total Loss Termination Sum shall remain unaffected and exist regardless of whether any of the insurers have agreed or refused to meet or has disputed in good faith, the claim for Total Loss. |
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43.3 |
If the Total Loss Proceeds unconditionally received by the Owners or the Owners’ Financiers in accordance with the terms of the relevant loss payable clause) are less than the Total Loss Termination Sum, the Charterers shall pay such shortfall to the Owner on the Total Loss Payment Date. |
43.4 |
The Owners shall have no obligation to supply to the Charterers with a replacement vessel following the occurrence of a Total Loss. |
CLAUSE 44 – FEES AND EXPENSES
44.1 |
The Charterers shall pay to the Owners a non-refundable arrangement fee (the “Arrangement Fee”) in the amount and at the times agreed in the Fee Letter. |
44.2 |
All costs and expenses including, but not limited to documented legal costs, expenses and other disbursements reasonably incurred by the Owners and each of their legal counsels in relation to preparing, negotiating and executing this Charter and the Leasing Document, shall be for the account of the Charterers (regardless of whether the transaction contemplated by the Leasing Documents actually completes). |
44.3 |
If: |
(a) |
the Charterers request an amendment, waiver or consent; or |
(b) |
the Charterers make a request to re-register the Vessel in another Flag State; or |
the Charterers shall, on demand, reimburse the Owners for the amount of all costs and expenses (including legal fees) incurred by the Owners in responding to, evaluating, negotiating or complying with that request or requirement (including, for the avoidance of doubt, any amounts the Owners have to pay under the terms of the Financial Instruments).
44.4 |
All documented costs and expenses incurred by the Owners in relation to the acquisition, registration of title of the Vessel in the Owners’ name in the Flag State together with any and all fees (including but not limited to any vessel registration and tonnage fees and the Owners’ initial and ongoing registration and maintenance costs if required to be registered as a foreign maritime entity or the appointment of resident agents under the laws of the Flag State) payable by the Owners to register, maintain and/or renew such registration, shall be for the account of the Charterers. Without prejudice to the foregoing, if the Flag State requires the Owners to establish a physical presence or office in the jurisdiction of such Flag State, all fees, costs and expenses payable by the Owners to establish and maintain such physical presence or office shall be for the account of the Charterers. The Charterers shall promptly provide the Owners with evidence of payment of the annual register/tonnage tax amounts payable to the Flag State or any other aforesaid costs, expenses and/or taxes when the same fall due. |
44.5 |
All documented costs and expenses (including legal fees) incurred by the Owners in relation to the transfer of title of the Vessel by the Owners to the Charterers and the re-delivery of the Vessel by the Charterers to the Owners pursuant to Clause 41 (Termination and Redelivery) shall be for the account of the Charterers. |
44.6 |
The Charterers shall, on demand, pay to the Owners the amount of all documented costs and expenses (including legal fees) incurred by the Owners in connection with the enforcement of, or the preservation of any rights under, any Leasing Document, including, without limitation, any action brought by the Owners to arrest or recover possession of the Vessel, and with any |
19
proceedings instituted by or against the Owners as a consequence of it entering into a Leasing Document or enforcing those rights.
44.7 |
The Charterers shall on demand reimburse the Owners for the amount of all costs and expenses (including legal fees) reasonably incurred by the Owners in connection with any amendment, waiver or consent relating to any change arising as a result of an amendment required under Clause 37.3. |
CLAUSE 45 – NO WAIVER OF RIGHTS
45.1 |
No neglect, delay, act, omission or indulgence on the part of either Party in enforcing the terms and conditions of this Charter or any other Leasing Document (to which they are party to) shall prejudice the strict rights of that Party or be construed as a waiver thereof nor shall any single or partial exercise of any right of either party preclude any other or further exercise thereof. |
45.2 |
No right or remedy conferred upon either Party by this Charter or any other Leasing Document shall be exclusive of any other right or remedy provided for herein or by law and all such rights and remedies shall be cumulative. |
CLAUSE 46 – NOTICES
46.1 |
Any notice, certificate, demand or other communication to be served, given, made or sent under or in relation to this Charter shall be in English and in writing and (without prejudice to any other valid method or giving, making or sending the same) shall be deemed sufficiently given or made or sent if sent by registered post or by email to the following respective address: |
(a) |
to the Owners: |
c/o CMB Financial Leasing Co., Ltd. 21F, China Merchants Bank Building No. 1088 Lujiazui Ring Road Shanghai 200120 The People’s Republic of China Attention: Email: Tel: |
(b) |
to the Charterers: |
c/o OET CHARTERING INC. Ethnarchou Makariou & D. Falireos Str. 2 185 47, Neo Faliro, Piraeus, Greece Attention: Email: Tel: |
or, if a party hereto changes its address or email address, to such other address (or email address) as that party may notify to the other.
46.2 |
Any such communication shall be deemed to have reached the party to whom it was addressed (a) when delivered (in case of a registered letter), or (b) when actually received in readable form (in case of an email). A notice or other such communication received on a non-working day or after 5.00 p.m. in the place of receipt shall be deemed to be served on the next following working day in such place. |
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CLAUSE 47 – TERMINATION EVENTS
47.1 |
The Owners and the Charterers hereby agree that any of the following events shall constitute a Termination Event: |
(a) |
any Obligor fails to pay or the Owners do not receive on the due date any amount payable pursuant to a Leasing Document, unless such failure to pay is caused by a technical error and payment is made within three (3) Business Days of its due date; |
(b) |
the Charterers breach or omit to observe or perform or procure the performance of any of the undertakings in Clauses 50.1(f), Clause 51 (Financial Covenants), Clause 52 (Valuations), 53.1(b), 53.1(c) and failed to remedy the breach in relation to the Delisting in Clause 50.1(i) above; |
(c) |
the Charterers fail to obtain and/or maintain the Insurances required under Clause 39(Insurance) in accordance with the provisions thereof (or any insurer in respect of such Insurances cancels the Insurances or disclaims liability with respect thereto); |
(d) |
any Obligor commits any other breach of, or omits to observe or perform, any of their other obligations or undertakings in any Leasing Document (other than a breach referred to in paragraphs (a) to (c) above) or any Approved Manager breaches any provision of, or omits to observe or perform, any of their obligations or undertakings in any Manager’s Undertaking unless such breach or omission is in the reasonable opinion of the Owners, remediable and the relevant Obligor or Approved Manager remedies such breach or omission to the satisfaction of the Owners within fifteen (15) Business Days of the earlier of (i) the date of the notice thereof from the Owners or (ii) upon the relevant Obligor or Approved Manager becoming aware of the same; |
(e) |
any representation or warranty made by or on behalf of an Obligor, in or pursuant to any Leasing Document to which it is a party, in the reasonable opinion of the Owners, proves to be materially untrue or misleading when it is made; |
(f) |
any of the following occurs in relation to any Financial Indebtedness of any Obligor: |
(i) |
any Financial Indebtedness is not paid when due or not paid within any originally applicable grace period; |
(ii) |
any Financial Indebtedness is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described) and following the expiry of any applicable grace period; |
(iii) |
any commitment for any Financial Indebtedness is cancelled or suspended by any of its creditors as a result of an event of default (however described) and following the expiry of any applicable grace period; |
(iv) |
any of its creditors becomes entitled to declare any Financial Indebtedness due and payable prior to its specified maturity as a result of an event of default (however described) and following the expiry of any applicable grace period; or |
(v) |
any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of such Obligors ceases to be |
21
available or becomes capable of being terminated or declared due and payable or cash cover is required or becomes capable of being required, as a result of any termination event or event of default (howsoever defined),
provided that no Termination Event will occur under this paragraph (f) in respect of the Guarantor if the aggregate amount of Financial Indebtedness falling within sub-paragraphs (i) to (v) above (for the Guarantor) is less than US$10,000,000 (or its equivalent in any other currency or currencies);
(g) |
any of the following occurs in relation to any Obligor: |
(i) |
it becomes unable to pay its debts as they fall due; |
(ii) |
any administrative or other receiver is appointed over all or a substantial part of its assets unless as part of a solvent reorganisation which has been approved in writing by the Owners; |
(iii) |
it makes any formal declaration of bankruptcy or any formal statement to the effect that it is insolvent or likely to become insolvent or a winding up or administration order is made in relation to it, or its members or directors of pass a resolution to the effect that it should be wound up, placed in administration or cease to carry on business or it makes any formal statement to the effect that it is reasonably likely to become insolvent; |
(iv) |
a petition is presented in any Relevant Jurisdiction for its winding up or administration, or the appointment of a provisional liquidator over it, unless the petition is being contested in good faith and on substantial grounds and is dismissed or withdrawn within twenty one (21) days of the presentation of the petition; |
(v) |
it petitions a court, or presents any proposal for, any form of judicial or non-judicial suspension or deferral of payments, reorganisation of its debt (or certain of its debt) or arrangement with all or a substantial proportion (by number or value) of their creditors or of any class of them or any such suspension or deferral of payments, reorganisation or arrangement is effected by court order, contract or otherwise; |
(vi) |
any meeting of its members or directors is summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraphs (ii), (iii), (iv) or (v) above; |
(vii) |
in a country other than England and Wales, any event occurs or any procedure is commenced which is similar to any of the foregoing described in paragraphs (ii), (iii), (iv) or (v) above; |
(viii) |
any expropriation, attachment, sequestration, distress or execution (or any analogous process in any jurisdiction) affects any of its asset or assets (other than a Total Loss of the Vessel); |
(ix) |
it fails to comply with or pay any sum due from it under any final judgment or any final order made or given by a court or tribunal of competent jurisdiction unless the aggregate sum is less than US$10,000,000 in aggregate in respect of the Guarantor; or |
22
(x) |
if it suspends or ceases to carry on (or threatens to suspend or cease carrying on) all or a material part of its business, |
provided that in the case of an Obligor other than the Charterers and the Guarantor, the occurrence of any of the above events falling within sub-paragraphs (i) to (x) above in respect of such Obligor shall be a Termination Event only if it has or is reasonably likely to have a Material Adverse Effect.
(h) |
any consent, approval, authorisation, license or permit necessary to enable the Charterers to operate or charter the Vessel or to enable any Obligor to (i) comply with any provision of a Leasing Document to which it is a party or (ii) ensure that the obligations of that Obligor or Approved Manager under such Leasing Document are legal, valid, binding or enforceable, is not granted, expires without being renewed, is revoked or becomes, at the relevant time, expressly liable to or otherwise subject to automatic revocation or any condition of such a consent, approval, authorisation, license or permit is not fulfilled or waived within any applicable grace period (resulting in such consent, approval, authorisation, licence or permit being, at the relevant time, subject to automatic revocation or expiration); |
(i) |
any event or circumstance occurs which has or is reasonably likely to have a Material Adverse Effect; |
(j) |
an Obligor suspends or ceases carrying on its business; |
(k) |
the Security Interest constituted by any Security Document is in any way imperilled or in jeopardy or this Charter or any Leasing Document or any Security Interest created by a Security Document: |
(i) |
is cancelled, terminated, rescinded or suspended or otherwise ceases to remain in full force and effect for any reason or no longer constitutes valid, binding and enforceable obligations of any party to that document for any reason whatsoever; or |
(ii) |
is amended or varied without the prior written consent of the Owners, except for any amendment or variation which is expressly permitted by this Charter or any other relevant Leasing Document; |
(l) |
any Obligor or any Approved Manager rescinds, repudiates (or purports to rescind or repudiates or purports to repudiate) a Leasing Document; |
(m) |
it is or has become: |
(i) |
unlawful or prohibited, whether as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or |
(ii) |
contrary to, or inconsistent with, any regulation, |
for any Obligor or Approved Manager to maintain or give effect to any of its obligations under any Leasing Document;
(n) |
if it becomes unlawful in any applicable jurisdiction for the Owners to perform any of their obligations as contemplated by this Charter or any other Leasing Document to which they are a party; |
23
(o) |
any Termination Event (as defined in an applicable Other Charter) occurs and is continuing under any Other Charter; |
(p) |
if as a result of any Sanctions, the Owners or the Owners’ Financiers are prohibited from performing any of their obligations under the Leasing Documents, the Financial Instruments or the transactions contemplated under each of these respective documents; |
(q) |
any lease, hire purchase agreement, charter or any other financing arrangement in respect of any Fleet Vessel (other than the Vessel and the Other Vessels) is terminated, cancelled or repudiated by the relevant lessor or owner or financier as a consequence of any termination event or event of default (howsoever defined therein); |
(r) |
if any Obligor: |
(i) |
is or becomes a Prohibited Person; |
(ii) |
is owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person; |
(iii) |
owns or controls a Prohibited Person; |
(iv) |
has a Prohibited Person serving as a director, officer or employee; or |
(r)a Change of Control occurs without the prior written consent of the Owners.
47.2 |
Notwithstanding and without prejudice to Clause 33 (Cancellation), upon the occurrence of any Termination Event which is continuing, the Owners may issue a written notice to the Charterers terminating this leasing of the Vessel under this Charter and demanding payment of the Termination Sum (the “Termination Notice”), whereupon the Charterers shall be obliged to pay the Termination Sum to the Owners on the date specified by the Owners in their sole discretion in the Termination Notice (the “Termination Date”). |
47.3 |
For the avoidance of doubt, notwithstanding any action taken by the Owners following a Termination Event, the Charterers shall remain liable for the outstanding obligations on their part to be performed under this Charter including but not limited to all insurance, operational and maintenance covenants until such time as the Vessel is redelivered to the Owners in accordance with Clause 42 (Sale of Vessel by the Owners in the event of Non-Payment of Termination Sum), or the title is transferred to the Charterers in accordance with Clause 41.3 or the Vessel is sold in accordance with Clause 42 (Sale of Vessel by the Owners in the event of Non-Payment of Termination Sum). |
47.4 |
Without limiting the generality of the foregoing or any other rights of the Owners, if a Termination Event occurs and it is continuing, the Charterers agree and acknowledge that the Owners shall have the sole and exclusive right and power to (i) settle, compromise, compound, adjust or defend any action, suit or proceeding relating to or pertaining to the Vessel and this Charter, (ii) make proof of loss, appear in and prosecute any action arising from any policy or policies of insurance maintained pursuant to this Charter, and settle, adjust or compromise any claims for loss, damage or destruction under, or take any other action in respect of, any such policy or policies and/or change or appoint a new manager for the Vessel and the appointment of any originally appointed manager may be terminated immediately without any recourse to the Owners. |
24
47.5 |
Each Termination Event shall either be a breach of condition by the Charterers where it involves a breach of this Charter or any of the other Leasing Document by the Charterers or shall otherwise be an agreed terminating event, the occurrence of which gives rise to a right of the Owners to terminate the leasing of the Vessel under this Charter and to exercise its rights under this clause. |
CLAUSE 48 – REPRESENTATIONS AND WARRANTIES
48.1 |
The Charterers represent and warrant to the Owners, save as otherwise stated in this Clause, as of the date hereof, and on each day henceforth until the last day of the Charter Period, as follows: |
(a) |
each of the Obligors is duly incorporated and validly existing under the laws of its jurisdiction of incorporation; |
(b) |
each Obligor and each Approved Manager has the corporate capacity and has taken all corporate actions to obtain and maintain all consents, approvals, authorisations, licenses or permits necessary or desirable for it: |
(i) |
to enable it lawfully to enter into, exercise its rights and comply with and perform its obligations under each of the Leasing Documents to which it is a party; and |
(ii) |
to make each of the Leasing Documents to which it is a party admissible in evidence in its Relevant Jurisdictions; |
(c) |
all consents, approvals, authorisations, licences or permits referred to in Clause 48(b) remain in full force and effect and nothing has occurred which makes any of them liable to revocation; |
(d) |
each Leasing Document to which an Obligor and Approved Manager is a party constitutes such Obligor’s and Approved Manager’s legal, valid and binding obligations enforceable against such party (and where expressed to be a deed, shall be enforceable as a deed) in accordance with its respective terms; |
(e) |
the entry into and performance by each Obligor and the transactions contemplated by, each Leasing Document to which such Obligors and Approved Manager is a party do not and will not conflict with: |
(i) |
any law or regulation applicable to it (including Anti-Money Laundering Laws, Anti-Bribery and Anti-Corruption Laws, Sanctions or laws relating to anti-trust or collusion and laws relating to human rights violation); |
(ii) |
its constitutional documents; and |
(iii) |
any agreement or instrument binding upon it or any of its assets or constitute a default or termination event (however described) under any such agreement or instrument; |
(f) |
the choice of governing law as stated in each Leasing Document and the agreement by the relevant parties thereto to refer disputes to the relevant courts or tribunals as stated in such Leasing Document are valid and binding against such parties; |
(g) |
under the laws of the Relevant Jurisdictions of each Obligor and Approved Manager it is not necessary for any of the Leasing Documents to which it is a party to be registered, filed, recorded, notarised or enrolled with any court or other authority in that jurisdiction or that |
25
any stamp, registration, notarial or similar taxes or fees be paid on or in relation to the Leasing Documents to which it is a party or the transactions contemplated by those Leasing Documents except payment of associated fees which registration, filings, taxes and fees will be made and paid promptly after the date of the relevant Leasing Documents to which it is a party;
(h) |
each Security Document to which an Obligor or Approved Manager is a party does now or, as the case may be, will upon execution and delivery create, the Security Interests it purports to create over any assets to which such Security Interest, by its terms, relates, and such Security Interests will, when created or intended to be created, be valid and effective; |
(i) |
no party has any Security Interest (other than the Permitted Security Interests) or any other interest, right or claim over, in or in relation to the Vessel, this Charter, any moneys payable under any Leasing Document or over any assets which are, the subject of the Security Interests created or intended to be created by the Security Documents; |
(j) |
the obligations of each Obligor, under each Leasing Document to which it is a party, are the direct, general and unconditional obligations of such Obligor and rank at least pari passu with all other present and future unsecured and unsubordinated creditors of each Obligor save for any obligation which is mandatorily preferred by law and not by virtue of any contract; |
(k) |
all payments which an Obligor is liable to make under any Leasing Document to which such Obligor is a party may be made by such party without deduction or withholding for or on account of any tax payable under the laws of their jurisdiction of incorporation; |
(l) |
no Obligor has failed to pay all taxes applicable to, or imposed on or in relation to it, its business or if applicable, the Vessel; |
(m) |
no Obligor has breached any law or regulation which breach has or is reasonably likely to have a Material Adverse Effect; |
(n) |
no Obligor or other member of the Group, nor any of their subsidiaries, directors or officers, affiliates or any employee, has engaged in any activity or conduct which would violate any Anti-Bribery and Anti-Corruption Laws, laws pertaining to anti-terrorism or Anti-Money Laundering Laws in any applicable jurisdiction and each Obligor and Group member has instituted and maintained policies and procedures designed to prevent violation of such laws, regulations and rules; |
(o) |
no Obligor or other member of the Group, nor any of their subsidiaries, directors or officers, affiliates or employees, has taken or will take any action in furtherance of an offer, payment, promise to pay or authorisation or approval of the payment or giving of money, property, gifts or anything else of value, directly or indirectly, to any government official (which shall include without limitation, any officer or employee of a government or government owned or controlled entity or of a public international organisation or any person acting in an official capacity for and on behalf of the foregoing or any political party or party official or candidate for public office) to influence official action or secure an improper advantage; |
(p) |
no Environmental Claim has been made against any Obligor or any other member of the Group; |
(q) |
no Environmental Incident has occurred and no person has claimed that an Environmental Incident has occurred; |
26
(r) |
no Termination Event or Potential Termination Event has occurred and is continuing or might reasonably be expected to result from the entry into and performance of this Charter or any other Leasing Document and no other event or circumstance is outstanding which constitutes a default or a termination event (however described) under any other agreement or instrument which is binding on it or to which its assets are subject; |
(s) |
no litigation, arbitration or administrative proceedings or investigations (including proceedings or investigations relating to any alleged or actual breach of the ISM Code or of the ISPS Code) of or before any court, arbitral body or agency have been started against any Obligor which has or is reasonably likely to have a Material Adverse Effect; |
(t) |
the consolidated financial statements delivered pursuant to Clause 49.1(a) are prepared in accordance with IFRS consistently applied and give a true and fair view of (if audited) or fairly represent (if unaudited) the financial condition of each of the Charterers and the Guarantor as at the end of the period to which such financial statements relate; |
(u) |
since the date of the Original Financial Statements or as the case may be, the date of any more recent financial statements delivered pursuant to Clause 49.1(a), there has been no material adverse change in each of the Charterers and the Guarantor or the Group’s business, assets or financial condition; |
(v) |
in relation to any information provided by any Obligor for the purposes of this Charter: |
(i) |
such information was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated; |
(ii) |
any financial projections contained in such information have been prepared on the basis of recent historical information and on the basis of reasonable assumptions, and |
(iii) |
nothing has occurred or been omitted from any such information and no information has been given or withheld that results in any such information being untrue or misleading; |
(w) |
no corporate action, legal proceeding or other procedure or step described in Clause 47.1(g) or circumstances described in Clause 47.1(f) has been taken or exists or, to their knowledge, threatened in relation to an Obligor; |
(x) |
no Obligors, nor any of its assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement); |
(y) |
for the purposes of the Regulation, the centre of main interest (as that term is used in Article 3(1) of the Regulation) of each Obligor is situated in Greece and it has no “establishment” (as that term is used in Article 2(10) of the Regulation) in any other jurisdiction; |
(z) |
no Obligor is a US Tax Obligor and none of them have established a place of business in the United States of America; |
(aa) |
no Obligor has established a place of business in the United Kingdom; |
(bb) |
no Obligor, Approved Manager, sub-charterer and no member of the Group: |
(i) |
is a Prohibited Person; |
27
(ii) |
is owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person; |
(iii) |
owns or controls a Prohibited Person; or |
(iv) |
has a Prohibited Person serving as a director, officer or, to the best of its knowledge, employee; |
(cc) |
no Obligor nor its respective directors, member, officers and employee, member of the Group, nor any sub-charterer is in breach of applicable Sanctions, has been or is currently being investigated on compliance with Sanctions, have received notice or are aware of any claim, action, suit or proceeding against any of them with respect to Sanctions, or have taken any action to evade the application of Sanctions; and |
(dd) |
any factual information provided by the Charterers (or on their behalf) to the Owners was true and accurate as at the date it was provided or as the date at which such information was stated. |
CLAUSE 49 – GENERAL INFORMATION UNDERTAKINGS
49.1 |
The Charterers undertake that they shall comply or procure compliance with the following information undertakings commencing from the date hereof and up to the last day of the Charter Period: |
(a) |
they will send to the Owners: |
(i) |
as soon as possible, but in no event later than ninety (90) days after the end of the first half of each financial year of each of the Charterers and the Guarantor, the unaudited semi-annual combined financial accounts of the Guarantor and the unaudited management accounts of the Charterers; |
(ii) |
as soon as possible, but in no event later than one hundred and eighty (180) days after the end of each financial year of the Guarantor, the audited annual combined financial accounts of the Guarantor and the unaudited management accounts of the Charterers, |
(b) |
they will procure that each set of financial statements delivered pursuant to Clause 49.1(a) shall be in English and certified by a duly authorised officer of the relevant company as giving a true and fair view (if audited) or fairly representing (if unaudited) its financial condition and operations as at the date as at which those financial statements were drawn up; |
(c) |
they will promptly provide to the Owners, copies of all notices and minutes relating to any of their extraordinary shareholders’ meetings which are despatched to the shareholders or to their creditors or any class thereof and its constitutional documents where these have been amended or varied (to the extent not contrary to the other provisions of this Charter); |
(d) |
they will provide the Owners as soon as reasonably practicable upon becoming aware of them, the details of: |
(i) |
any litigation, arbitration or administrative proceedings or investigations relating to any alleged or actual breach of any Sanctions, laws pertaining to anti-terrorism or Anti-Money Laundering Laws which are current or pending against any Obligor, Approved Manager, other member of the Group, or, to the best knowledge of the Charterers, any sub-charterer; |
28
(ii) |
any litigation, arbitration or administrative proceedings or investigations relating to any other matters not referred to in paragraph (i) above (including proceedings or investigations relating to any alleged or actual breach of the ISM Code or of the ISPS Code) in relation to an Obligor; and |
(iii) |
any Termination Event or Potential Termination Event that has occurred (and the steps, if any, being taken to remedy it); |
(e) |
they will, promptly upon a request by the Owners, supply to the Owners a certificate signed by an officer on its behalf certifying that no Termination Event or Potential Termination Event has occurred (or if a Termination Event or Potential Termination Event has occurred, specifying the nature of the Potential Termination Event or Termination Event (and the steps, if any, being taken to remedy it); |
(f) |
they will, as soon as practicable upon the request of the Owners, provide the Owners with any additional financial or other information relating to: |
(i) |
themselves, any Obligor and/or the Vessel (including, but not limited to the condition and location of the Vessel, its Earnings and its Insurances); |
(ii) |
the Security Interests relating to any Leasing Documents; |
(iii) |
compliance of each Obligor and any Approved Manager with the terms of the Leasing Documents; |
(iv) |
the financial condition, business and operations of the Obligors; or |
(v) |
to any other matter relevant to, or to any provision of any Leasing Document to which it is a party, |
which may reasonably be requested by the Owners at any time;
(g) |
they shall provide details of the Vessel’s management and employment status (including the entry into any pooling arrangements) at least every six (6) months to the Owners upon a request by the Owners; and |
(h) |
they shall as soon as reasonable practicable notify the Owners in writing if any payments which they or any other Obligor, is liable to make under any Leasing Document is subject to deduction or withholding or any other tax whatsoever; |
CLAUSE 50 – GENERAL UNDERTAKINGS
50.1 |
The Charterers undertake that they shall comply or procure compliance with the following general undertakings commencing from the date hereof and up to the last day of the Charter Period: |
(a) |
they will, and will procure that each other Obligor and each Approved Manager shall, obtain and promptly renew or procure the provision or renewal of and provide copies of, from time to time, any necessary consents, approvals, authorisations, licenses or permits of any regulatory body or authority for the transactions contemplated under each Leasing Document to which any Obligor and each Approved Manager is a party (including without limitation the sale, chartering and operation of the Vessel); |
29
(b) |
they will at their own cost, and will procure and each other Obligor and each Approved Manager, will: |
(i) |
ensure that any Leasing Document to which they are a party validly creates the obligations and the Security Interests which such Leasing Document purports to create; and |
(ii) |
without limiting the generality of paragraph (i), promptly register, file, record or enrol any Leasing Document to which they are a party with any court or authority in all Relevant Jurisdictions, pay any stamp duty, registration or similar tax in all Relevant Jurisdictions in respect of any Leasing Document to which they are a party, give any notice or take any other step which, is or has become necessary or desirable for any such Leasing Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which such Leasing Document creates; |
(c) |
they will not, and will procure each other Obligor and Approved Manager will not, create or permit to subsist any Security Interest over any of its assets which are, the subject of the Security Interests created or intended to be created by the Security Documents, unless with the prior written approval of the Owners and save for Permitted Security Interests; |
(d) |
they will not, and will procure each Obligor will not, change the location of its centre of main interest (as that term is used in Article 3(1) of the Regulation) from that stated in relation to it under 48.1(y) and it will create no “establishment” (as that term is used in Article 2(10) of the Regulation) in any other jurisdiction; |
(e) |
except with the Owners’ prior written consent, they will not, and will procure each other Obligor will not, make a substantial change to the general nature of their respective businesses from that carried on at the date of this Charter; |
(f) |
except with the Owners’ prior written consent or where expressly permitted under the Leasing Documents, they will not enter into any merger, amalgamation, demerger, solvent reorganisation or corporate reconstruction; |
(g) |
they will not: |
(i) |
enter into any borrowing except for loans from affiliates which are unsecured and fully subordinated to the Owners; |
(ii) |
incur any liabilities or obligations to any party except for those reasonably incurred in the ordinary course of operating, chartering, repairing and maintaining the Vessel; |
(iii) |
be the creditor in respect of any loan or any form of credit to any person; |
(iv) |
give or allow any to be outstanding any guarantee or indemnity to or for the benefit of any person in respect of any obligation of any other person or enter into any document under which they assume any liability of any other person other than any guarantee or indemnity given under the Leasing Documents; |
(v) |
enter into any material agreement other than the Leasing Documents or any other agreement expressly allowed under any term of the Leasing Documents; |
30
(vi) |
enter into a single transaction or a series of transactions (whether related or not) to sell, lease, transfer or otherwise dispose of any asset (including without limitation the Vessel, its Earnings or its Insurances); and |
(vii) |
without prejudice to the above sub-paragraphs (i) to (vi), enter into any transaction (whether with another member of the Group or otherwise) which are, in any respect, less favourable than those which they could obtain an a bargain made at arms’ length; |
(h) |
they will not, and shall procure that the Guarantor shall not, following the occurrence of a Termination Event which is continuing or where any of the following would result in the occurrence of a Potential Termination Event or Termination Event: |
(i) |
declare, make or pay any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (whether in cash or in kind) on or in respect of its shares (or any class of its shares including any preferred shares); |
(ii) |
repay or distribute any dividend or share premium reserve; |
(iii) |
pay any management, advisory or other fee to or to the order of any of its shareholders; or |
(iv) |
redeem, repurchase, defease, retire or repay any of their shares or resolve to do so; and |
(i) |
they shall procure that a Delisting shall not occur provided that if a Delisting shall occur, then the Charterers shall, promptly and in any event no later than the date falling thirty (30) days from the date of such Delisting, make such prepayments or provide additional security to the satisfaction of the Owners. |
CLAUSE 51 – FINANCIAL COVENANTS
51.1 |
The Charterers undertake that they shall procure that the Guarantor shall comply with the following financial covenants during the Charter Period: |
(a) |
the Guarantor’s Leverage Ratio shall not exceed seventy five per cent (75%). |
(b) |
the Guarantor shall maintain Liquid Assets (free of any Security and inclusive of any balances in time deposits) in an amount of not less than the higher of (i) $10,000,000 on an aggregate basis and (ii) $750,000 per Fleet Vessel; |
(c) |
the Guarantors’ Consolidated Net Worth shall not be less than $100,000,000. |
51.2 |
In this Clause 51 (Financial Covenants): |
“Accounting Information” means the annual audited combined financial accounts and the unaudited semi-annual combined financial accounts to be provided to the Owner in accordance with this Charter.
“Adjusted Total Assets” means, at any date, the amount which would be shown as “Total Assets” under the heading “ASSETS” in the balance sheet of the most recent Accounting Information as adjusted for the aggregate difference (positive or negative) between the book value (being the fixed asset value as per the most recent Accounting Information) and the Fleet Market Value minus the Liquid Assets.
31
“Consolidated Net Worth” means the aggregate of the Consolidated Market Value Adjusted Total Assets less the Consolidated Total Liabilities.
“Consolidated Net Worth” means the aggregate of the Consolidated Market Value Adjusted Total Assets less the Consolidated Total Liabilities.
“Consolidated Current Assets” means the aggregate of the cash and marketable securities, trade and other receivables from persons other than a member of the Group realisable 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, in each case in relation to the Group, as stated in the then most recent and relevant Accounting Information.
“Consolidated Market Value Adjusted Tangible Fixed Assets” means the Fleet Market Value plus the book value (less depreciation computed in accordance with the IFRS consistently applied) on a consolidated basis of all other tangible fixed assets of the Group (excluding the Fleet Vessels), as stated in the then most recent and relevant Accounting Information.
“Consolidated Market Value Adjusted Total Assets” means, at any relevant time, the aggregate of Consolidated Current Assets and Consolidated Market Value Adjusted Tangible Fixed Assets.
“Consolidated Total Liabilities” means the aggregate (as of the date of calculation) of all obligations of the Guarantor then outstanding for the payment or repayment of money as stated under “Total Liabilities” in the financial statements or, as the case may be, management accounts, then most recently required to be delivered pursuant to this Charter including, without limitation:
(a) |
any amounts payable by the Guarantor under leases or similar arrangements over their respective periods; |
(b) |
any credit to the Guarantor from a supplier of goods or under any instalment purchase or other similar arrangement; |
(c) |
the aggregate amount then outstanding of liabilities and obligations of third parties to the extent that they are guaranteed by the Guarantor; |
(d) |
any contingent liabilities (including any taxes or other payments under dispute or arbitration) which have been or should be recorded in the notes to the Guarantor’s financial statements or, as the case may be, management accounts; and |
(e)any deferred tax liabilities.
“Fleet Market Value” means the aggregate Fair Market Value of the Fleet Vessels, and for the purpose of ascertaining the Fair Market Value of the Fleet Vessel, the definition of Fair Market Value in Clause 66 (Definitions) shall apply.
“Leverage Ratio” means, at any date, the ratio (expressed as a percentage) of:
(i) |
the Total Liabilities minus Liquid Assets; and |
(ii) |
the Adjusted Total Assets. |
32
“Liquid Assets” means, at any date, the amount of cash and cash equivalents which would be shown as “Cash and Cash Equivalents” under the heading “ASSETS” in the balance sheet of the most recent Accounting Information.
“Total Liabilities” means, at any date, the amount which would be shown as “Total current liabilities” plus the amount which would be shown as “Total non-current liabilities”, both under the heading “LIABILITIES AND SHAREHOLDERS’EQUITY” in the balance sheet of the most recent Accounting Information (which, for the avoidance of doubt, shall include potential leasing liabilities and shall only exclude shareholder loans when subordinated, non-interest bearing and not callable at will (minimum one year notice)).
51.3 |
The Charterers shall promptly notify the Owners if the Guarantor agrees to provide any new financial covenants to a creditor (or to amend existing ones such that they materially differ from the financial covenants under Clause 51.1 above placing such creditor in a position which is comparatively more favourable in terms of the financial covenants than the position of the Owners) under the agreements entered into or to be entered into in connection with any Financial Indebtedness owed by the Guarantor or a Group member to such creditor and agrees that it will and shall procure the Guarantor will promptly enter into such necessary documentation as may be required to amend and supplement (as applicable) this Charter and any applicable Leasing Document so as to reflect and incorporate such more favourable financial covenants into this Charter and any applicable Leasing Document (as the case may be). |
CLAUSE 52 – VALUATIONS
52.1 |
The Charterers undertake that they shall comply or procure compliance with the following undertakings commencing from the date hereof and up to the last day of the Charter Period: |
(a) |
they shall at their cost: |
(i) |
provide to the Owners valuations of the Vessel (to be addressed to the Owners) to enable the Owners to determine the Initial Market Value of the Vessel; |
(ii) |
at least once per calendar year as requested by the Owners, provide to the Owners valuations of the Vessel (to be addressed to the Owners) to enable the Owners to determine the Fair Market Value of the Vessel; and |
(iii) |
at any time as requested by the Owners following the occurrence of a Termination Event or a Potential Termination Event, provide to the Owners valuations of the Vessel (to be addressed to the Owners) to enable the Owners to determine the Fair Market Value of the Vessel; and |
(b) |
if at any time, the Vessel’s Fair Market Value falls below an amount equivalent to one hundred and twenty five per cent (125%) of the Owners’ Costs (the “LTV Breach”, and the said difference between the Fair Market Value and the Owners’ Costs shall be referred to as the “shortfall” for the purposes of this paragraph) then the Charterers shall, promptly and in any event no later than the date falling thirty (30) days from the date which the valuations relating to the Vessel’s Fair Market Value are received by the Owners, make payment in an amount such as to eliminate the shortfall which payment shall be applied in the Owners’ sole discretion. |
33
CLAUSE 53 – VESSEL UNDERTAKINGS
53.1 |
The Charterers undertake that they shall comply or procure compliance with the following Vessel and Sanctions related undertakings commencing from the date hereof and up to the last day of the Charter Period: |
(a) |
they will notify the Owners promptly upon becoming aware: |
(i) |
that any Environmental Claim has been made against the Charterers or in connection with the Vessel, or that any Environmental Incident has occurred; |
(ii) |
of any arrest or detention of the Vessel or any exercise or purported exercise of any lien on that Vessel or its Earnings or any requisition of the Vessel for hire; |
(iii) |
any modification or alteration of the Vessel of a value in excess of $1,000,000; |
(iv) |
any casualty or occurrence as a result of which the Vessel has become or is, by the passing of time or otherwise, likely to become, a Major Casualty; and |
(v) |
that a Total Loss has occurred, |
and will keep the Owners fully up-to-date with all developments;
(b) |
they will comply, and will procure that each other Obligor, each other member of the Group, and any sub-charterer will comply, with all Sanctions and all laws and regulations relating to them, the Vessel and its construction, ownership, employment, operation, management and registration, including the ISM Code, the ISPS Code (including the maintenance of an ISSC), all Environmental Laws, all Anti-Money Laundering Laws, laws pertaining to anti-terrorism, Anti-Bribery and Anti-Corruption Laws and the laws of the Vessel’s registry, and in particular, they shall effect and maintain a sanctions compliance policy which, inter alia, implements the recommendations of the Sanctions Advisory, to ensure compliance with all such laws and regulations implemented from time to time, including, without limitation they will, and will procure that each other Obligors, each other member of the Group and each sub-charterer will: |
(i) |
conduct their activities in a manner consistent with US and UN sanctions, as applicable; |
(ii) |
have sufficient resources in place to ensure execution of and compliance with their own sanctions policies by their personnel, e.g., direct hires, contractors, and staff; |
(iii) |
ensure subsidiaries and affiliates comply with the relevant policies, as applicable; |
(iv) |
have relevant controls in place to monitor automatic identification system (AIS) transponders; |
(v) |
have controls in place to screen and assess onboarding or offloading cargo in areas they determine to present a high risk; |
(vi) |
have controls to assess authenticity of bills of lading, as necessary; and |
(vii) |
have controls in place consistent with the Sanctions Advisory, |
(c) |
without limiting Clause 53.1(b), they will procure that: |
34
(i) |
the Vessel shall not be constructed, operated, employed, managed, used by or for the benefit of a Prohibited Person or in trading to or from a Prohibited Country, including calling at any port of a Prohibited Country; |
(ii) |
the Vessel shall not be used in any manner contrary to Sanctions, or in a manner that creates a risk that an Obligor will become a Prohibited Person; |
(iii) |
notwithstanding any other provision of this paragraph (c), the Vessel shall not be used in trading in any manner that creates a risk that the Vessel will become a Sanctioned Ship; |
(iv) |
the Vessel shall not be traded in any manner which would trigger the operation of any sanctions limitation or exclusion clause (or similar) in the Insurances or in any manner which would result or would reasonably be expected to result in any Obligor or the Owners becoming a Prohibited Person; and |
(v) |
that each charterparty in respect of the Vessel shall contain, for the benefit of the Owners, language which gives effect to the provisions of Clause 53.1(c) as regards Sanctions and of this Clause and which permits refusal of employment or voyage orders if compliance would result in a breach of Sanctions and which prohibits trading to any Prohibited Country; and |
(vi) |
it and any sub-charterer of the Vessel or the Approved Manager will cooperate and exchange all relevant data and information in a timely manner to facilitate compliance with any applicable Emissions Scheme and enable each party to calculate the amount of Emissions Allowances in respect of the Vessel that must be surrendered to the authorities of the applicable Emissions Scheme for the Charter Period and that each relevant party will supply the relevant authority of such Emission Scheme with relevant mandating documents to surrender such allowances to ensure that the Owners and the Charterers will be in compliance with all Environmental Laws; |
(d) |
they will, promptly notify the Owners and provide all information which may be relevant for the purposes of ascertaining whether the Obligors, the Approved Manager and any sub-charterer are in compliance with all laws and regulations and Sanctions applicable to and/or binding on them, and in particular, they shall notify the Owners in writing immediately upon being aware that any of the Charterers’ shareholders, directors, officers or employees is a Prohibited Person or has otherwise become a target of any Sanctions; |
(e) |
save with the Owners’ prior consent in writing, they shall not agree or enter into, and shall procure that each Approved Manager does not agree or enter into, any transaction, arrangement, document or do or omit to do anything which will have the effect of varying, amending, supplementing or waiving any term of the relevant management agreement which would result in an annual increase of the management fee to more than twenty per cent. (20%) of the management fee payable under the relevant management agreement as at the date of this Charter; |
(f) |
they shall not: |
(i) |
change an Approved Manager unless such change in appointment is approved in writing by the Owners (such approval not to be unreasonably withheld or delayed) and provided that such substitute Approved Manager has (prior to accepting its |
35
appointment) entered into an undertaking in a form substantially similar to the Manager’s Undertaking or in such other form as may be acceptable to the Owners; or
(ii) |
terminate or otherwise assign or transfer the relevant management agreement unless with the prior approval in writing by the Owners (such approval not to be unreasonably withheld or delayed); |
(g) |
ensure that the Vessel will be registered in the Flag State under the name of the Owners; |
(h) |
the Vessel shall be classed with an Approved Classification Society upon Delivery at the highest classification available for vessels of its type and be free of all overdue recommendations or conditions, and maintain such class during the Charter Period; |
(i) |
unless with the Owners’ prior written consent (such consent not to be unreasonably withheld or delayed save that such qualification shall not apply following the occurrence of a Termination Event), they shall not deactivate or lay up the Vessel; |
(j) |
they shall not make any structural change to the Vessel without the prior written consent of the Owners other than a structural change that: |
(i) |
is mandatorily required by any applicable law and regulation; or |
(ii) |
relates to the installation of exhaust gas cleaning systems (scrubbers) and/or ballast water treatment systems (and in the case of the ballast water treatment system, the Charterers shall ensure that the same is installed and a USCG certificate of compliance regarding the same issued on a date prior to 1 July 2022); or |
(iii) |
would not, in the Owners’ reasonable opinion: |
(A) |
have a material adverse effect on the Vessel’s fitness for purpose; |
(B) |
materially alter the structure, type or performance characteristics of the Vessel; and/or |
(C) |
materially diminish the value of the Vessel or have a material adverse effect on the safety, performance or marketability of the Vessel, |
and the Charterers shall provide the Owners with at least fifteen (15) days prior written notice of the commencement of any such alterations (as well as notification of such alterations being completed promptly after such completion) and shall provide the Owners with all information (including without limitation, any plans for the proposed modifications, repairs, replacement, installation or alteration, valuation reports and confirmation of class from the Approved Classification Society) as the Owners may require for the purposes of determining the matters set out in paragraphs (i) to (iii) above together with evidence that the Obligatory Insurances have been appropriately updated, and shall indemnify the Owners against all costs and expenses incurred by the Owners in connection with all such proposed modifications, repairs, replacement, installation or alteration of the Vessel and if such modification, repair or replacement or installation is approved or satisfies the requirements of this Clause, once effected, shall form part of the Vessel;
(k) |
they will procure that each Approved Manager shall, upon the request of the Owners at the expense of the Charterers, furnish the Owners with an inspection report setting out such matters relating to the condition of the Vessel as the Owners may require on an annual basis |
36
and if a Termination Event occurs, at such other frequency as the Owners may otherwise require;
(l) |
subject to the other terms of this Charter, the Charterers may freely sub-charter the Vessel save that the Owners’ prior written consent shall be required: |
(i) |
to any sub-bareboat or demise charter of the Vessel; |
(ii) |
to any other employment of the Vessel which would constitute an Assignable Sub-Charter (and upon the Owners’ consent the Charterers shall assign their rights and interests in such Assignable Sub-Charter to the Owners); and |
(iii) |
to any employment of the Vessel which does not permit a transfer of the registered ownership of the Vessel without the consent of the applicable sub-charterer; |
(m) |
they shall procure that all Earnings in connection with the Vessel are paid into the Operating Account and that the Charterers facilitate access by the Owners to information relating to the Operating Account; |
(n) |
they shall ensure that a minimum amount of $500,000 is maintained in the Operating Account at all times during the Charter Period; and |
(o) |
they shall, upon the request of the Owners and at the cost of the Charterers, on or before 31st July in each calendar year, supply or procure the supply to the Owners all information necessary in order for the Owners to comply with its or any Owners’ Financiers’ obligations under the Poseidon Principles in respect of the preceding year, including, without limitation, all ship fuel oil consumption data required to be collected and reported in accordance with Regulation 22A of Annex VI and any Statement of Compliance relating to the Vessel for the preceding calendar year and, for the avoidance of doubt, such information shall be “Confidential Information” for the purposes of Clause 63 (Confidentiality) but the Charterers acknowledge that, in accordance with the Poseidon Principles, such information will form part of the information published regarding the Owners’ and/or Owners’ Financiers’ portfolio climate alignment. |
(p) |
they shall procure that the Vessel is free of encumbrances and liens (save for those created by the Owners or otherwise permitted in writing under the terms of this Charter). |
CLAUSE 54 – INSPECTION OF VESSEL
54.1 |
Without prejudice to Clause 54.2 below, the Owners shall be entitled to inspect or survey the Vessel or instruct a duly authorized surveyor to carry out such survey on their behalf: |
(a) |
to ascertain the condition of the Vessel and satisfy themselves that the Vessel is being properly repaired and maintained; |
(b) |
in dry-dock if the Charterers have not dry-docked the Vessel in accordance with Clause 10(g) (Periodical Dry-docking); |
(c) |
as may be required for classification purposes; and |
(d) |
for any other commercial reason they consider necessary, |
37
and in doing so, the Charterers shall afford the Owners or their authorised surveyor with all proper facilities in relation to such inspection or survey.
54.2 |
The Owners shall be entitled to exercise its rights of inspection or survey as described under Clause 54.1 (Inspection of Vessel) once a year (subject to provision of reasonable prior notice) without interference to the operation of the Vessel save that upon the occurrence of a Termination Event or Potential Termination Event, the Owners shall have the right to inspect or survey the Vessel at any time (and for the avoidance of doubt, more than once a year). |
54.3 |
The documented costs and fees for any inspection and survey permitted under this Clause shall be paid by the Charterers. |
54.4 |
All time used in respect of inspection, survey or repairs pursuant to this Clause shall be for the Charterers’ account and form part of the Charter Period. |
54.5 |
The Charterers shall also permit the Owners to inspect the Vessel’s log books or survey reports whenever requested and shall whenever required by the Owners furnish them with full information regarding any casualties or other accidents or damage to the Vessel. |
CLAUSE 55 – PURCHASE OPTION
55.1 |
The Charterers shall have the option (the “Purchase Option”) to purchase the Vessel on each Payment Date as from the first anniversary of the Commencement Date as specified in the Purchase Option Notice (as hereinafter defined) at the applicable Purchase Option Price, subject to the other terms of this Clause 55 (Purchase Option). |
55.2 |
The Purchase Option shall be exercisable only: |
(a) |
upon the Charterers providing not less than sixty (60) days’ written notice (the “Purchase Option Notice”) to purchase the Vessel on a date specified therein (the “Purchase Option Date”) which shall fall on a Payment Date described in Clause 55.1 or on the last day of the Charter Period (as the case may be) subject to Clause 60.1 (unless otherwise agreed by the Owners); and |
(b) |
in the absence of the occurrence of a Potential Termination Event or a Termination Event on or prior to either the date of the Purchase Option Notice or the Purchase Option Date. |
55.3 |
The Purchase Option Notice shall be signed by a duly authorised officer or attorney of the Charterers and, once delivered to the Owners, will in each case be irrevocable and the Charterers shall be bound to pay to the Owners the Purchase Option Price on the Purchase Option Date. |
55.4 |
The sale of the Vessel pursuant to the Charterers’ exercise of the Purchase Option shall be conducted in accordance with Clause 56 (Sale of the Vessel). |
55.5 |
If the Charterers do not exercise the Purchase Option on or before the expiration of the Charter Period: |
(a) |
the Charterers shall pay the Option Premium to Owners on the last day of the Charter Period; |
(b) |
the Charterers shall on the last day of the Charter Period re-deliver the Vessel to the Owners in accordance with Clause 41.6 and shall ensure that they have fulfilled their obligations under |
38
this Charter and made payment of the Option Premium, all Charterhire and all other moneys pursuant to the terms of this Charter; and
(c) |
the Owners shall be entitled (at Owners’ sole discretion) to sell or operate the Vessel as they may require. For the avoidance of doubt, the Charterers agree that should the Option Premium not be paid or not be paid in full on its due date for payment under the terms of this Charter, any net proceeds deriving from the sale or operation of the Vessel by the Owners shall not be applied towards reduction of the unpaid Option Premium, Charterhire or any other moneys due pursuant to the terms of this Charter. |
CLAUSE 56 – SALE OF THE VESSEL
56.1 |
The sale of the legal and beneficial interest and title in the Vessel pursuant to the Charterers’ exercise of, as the case may be, the Charterers’ Purchase Option under Clause 55 (Purchase Option) or pursuant to Clause 41.3, shall be on an “as is where is” and subject to the following terms and conditions: |
(a) |
no condition, warranty or representation of any kind is or has been given by or on behalf of the Owners in respect of the Vessel or any part thereof, and accordingly the Charterers hereby confirm that they have not, in entering into this Charter, relied on any condition, warranty or representation by the Owners or any person on the Owners’ behalf, express or implied, whether arising by law or otherwise in relation to the Vessel or any part thereof, including, without limitation, warranties or representations as to the description, suitability, quality, merchantability, fitness for any purpose, value, state, condition, appearance, safety, durability, design or operation of any kind or nature of the Vessel or any part thereof, and the benefit of any such condition, warranty or representation by the Owners is hereby irrevocably and unconditionally waived by the Charterers to the extent permissible under applicable law, and the Charterers hereby also waive any rights which they may have in tort in respect of any of the matters referred to above and irrevocably agree that the Owners shall have no greater liability in tort in respect of any such matter than they would have in contract after taking account of all of the foregoing exclusions. No third party making any representation or warranty relating to the Vessel or any part thereof is the agent of the Owners nor has any such third party authority to bind the Owners thereby. Notwithstanding anything contained above, nothing contained herein is intended to obviate, remove or waive any rights or warranties or other claims relating thereto which the Charterers (or their nominee) or the Owners may have against the manufacturer or supplier of the Vessel or any third party; |
(b) |
the Vessel shall be free from any registered mortgages incurred by the Owners (save for those mortgages, liens, encumbrances and debts arising out of or in connection with this Charter or the Leasing Documents); |
(c) |
the Purchase Option Price or Termination Sum (as applicable) shall be paid by (or on behalf of) the Charterers to the Owners together with (without double counting) unpaid amounts of Charterhire, Breakfunding Costs (if applicable), default interest accruing under Clause 37.4 (if applicable), fees, expenses and any other moneys owing by or accrued or due from the Charterers under this Charter on or prior to the Purchase Option Date or the Termination Date (as the case may be) which remain unpaid; and |
(d) |
concurrently with the Owners receiving irrevocable payment of the Purchase Option Price or the Termination Sum (as applicable) and all other moneys payable under this Charter in full pursuant to the terms of this Charter, the Owners shall (save in the event of Total Loss) (at Charterers’ cost) transfer the legal and beneficial ownership of the Vessel on an “as is where |
39
is” basis to the Charterers or their nominees and shall (at Charterers’ cost) execute a bill of sale and a protocol of delivery and acceptance evidencing the same and any other document strictly necessary to transfer the title of the Vessel, as well as procure the relevant ship registry to issue a certificate of title or any other evidence provided in accordance with the practice of such registry showing that the Vessel shall be free from any registered mortgages in favour of the Owners, to the Charterers and the relevant ship registry of the Vessel under the Charterers’ flag of choice (and to the extent required for such purposes, the Vessel shall be deemed first to have been redelivered to the Owners), provided that the Owners shall not be obliged to do anything which would (in its reasonable opinion) constitute a breach of the applicable QEL (if any). Any fees (including legal fees), costs or disbursements incurred by the Owners in connection with the Charterers’ exercise of the Purchase Option or transfer of the Vessel following payment of the Termination Sum (as the case may be) shall be indemnified or reimbursed by the Charterers to the Owners upon the Owners’ demand on or prior to the Purchase Option Date or date of payment of the Termination Sum (as applicable).
CLAUSE 57 – INDEMNITIES
57.1 |
The Charterers shall pay such amounts to the Owners, on the Owners’ demand, in respect of all documented claims, expenses, liabilities, losses, taxes, fees (including but not limited to any vessel registration and tonnage fees) suffered or incurred by or imposed on the Owners arising from this Charter and any Leasing Document, whether prior to, during or after termination of the leasing of this Charter, including without limitation: |
(a) |
as a result of incorporating the Owners in the relevant jurisdiction selected by the Charterers or required for the purpose of flying the flag of the Vessel in a particular jurisdiction; |
(b) |
in connection with delivery, possession, performance, control, registration, repair, survey, insurance, maintenance, manufacture, purchase, ownership or operation of the Vessel (including but not limited to any social security contributions); |
(c) |
in connection with the prevention or release of liens or detention of or requisition, use, operation, redelivery, sale or disposal of the Vessel (or any part of it) and/or whether prior to, during or after termination; |
(d) |
in connection with or following the occurrence of a Termination Event or Potential Termination Event (including without limitation, by reason thereof in re-taking possession or otherwise in acquiring the Vessel pursuant to Clause 38.3). |
Without prejudice to its generality, this Clause covers any claims, expenses, liabilities and losses which arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code, the ISPS Code, the MARPOL Protocol, any Environmental Law or any Sanctions.
57.2 |
The Charterers hereby irrevocably agree to indemnify and hold harmless the Owners against all consequences or liabilities arising from the master, officers or agents signing bills of lading or other documents and any claim, expense, liability or loss incurred by the Owners in liquidating or employing deposits from the Owners’ Financiers or third parties to fund the acquisition of the Vessel pursuant to the MOA. |
57.3 |
Notwithstanding anything to the contrary herein (but subject and without prejudice to Clause 33 (Cancellation)) and without prejudice to any right to damages or other claim which the Charterers may have at any time against the Owners under this Charter, the indemnities |
40
provided by the Charterers in favour of the Owners shall continue in full force and effect notwithstanding any breach of the terms of this Charter or termination of this Charter pursuant to the terms hereof or termination of this Charter by the Owners.
57.4 |
All rights which the Charterers have at any time (whether in respect of this Charter or any other transaction) against any Obligors shall be fully subordinated to the rights of the Owners under the Leasing Documents and until the end of this Charter and unless the Owners otherwise direct, the Charterers shall not exercise any rights which it may have (whether in respect of this Charter or any other transaction) by reason of performance by it of its obligations under any Leasing Document or by reason of any amount becoming payable, or liability arising, under this Clause: |
(a) |
to be indemnified by any Obligor; |
(b) |
to claim any contribution from any third party providing security for, or any other guarantor of, any Obligor under any Leasing Document; |
(c) |
to take any benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of any Obligor under any Leasing Document or of any other guarantee or security taken pursuant to, or in connection with, any Leasing Document by any Obligors; |
(d) |
to bring legal or other proceedings for an order requiring any Obligor to make any payment, or perform any obligation, in respect of any Leasing Document; |
(e) |
to exercise any right of set-off against any Obligor; and/or |
(f) |
to claim or prove as a creditor of any Obligor, |
and if the Charterers receive any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to the extent necessary to enable all amounts which may be or become payable to the Owners by any Obligor or in connection with any Leasing Document to be repaid in full on trust for the Owners and shall promptly pay or transfer the same to the Owners.
CLAUSE 58 – NO SET-OFF OR TAX DEDUCTION
58.1 |
All Charterhire and any payment made from the Charterers to enable the Owners to pay all amounts under a Leasing Document shall be paid punctually and: |
(a) |
without any form of set-off, cross claim, condition or counterclaim; |
(b) |
free and clear of any tax deduction or withholding unless required by law; and |
(c) |
net of any bank charges or bank fees. |
58.2 |
Without prejudice to Clause 58.1, if the Owners are required by law to make a tax deduction from any payment: |
(a) |
the Owners shall notify the Charterers as soon as they become aware of the requirement; and |
(b) |
the amount due in respect of the payment shall be increased by the amount necessary to ensure that the Owners receive and retain (free from any liability relating to the tax deduction) |
41
a net amount which, after the tax deduction, is equal to the full amount which they would otherwise have received.
58.3 |
The Charterers shall (within three (3) Business Days of demand by Owners) pay to the Owners an amount equal to the loss, liability or cost which the Owners determine will be or has been (directly or indirectly) suffered for or on account of tax by the Owners in respect of a Leasing Document. |
58.4 |
Clause 58.3 shall not apply: |
(a) |
with respect to any tax assessed on the Owners under the law of the jurisdiction in which the Owners are incorporated or, if different, the jurisdiction (or jurisdictions) in which the Owners are treated as resident for tax purposes if that tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by the Owners; or |
(b) |
to the extent a loss, liability or cost is compensated for by an increased payment under Clause 58.2. |
58.5 |
Notwithstanding any other provision to this Charter, if any deduction or withholding or other tax is or will be required to be made by the Charterers or the Owners in respect of a payment to the Owners as a result of the Owners being incorporated in a particular jurisdiction, the Owners shall have the right to transfer their interest in the Vessel (and this Charter) to any person nominated by the Owners and all costs in relation to such transfer shall be for the account of the Charterers. |
58.6 |
If the Charterers compensate the Owners by an increased payment pursuant to Clauses 58.2 or 58.3 and the Owners determine that they have obtained and utilized a tax credit attributable to this increased payment, the Owners shall reimburse the Charterers that increased payment (or part thereof if the tax credit is attributable to only part of such increased payment). |
CLAUSE 59 – INCREASED COSTS
59.1 |
This Clause 59 (Increased Costs) applies if the Owners notify the Charterers that they consider that as a result of: |
(a) |
the introduction or alteration after the date of this Charter of a law or an alteration after the date of this Charter in the manner in which a law is interpreted or applied (disregarding any effect which relates to the application to payments under this Charter of a tax on the Owners’ overall net income); or |
(b) |
complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which the Owners allocates capital resources to their obligations under this Charter) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Charter, |
the Owners (or a parent company of them) has incurred or will incur an “increased cost”.
59.2 |
In this Clause 59 (Increased Costs), “increased cost” means, in relation to the Owners: |
(a) |
an additional or increased cost incurred as a result of, or in connection with, the Owners or the Owners’ parent company having entered into, or being a party to, this Charter, or funding the acquisition of the Vessel pursuant to the MOA or performing their obligations under this |
42
Charter (including as a result of, or in connection with, incorporating itself in a particular jurisdiction as requested by the Charterers or in order to fly a particular flag in respect of the Vessel);
(b) |
an additional or increased cost of funding or financing the acquisition of the Vessel pursuant to the MOA; or |
(c) |
a liability to make a payment or a return forgone, which is calculated by reference to any amounts received or receivable by the Owners under this Charter, |
and for the purposes of this Clause, the Owners may in good faith allocate or spread costs an/or losses among their assets and liabilities (or any class of their assets and liabilities) on such basis as they consider appropriate.
59.3 |
Subject to the terms of Clause 59.1, the Charterers shall pay to the Owners, upon receipt of the Owners’ demand and any evidence thereto (where available to the Owners), the amounts which the Owners from time to time notify the Charterers to be necessary to compensate the Owners for the increased cost. |
CLAUSE 60 – MISCELLANEOUS
60.1 |
Unless otherwise expressly stated to the contrary in this Charter, any payment which is due to be made on a day which is not a Business Day shall be made on the preceding Business Day instead. |
60.2 |
If, at any time, any provision of any Leasing Document is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions under the law of that jurisdiction nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired. |
60.3 |
The Charterers waive any rights of sovereign immunity which they or any of their properties may enjoy in any jurisdiction and subjects itself to civil and commercial law with respect to their obligations under this Charter. |
60.4 |
No term of this Charter is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Charter. |
60.5 |
This Charter and each other Leasing Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Charter or that Leasing Document, as the case may be. |
CLAUSE 61 – FATCA
61.1 |
Defined terms |
For the purposes of this Clause 61 (FATCA), the following terms shall have the following meanings:
“Code” means the United States Internal Revenue Code of 1986, as amended.
“FATCA” means:
43
(a) |
sections 1471 to 1474 of the Code or any associated regulations; |
(b) |
any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or |
(c) |
any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the IRS, the US government or any governmental or taxation authority in any other jurisdiction. |
“FATCA Deduction” means a deduction or withholding from a payment under this Charter or the Leasing Documents required by or under FATCA.
“FATCA Exempt Party” means a Relevant Party that is entitled under FATCA to receive payments free from any FATCA Deduction.
“FATCA Non-Exempt Party” means any Relevant Party who is not a FATCA Exempt Party.
“IRS” means the United States Internal Revenue Service or any successor taxing authority or agency of the United States government.
“Relevant Party” means any of the parties to this Charter and the Leasing Documents.
61.2 |
FATCA Information |
(a) |
Subject to paragraph (c) below, each Relevant Party shall, on the date of this Charter, and thereafter within ten (10) Business Days of a reasonable request by another Relevant Party: |
(i) |
confirm to that other party whether it is a FATCA Exempt Party or is not a FATCA Exempt Party; and |
(ii) |
supply to the requesting party (with a copy to all other Relevant Parties) such other form or forms (including IRS Form W-8 or Form W-9 or any successor or substitute form, as applicable) and any other documentation and other information relating to its status under FATCA (including its applicable “pass thru percentage” or other information required under FATCA or other official guidance including intergovernmental agreements) as the requesting party reasonably requests for the purpose of the requesting party’s compliance with FATCA. |
(b) |
If a Relevant Party confirms to any other Relevant Party that it is a FATCA Exempt Party or provides an IRS Form W-8 or W-9 to showing that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, or that the said form provided has ceased to be correct or valid, that party shall so notify all other Relevant Parties or provide the relevant revised form, as applicable, reasonably promptly. |
(c) |
Nothing in this Clause shall oblige any Relevant Party to do anything which would or, in its reasonable opinion, might constitute a breach of any law or regulation, any policy of that party, any fiduciary duty or any duty of confidentiality, or to disclose any confidential information (including, without limitation, its tax returns and calculations); provided, however, that nothing in this paragraph shall excuse any Relevant Party from providing a true, complete and correct IRS Form W-8 or W-9 (or any successor or substitute form where applicable). Any |
44
information provided on such IRS Form W-8 or W-9 (or any successor or substitute forms) shall not be treated as confidential information of such party for purposes of this paragraph.
(d) |
If a Relevant Party fails to confirm its status or to supply forms, documentation or other information requested in accordance with the provisions of this Charter or the provided information is insufficient under FATCA, then: |
(i) |
if that party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such party shall be treated for the purposes of this Charter and the Leasing Documents as if it is a FATCA Non-Exempt Party; and |
(ii) |
if that party failed to confirm its applicable passthru percentage then such party shall be treated for the purposes of this Charter and the Leasing Documents (and payments made thereunder) as if its applicable passthru percentage is 100%, |
until (in each case) such time as the party in question provides sufficient confirmation, forms, documentation or other information to establish the relevant facts.
61.3 |
FATCA Deduction and gross-up by Relevant Party. |
(a) |
If the representation made by the Charterers under 48.1(bb) proves to be untrue or misleading such that the Charterers are required to make a FATCA Deduction, the Charterers shall make the FATCA Deduction and any payment required in connection with that FATCA Deduction within the time allowed and in the minimum amount required by FATCA. |
(b) |
If the Charterers are required to make a FATCA Deduction then the Charterers shall increase the payment due from them to the Owners to an amount which (after making any FATCA Deduction) leaves an amount equal to the payment which would have been due if no FATCA Deduction had been required. |
(c) |
The Charterers shall promptly upon becoming aware that they must make a FATCA Deduction (or that there is any change in the rate or basis of a FATCA Deduction) notify the Owners accordingly. Within thirty (30) days of the Charterers making either a FATCA Deduction or any payment required in connection with that FATCA Deduction, the Charterers shall deliver to the Owners evidence reasonably satisfactory to the Owners that the FATCA Deduction has been made or (as applicable) any appropriate payment paid to the relevant governmental or taxation authority. |
61.4 |
FATCA Deduction by Owners. |
The Owners may make any FATCA Deduction they are required by FATCA to make, and any payment required in connection with that FATCA Deduction, and the Owners shall not be required to increase any payment in respect of which they make such a FATCA Deduction or otherwise compensate the recipient for that FATCA Deduction.
61.5 |
FATCA Mitigation. |
Notwithstanding any other provision to this Charter, if a FATCA Deduction is or will be required to be made by any party under Clause 61.4 in respect of a payment to the Owners as a result of the Owners not being a FATCA Exempt Party, the Owners shall have the right to transfer their interest in the Vessel (and this Charter) to any person nominated by the Owners and all costs in relation to such transfer shall be for the account of the Charterers.
45
CLAUSE 62 – ASSIGNMENT, TRANSFER AND REFINANCING
62.1 |
The Charterers shall not assign or transfer (whether by novation or otherwise) their rights and/or obligations under this Charter or any other Leasing Document. |
62.2 |
The Charterers acknowledge that, at any time during the Charter Period: |
(a) |
the Owners are entitled to enter into certain funding arrangements in relation to the Vessel with the Owners’ Financiers in order to refinance the then outstanding Owners’ Costs (or part thereof), which funding arrangements may be secured, inter alia, by the relevant Financial Instruments; |
(b) |
the Owners may do any of the following as security for the funding arrangements referred to in paragraph (a) above, in each case without consent of the Charterers but with notice to the Charterers: |
(i) |
execute a ship mortgage over the Vessel or any other Financial Instrument in favour of the Owners’ Financiers; |
(ii) |
assign their rights and interests to, in or in connection with this Charter and/or any other Leasing Document in favour of the Owners’ Financiers; |
(iii) |
assign their rights and interests to, in or in connection with the Insurances, the Earnings and the Requisition Compensation of the Vessel in favour of the Owners’ Financiers; and |
(iv) |
enter into any other document or arrangement which is necessary to give effect to such financing arrangements. |
62.3 |
The Charterers undertake to comply, and provide such information and documents reasonably required to enable the Owners to comply, with all such instructions or directions in regard to the employment, insurances, operation, repairs and maintenance of the Vessel as laid down in any Financial Instrument or as may be reasonably directed from time to time during the currency of this Charter by the Owners’ Financiers in conformity with any Financial Instrument. The Charterers further agree and acknowledge for themselves all relevant terms, conditions and provisions of each Financial Instrument (if any) and agree to acknowledge this in writing in any form that may be reasonably required by the Owners’ Financiers subject to not imposing to the Charterers any more onerous obligations than those included in the Leasing Documents. The Charterers further agree to enter into any required acknowledgements of assignments and other customary documents as may be required in connection with the Financing Documents. |
62.4 |
The Owners shall, if requested by the Charterers or any applicable sub-charterer, procure that on or around the time a mortgage over the Vessel is executed in favour of Owners’ Financiers, the Owners’ Financiers shall enter into a QEL with the Owners and the Charterers or any applicable sub-charterer (in a form to be agreed among the Owners’ Financiers, the Owners, the Charterers and any applicable sub-charterer). |
62.5 |
During the Charter Period, the Owners may procure a: |
(a) |
change in the registered ownership of the Vessel; and/or |
(b) |
assign or transfer by novation of any of its rights and obligations under any of the Leasing Documents, |
46
without the consent of the Charterers to any other financial institution, trust, fund, leasing company or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets provided always that such change of ownership or transfer shall not disturb or interfere with the Charterers’ lawful use, possession and quiet enjoyment of the Vessel during the Charter Period. The Charterers shall be liable to the aforesaid new owner of the Vessel for its performance of all obligations under this Charter (as novated) after any such change of the registered ownership from the Owners to such new owner and the Charterers shall procure that any party to a Leasing Document:
(i) |
becomes liable to the new of owner of the Vessel for its performance of all obligations pursuant to such Leasing Document; and |
(ii) |
enters into all necessary documents or takes any necessary actions required for such Leasing Document and any Security Interest created thereunder remaining in full force and effect (or to be novated and/or re-executed) as from the completion of the relevant sale. |
62.6 |
The Charterers agree and undertake to enter into any such usual documents and provide all necessary assistance as the Owners shall require to complete or perfect the transfer of the Vessel (with the benefit and burden of this Charter) or any novation or assignment made pursuant to this Clause 62 (Assignment, Transfer and Re-financing) at no cost for the Charterers. |
CLAUSE 63 – CONFIDENTIALITY
The Parties agree to keep the terms and conditions of this Charter and any other Leasing Document (the “Confidential Information”) strictly confidential, provided that a Party may disclose Confidential Information in the following cases:
(a) |
it is already known to the public or becomes available to the public other than through the act or omission of the disclosing Party; |
(b) |
it is required to be disclosed under the applicable laws of any Relevant Jurisdiction or by a governmental order, decree, regulation or rule; |
(c) |
in filings with a court or arbitral body in proceedings in which the Confidential Information is relevant and in discovery arising out of such proceedings; |
(d) |
to any other party to a Leasing Document; |
(e) |
to (or through) whom a Party assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Leasing Document (as permitted by the terms thereof) provided that such person shall undertake that it would not disclose Confidential information to any other party save for circumstances arising which are similar to those described under this Clause; |
(f) |
to any of the following persons (on a need to know basis): |
(i) |
a shareholder or an Affiliate of either Party or a party referred to in paragraph (d); |
(ii) |
its board of directors, employees or its shareholders; |
47
(iii) |
professional advisers retained by a disclosing party; |
(iv) |
any rating agencies; |
(v) |
the Approved Classification Society; |
(vi) |
the ship registry of the Flag State; and |
(vii) |
in the case of the disclosing party being the Owners, persons advising on, providing or considering the provision of financing to the Owners or an Affiliate of the Owners, |
provided that the disclosing party shall exercise due diligence to ensure that no such person shall disclose Confidential Information to any other party save for circumstances arising which are similar to those described under this Clause or such other circumstances as may be permitted by all Parties;
(g) |
to any person which is a classification society or other entity which the Owners or the Owners’ Financiers have engaged to make the calculations necessary to enable the Owners and/or the Owners’ Financiers to comply with their reporting obligations under the Poseidon Principles; or |
(h) |
with the prior written consent of all Parties and if required by any Party, subject to a corresponding confidentiality undertaking obtained from the party to whom the Confidential Information is disclosed to. |
CLAUSE 64 – GENERAL APPLICATION OF PROCEEDS
64.1 |
Any Net Trading Proceeds, Net Sales Proceeds, Total Loss Proceeds, any proceeds realised by the Owners in connection with the enforcement of the Security Documents (unless otherwise specified in the Security Documents) and any proceeds received by the Owners from any Other Owner (as trustee for the Owners) shall be applied in the following order of application against amounts payable under the Leasing Documents: |
(a) |
firstly, in or towards any amounts outstanding under the Leasing Documents other than the Termination Sum (including but not limited to any costs and expenses incurred in the enforcement of the Security Documents, to the extent these are not covered under the Termination Sum); |
(b) |
secondly, in or towards satisfaction of the Charterers’ obligation to pay the Termination Sum (or such portion of it that then remains unpaid) in any order of application in the amounts comprising the Termination Sum as the Owners may determine; and |
(c) |
thirdly, upon satisfaction in full of all amounts payable to the Owners under the Leasing Documents, in payment of any surplus to the Charterers. |
CLAUSE 65 – GOVERNING LAW AND ENFORCEMENT
65.1 |
This Charter, and any non-contractual obligations arising out of or in connection with it, shall be governed by English law. |
65.2 |
Any dispute arising out of or in connection with any Leasing Document (including a dispute regarding the existence, validity or termination of any Leasing Document or any non-contractual obligation arising out of or in connection with any Leasing Document) (a “Dispute”) |
48
shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause.
65.3 |
The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. The reference shall be to three (3) arbitrators. A Party wishing to refer the Dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other Party requiring the other Party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other Party appoints its own arbitrator and give notice that it has done so within the fourteen (14) days specified. If the other Party does not appoint its own arbitrator and give notice that it has done so within the fourteen (14) days specified, the Party referring a Dispute to arbitration may, without the requirement of any further prior notice to the other Party, appoint its arbitrator as sole arbitrator and shall advise the other Party accordingly. The award of a sole arbitrator shall be binding on both Parties as if he had been appointed by agreement. Nothing herein shall prevent the Parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. |
65.4 |
In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 (or such other sum as the Parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. |
CLAUSE 66 – DEFINITIONS
66.1 |
In this Charter the following terms shall have the meanings ascribed to them below: |
“Acceptance Certificate” means a certificate substantially in the form set out in Schedule 1 (Acceptance Certificate) to be signed by the Charterers at Delivery.
“Account Bank” means ABN AMRO Bank N.V., Netherlands or such other bank approved by the Owners.
“Account Charge” means the document creating charge(s) over the Operating Account executed or to be executed by the Charterers in favour of the Owners.
“Advance Charterhire” has the meaning as defined under Clause 36.2 of the Charter.
“Affiliate” means in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.
“Annex VI” means Annex VI of the Protocol of 1997 to amend the International Convention for the Prevention of Pollution from Ships 1973 (Marpol), as modified by the Protocol of 1978 relating thereto.
“Anti-Bribery and Anti-Corruption Laws” means the US Foreign Corrupt Practices Act of 1977 as amended and the rules and regulations thereunder, the UK Bribery Act of 2010, and/or any similar laws, rules or regulations issued, administered or enforced by the United States, United Kingdom, the European Union or any of its member states, or any other country or governmental agency having jurisdiction over the Owners or any Obligors or their respective subsidiaries.
49
“Anti-Money Laundering Laws” means all applicable financial record-keeping and reporting requirements, anti-money laundering statutes (including all applicable rules and regulations thereunder) and all applicable related or similar laws, rules, regulations or guidelines, of all jurisdictions including and without limitation, the United States of America, the United Kingdom, Greece, the Republic of the Marshall Islands, Hong Kong and the People’s Republic of China and which in each case are:
(a) |
issued, administered or enforced by any governmental agency having jurisdiction over the Charterers or any other Obligors or their respective subsidiaries; |
(b) |
of any jurisdiction in which the Charterers or any other Obligor conducts business; or |
(c) |
to which the Charterers or any other Obligor is subjected or subject to. |
“Approved Classification Society” means ABS or any other classification society which is a member of the International Association of Classification Societies and approved by the Owners in writing.
“Approved Commercial Manager” means OET Chartering Inc. or any other reputable ship management company as may be approved by the Owners in writing prior to its appointment as commercial manager of the Vessel in accordance with this Charter.
“Approved Manager” means the Approved Commercial Manager or the Approved Technical Manager.
“Assignable Sub-charter” means any period time charters relating to the Vessel, whether or not already in existence.
“Approved Technical Manager” means Kyklades Maritime Corporation or any other reputable ship management company as may be approved by the Owners in writing prior to its appointment as technical manager of the Vessel in accordance with this Charter.
“Approved Valuer” means Clarksons Platou, Simpson Spence Young, Braemar ACM, Arrow, Fearnleys, Maersk Brokers or such other independent and reputable shipbroker nominated by the Charterers and approved by the Owners.
“Arrangement Fee” has the meaning as defined under Clause 44.1.
“Breakfunding Costs” means all breakfunding costs and expenses incurred or payable by the Owners when a repayment or prepayment under the relevant funding arrangement entered into by the Owners for the purpose of financing the Purchase Price (or any part thereof) does not fall on a Payment Date, a Purchase Option Date or a date specified by the Owners in any Termination Notice.
“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for business in the principal business centres of Shanghai, Singapore, Amsterdam and Piraeus or:
(a) |
in respect of a day on which a payment is required to be made or other dealing is due to take place under this Agreement in Dollars, a day on which banks are open in New York City; |
(b) |
in respect of the calculation of any Variable Charterhire, a US Government Securities Business Day; and |
50
(c) |
in respect of a day on which the Deed of Release is executed and/or dated, a day on which the Outgoing Financier is open for business in Paris. |
“Cancelling Date” has the meaning ascribed to such term in the MOA.
“Change of Control” means:
(a) |
the Guarantor ceasing to directly own one hundred percent (100%) of the shares in the Charterers; or |
(b) |
Mr. Ioannis Alafouzos and Mr. Themistoklis Alafouzos cease to hold on aggregate less than 35% of the shares (directly or indirectly) of the Guarantor. |
“Charter Period” means the period described in Clause 32.1 unless it is terminated earlier in accordance with the provisions of this Charter.
“Charterhire” means each of, as the context may require, all of the instalments of hire payable hereunder on each applicable Payment Date comprising in each case both Fixed Charterhire and Variable Charterhire, as further detailed in Clause 36.
“Commencement Date” means the date on which Delivery takes place.
“Delisting” means the Guarantor ceasing to be listed on both:
(a) the Oslo Stock Exchange (Oslo Børs); and
(b)the New York Stock Exchange.
“Delivery” means the physical and legal delivery of the Vessel from the Owners to the Charterers pursuant to the terms of this Charter.
“Dollars” and “US$” mean the lawful currency for the time being of the United States of America.
“Earnings” means all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Charterers and which arise out of the use or operation of the Vessel, including (but not limited to):
(a) |
all freight, hire and passage moneys; |
(b) |
any compensation payable in the event of requisition of the Vessel for hire; |
(c) |
any remuneration for salvage and towage services; |
(d) |
any demurrage and detention moneys; |
(e) |
damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of the Vessel; |
(f) |
all moneys which are at any time payable to the Charterers in relation to general average contribution; and |
51
(g) |
if and whenever the Vessel is employed on terms whereby any moneys falling within paragraphs (a) to (f) are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to the Vessel. |
“Emission Allowances” means an allowance, credit, quota, permit or equivalent, representing a right of a vessel to emit a specified quantity of greenhouse gas emissions recognised by the Emissions Scheme.
“Emission Scheme” means a greenhouse gas emissions trading scheme which for the purposes of this Charter shall include the EU ETS and any other similar systems imposed by applicable lawful authorities that regulate the issuance, allocation, trading or surrendering of Emission Allowances.
“Environmental Claim” means any claim by any governmental, judicial or regulatory authority or any other person which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law and, for this purpose, “claim” includes a claim for damages, compensation, contribution, injury, fines, losses and penalties or any other payment of any kind, including in relation to clean-up and removal, whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset.
“Environmental Incident” means:
(a) |
any release, emission, spill or discharge of Environmentally Sensitive Material whether within the Vessel or from the Vessel into any other vessel or into or upon the air, water, land or soils (including the seabed) or surface water; or |
(b) |
any incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, water, land or soils (including the seabed) or surface water from a vessel other than the Vessel and which involves a collision between the Vessel and such other vessel or some other incident of navigation or operation, in either case, in connection with which the Vessel is actually or potentially liable to be arrested, attached, detained or injuncted and/or the Vessel and/or any Obligors and/or any operator or manager of the Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or |
(c) |
any other incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, water, land or soils (including the seabed) or surface water otherwise than from the Vessel and in connection with which the Vessel is actually or potentially liable to be arrested and/or where any Obligors and/or any operator or manager of the Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action. |
“Environmental Law” means any present or future law relating to pollution or protection of human health or the environment, to conditions in the workplace, to the carriage, generation, handling, storage, use, release or spillage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material including any law pertaining to any Emission Scheme.
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“Environmentally Sensitive Material” means and includes all contaminants, oil, oil products, toxic substances and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous.
“EU ETS” means the European Union Emissions Trading System specifically applicable to shipping pursuant to the European Directive 2023/959 amending European Directive 2003/87/EC and Commission Implementing Regulation (EU) 2023/2599 of 22 November 2023 laying down rules for the application of Directive 2003/97/EC of the European Parliament and of the Council as regards the administration of shipping companies by administering authorities in respect of a shipping company.
“ETS and Fuel EU Maritime Letter” shall have the meaning as defined under Clause 40.5(c).
“Expiry Owners’ Costs” means an amount equal to fifty five per cent. (55%) of the Opening Capital Balance.
“Fair Market Value” means the value of the Vessel determined as follows:
(a) |
subject to sub-paragraph (b) below, the arithmetic mean of the valuations shown by two (2) valuation reports each addressed to the Buyers and prepared at the Sellers’ cost: |
(i) |
on a date no earlier than thirty (30) days prior to the relevant date of valuation; |
(ii) |
by Approved Valuers one nominated by the Owners and the other nominated by the Charterers (but with the report addressed to the Owners); |
(iii) |
without physical inspection of the Vessel; and |
(iv) |
on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, without taking into account any charter; and |
(b) |
if there is a discrepancy of five per cent. (5%) or more between the market valuations shown on the two (2) valuation reports obtained pursuant to paragraph (a) above (using the lower valuation figure as the denominator), then a third valuation shall be obtained and prepared on the same terms and conditions as set out under paragraph (a) above (except that the third valuation report additionally required under this sub-paragraph (b) shall be prepared by an Approved Valuer nominated by the Owners), with the arithmetic mean taken from the valuations shown by such three (3) valuation reports. |
“Fee Letter” mean the fee letter referred to under Clause 44.1 for payment of the Arrangement Fee.
“Financial Indebtedness” means, in relation to a person (the “debtor”), a liability of the debtor:
(a) |
for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor; |
(b) |
under any loan stock, bond, note or other security issued by the debtor; |
53
(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 (other than deferred payments for assets or services obtained on normal commercial terms in the ordinary course of business) or any other agreement having the commercial effect of a borrowing or raising of money by the debtor; |
(e) |
under any foreign exchange transaction, any interest or currency swap 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 paragraphs (a) to (e) if the references to the debtor referred to the other person. |
“Financial Instruments” means the applicable loan or facility agreement entered into between the Owners (or their affiliate) and the Owners’ Financiers and any mortgage, deed of covenants, assignment in respect of any of the Leasing Documents, assignment in respect of Earnings, Insurances and Requisition Compensation, manager’s undertaking and subordination (including assignment of manager’s interests in the Insurances) or any other financial security instruments granted by the Owners to the Owners’ Financiers as security for the financing or refinancing of the Owners’ acquisition of the Vessel.
“First Payment Date” shall have the meaning as defined under 36.5(a).
“Fixed Charterhire” shall have the meaning as defined under Clause 36.4(a).
“Flag State” means the flag state named in Box 5 of this Charter or any other state or jurisdiction approved in writing by the Owners (whose approval shall not be unreasonably withheld or delayed).
“Fleet Vessel” means any ship or vessel (including, but not limited to, the Vessel and the Other Vessels) from time to time wholly leased, hired, chartered or financed under any lease, hire purchase agreement, charter or any other financing arrangement by affiliates of the Owners and/or the Other Owners to subsidiaries or affiliates of the Guarantor.
“Fuel EU Maritime” means Fuel EU Maritime Regulation 2023/1805 dated 13 September 2023 on the use of renewable and low-carbon fuels in maritime transport, and amending Directive 2009/16/EC.
“General Assignment” means the assignment agreement executed or to be executed between the Charterers and the Owners in respect of the Vessel, pursuant to which the Charterers shall, inter alia, assign its rights under:
(a) |
the Earnings, Insurances, Requisition Compensation in respect of the Vessel; and |
(b) |
any Assignable Sub-charter; |
in favour of the Owners.
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“Group” means the Guarantor and its Subsidiaries (whether directly or indirectly owned) from time to time.
“Guarantee” means the guarantee executed by the Guarantor in favour of the Owners on or about the date hereof.
“Guarantor” means Okeanis Eco Tankers Corp., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with registration number 96382 and its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Republic of the Marshall Islands MH 96960.
“Hire Period” means (i) in the case of the first Hire Period, the period commencing on the Commencement Date and ending on the First Payment Date; and (ii) in the case of each subsequent Payment Date, the period of commencing on the last day of the preceding Hire Period and ending on the next occurring Payment Date.
“Historic Term SOFR” means, in relation to any Hire Period, the most recent applicable Term SOFR for a period equal in length to that Hire Period and which is as of a day which is no more than three US Government Securities Business Days before the Quotation Day.
“Holding Company” means, in relation to a person, any other person in relation to which (i) it is a Subsidiary or (ii) it is a Subsidiary of a Subsidiary.
“IAPPC” means a valid international air pollution prevention certificate for the Vessel issued pursuant to the MARPOL Protocol.
“IFRS” means International Financing Reporting Standards.
“Initial Market Value” has the meaning ascribed to such term in the MOA.
“Insurances” means:
(a) |
all policies and contracts of insurance, including entries of the Vessel in any protection and indemnity or war risks association, which are effected in respect of the Vessel or otherwise in relation to it whether before, on or after the date of this Charter; and |
(b) |
all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium and any rights in respect of any claim whether or not the relevant policy, contract of insurance or entry has expired on or before the date of this Charter. |
“Interpolated Historic Term SOFR” means, in relation to any Hire Period, the rate (rounded to the same number of decimal places as Term SOFR) which results from interpolating on a linear basis between:
(A) |
either: |
(1) |
the most recent applicable Term SOFR (as of a day which is not more than three US Government Securities Business Days before the Quotation Day) for the longest period (for which Term SOFR is available) which is less than the Hire Period; or |
55
(2) |
if no such Term SOFR is available for a period which is less than the Hire Period, SOFR for a day which is no more than five US Government Securities Business Days (and no less than two US Government Securities Business Days) before the Quotation Day; and |
(B) |
the most recent applicable Term SOFR (as of a day which is not more than three US Government Securities Business Days before the Quotation Day) for the shortest period (for which Term SOFR is available) which exceeds the Hire Period. |
“Interpolated Term SOFR” means, in relation to any Hire Period, the rate (rounded to the same number of decimal places as Term SOFR) which results from interpolating on a linear basis between:
(A) |
either: |
(1) |
the applicable Term SOFR (as of the Quotation Day in respect of that Hire Period) for the longest period (for which Term SOFR is available) which is less than that Hire Period; or |
(2) |
if no such Term SOFR is available for a period which is less than that Hire Period, SOFR for the day which is two US Government Securities Business Days before the Quotation Day; and |
(B) |
the applicable Term SOFR (as of the Quotation Day in respect of that Hire Period) for the shortest period (for which Term SOFR is available) which exceeds that Hire Period. |
“Interest Rate” means, for any Hire Period, the applicable Reference Rate.
“ISM Code” means the International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organisation Assembly as Resolutions A.741 (18) and A.788 (19), as the same may be amended or supplemented from time to time (and the terms “safety management system”, “Safety Management Certificate” and “Document of Compliance” have the same meanings as are given to them in the ISM Code).
“ISPS Code” means the International Ship and Port Security Code as adopted by the Conference of Contracting Governments to the Safety of Life at Sea Convention 1974 on 13 December 2002 and incorporated as Chapter XI-2 of the Safety of Life at Sea Convention 1974, as the same may be supplemented or amended from time to time.
“ISSC” means a valid international ship security certificate for the Vessel issued pursuant to the ISPS Code.
“Joint Surveyor” shall have the meaning as defined under Clause 41.8.
“Leasing Documents” means this Charter, the Guarantee, the MOA, the Fee Letter, any QEL, the Security Documents, any other document designated as a “Leasing Document” as agreed between the Charterers and the Owners and each, as the context may require, the “Leasing Document”.
56
“Major Casualty” means any casualty to the Vessel in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds US$2,000,000 or the equivalent in any other currency.
“Manager’s Undertaking” means, in relation to an Approved Manager, a letter of undertaking to be executed by that Approved Manager in favour of the Owners subordinating the rights of that Approved Manager against the Vessel and the Charterers to the rights of the Owners.
“Margin” means one point nine per cent. (1.90%) per annum.
“Market Disruption Rate” means the Reference Rate.
“MARPOL Protocol” means Annex VI (Regulations for the Prevention of Air Pollution from Ships) to the International Convention for the Prevention of Pollution from Ships 1973 (as amended in 1978 and 1997).
“Material Adverse Effect” means, in the reasonable opinion of the Owners, a material adverse effect on:
(a) |
the business, operations, property, condition (financial or otherwise) of any Obligor or the Group (taken as a whole); or |
(b) |
the ability of any Obligor to perform its obligations under any Leasing Document to which it is a party; or |
(c) |
the validity or enforceability of, or the effectiveness or ranking of any Security Interests granted pursuant to, any of the Leasing Documents or the rights or remedies of the Owners under any of the Leasing Documents. |
“MOA” means the memorandum of agreement dated on or about the date of this Charter and made between the Owners (in their capacity as buyers) and the Charterers (in their capacity as sellers), pursuant to which the Charterers agree to sell and the Owners agree to purchase the Vessel upon the terms and conditions set out therein.
“Net Sales Proceeds” has the meaning given to it under Clause 42.1(c).
“Net Trading Proceeds” has the meaning given to it under Clause 42.1(b).
“Nominated Purchaser” has the meaning given to it under Clause 42.1(c).
“Obligatory Insurances” means any insurances of the Vessel required to be effected by or on behalf of the Charterers pursuant to Clause 39.
“Obligors” means:
(a) |
the Charterers; |
(b) |
the Guarantor; |
(c) |
the Approved Managers as at the date of this Charter which is an entity within the Group; |
(d) |
any sub-charterer of the Vessel which is an entity within the Group; and |
57
(e) |
any other party providing security for the Charterers’ obligations under this Charter pursuant to a Security Document or otherwise (except any Approved Manager or sub-charterer which are not entities within the Group). |
“Opening Capital Balance” means an amount which is equal to sixty five per cent. (65%) of the Purchase Price.
“Operating Account” means an interest bearing account opened or to be opened in the name of the Charterers with the Account Bank.
“Option Premium” means an amount of US$8,000,000.
“Original Financial Statements” means in relation to the Guarantor, its audited consolidated financial statements for the fiscal year ended 31 December 2021 and its unaudited consolidated financial statements for the fiscal year ended 31 December 2022.
“Original Jurisdiction” means, in relation to an Obligor, the jurisdiction under whose laws they are incorporated as at the date of this Charter.
“Other Charters” means, in relation to each Other Vessel, each bareboat charterparty which is entered into between each applicable Other Owner and each applicable Other Charterer.
“Other Charterer” means, in relation to an Other Vessel, Ark Marine S.A. and Theta Navigation Ltd.
“Other Owner” means, in relation to an Other Vessel, Sea 289 Leasing Co. Limited and Sea 290 Leasing Co. Limited.
“Other Vessel” means each, or as the context may require, of m.v. “Nissos Kea” (IMO number 9920758) and “Nissos Nikouria” (IMO number 9920760).
“Outgoing Financier” has the meaning ascribed to such term in the MOA.
“Owners’ Costs” means, on any relevant date, (i) the Opening Capital Balance minus (ii) the aggregate of Fixed Charterhire which has been paid by the Charterers and received by the Owners as at such date.
“Owners’ Financier” means any financier providing financing or refinancing facilities to the Owners or any affiliate of the Owners in respect of the Owners’ purchase and/or lease of the Vessel to the Charterers under the terms of the Leasing Documents.
“Owners’ Surveyor” shall have the meaning as defined under Clause 41.9.
“Party” means a party to this Charter, namely the Owners or the Charterers.
“Payment Date” shall have the meaning as defined under Clause 36.5.
“Permitted Security Interest” means:
(a) |
any Security Interest created by a Security Document or a Financial Instrument; |
(b) |
any lien for unpaid master’s and crew’s wages in accordance with the ordinary course of operation of the Vessel or in accordance with usual reputable maritime practice; |
58
(c) |
any lien for salvage; |
(d) |
any lien for master’s disbursements incurred in the ordinary course of trading; |
(e) |
any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of the Vessel provided such liens do not secure amounts more than thirty (30) days overdue; |
(f) |
any Security Interest created in favour of a plaintiff or defendant in any action of the court or tribunal before whom such action is brought as security for costs and expenses where the Owners are prosecuting or defending such action in good faith by appropriate steps; and |
(g) |
Security Interests arising by operation of law in respect of taxes which are not overdue or for payment of taxes which are overdue for payment but which are being contested by the Owners or the Charterers in good faith by appropriate steps and in respect of which adequate reserves have been made, |
provided that the foregoing have not arisen due to the default or omission of any Obligor.
“Poseidon Principles” means the financial industry framework for assessing and disclosing the climate alignment of ship finance portfolios published in June 2019 as the same may be amended or replaced to reflect changes in applicable law or regulation or the introduction of or changes to mandatory requirements of the International Maritime Organisation from time to time.
“Potential Termination Event” means, an event or circumstance specified in Clause 47 (Termination Event) which would with the giving of any notice, the lapse of time, and/or a determination of the Owners, constitute a Termination Event.
“Prepositioning Date” shall have the same meaning as defined under the MOA.
“Prohibited Countries” means countries or territories whose government is the target of Sanctions or that is subject to comprehensive country-wide or territory-wide Sanctions, in particular but not limited to pursuant to the US’s Office of Foreign Asset Control of the US Department of Treasury (“OFAC”).
“Prohibited Person” means any person who is the subject of Sanctions (whether designated by name or by reason of being included in a class of persons to whom the applicable Sanctions apply in accordance with their terms).
“Published Rate” means Term SOFR for three (3) months.
“Published Rate Replacement Event” means, in relation to a Published Rate:
(a) |
the methodology, formula or other means of determining that Published Rate has, in the opinion of the Owners and the Charterers, materially changed; |
(b) |
(i) |
(I) |
the administrator of that Published Rate or its supervisor publicly announces that such administrator is insolvent; or |
59
(II) |
information is published in an order, decree, notice, petition or filing, howsoever described, of or filed with a court, tribunal, exchange, regulatory authority or similar administrative, regulatory or judicial body which reasonably confirms that the administrator of that Published Rate is insolvent, |
provided that, in each case, at that time, there is no successor administrator to continue to provide that Published Rate;
(ii) |
the administrator of that Published Rate publicly announces that it has ceased or will cease, to provide that Published Rate permanently or indefinitely and, at that time, there is no successor administrator to continue to provide that Published Rate; |
(iii) |
the supervisor of the administrator of that Published Rate publicly announces that such Published Rate has been or will be permanently or indefinitely continued; or |
(iv) |
the administrator of that Published Rate or its supervisor publicly announces that that Published Rate may no longer be used; or |
(c) |
the administrator of that Published Rate (or the administrator of an interest rate which is a constituent element of that Published Rate) determines that that Published Rate should be calculated in accordance with its reduced submissions or other contingency or fallback policies or arrangements and either: |
(i) |
the circumstance(s) or event(s) leading to such determination are not (in the opinion of the Owners and the Charterers) temporary; or |
(ii) |
that Published Rate is calculated in accordance with any such policy or arrangement for a period no less than a time period approved by the Owners and the Charterers; or |
(d) |
in the opinion of the Owners and the Charterers, that Published Rate is otherwise no longer appropriate for the purposes of calculating interest under this Charter. |
“Purchase Option” means the purchase option referred to in Clause 55.1.
“Purchase Option Date” shall have the meaning ascribed thereto in Clause 55.2.
“Purchase Option Notice” shall have the meaning ascribed thereto in Clause 55.2.
“Purchase Option Price” means, in respect of any Purchase Option Date:
(a) |
If the Purchase Option Date falls on or after the first (1st) anniversary of the Commencement Date but prior to the seventh (7th) anniversary of the Commencement Date, the aggregate of: |
(i) |
the Owners’ Costs prevailing as at the relevant Purchase Option Date; |
(ii) |
any Charterhire accrued but unpaid as at the date of payment of the Purchase Option Price; |
(iii) |
any Breakfunding Costs including any Swap Costs; |
60
(iv) |
any documented legal or other costs incurred by the Owners in connection with the exercise of the Purchase Option under Clause 55 (Purchase Option); and |
(v) |
aside from the amounts described under paragraph (i) to (iv) above, any other moneys due and owing under the Leasing Documents at the relevant Purchase Option Date; |
(b) |
if the Purchase Option Date falls on the seventh (7th) anniversary of the Commencement Date, the aggregate of: |
(i) |
the Expiry Owners’ Costs; |
(ii) |
any Charterhire accrued but unpaid as at the date of payment of the Purchase Option Price; |
(iii) |
any documented legal or other costs incurred by the Owners in connection with the exercise of the Purchase Option under Clause 55 (Purchase Option); and |
(iv) |
aside from the amounts described under paragraphs (i) to (iii) above, any other moneys due and owing under the Leasing Documents at the relevant Purchase Option Date. |
“Purchase Price” has the meaning given to it in the MOA.
“QEL” means any agreement (entered or, as the context may require, to be entered into) between the Owners, the Owners’ Financiers (if applicable), the Charterers and (if applicable) any sub-charterer.
“Quotation Day” means, in relation to any Hire Period, two (2) US Government Securities Business Days before the first day of that Hire Period unless market practice differs in the relevant syndicated loan market in which case the Quotation Day will be determined by the Owners in accordance with that market practice (and if quotations would normally be given on more than one day, the Quotation Day will be the last of those days).
“Reference Rate” means, in relation to a Hire Period:
(a) |
the applicable Term SOFR for three (3) months as of 5:00pm New York time on the Quotation Day for dollars; or |
(b) |
as otherwise determined pursuant to Clause 37 (Changes to Interest Rate, Default Interest), |
and if, in either case, if that rate is less than zero, the Reference Rate shall be deemed to be zero.
“Relevant Jurisdiction” means, in relation to an Obligor:
(a) |
its Original Jurisdiction; |
(b) |
any jurisdiction where any property owned by it and charged under a Leasing Document is situated; |
61
(c) |
any jurisdiction where it conducts its business; or |
(d) |
any jurisdiction whose laws govern the perfection of any of the Security Documents entered into by it creating a Security Interest. |
“Relevant Nominating Body” means any applicable central bank, regulator or other supervisory authority or a group of them, or any working group or committee sponsored or chaired by, or constituted at the request of, any of them or the Financial Stability Board.
“Replacement Reference Rate” means a reference rate which is:
(a) |
formally designated, nominated or recommended as the replacement for a Published Rate by: |
(i) |
the administrator of that Published Rate (provided that the market or economic reality that such benchmark rate measures is the same as that measured by that Published Rate); or |
(ii) |
any Relevant Nominating Body, |
and if replacements have, at the relevant time, been formally designated, nominated or recommended under both paragraphs, the “Replacement Reference Rate” will be the replacement under sub-paragraph (ii) above;
(b) |
in the opinion of the Owners and the Charterers, generally accepted in the international or any relevant domestic syndicated loan markets as the appropriate successor or alternative to that Published Rate; or |
(c) |
in the opinion of the Owners and the Charterers, an appropriate successor or alternative to a Published Rate. |
“Requisition Compensation” includes all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (a) of the definition of “Total Loss”.
“Sanctions” means any sanctions (including US “secondary sanctions”), embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment, exporting, financing or making assets available (or other activities similar to or connected with any of the foregoing):
(a) |
imposed by law or regulation of the United Kingdom, the Council of the European Union, the United Nations or its Security Council, the People’s Republic of China, the Special Administrative Region of Hong Kong or the United States of America; or |
(b) |
otherwise imposed by any law or regulation which are applicable to and/or binding on any Obligor. |
“Sanctions Advisory” means the Sanctions Advisory for the Maritime Industry, Energy and Metals Sectors, and Related Communities issued May 14, 2020 by the US Department of the Treasury, Department of State and Coast Guard, as may be amended or supplemented, and any similar future advisory.
“Sanctioned Ship” means a ship which is the subject of Sanctions.
62
“Security Documents” means:
(a) |
the Account Charge; |
(b) |
the General Assignment; |
(c) |
the Shares Security; |
(d) |
each Manager’s Undertaking; and |
(e) |
any other security document conferring any Security Interest in respect of the obligations of the Charterers under or in connection with this Charter. |
“Security Interest” means:
(a) |
a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or any other security interest of any kind; |
(b) |
the security rights of a plaintiff under an action in rem; or |
(c) |
any other right which confers on a creditor or potential creditor a right or privilege to receive the amount actually or contingently due to it ahead of the general unsecured creditors of the debtor concerned; however this paragraph (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution. |
“Shareholder” means the Guarantor.
“Shares Security” means a first priority charge/pledge over the shares of the Charterers executed or to be executed by the Shareholder in favour of the Owners.
“SOFR” means the secured overnight financing rate (SOFR) administered by the Federal Reserve Bank of New York (or any other person which takes over the administration of that rate) published (before any correction, recalculation or republication by the administrator) by the Federal Reserve Bank of New York (or any other person which takes over the publication of that rate).
“Statement of Compliance” means a Statement of Compliance related to fuel oil consumption pursuant to regulations 6.6 and 6.7 of Annex VI.
“Subsidiary” means a subsidiary within the meaning of section 1159 of the UK Companies Act 2006.
“Swap Costs” means any amount payable by the Owners or documented costs incurred by the Owners (after netting out any gains) as a result of the termination or close-out of any Treasury Transaction entered into in connection with the Leasing Documents.
“Termination Date” has the meaning given to it under Clause 47.2.
“Termination Event” means any event described in Clause 47 (Termination Events).
“Termination Fee” means one point five per cent. (1.50%) of the Owners’ Costs as at the relevant date.
63
“Termination Notice” has the meaning given to it under Clause 47.2.
“Term SOFR” means the term SOFR reference rate administered by CME Group Benchmark Administration Limited (or any other person which takes over the administration of that rate) for the relevant period published (before any correction, recalculation or republication by that administrator) by CME Group Benchmark Administration Limited (or any other person which takes over the administration of that rate).
“Termination Sum” means, in respect of any date (such date being referred to as the “Relevant Date” for the purposes of this definition only), the aggregate of (without double counting amounts that may be included in more than one sub-paragraph below):
(a) |
the Owners’ Costs prevailing as at the Relevant Date; |
(b) |
any Variable Charterhire accrued and unpaid as at the date of payment of the Termination Sum; |
(c) |
the Termination Fee; |
(d) |
any Breakfunding Costs including any Swap Costs; |
(e) |
any and all evidenced and documented direct costs, losses and liabilities incurred by the Owners as a result of the early termination of the leasing under this Charter (including any losses based on estimated market charter rates provided by an Approved Valuer of re-chartering the Vessel to another party other than the Charterers for the period up until the natural expiry of the Charter Period) including but not limited to any legal costs, any agency or broker fees incurred in attempting to re-charter or otherwise dispose of the Vessel; |
(f) |
any and all documented costs, losses and liabilities incurred by the Owners in locating, repossessing, recovering, repositioning, berthing, insuring and maintaining the Vessel and/or in collecting any payments due under this Charter and/or in obtaining the due performance of the obligations of the Charterers under this Charter or the other Leasing Documents; and |
(g) |
aside from the amounts described under paragraphs (a) to (f) above, any other moneys due and owing under the Leasing Documents at the Relevant Date including any default interest on amounts under (a) to (f) above. |
“Total Loss” means:
(a) |
any expropriation, confiscation, requisition (other than a requisition for hire) or acquisition of the Vessel, whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority; |
(b) |
any requisition for hire, arrest, condemnation, capture, seizure or detention of the Vessel (including any hijacking or theft but excluding any event specified in paragraph (a) of this definition) unless it is redelivered within thirty (30) days to the full control of the Owners or the Charterers; or |
(c) |
actual, constructive, compromised, agreed or arranged total loss of the Vessel. |
64
“Total Loss Date” means, in relation to the Total Loss of the Vessel:
(a) |
in the case of a Total Loss occurring under paragraph (a) of the definition of Total Loss, on the date on which the expropriation, confiscation, requisition or, as the case may be, the acquisition of the Vessel is completed by delivery of the Vessel to the relevant government or official authority or the person or persons claiming to be or to represent the relevant government or official authority; |
(b) |
in the case of a Total Loss occurring under paragraph (b) of the definition of Total Loss, the date falling on the expiration of such thirty (30) day period; |
(c) |
in the case of an actual loss of the Vessel, the date on which it occurred; and |
(d) |
in the case of a constructive, compromised, agreed or arranged total loss of the Vessel, the earliest of: |
(i) |
the date when the Vessel was last heard of; |
(ii) |
the date on which a notice of abandonment is given to the insurers; and |
(iii) |
the date of any compromise, arrangement or agreement made by or on behalf of the Charterers with the insurers in which the insurers agree to treat the Vessel as a Total Loss. |
“Total Loss Payment Date” means, following the occurrence of a Total Loss, the earlier of:
(a) |
the date falling ninety (90) days after the Total Loss Date or such later date as the Owners may agree; and |
(b) |
the date on which the Owners receive the Total Loss Proceeds. |
“Total Loss Proceeds” means the proceeds of any policy or contract of insurance or any Requisition Compensation in each case arising in respect of a Total Loss.
“Total Loss Termination Sum” means, in respect of any date (such date being referred to as the “Relevant Date” for the purposes of this definition only), the aggregate of (without double counting amounts that may be included in more than one sub-paragraph below):
(a) |
the Owners’ Costsprevailing as at the Relevant Date; |
(b) |
any Variable Charterhire accrued and unpaid as at the date of payment of the Termination Sum; |
(c) |
any Breakfunding Costs including any Swap Costs; |
(d) |
any and all evidenced and documented direct costs, losses and liabilities incurred by the Owners as a result of the early termination of the leasing under this Charter (including any losses based on estimated market charter rates provided by an Approved Valuer of re-chartering the Vessel to another party other than the Charterers for the period up until the natural expiry of the Charter Period) including but not limited to any legal costs, any agency or broker fees incurred in attempting to re-charter or otherwise dispose of the Vessel; |
65
(e) |
any and all documented costs, losses and liabilities incurred by the Owners in collecting any payments due under this Charter and/or in obtaining the due performance of the obligations of the Charterers under this Charter or the other Leasing Documents; and |
(f) |
aside from the amounts described under paragraphs (a) to (f) above, any other moneys due and owing under the Leasing Documents at the Relevant Date including any default interest on amounts under (a) to (f) above. |
“Treasury Transaction” means any derivative transaction entered into in connection with protection against or benefit from any fluctuation in price or rate.
“US” means the United States of America.
“US Government Securities Business Day” means any day other than:
(a)a Saturday or a Sunday; and
(b) |
a day on which the Securities Industry and Financial Markets Association (or any successor organisation) recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in US Government securities. |
“US Tax Obligor” means:
(a) |
a person which is resident for tax purposes in the US; or |
(b) |
a person some or all of whose payments under the Leasing Documents are from sources within the US for US federal income tax purposes. |
“Variable Charterhire” shall have the meaning as defined under Clause 36.4(b).
“Vessel” means the vessel named Nissos Anafi with IMO number 9856086 and registered or to be registered under the name of the Owners under the Flag State upon Delivery.
66.2 |
In this Charter: |
“agreed form” means, in relation to a document, such document in a form agreed in writing between the Owners and the Charterers;
“asset” includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;
“company” includes any partnership, joint venture and unincorporated association;
“consent” includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation;
“contingent liability” means a liability which is not certain to arise and/or the amount of which remains unascertained;
“control” over a particular company means the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:
66
(a) |
cast, or control the casting of, fifty one per cent. (51%) or more of the maximum number of votes that might be cast at a general meeting of such company; or |
(b) |
appoint or remove all, or the majority, of the directors or other equivalent officers of such company; or |
(c) |
give directions with respect to the operating and financial policies of such company with which the directors or other equivalent officers of such company are obliged to comply; |
“document” includes a deed; also a letter or fax or email;
“expense” means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;
“law” includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;
“legal or administrative action” means any legal proceeding or arbitration and any administrative or regulatory action or investigation;
“liability” includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;
“months” shall be construed in accordance with Clause 66.3;
“person” includes any company; any state, political sub-division of a state and local or municipal authority; and any international organisation;
“policy”, in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;
“protection and indemnity risks” means the usual risks covered by a protection and indemnity association which is a member of the International Group of Protection and Indemnity Clubs including pollution risks, extended passenger cover and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 6 of the International Hull Clauses (1/11/02 or 1/11/03), clause 8 of the Institute Time Clauses (Hulls) (1/10/83) or clause 8 of the Institute Time Clauses (Hulls) (1/11/1995) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;
“regulation” includes any regulation, rule, official directive, request or guideline whether or not having the force of law of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation; and
“tax” includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine.
66.3 |
Meaning of “month” |
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A period of one or more “months” ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (“the numerically corresponding day”), but:
(a) |
on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or |
(b) |
on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day; |
and “month” and “monthly” shall be construed accordingly.
66.4 |
In this Charter: |
(a) |
references to a Leasing Document or any other document being in the form of a particular appendix or to any document referred to in the recitals include references to that form with any modifications to that form which the Owners approve; |
(b) |
references to, or to a provision of, a Leasing Document or any other document are references to it as amended or supplemented, whether before the date of this Charter or otherwise; |
(c) |
references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Charter or otherwise; and |
(d) |
words denoting the singular number shall include the plural and vice versa. |
66.5 |
Headings |
In interpreting a Leasing Document or any provision of a Leasing Document, all clauses, sub-clauses and other headings in that and any other Leasing Document shall be entirely disregarded.
68
EXECUTION PAGE
OWNERS |
|
|
|
SIGNED BY Lam Wing Kaylee |
) /s/ Lam Wing Kaylee |
for and on behalf of |
) |
SEA 112 LEASING CO. LIMITED |
) |
as attorney-in-fact |
) |
in the presence of |
) |
|
|
Witness’ signature: /s/ CHAN Wei Yan Regina |
) |
Witness’ name: CHAN Wei Yan Regina |
) |
Witness’ address: Suites 4610-4619, Jardine House |
) |
1 Connaught Place, Hong Kong |
|
|
|
CHARTERERS |
|
|
|
SIGNED BY Thaleia Kalafati |
) /s/ Thaleia Kalafati |
for and on behalf of |
) |
MOONSPRITE SHIPPING CORP. |
|
|
) |
as attorney-in-fact |
) |
in the presence of |
) |
|
|
Witness’ signature: /s/ Eirini Chaidemenou |
) |
Witness’ name: Eirini Chaidemenou |
) |
Witness’ address: Attorney at Law |
) |
Athens Bar Association |
|
Athens - Greece |
|
69
SCHEDULE 1
ACCEPTANCE CERTIFICATE
70
SCHEDULE 2
CONDITIONS PRECEDENT
71
EXECUTION VERSION
Dated 29 January 2024
OKEANIS ECO TANKERS CORP.
as Guarantor
– and –
SEA 112 LEASING CO. LIMITED
as Owner
GUARANTEE
relating to a Bareboat Charter of one (1) very large crude carrier named “Nissos Anafi”
|
INDEX |
|
|
|
|
Clause |
|
Page |
|
|
|
1 |
INTERPRETATION |
1 |
|
|
|
2 |
GUARANTEE |
2 |
|
|
|
3 |
LIABILITY AS PRINCIPAL AND INDEPENDENT DEBTOR |
3 |
|
|
|
4 |
EXPENSES |
3 |
|
|
|
5 |
ADJUSTMENT OF TRANSACTIONS |
4 |
|
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PAYMENTS |
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INTEREST |
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SUBORDINATION |
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ENFORCEMENT |
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10 |
REPRESENTATIONS AND WARRANTIES |
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11 |
UNDERTAKINGS |
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12 |
JUDGMENTS AND CURRENCY INDEMNITY |
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13 |
SET-OFF |
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SUPPLEMENTAL |
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15 |
ASSIGNMENT |
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16 |
NOTICES |
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INVALIDITY OF LEASING DOCUMENTS |
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18 |
INCORPORATION OF BAREBOAT CHARTER PROVISIONS |
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19 |
GOVERNING LAW AND JURISDICTION |
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SCHEDULE 1 |
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FORM OF COMPLIANCE CERTIFICATE |
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EXECUTION PAGE |
17 |
THIS GUARANTEE is made on 29 January 2024
BETWEEN
(1) |
OKEANIS ECO TANKERS CORP., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with registration number 96382 and having its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the “Guarantor”); and |
(2) |
SEA 112 LEASING CO. LIMITED, a company incorporated under the laws of Hong Kong with business registration number 69599951 whose registered office is at 46/F, Champion Tower, 3 Garden Road, Central, Hong Kong (the “Owner”, which expression includes its successors and assigns). |
BACKGROUND
(A) |
By a bareboat charter dated 29 January 2024 (the “Bareboat Charter”) and made between (i) the Owner as owner and (ii) Moonsprite Shipping Corp. as charterer (the “Bareboat Charterer”), the Owner has agreed to bareboat charter the Vessel to the Bareboat Charterer pursuant to the terms and conditions contained therein. |
(B) |
The Guarantor is a shareholder of the Bareboat Charterer and holds 100 per cent of all of the issued shares in the Bareboat Charterer. |
(C) |
The execution and delivery to the Owner of this Guarantee is one of the conditions to the purchase of the Vessel by the Owner from the Bareboat Charterer in accordance with the MOA and the chartering of the Vessel by the Owner to the Bareboat Charterer under the Bareboat Charter. |
(D) |
This Guarantee is the Guarantee referred to in the Bareboat Charter. |
IT IS AGREED as follows:
1 |
INTERPRETATION |
1.1 |
Defined expressions. Words and expressions defined in the Bareboat Charter shall have the same meanings when used in this Guarantee unless the context otherwise requires. |
1.2 |
Construction of certain terms. In this Guarantee: |
“bankruptcy” includes a liquidation, receivership or administration and any form of suspension of payments, arrangement with creditors or reorganisation under any corporate or insolvency law of any country.
“Code” means the United States Internal Revenue Code of 1986, as amended.
“Compliance Certificate” means a certificate in the form set out in Schedule 1 (Form of Compliance Certificate) or in any other form agreed between the Guarantor and the Owner.
“control” over a particular company means the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:
(a) |
cast, or control the casting of, more than 51 per cent, of the maximum number of votes that might be cast at a general meeting of such company. |
1
(b) |
appoint or remove all, or the majority, of the directors or other equivalent officers of such company; or |
(c) |
give directions with respect to the operating and financial policies of such company with which the directors or other equivalent officers of such company are obliged to comply; |
“FATCA” means:
(a) |
sections 1471 to 1474 of the Code or any associated regulations; |
(b) |
any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or |
(c) |
any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the IRS, the US government or any governmental or taxation authority in any other jurisdiction. |
“FATCA Deduction” means a deduction or withholding from a payment under the Bareboat Charter or the Leasing Documents required by or under FATCA.
“FATCA Exempt Party” means a Relevant Party that is entitled under FATCA to receive payments free from any FATCA Deduction.
“Okeanis Group” means the Guarantor and each of the Guarantor’s Subsidiaries (whether directly or indirectly owner) from time to time.
“Party” means a party to this Guarantee.
“Subsidiary” means a subsidiary within the meaning of section 1159 of the Companies Act 2006.
“US Tax Obligor” means:
(a) |
a Party which is resident for tax purposes in the United States of America; or |
(b) |
a Party some or all of whose payments under this Guarantee, the Bareboat Charter are from sources within the United States for US federal income tax purposes. |
1.3References to “Bareboat Charterer”.References to the Bareboat Charterer under this Guarantee shall, for the avoidance of doubt, include reference to the Bareboat Charterer in its various capacities under the Leasing Documents.
1.4 |
Application of construction and interpretation provisions of Bareboat Charter |
Clauses 66.2 to 66.5 of the Bareboat Charter apply, with any necessary modifications, to this Guarantee.
2 |
GUARANTEE |
2.1 |
Guarantee and indemnity. The Guarantor unconditionally and irrevocably: |
(a) |
guarantees the due payment of all amounts payable by the Bareboat Charterer under or in connection with the Leasing Documents; |
2
(b) |
guarantees the punctual performance by the Bareboat Charterer of all the Bareboat Charterer’s obligations under or in connection with the Leasing Documents; |
(c) |
undertakes to pay to the Owner, immediately on the Owner’s demand as if it was the principal obligor, any such amount which is not paid by the Bareboat Charterer when due and payable under or in connection with the Leasing Documents; and |
(d) |
undertakes to fully indemnify, as an independent and primary obligation, the Owner immediately on its demand in respect of all documented claims, expenses, liabilities, costs and losses which are made or brought against or incurred by the Owner as a result of or in connection with any obligation or liability of the Bareboat Charterer under the Leasing Documents and/or any obligation or liability guaranteed by the Guarantor being or becoming unenforceable, invalid, void or illegal; and the amount recoverable under this indemnity shall be equal to the amount which the Owner would otherwise have been entitled to recover under the applicable Leasing Documents. |
2.2 |
No limit on number of demands. The Owner may serve more than one (1) demand under Clause 2.1. |
2.3 |
Guarantee of whole amount. |
This Guarantee shall be construed and take effect as a guarantee of all amounts due to the Owner under the Leasing Documents (or any of them).
3 |
LIABILITY AS PRINCIPAL AND INDEPENDENT DEBTOR |
3.1 |
Principal and independent debtor. The Guarantor shall be liable under this Guarantee as a principal and independent debtor and accordingly it shall not have, as regards this Guarantee, any of the rights or defences of a surety. |
3.2 |
Waiver of rights and defences. Without limiting the generality of Clause 3.1, the Guarantor shall neither be discharged by, nor have any claim against the Owner in respect of: |
(a) |
any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor or any other person; |
(b) |
any amendment or supplement being made to any Leasing Document (however fundamental and whether or not more onerous); |
(c) |
any arrangement or concession (including a rescheduling or acceptance of partial payments) relating to, or affecting, any Leasing Document; |
(d) |
any release or loss (even though negligent) of any right or Security Interest created by any Leasing Document; |
(e) |
any failure (even though negligent) promptly or properly to exercise or enforce any such right or Security Interest, including a failure to realise for its full market value an asset covered by such a Security Interest; |
(f) |
any Leasing Document being or later becoming void, unenforceable, illegal or invalid or otherwise defective in whole or in part for any reason, including a neglect to register it or |
(g) |
any insolvency or similar proceedings. |
4 |
EXPENSES |
4.1 |
Costs of preservation of rights, enforcement etc. The Guarantor shall pay to the Owner on its demand the amount of all documented expenses (including, without limitation, out of |
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pocket expenses and legal fees) incurred by the Owner in connection with the enforcement of, or the preservation of any rights under this Guarantee or any Leasing Document, including any advice, claim or proceedings relating to this Guarantee or any Leasing Document.
4.2 |
Fees and expenses payable under Leasing Documents. Clause 4.1 is without prejudice to the Guarantor’s liabilities in respect of the Bareboat Charterer’s obligations under any Leasing Document to which it is a party. |
5 |
ADJUSTMENT OF TRANSACTIONS |
5.1 |
Reinstatement of obligation to pay. The Guarantor shall pay to the Owner on its demand any amount which the Owner is required, or agrees, to pay pursuant to any claim by, or settlement with, a trustee in bankruptcy of the Bareboat Charterer on the ground that the Bareboat Charter (as the case may be), or a payment by the Bareboat Charterer or other Obligor, was invalid or on any similar ground. |
6 |
PAYMENTS |
6.1 |
Method of payments. Any amount due under this Guarantee shall be paid: |
(a) |
in immediately available funds; |
(b) |
to such account as the Owner may from time to time notify to the Guarantor; |
(c) |
without any form of set-off, cross-claim or condition; and |
(d) |
free and clear of any tax deduction or withholding for or on account of any tax payable except a tax deduction or withholding which the Guarantor is required by law to make. |
6.2 |
Grossing-up for taxes. If the Guarantor is required by law to make a tax deduction, the amount due to the Owner shall be increased by the amount necessary to ensure that the Owner receives and retains a net amount which, after the tax deduction, is equal to the full amount that it would otherwise have received. |
7 |
INTEREST |
7.1 |
Accrual of interest. Any amount due under this Guarantee shall carry interest after the date on which the Owner demands payment of it until it is actually paid, unless interest on that same amount also accrues under the relevant Leasing Document. |
7.2 |
Calculation of interest. Interest under this Guarantee shall be calculated and accrue in the same way as interest under clause 37 of the Bareboat Charter, as applicable. |
7.3 |
Guarantee extends to interest payable under Leasing Documents. For the avoidance of doubt, it is confirmed that this Guarantee covers all interest payable under the Leasing Documents. |
8 |
SUBORDINATION |
8.1 |
Subordination of rights of Guarantor. All rights which the Guarantor at any time has (whether in respect of this Guarantee or any other transaction) against the Bareboat Charterer or any other Obligor or their respective assets shall be fully subordinated to the rights of the Owner under the Leasing Documents and, in particular, the Guarantor shall not: |
(a) |
claim, or in a bankruptcy of the Bareboat Charterer or any Obligor prove for, any amount payable to the Guarantor by the Bareboat Charterer or any Obligor, whether in respect of this Guarantee or any other transaction; |
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(b) |
take or enforce any Security Interest for any such amount; |
(c) |
claim to set-off any such amount against any amount payable by the Guarantor to the Bareboat Charterer or any Obligor; or |
(d) |
claim any subrogation or other right in respect of any Leasing Document or any sum received or recovered by the Owner under the Leasing Documents. |
9 |
ENFORCEMENT |
9.1 |
No requirement to commence proceedings against Bareboat Charterer. The Owner will not need to commence any proceedings under, or enforce any Security Interest created by any Leasing Document before claiming or commencing proceedings under this Guarantee. |
9.2 |
Conclusive evidence of certain matters. However, as against the Guarantor: |
(a) |
any judgment or order of a court in any Relevant Jurisdiction in connection with any Leasing Document; and |
(b) |
any statement or admission of the Bareboat Charterer in connection with any Leasing Document, |
shall be binding and conclusive as to all matters of fact and law to which it relates.
10 |
REPRESENTATIONS AND WARRANTIES |
10.1 |
General. The Guarantor represents and warrants to the Owner, as at the date of this Guarantee and throughout the Charter Period, as follows. |
10.2 |
Status. |
(a) |
The Guarantor is duly incorporated and validly existing and in good standing under the laws of the Republic of the Marshall Islands. |
(b) |
The Guarantor is not a US Tax Obligor. |
10.3 |
Corporate power. |
(a) |
The Guarantor has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it: |
(i) |
to execute this Guarantee or any other Security Document to which it is a party; and |
(ii) |
to make all the payments contemplated by, and to comply with, this Guarantee or any other Security Document to which it is a party. |
(b) |
For the avoidance of doubt, the Guarantor executes this Guarantee in furtherance of its corporate purposes pursuant to s.16 of the Marshall Islands’ Business Corporations Act, as amended, and no authorisation by vote of its shareholders is (or shall be) required for it to execute this Guarantee. |
10.4 |
Consents in force. All the consents referred to in Clause 10.3 remain in force and nothing has occurred which makes any of them liable to revocation. |
10.5 |
Legal validity. This Guarantee and the Security Documents to which it is a party constitute the Guarantor’s legal, valid and binding obligations enforceable against the Guarantor in accordance with their terms subject to any relevant insolvency laws affecting creditors’ rights generally. |
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10.6 |
No third party Security Interests. Without limiting the generality of Clause 10.5, at the time of the execution and delivery of this Guarantee and any other Security Document to which the Guarantor is a party: |
(a) |
the Guarantor will have the right to create all the Security Interests which that Security Document purports to create; and |
(b) |
no third party will have any Security Interest (except for Permitted Security Interests) or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates. |
10.7 |
No conflicts. The execution by the Guarantor of this Guarantee and any other Security Document to which it is a party and its compliance with this Guarantee and such Security Documents will not involve or lead to a contravention of: |
(a) |
any law or regulation; or |
(b) |
the constitutional documents of the Guarantor; or |
(c) |
any contractual or other obligation or restriction which is binding on the Guarantor or any of its assets. |
10.8 |
No withholding taxes. All payments which the Guarantor is liable to make under this Guarantee and the Security Documents to which it is a party may be made without deduction or withholding for or on account of any tax payable under any law of any Relevant Jurisdiction. |
10.9 |
No default. No Termination Event or Potential Termination Event has occurred and is continuing. |
10.10 |
Information. All information which has been provided in writing by or on behalf of the Guarantor to the Owner in connection with any Security Document satisfies the requirements of Clause 11.2; all audited and unaudited accounts which have been so provided satisfies the requirements of Clause 11.4; and there has been no Material Adverse Effect in the financial position or state of affairs of the Guarantor from that disclosed in the latest of those accounts. |
10.11 |
No litigation. No legal or administrative action involving the Guarantor has been commenced or taken which has or is reasonably likely to have a Material Adverse Effect. |
10.12 |
Restricted Persons. Neither the Guarantor, nor any of its directors, officers or employees or any person acting on its behalf is a Restricted Person or otherwise a target of applicable Sanctions. |
10.13 |
Sanctions. None of the Guarantor nor its directors, officers or employees are in breach of applicable Sanctions laws, have been or are currently being investigated on compliance with Sanctions, have received notice of or are aware of any claim, action, suit, proceeding or investigation against them with respect of Sanctions and none of them have taken any action to evade the application of Sanctions. |
10.14 |
Anti-Money Laundering Laws. The Guarantor is not in breach of any Anti-Money Laundering Laws and has instituted and maintained systems, controls, policies and procedures designed to: |
(i) |
prevent and detect incidences of bribery and corruption, money laundering and terrorism financing; and |
(ii) |
promote and achieve compliance with Anti-Money Laundering Laws including, but not limited to, ensuring thorough and accurate books and records, and utilization of best |
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efforts to ensure that Affiliates acting on behalf of the Guarantor shall act in compliance with Anti-Money Laundering Laws.
10.15 |
Taxes paid. The Guarantor has paid all taxes applicable to, or imposed on or in relation to the Guarantor or its business. |
10.16 |
Provisions of Leasing Documents. The Guarantor is fully familiar with and agrees with all provisions of the Leasing Documents to which the Bareboat Charterer is a party. |
10.17 |
No waiver. No oral or written statement has been made to the Guarantor by or on behalf of the Owner or any other person which could be construed as a waiver of any provisions of this Guarantee or a statement of intention not to enforce this Guarantee in accordance with its terms. |
11 |
UNDERTAKINGS |
11.1 |
General. The Guarantor undertakes with the Owner to comply with the following provisions of this Clause 11 at all times during the Charter Period, except as the Owner may otherwise permit. |
11.2 |
Information provided to be accurate. All financial and other information which is provided in writing by or on behalf of the Guarantor under or in connection with this Guarantee will be true and not misleading and will not omit any material fact or consideration. |
11.3 |
Provision of financial statements. The Guarantor will send to the Owner: |
(a) |
as soon as possible, but in no event later than one hundred and eighty (180) days after the end of each financial year of the Guarantor, the audited annual combined financial reports of the Guarantor for that financial year; |
(b) |
as soon as possible, but in no event later than ninety (90) days after the end of each half-year, the consolidated semi-annual management accounts of the Guarantor certified as to their correctness by at least one officer of the Guarantor; and |
(c) |
such financial and other information as the Owner or its financiers may reasonably request. |
11.4 |
Form of financial statements. All accounts (audited and unaudited) delivered under Clause 11.3 will: |
(a) |
be prepared in accordance with all applicable laws and generally accepted accounting principles consistently applied; |
(b) |
give a true and fair view of the state of affairs of the Guarantor and the Okeanis Group at the date of those accounts and of their profit for the period to which those accounts relate; |
(c) |
fully disclose or provide for all significant liabilities of the Guarantor and the Okeanis Group; and |
(d) |
if not in the English language, be accompanied by an English translation duly certified as to its correctness. |
11.5 |
Shareholder and creditor notices. The Guarantor will send the Owner, at the same time as they are despatched, copies of all material communications in relation to any Leasing Document. |
11.6 |
Consents. The Guarantor will maintain in force and promptly obtain or renew, and will, upon the request of the Owner, promptly send certified copies to the Owner of, all consents required: |
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(a) |
for the Guarantor to perform its obligations under this Guarantee and any other Security Document to which it is a party; and |
(b) |
for the validity or enforceability of this Guarantee and any other Security Document to which it is a party, |
and the Guarantor will comply with the terms of all such consents.
11.7 |
Maintenance of Security Interests. The Guarantor will: |
(a) |
at its own cost, do all that it reasonably can to ensure that any Security Document to which it is a party validly creates the obligations and the Security Interests which it purports to create; and |
(b) |
without limiting the generality of paragraph (a) above, at its own cost, promptly register, file, record or enrol any Security Document to which it is a party with any court or authority in all Relevant Jurisdictions, pay any stamp, registration or similar tax in all Relevant Jurisdictions in respect of any Security Document to which it is a party, give any notice or take any other step which may be or become necessary or desirable for any Security Document to which it is a party to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates. |
11.8 |
Notification of litigation. The Guarantor will provide the Owner with details of any legal, arbitral or administrative action which are current, threatened or pending against the Guarantor as soon as such action is instituted. |
11.9 |
Notification of default. The Guarantor will notify the Owner as soon as the Guarantor becomes aware of: |
(a) |
the occurrence of a Termination Event or a Potential Termination Event; or |
(b) |
any matter which indicates that a Termination Event or a Potential Termination Event may have occurred, |
and will thereafter keep the Owner fully up-to-date with all developments.
11.10 |
Maintenance of status. The Guarantor will maintain its separate corporate existence as a corporation and remain in good standing under the laws of the Republic of the Marshall Islands. |
11.11 |
Negative Pledge. The Guarantor shall procure that the Bareboat Charterer will not create or permit to arise any Security Interest over any asset present or future except for the Permitted Security Interests. |
11.12 |
No disposal of assets, change of business. The Guarantor shall not, and shall procure that the Bareboat Charterer will not: |
(a) |
transfer, lease or otherwise dispose of all or a substantial part of its assets, whether by one transaction or a number of transactions, whether related or not except in the usual course of its trading operations; or |
(b) |
make any substantial change to the nature of its business or its corporate structure from that existing at the date of this Guarantee, provided that no breach of this clause will occur if (a) and (b) occurs in relation to the Guarantor but such event does not cause a Material Adverse Effect. |
11.13 |
No payment of dividend. The Guarantor shall not make or pay any dividend or other distribution of its share capital (including in relation to any preferred shares) following the |
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occurrence of a Termination Event which is continuing or where the payment of such dividend or distribution of such share capital will result in the occurrence of a Potential Termination Event or Termination Event.
11.14 |
No merger etc. The Guarantor shall procure that the Bareboat Charterer will not, enter into any form of merger, sub-division, amalgamation, demerger, reorganisation or corporate reconstruction. |
11.15 |
Maintenance of ownership of Bareboat Charterer. The Guarantor shall remain the direct owner of one hundred percent (100%) of the shares in the Charterers. |
11.16 |
Sanctions. The Guarantor shall comply with all applicable laws and regulations in respect of Sanctions, and in particular, the Guarantor shall effect and maintain a sanctions compliance policy to ensure compliance with all such laws and regulations implemented from time to time. |
11.17Anti-Money Laundering Laws.The Guarantor shall conduct its business in compliance with Anti-Money Laundering Laws and maintain systems, controls, policies and procedures designed to promote and achieve ongoing compliance with Anti-Money Laundering Laws.
11.18 |
FATCA. The Guarantor shall not, and shall procure that the Bareboat Charterer will not become a US Tax Obligor. |
11.19 |
Financial covenants. The Guarantor shall ensure that, at all times: |
(a) |
the Guarantor’s Leverage Ratio shall not exceed seventy five per cent (75%). |
(b) |
it shall maintain Liquid Assets (free of any Security and inclusive of any balances in time deposits) in an amount of not less than the higher of (i) $10,000,000 on an aggregate basis and (ii) $750,000 per Fleet Vessel; |
(c) |
its Consolidated Net Worth shall not be less than $100,000,000. |
For the purposes of this Clause 11.19;
“Accounting Information” means the annual audited combined financial accounts and the unaudited semi-annual combined financial accounts to be provided to the Owner in accordance with the Bareboat Charter.
“Adjusted Total Assets” means, at any date, the amount which would be shown as “Total Assets” under the heading “ASSETS” in the balance sheet of the most recent Accounting Information as adjusted for the aggregate difference (positive or negative) between the book value (being the fixed asset value as per the most recent Accounting Information) and the Fleet Market Value minus the Liquid Assets.
"Consolidated Net Worth" means the aggregate of the Consolidated Market Value Adjusted Total Assets less the Consolidated Total Liabilities.
"Consolidated Net Worth" means the aggregate of the Consolidated Market Value Adjusted Total Assets less the Consolidated Total Liabilities.
"Consolidated Current Assets" means the aggregate of the cash and marketable securities, trade and other receivables from persons other than a member of the Group realisable 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, in each case in relation to the Group, as stated in the then most recent and relevant Accounting Information.
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"Consolidated Market Value Adjusted Tangible Fixed Assets" means the Fleet Market Value plus the book value (less depreciation computed in accordance with the IFRS consistently applied) on a consolidated basis of all other tangible fixed assets of the Group (excluding the Fleet Vessels), as stated in the then most recent and relevant Accounting Information.
"Consolidated Market Value Adjusted Total Assets" means, at any relevant time, the aggregate of Consolidated Current Assets and Consolidated Market Value Adjusted Tangible Fixed Assets.
"Consolidated Total Liabilities" means the aggregate (as of the date of calculation) of all obligations of the Guarantor then outstanding for the payment or repayment of money as stated under "Total Liabilities" in the financial statements or, as the case may be, management accounts, then most recently required to be delivered pursuant to this Charter including, without limitation:
(a) |
any amounts payable by the Guarantor under leases or similar arrangements over their respective periods; |
(b) |
any credit to the Guarantor from a supplier of goods or under any instalment purchase or other similar arrangement; |
(c) |
the aggregate amount then outstanding of liabilities and obligations of third parties to the extent that they are guaranteed by the Guarantor; |
(d) |
any contingent liabilities (including any taxes or other payments under dispute or arbitration) which have been or should be recorded in the notes to the Guarantor's financial statements or, as the case may be, management accounts; and |
(e)any deferred tax liabilities.
"Fleet Market Value" means the aggregate Fair Market Value of the Fleet Vessels.
“Leverage Ratio” means, at any date, the ratio (expressed as a percentage) of:
(a) |
the Total Liabilities minus Liquid Assets; and |
(b) |
the Adjusted Total Assets. |
“Liquid Assets” means, at any date, the amount of cash and cash equivalents which would be shown as “Cash and Cash Equivalents” under the heading “ASSETS” in the balance sheet of the most recent Accounting Information.
“Total Liabilities” means, at any date, the amount which would be shown as “Total current liabilities” plus the amount which would be shown as “Total non-current liabilities”, both under the heading “LIABILITIES AND SHAREHOLDERS’EQUITY” in the balance sheet of the most recent Accounting Information (which, for the avoidance of doubt, shall include potential leasing liabilities and shall only exclude shareholder loans when subordinated, non-interest bearing and not callable at will (minimum one year notice)).
11.20 |
Compliance Certificate. |
(a) |
The Guarantor shall supply to the Owner, a Compliance Certificate setting out (in reasonable detail) computations as to compliance with Clause 11.19 (financial covenants) together with: |
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(i) |
the annual consolidated financial reports of the Guarantor to be provided to the Owner in accordance with Clause 11.3(a); and |
(ii) |
semi-annual consolidated accounts of the Guarantor to be provided to the Owner in accordance with Clause 11.3(b); and |
(b) |
Each Compliance Certificate shall be signed by an officer of the Guarantor as appropriate. |
11.21 |
Listing. |
The Guarantor shall remain listed on the Oslo Stock Exchange (Oslo Børs) , or on the New York Stock Exchange (NYSE) or any other recognized stock exchange and shall procure that the Charterers will make the necessary prepayments or provide additional security under Clause 50.1(i) of the Bareboat Charter should it cease to be listed on the respective Stock Exchange.
12 |
JUDGMENTS AND CURRENCY INDEMNITY |
12.1 |
Judgments relating to Leasing Documents. This Guarantee shall cover any amount payable by the Bareboat Charterer under or in connection with any judgment relating to any Leasing Document. |
12.2 |
Currency indemnity. If any sum due from the Guarantor to the Owner under this Guarantee or under any order or judgment relating to this Guarantee has to be converted from the currency in which this Guarantee provided for the sum to be paid (the “Contractual Currency”) into another currency (the “Payment Currency”) for the purpose of: |
(a) |
making or lodging any claim or proof against the Guarantor, whether in its liquidation, any arrangement involving it or otherwise; or |
(b) |
obtaining an order or judgment from any court or other tribunal; or |
(c) |
enforcing any such order or judgment; |
the Guarantor shall indemnify the Owner against the loss arising when the amount of the payment actually received by the Owner is converted at the available rate of exchange into the Contractual Currency.
In this Clause 12.2, the “available rate of exchange” means the rate at which the Owner is able, at the opening of business (Beijing time) on the Business Day after it receives the sum concerned, to purchase the Contractual Currency with the Payment Currency.
13 |
SET-OFF |
13.1 |
Application of credit balances. The Owner or any affiliate of the Owner may without prior notice: |
(a) |
apply any balance (whether or not then due) which at any time stands to the credit of any account in the name of the Guarantor at any office in any country of the Owner or its affiliate in or towards satisfaction of any sum then due from the Guarantor to the Owner or its affiliate under this Guarantee and any other Security Document; and |
(b) |
for that purpose: |
(i) |
break, or alter the maturity of, all or any part of a deposit of the Guarantor; |
(ii) |
convert or translate all or any part of a deposit or other credit balance into Dollars; and |
11
(iii) |
enter into any other transaction or make any entry with regard to the credit balance which the Owner or its affiliate considers appropriate. |
13.2 |
Existing rights unaffected. The Owner or its affiliate shall not be obliged to exercise any of its rights under Clause 13.1; and those rights shall be without prejudice and in addition to any right of set-off, combination of accounts, charge, lien or other right or remedy to which the Owner or its affiliate is entitled (whether under the general law or any document). |
14 |
SUPPLEMENTAL |
14.1 |
Continuing guarantee. This Guarantee shall remain in force as a continuing security at all times from the date of this Guarantee up to the last day of the Charter Period. |
14.2 |
Rights cumulative, non-exclusive. The Owner’s rights under and in connection with this Guarantee are cumulative, may be exercised as often as appears expedient and shall not be taken to exclude or limit any right or remedy conferred by law. |
14.3 |
No impairment of rights under Guarantee. If the Owner omits to exercise, delays in exercising or invalidly exercises any of its rights under this Guarantee, that shall not impair that or any other right of the Owner under this Guarantee. |
14.4 |
Severability of provisions. If any provision of this Guarantee is or subsequently becomes void, illegal, unenforceable or otherwise invalid, that shall not affect the validity, legality or enforceability of its other provisions. |
14.5 |
Guarantee not affected by other security. This Guarantee shall not impair, nor be impaired by, any other guarantee, any Security Interest or any right of set-off or netting or to combine accounts which the Owner may now or later hold in connection with the Leasing Documents. |
14.6 |
Guarantor bound by Leasing Documents. The Guarantor agrees with the Owner to be bound by all provisions of each Leasing Document in the same way as if those provisions had been set out (with any necessary modifications) in this Guarantee. |
14.7 |
Applicability of provisions of Guarantee to other Security Interests. Any Security Interest which the Guarantor creates (whether at the time at which it signs this Guarantee or at any later time) to secure any liability under this Guarantee shall be a principal and independent security, and Clauses 3 and 17 shall, with any necessary modifications, apply to it, notwithstanding that the document creating the Security Interest neither describes it as a principal or independent security nor includes provisions similar to Clauses 3 and 17. |
14.8 |
Applicability of provisions of Guarantee to other rights. Clauses 3 and 17 shall also apply to any right of set-off or netting or to combine accounts which the Guarantor creates by an agreement entered into at the time of this Guarantee or at any later time (notwithstanding that the agreement does not include provisions similar to Clauses 3 and 17), being an agreement referring to this Guarantee. |
14.9 |
Third party rights. A person who is not a party to this Guarantee has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Guarantee. |
14.10 |
Counterparts. This Guarantee may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Guarantee. |
14.11 |
FATCA Information. |
(a) |
Subject to paragraph (c) below, each Party shall, on the date of this Guarantee, and thereafter within ten (10) Business Days of a reasonable request by the other Party: |
12
(i) |
confirm to the other Party whether it is: |
(A) |
a FATCA Exempt Party; or |
(B) |
not a FATCA Exempt Party; and |
(ii) |
supply to the requesting party (with a copy to all other Relevant Parties) such other form or forms (including IRS Form W-8 or Form W-9 or any successor or substitute form, as applicable) and any other documentation and other information relating to its status under FATCA (including its applicable “pass thru percentage” or other information required under FATCA or other official guidance including intergovernmental agreements) as the requesting party reasonably requests for the purposes of the requesting party's compliance with FATCA. |
(b) |
If a Relevant Party confirms to any other Relevant Party that it is a FATCA Exempt Party or provides an IRD Form W-8 or W-9 to showing that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, or that the said form provided has ceased to be correct or valid, that Party shall notify the other Party reasonably promptly. |
(c) |
Nothing in this Clause shall oblige any Relevant Party to do anything which would or, in its reasonable opinion, might constitute a breach of any law or regulation, any policy of that party, any fiduciary duty or any duty of confidentiality, or to disclose any confidential information (including, without limitation, its tax returns and calculations); provided, however, that nothing in this paragraph shall excuse any Relevant Party from providing a true, complete and correct IRS Form W-8 or W-9 (or any successor or substitute form where applicable). Any information provided on such IRS Form W-8 or W-9 (or any successor or substitute forms) shall not be treated as confidential information of such party for purposes of this paragraph. |
(d) |
If a Relevant Party fails to confirm its status or to supply forms, documentation or other information requested in accordance with the provisions of this Guarantee or the provided information is insufficient under FATCA, then: |
(i) |
if that Party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such Party shall be treated for the purposes of this Guarantee and the Leasing Documents as if it is not a FATCA Exempt Party; and |
(ii) |
if that Party failed to confirm its applicable passthru percentage then such Party shall be treated for the purposes of the Leasing Documents (and payments made thereunder) as if its applicable passthru percentage is 100%, |
until (in each case) such time as the Party in question provides sufficient confirmation, forms, documentation or other information to establish the relevant facts.
15 |
ASSIGNMENT |
15.1 |
Assignment by Charterer. The Charterer shall not assign or transfer (whether by novation or otherwise) its rights and/or obligations under this Guarantee. |
15.2 |
Assignment by Owner. The Owner may assign any of its rights and transfer any of its obligations under this Guarantee to the same extent as it may transfer the same under the other Leasing Documents to which it is a party subject always to the provisions of the Bareboat Charter. |
13
16 |
NOTICES |
16.1 |
Notices. Any notice, certificate, demand or other communication to be served, given made or sent under or in relation to this Guarantee shall be in English and in writing and (without prejudice to any other valid method or giving making or sending the same) shall be deemed sufficiently given or made or sent if sent by registered post or by email to the following respective addresses: |
(A) |
to the Owner: |
c/o CMB Financial Leasing Co., Ltd 21F, China Merchants Bank Building No. 1088, Lujiazui Ring Road Shanghai 200120 The People’s Republic of China Attention: Email: Tel: |
(B) |
to the Guarantor: |
c/o OET CHARTERING INC. Ethnarchou Makariou & D. Falireos Str. 2 185 47, Neo Faliro, Piraeus, Greece Attention: Email: Tel: |
or, if a party hereto changes its address, to such other address as that party may notify to the other.
16.2 |
Validity of demands. A demand under this Guarantee shall be valid notwithstanding that it is served: |
(a) |
on the date on which the amount to which it relates is payable by the Bareboat Charterer under a Leasing Document; and |
(b) |
at the same time as the service of the Termination Notice referred to under clause 47.2 of the Bareboat Charter; |
and a demand under this Guarantee should specifically refer to each amount payable under or in connection with a Leasing Document.
17 |
INVALIDITY OF LEASING DOCUMENTS |
17.1 |
Invalidity of Leasing Documents. In the event of: |
(a) |
any Leasing Document now being or later becoming, with immediate or retrospective effect, void, illegal, unenforceable or otherwise invalid for any other reason whatsoever, whether of a similar kind or not; or |
(b) |
without limiting the scope of paragraph (a), a bankruptcy or insolvency of any Obligor, the introduction of any law or any other matter resulting in any Obligor being discharged from liability under any Leasing Document, or the Bareboat Charter ceasing to operate (for example, by interest ceasing to accrue), |
this Guarantee shall cover any amount which would have been or become payable under or in connection with a Leasing Document if such Leasing Document had been and remained entirely valid, legal and enforceable, or the Bareboat Charterer had not suffered bankruptcy or insolvency, or any combination of such events or circumstances, as the case may be, and the Bareboat Charterer had remained fully liable under it for obligations whether invalidly incurred or validly incurred but subsequently retrospectively invalidated; and references in this Guarantee to amounts payable by the Bareboat Charterer under or in connection with a Leasing Document shall include references to any amount which would have so been or become payable as aforesaid.
14
18 |
INCORPORATION OF BAREBOAT CHARTER PROVISIONS |
18.1 |
The following provisions of the Bareboat Charter apply to this Guarantee as if they were expressly incorporated therein with any necessary modifications: |
Clause 45 (No waiver of rights);
Clause 58 (No set-off or tax deduction);
Clause 61 (FATCA); and
Clause 63 (Confidentiality).
18.2 |
Clause 18.1 is without prejudice to the application to this Guarantee of any provision of the Bareboat Charter which, by its terms, applies or relates to this Guarantee. |
19 |
GOVERNING LAW AND JURISDICTION |
19.1 |
This Guarantee and any non-contractual obligations arising out of or in connection with it are governed by English law. |
19.2 |
Any dispute arising out of or in connection with this Guarantee shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause 19. The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. |
19.3 |
The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the 14 days specified, the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if he had been appointed by agreement. Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. |
19.4 |
In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. Where the reference is to three arbitrators the procedure for making appointments shall be in accordance with the procedure for full arbitration stated above. |
THIS GUARANTEE has been executed and delivered as a deed on the date stated at the beginning of this Guarantee.
15
SCHEDULE 1
FORM OF COMPLIANCE CERTIFICATE
16
EXECUTION PAGE
GUARANTOR |
|
|
|
EXECUTED AND DELIVERED AS A DEED |
) |
by Thaleia Kalafati |
) /s/ Thaleia Kalafati |
as an attorney-in-fact |
) |
for and on behalf of |
) |
OKEANIS ECO TANKERS CORP. |
) |
In the presence of: |
) |
) |
|
Witness’ signature: /s/ Eirini Chaidemenou |
) |
Witness’ name: Eirini Chaidemenou |
) |
Witness’ address: Attorney at Law |
) |
Athens Bar Association |
|
Athens – Greece |
|
|
|
|
|
OWNER |
|
SIGNED, SEALED AND DELIVERED AS A DEED |
) |
By Lam Wing Kaylee |
) /s/ Lam Wing Kaylee |
as an attorney-in-fact |
) |
for and on behalf of |
) |
SEA 112 LEASING CO. LIMITED |
) |
In the presence of: |
) |
) |
|
Witness' signature: /s/ CHAN Wai Yan Regina |
) |
Witness' name: CHAN Wai Yan Regina |
) |
Witness' address: Suites 4610-4619, Jardine House |
) |
1 Connaught Place, Hong Kong |
|
17
Exhibit 4.9
1. Shipbroker N/A |
2.Place and date 21 March 2022 |
|
3.Owners/Place of business (Cl. 1) SEA 289 LEASING CO. LIMITED, a company incorporated under the laws of Hong Kong with limited liability whose registered office is at27/F, Three Exchange Square, 8 Connaught Place, Hong Kong |
4.Bareboat Charterers/Place of business (Cl. 1) ARK MARINE S.A., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with Entity Number 109613 and with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 |
|
5.Vessel’s name, call sign and flag (Cl. 1 and 3) Vessel name: Hull No. 3211 Call Sign: 9920758 Flag: Marshall Islands or otherwise agreed between Parties | ||
6. Type of Vessel VLCC |
7.GT/NT 154,500/106,657 |
|
8.When/Where built 2022 Hyundai Heavy Industries, South Korea |
9.Total DWT (abt.) in metric tons on summer freeboard 300,000 |
|
10. Classification Society (Cl. 3) DNV |
11. Date of last special survey by the Vessel’s classification society N/A |
|
12 Further particulars of Vessel (also indicate minimum number of months’ validity of class certificates agreed acc. to Cl. 3) N/A | ||
13. Port or Place of delivery (Cl. 3) Back to back with MOA delivery |
14. Time for delivery (Cl. 4) See Clause 34, back to back with MOA delivery |
15. Cancelling date (Cl. 5) See definition of “Cancelling Date” and Clause 33 |
16. Port or Place of redelivery (Cl. 15) See Clauses 41and 42 |
17. No. of months’ validity of trading and class certificates upon redelivery (Cl. 15) Six (6) months |
|
18. Running days’ notice if other than stated in Cl. 4 |
19. Frequency of dry-docking (Cl. 10(g)) In accordance with Approved Classification Society or requirements of Flag State |
|
20. Trading limits (Cl. 6) Worldwide within International Navigating Limits and excluding any war listed area declared by the Joint War Committee | ||
21. Charter period (Cl. 2) See Clause 32 |
22. Charter hire (Cl. 11) See Clause 36 |
|
23. New class and other safety requirements (state percentage of Vessel’s insurance value acc. to Box 29)(Cl. 10(a)(ii)) N/A | ||
24. Rate of interest payable acc. to Cl. 11 (f) and, if applicable, acc. to PART IV See Clause 37 |
25. Currency and method of payment (Cl. 11) Dollars/Bank transfer |
|
26. Place of payment; also state beneficiary and bank account (Cl. 11) See Clause 36 |
27. Bank guarantee/bond (sum and place) (Cl. 24) (optional) N/A |
|
28. Mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) applies state date of Financial Instrument and name of Mortgagee(s)/Place of business) (Cl. 12) N/A |
29. Insurance (hull and machinery and war risks) (state value acc. to Cl. 13(f) or, if applicable, acc. to Cl. 14(k)) (also state if Cl. 14 applies) See Clause 39 |
|
30. Additional insurance cover, if any, for Owners’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) See Clause 39 |
31. Additional insurance cover, if any, for Charterers’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) See Clause 39 |
|
32. Latent defects (only to be filled in if period other than stated in Cl. 3) N/A |
33. Brokerage commission and to whom payable (Cl. 27) N/A |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
34. Grace period (state number of clear banking days) (Cl. 28) N/A |
35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed Place of Arbitration must be stated (Cl. 30) (c) Clause 30 not applicable. See Clause 65 |
36. War cancellation (indicate countries agreed) (Cl. 26(f)) N/A | |
37. Newbuilding Vessel (indicate with “yes” or “no” whether PART III applies) (optional) Yes, Part III does not apply |
38. Name and place of Builders (only to be filled in if PART III applies) N/A |
39. Vessel’s Yard Building No. (only to be filled In if PART III applies) N/A |
40. Date of Building Contract (only to be filled in if PART III applies) N/A |
41. Liquidated damages and costs shall accrue to (state party acc. to Cl. 1) a) N/A b) N/A c) N/A | |
42. Hire/Purchase agreement (indicate with “yes” or “no” whether PART IV applies) (optional) No, Part IV does not apply |
43. Bareboat Charter Registry (indicate with “yes” or “no” whether PART V applies) (optional) No |
44. Flag and Country of the Bareboat Charter Registry (only to be filled in if PART V applies) N/A |
45. Country of the Underlying Registry (only to be filled In if PART V applies) N/A |
46. Number of additional clauses covering special provisions, If agreed Clause 32 to Clause 66 |
PREAMBLE It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall Include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It Is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter if expressly agreed and stated in Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further. It is further agreed that the Additional Clauses as indicated in Box 45 above, appended to and integrated in this Charter supplement Part I and II of this Charter. In the event of a conflict, the Additional Clauses shall prevail.
Signature (Owners) |
/s/ Wong Wai Sum |
Signature (Charterers) |
/s/ Thaleia Kalalati |
|
Wong Wai Sum |
|
Thaleia Kalalati |
|
Attorney-in-Fact |
|
Attorney-in-Fact |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
1 |
1. Definitions |
|
61 |
(not applicable when Part III applies, as indicated in Box 37) |
2 |
In this Charter, the following terms shall have the |
|
62 |
(a) Should the Vessel not be delivered latest by the |
3 |
meanings hereby assigned to them: |
|
63 |
cancelling date indicated in Box 15, the Charterers shall |
4 |
“The Owners” shall mean the party identified in Box 3; |
|
64 |
have the option of cancelling this Charter by giving the |
5 |
“The Charterers” shall mean the party identified in Box 4; |
|
65 |
Owners notice of cancellation within thirty-six (36) |
6 |
“The Vessel” shall mean the vessel named in Box 5 and |
|
66 |
running hours after the cancelling date stated in Box |
7 |
with particulars as stated in Boxes 6 to 12. |
|
67 |
15, failing which this Charter shall remain in full force |
8 |
“Financial Instrument” has the meaning ascribed to it in |
|
68 |
and effect. |
|
Clause 66.1.means the mortgage, deed of |
|
69 |
(b) If it appears that the Vessel will be delayed beyond |
9 |
covenant or other such financial security instrument as |
|
70 |
the cancelling date, the Owners may, as soon as they |
10 |
annexed to this Charter and stated in Box 28. |
|
71 |
are in a position to state with reasonable certainty the |
|
|
|
72 |
day on which the Vessel should be ready, give notice |
11 |
2 Charter Period |
|
73 |
thereof to the Charterers asking whether they will |
12 |
In consideration of the hire detailed in Box 22, |
|
74 |
exercise their option of cancelling, and the option must |
13 |
the Owners have agreed to let and the Charterers have |
|
75 |
then be declared within one hundred and sixty-eight |
14 |
agreed to hire the Vessel for the period stated in Box 21 |
|
76 |
(168) running hours of the receipt by the Charterers of |
15 |
(“The Charter Period”). See also Clause 32. |
|
77 |
such notice or within thirty-six (36) running hours after |
|
|
|
78 |
the cancelling date, whichever is the earlier. If the |
16 |
3. Delivery |
|
79 |
Charterers do not then exercise their option of cancelling, |
17 |
(not applicable when Part III applies, as indicated in Box 37) |
|
80 |
the seventh day after the readiness date stated in the |
18 |
(a) The Owners shall before and at the time of delivery |
|
81 |
Owners’ notice shall be substituted for the cancelling |
19 |
exercise due diligence to make the Vessel seaworthy |
|
82 |
date indicated in Box 15 for the purpose of this Clause 5. |
20 |
And in every respect ready in hull, machinery and |
|
83 |
(c) Cancellation under this Clause 5 shall be without |
21 |
equipment for service under this Charter. |
|
84 |
prejudice to any claim the Charterers may otherwise have |
22 |
The Vessel shall be delivered by the Owners and taken |
|
85 |
on the Owners under this Charter. |
23 |
over by the Charterers at the port or place indicated in |
|
|
|
24 |
Box 13. in such ready safe berth as the Charterers may |
|
86 |
6. Trading Restrictions (See also Clauses 39.9(d) and 53.1(c)) |
25 |
direct. |
|
87 |
The Vessel shall be employed in lawful trades for the |
26 |
(b) The Vessel shall be properly documented on |
|
88 |
carriage of suitable lawful merchandise within the trading |
27 |
delivery in accordance with the laws of the flag State |
|
89 |
limits indicated in Box 20. |
28 |
indicated in Box 5 and the requirements of the |
|
90 |
The Charterers undertake not to employ the Vessel or |
29 |
classification society stated in Box 10. The Vessel upon |
|
91 |
suffer the Vessel to be employed otherwise than in |
30 |
delivery shall have her survey cycles up to date and |
|
92 |
conformity with the terms of the contracts of insurance |
31 |
trading and class certificates valid for at least the number |
|
93 |
(including any warranties expressed or implied therein) |
32 |
of months agreed in Box 12. |
|
94 |
without first obtaining the consent of the insurers to such |
33 |
(c) The delivery of the Vessel by the Owners and the |
|
95 |
employment and complying with such requirements as |
34 |
taking over of the Vessel by the Charterers shall |
|
96 |
to extra premium or otherwise as the insurers may |
35 |
constitute a full performance by the Owners of all the |
|
97 |
prescribe. |
36 |
Owners’ obligations under this Clause 3, and thereafter |
|
98 |
The Charterers also undertake not to employ the Vessel |
37 |
the Charterers shall not be entitled to make or assert |
|
99 |
or suffer her employment in any trade or business which |
38 |
any claim against the Owners on account of any |
|
100 |
is forbidden by the law of any country to which the Vessel |
39 |
conditions, representations or warranties expressed or |
|
101 |
may sail or is otherwise illicit or in carrying illicit or |
40 |
implied with respect to the Vessel. but the Owners shall |
|
102 |
prohibited goods or in any manner whatsoever which |
41 |
be liable for the cost of but not the time for repairs or |
|
103 |
may render her liable to condemnation, destruction, |
42 |
renewals occasioned by latent defects in the Vessel, |
|
104 |
seizure or confiscation. |
43 |
her machinery or appurtenances, existing at the time of |
|
105 |
Notwithstanding any other provisions contained in this |
44 |
delivery under this Charter, provided such defects have |
|
106 |
Charter it is agreed that nuclear fuels or radioactive |
45 |
manifested themselves within twelve (12) months after |
|
|
|
46 |
delivery unless otherwise provided in Box 32. |
|
107 |
products or waste are specifically excluded from the |
|
|
|
108 |
cargo permitted to be loaded or carried under this |
47 |
4. Time for Delivery (See Clause 34) |
|
109 |
Charter. This exclusion does not apply to radio-isotopes |
48 |
(not applicable when Part III applies, as indicated in Box 37) |
|
110 |
used or intended to be used for any industrial, |
49 |
The Vessel shall not be delivered before the date |
|
111 |
commercial, agricultural, medical or scientific purposes |
50 |
indicated in Box 14 without the Charterers’ consent and |
|
112 |
provided the Owners’ prior approval has been obtained |
51 |
the Owners shall exercise due diligence to deliver the |
|
113 |
to loading thereof. |
52 |
Vessel not later than the date indicated in Box 15. |
|
|
|
54 |
give the Charterers not less than thirty (30) running days’ |
|
115 |
(not applicable when Part III applies, as indicated in Box 37) |
55 |
preliminary and not less than fourteen (14) running days’ |
|
116 |
The Owners and Charterers shall each appoint |
56 |
definite notice of the date on which the Vessel is |
|
117 |
surveyors for the purpose of determining and agreeing |
57 |
expected to be ready for delivery. |
|
118 |
in writing the condition of the Vessel at the time of |
58 |
The Owners shall keep the Charterers closely advised |
|
|
|
59 |
of possible changes in the Vessel’s position. |
|
119 |
delivery and redelivery hereunder (if applicable). The |
|
|
|
|
Owners shall |
60 |
5. Cancelling (See Clause 33) |
|
|
|
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
120 |
bear all expenses of the On-hire Survey including loss |
|
181 |
Society indicated in Box 10 and maintain all other |
121 |
of time, if any, and the Charterers shall bear all expenses |
|
182 |
necessary certificates in force at all times. |
122 |
of the Off-hire Survey including loss of time, if any, at |
|
|
|
123 |
the daily equivalent to the rate of hire or pro rata thereof. |
|
183 |
(ii) New Class and Other Safety Requirements - In the |
|
|
|
184 |
event of any improvement, structural changes or |
124 |
8. Inspection (See Clause 54) |
|
185 |
new equipment becoming necessary for the |
125 |
The Owners shall have the right at any time after giving |
|
186 |
continued operation of the Vessel by reason of new |
126 |
reasonable notice to the Charterers to inspect or survey |
|
187 |
class requirements or by compulsory legislation, the costs |
127 |
the Vessel or instruct a duly authorised surveyor to carry |
|
|
of compliance shall be for the Charterers’ account. |
128 |
out such survey on their behalf:- |
|
188 |
costing (excluding the Charterers’ loss of time) |
129 |
(a) to ascertain the condition of the Vessel and satisfy |
|
189 |
more than the percentage stated in Box 23, or if |
130 |
themselves that the Vessel is being properly repaired |
|
190 |
Box 23 is left blank, 5 per cent. of the Vessel’s |
131 |
and maintained. The costs and fees for such inspection |
|
191 |
insurance value as stated in Box 29, then the |
132 |
or survey shall be paid by the Owners unless the Vessel |
|
192 |
extent, if any, to which the rate of hire shall be varied |
133 |
is found to require repairs or maintenance in order to |
|
193 |
and the ratio in which the cost of compliance shall |
134 |
achieve the condition so provided; |
|
194 |
be shared between the parties concerned in order |
135 |
(b) in dry-dock if the Charterers have not dry-docked |
|
195 |
to achieve a reasonable distribution thereof as |
136 |
Her in accordance with Clause 10(g). The costs and fees |
|
196 |
between the Owners and the Charterers having |
137 |
for such inspection or survey shall be paid by the |
|
197 |
regard, inter alia, to the length of the period |
138 |
Charterers; and |
|
198 |
remaining under this Charter shall, in the absence |
139 |
(c) for any other commercial reason they consider |
|
199 |
of agreement, be referred to the dispute resolution |
140 |
necessary (provided it does not unduly interfere with |
|
200 |
method agreed in Clause 30. |
141 |
the commercial operation of the Vessel). The costs and |
|
|
|
142 |
fees for such inspection and survey shall be paid by the |
|
201 |
(iii) Financial Security - The Charterers shall maintain |
143 |
Owners. |
|
202 |
financial security or responsibility in respect of third |
144 |
All time used in respect of inspection, survey or repairs |
|
203 |
party liabilities as required by any government, |
145 |
shall be for the Charterers’ account and form part of the |
|
204 |
including federal, state or municipal or other division |
146 |
Charter Period. |
|
205 |
or authority thereof, to enable the Vessel, without |
147 |
The Charterers shall also permit the Owners to inspect |
|
206 |
penalty or charge, lawfully to enter, remain at, or |
148 |
the Vessel’s log books whenever requested and shall |
|
207 |
leave any port, place, territorial or contiguous |
149 |
whenever required by the Owners furnish them with full |
|
208 |
waters of any country, state or municipality in |
150 |
information regarding any casualties or other accidents |
|
209 |
performance of this Charter without any delay. This |
151 |
or damage to the Vessel. |
|
210 |
obligation shall apply whether or not such |
|
|
|
211 |
requirements have been lawfully imposed by such |
152 |
9. Inventories, Oil and Stores |
|
212 |
government or division or authority thereof. |
153 |
A complete inventory of the Vessel’s entire equipment, |
|
213 |
The Charterers shall make and maintain all arrange- |
154 |
outfit including spare parts, appliances and of all |
|
214 |
ments by bond or otherwise as may be necessary to |
155 |
consumable stores on board the Vessel shall be made |
|
215 |
satisfy such requirements at the Charterers’ sole |
156 |
by the Charterers in conjunction with the Owners on |
|
216 |
expense and the Charterers shall indemnify the Owners |
157 |
delivery and again on redelivery of the Vessel. The |
|
217 |
against all consequences whatsoever (including loss of |
158 |
Charterers and the Owners, respectively, shall at the |
|
218 |
time) for any failure or inability to do so. |
159 |
time of delivery and redelivery take over and pay for all |
|
219 |
(b) Operation of the Vessel - The Charterers shall at |
160 |
bunkers, lubricating oil, unbroached provisions, paints, |
|
220 |
their own expense and by their own procurement man, |
161 |
ropes and other consumable stores (excluding spare |
|
221 |
victual, navigate, operate, supply, fuel and, whenever |
162 |
parts) in the said Vessel at the then current market prices |
|
222 |
required, repair the Vessel during the Charter Period |
163 |
at the ports of delivery and redelivery, respectively. The |
|
223 |
and they shall pay all charges and expenses of every |
164 |
Charterers shall ensure that all spare parts listed in the |
|
224 |
kind and nature whatsoever incidental to their use and |
165 |
inventory and used during the Charter Period are |
|
225 |
operation of the Vessel under this Charter, including |
166 |
replaced at their expense prior to redelivery of the |
|
226 |
annual flag State fees of the Flag State and any foreign |
167 |
Vessel. |
|
|
general |
|
|
|
227 |
municipality and/or state taxes. The Master, officers |
168 |
10. Maintenance and Operation |
|
228 |
and crew of the Vessel shall be the servants of the Charterers |
169 |
(a)(i) Maintenance and Repairs - During the Charter |
|
229 |
for all purposes whatsoever, even if for any reason |
170 |
Period the Vessel shall be in the full possession |
|
230 |
appointed by the Owners. |
171 |
and at the absolute disposal for all purposes of the |
|
231 |
Charterers shall comply with the regulations regarding |
172 |
Charterers and under their complete control in |
|
232 |
officers and crew in force in the country of the Vessel’s |
173 |
every respect. The Charterers shall maintain the |
|
233 |
flag or any other applicable law. |
174 |
Vessel, her machinery, boilers, appurtenances and |
|
234 |
(c) The Charterers shall keep the Owners and the |
175 |
spare parts in a good state of repair, in efficient |
|
235 |
mortgagee(s) advised of the intended employment, |
176 |
operating condition and in accordance with good |
|
236 |
planned dry-docking and major repairs of the Vessel, |
177 |
commercial maintenance practice and, except as |
|
237 |
as reasonably required. |
178 |
provided for in Clause 14(l), if applicable, at their |
|
238 |
(d) Flag and Name of Vessel - During the Charter |
179 |
own expense they shall at all times keep the |
|
239 |
Period, the Charterers shall have the liberty to paint the |
180 |
Vessel’s Classification Class fully up to date with the |
|
240 |
Vessel in their own colours, install and display their |
|
Classification |
|
241 |
funnel insignia and fly their own house flag. The |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
242 |
Charterers shall also have the liberty, with the Owners’ |
|
292 |
punctually in accordance with the terms of this Charter |
243 |
consent, which shall not be unreasonably withheld or |
|
293 |
in respect of which time shall be of the essence. |
|
delayed, to |
|
294 |
(b) The Charterers shall pay to the Owners for the hire |
244 |
change the flag and/or the name of the Vessel during |
|
295 |
of the Vessel a lump sum in the amount indicated in |
245 |
the Charter Period (with all fees, costs and expenses |
|
296 |
Box 22 which shall be payable not later than every thirty |
|
arising in relation thereto for the Charterers’ |
|
297 |
(30) running days in advance, the first lump sum being |
|
account). Painting and re-painting, instalment |
|
298 |
payable on the date and hour of the Vessel’s delivery to |
246 |
and re-instalment, registration and re-registration, if |
|
299 |
the Charterers. Hire shall be paid continuously |
247 |
required by the Owners, shall be at the Charterers’ |
|
300 |
throughout the Charter Period. |
248 |
expense and time. |
|
301 |
(c) Payment of hire shall be made in cash without |
249 |
(e) Changes to the Vessel - See Clause 53.1(k). Subject to |
|
302 |
discount in the currency and in the manner indicated in |
|
Clause 10(a)(ii), |
|
303 |
Box 25 and at the place mentioned in Box 26. |
250 |
the Charterers shall make no structural changes in the |
|
304 |
(d) Final payment of hire, if for a period of less than |
251 |
Vessel or changes in the machinery, boilers, appurten- |
|
305 |
thirty (30) running days, shall be calculated proportionally |
252 |
ances or spare parts thereof without in each instance |
|
306 |
according to the number of days and hours remaining |
253 |
first securing the Owners’ approval thereof. If the Owners |
|
307 |
before redelivery and advance payment to be effected |
254 |
so agree, the Charterers shall, if the Owners so require, |
|
308 |
accordingly. |
255 |
restore the Vessel to its former condition before the |
|
309 |
(e) Should the Vessel be lost or missing, hire shall |
256 |
termination of this Charter. |
|
310 |
cease from the date and time when she was lost or last |
257 |
(f) Use of the Vessel’s Outfit, Equipment and |
|
311 |
heard of. The date upon which the Vessel is to be treated |
258 |
Appliances - The Charterers shall have the use of all |
|
312 |
as lost or missing shall be ten (10) days after the Vessel |
259 |
outfit, equipment, and appliances on board the Vessel |
|
313 |
was last reported or when the Vessel is posted as |
260 |
at the time of delivery, provided the same or their |
|
314 |
missing by Lloyd’s, whichever occurs first. Any hire paid |
261 |
substantial equivalent shall be returned to the Owners |
|
315 |
in advance to be adjusted accordingly. |
262 |
on redelivery in the same good order and condition as |
|
316 |
(f) Any delay in payment of hire shall entitle the |
263 |
when received, ordinary wear and tear excepted. The |
|
317 |
Owners to interest at the rate per annum as agreed |
264 |
Charterers shall from time to time during the Charter |
|
318 |
in Box 24. If Box 24 has not been filled in, the three months |
265 |
Period replace, renew or substitute such items of |
|
319 |
Interbank offered rate in London (LIBOR or its successor) |
|
equipment as shall be so |
|
320 |
for the currency stated in Box 25, as quoted by the British |
266 |
damaged or worn as to be unfit for use. The Charterers |
|
321 |
Bankers’ Association (BBA) on the date when the hire |
267 |
are to procure that all repairs to or replacement of any |
|
322 |
fell due, increased by 2 per cent., shall apply. |
268 |
damaged, worn or lost parts or equipment be effected |
|
323 |
(g) Payment of interest due under sub-clause 11(f) |
269 |
in such manner (both as regards workmanship and |
|
324 |
shall be made within seven (7) running days of the date |
270 |
quality of materials) as not to diminish the value of the |
|
325 |
of the Owners’ invoice specifying the amount payable |
271 |
Vessel provided that the Vessel’s value not to be |
|
326 |
or, in the absence of an invoice, at the time of the next |
|
diminished if the repairs or replacement are effected |
|
327 |
hire payment date. |
|
in accordance with the Classification Society and/or |
|
|
|
|
the respective makers’ recommendations. Title of any |
|
328 |
12. Mortgage (See Clause 62) |
|
equipment so replaced, renewed or substituted shall |
|
329 |
(only to apply if Box 28 has been appropriately filled in) |
|
vest in and remain with the Owners. The Charterers |
|
330 |
*)(a) The Owners warrant that they have not effected |
|
have the right to fit additional |
|
331 |
any mortgage(s) of the Vessel and that they shall not |
272 |
equipment at their expense and risk but the Charterers |
|
332 |
effect any mortgage(s) without the prior consent of the |
273 |
shall remove such equipment at the end of the period if |
|
333 |
Charterers, which shall not be unreasonably withheld. |
274 |
requested by the Owners. See also Clause 53.1(k). Any |
|
334 |
*)(b) The Vessel chartered under this Charter is financed |
|
equipment including radio |
|
335 |
by a mortgage according to the Financial Instrument. |
275 |
equipment on hire on the Vessel at time of delivery shall |
|
336 |
The Charterers undertake to comply, and provide such |
276 |
be kept and maintained by the Charterers and the |
|
337 |
information and documents to enable the Owners to |
277 |
Charterers shall assume the obligations and liabilities |
|
338 |
comply, with all such instructions or directions in regard |
278 |
of the Owners under any lease contracts in connection |
|
339 |
to the employment, insurances, operation, repairs and |
279 |
therewith and shall reimburse the Owners for all |
|
340 |
maintenance of the Vessel as laid down in the Financial |
280 |
expenses incurred in connection therewith, also for any |
|
341 |
Instrument or as may be directed from time to time during |
281 |
new equipment required in order to comply with radio |
|
342 |
the currency of the Charter by the mortgagee(s) in |
282 |
regulations. |
|
343 |
conformity with the Financial Instrument. The Charterers |
283 |
(g) Periodical Dry-Docking - The Charterers shall dry- |
|
344 |
confirm that, for this purpose, they have acquainted |
284 |
dock the Vessel and clean and paint her underwater |
|
345 |
themselves with all relevant terms, conditions and |
285 |
parts whenever the same may be necessary, but not |
|
346 |
provisions of the Financial Instrument and agree to |
286 |
less than once during the period stated in Box 19 or, if |
|
347 |
acknowledge this in writing in any form that may be |
287 |
Box 19 has been left blank, every sixty (60) calendar |
|
348 |
required by the mortgagee(s). The Owners warrant that |
288 |
months after delivery or such other period as may be |
|
349 |
they have not effected any mortgage(s) other than stated |
289 |
required by the Classification Society or flag State. |
|
350 |
in Box 28 and that they shall not agree to any |
|
|
|
351 |
amendment of the mortgage(s) referred to in Box 28 or |
290 |
11. Hire (See Clause 36) |
|
|
|
291 |
(a) The Charterers shall pay hire due to the Owners |
|
352 |
effect any other mortgage(s) without the prior consent |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
353 |
of the Charterers, which shall not be unreasonably |
|
406 |
(d) Subject to the provisions of the Financial Instru- |
354 |
withheld. |
|
407 |
ments and Clause 43, if any, should the Vessel become a |
355 |
*)(Optional, Clauses 12(a) and 12(b) are alternatives; |
|
|
Total Loss, an actual, |
356 |
indicate alternative agreed in Box 28). |
|
408 |
constructive, compromised or agreed total loss under |
|
|
|
409 |
the insurances required under sub-clause 13(a), all |
357 |
13. Insurance and Repairs (See also Clause 39) |
|
410 |
insurance payments for such loss shall be paid to the |
358 |
(a) During the Charter Period the Vessel shall be kept |
|
411 |
Owners (or, if applicable, the Owners’ Financiers) in |
359 |
insured in accordance with Clause 39 andby the |
|
|
accordance with the agreed loss payable clauses. who |
|
Charterers at their expense against hull |
|
|
shall distribute the moneys between the |
360 |
and machinery, war and Protection and Indemnity risks |
|
412 |
Owners and the Charterers according to their respective |
361 |
(and any risks against which it is compulsory to insure |
|
413 |
interests. The Charterers undertake to notify the Owners |
362 |
for the operation of the Vessel, including but not limited |
|
|
and the Owners’ Financiers, |
|
to maintaining |
|
414 |
and the mortgagee(s), if any, of any occurrences in |
363 |
financial security in accordance with sub-clause |
|
415 |
consequence of which the Vessel is likely to become a |
364 |
10(a)(iii)) in such form as the Owners shall in writing |
|
416 |
tTotal lLoss. as defined in this Clause. |
365 |
approve, which approval shall not be un-reasonably |
|
417 |
(e) The Owners shall upon the request of the |
366 |
withheld. Such insurances shall be arranged by the |
|
418 |
Charterers, promptly execute such documents as may |
367 |
Charterers to protect the interests of both the Owners |
|
419 |
be required to enable the Charterers to abandon the |
368 |
and the Charterers and the Owners’ Financiers |
|
420 |
Vessel to insurers and claim a constructive total loss. |
|
mortgagee(s) (if any), and |
|
421 |
(f) For the purpose of insurance coverage against hull |
369 |
The Charterers shall be at liberty to protect under such |
|
422 |
and machinery and war risks under the provisions of |
370 |
insurances the interests of any managers they may |
|
423 |
sub-clause 13(a), the value of the Vessel is the sum |
371 |
appoint provided such manager has entered into a |
|
424 |
indicated in Clause 39.Box 29. |
|
manager’s undertaking in form and substance |
|
|
|
|
acceptable to the Owners and the Owners’ Financiers |
|
425 |
14. Insurance, Repairs and Classification |
|
(if any). Insurance policies shall cover the Owners , the |
|
426 |
(Optional, only to apply if expressly agreed and stated |
|
mortgagee(s) (if any), and |
|
427 |
in Box 29, in which event Clause 13 shall be considered |
372 |
the Charterers according to their respective interests. |
|
428 |
deleted). |
373 |
Subject to the provisions of the agreed loss payable |
|
429 |
(a) During the Charter Period the Vessel shall be kept |
|
clauses, Financial Instrument, if |
|
430 |
insured by the Owners at their expense against hull and |
374 |
any, and the approval of the Owners and the insurers, |
|
431 |
machinery and war risks under the form of policy or |
375 |
the Charterers shall effect all insured repairs and shall |
|
432 |
policies attached hereto. The Owners and/or insurers |
376 |
undertake settlement and reimbursement from the |
|
433 |
shall not have any right of recovery or subrogation |
377 |
insurers of all costs in connection with such repairs as |
|
434 |
against the Charterers on account of loss of or any |
378 |
well as insured charges, expenses and liabilities to the |
|
435 |
damage to the Vessel or her machinery or appurt- |
379 |
extent of coverage under the insurances herein provided |
|
436 |
enances covered by such insurance, or on account of |
380 |
for. |
|
437 |
payments made to discharge claims against or liabilities |
381 |
The Charterers also to remain responsible for and to |
|
438 |
of the Vessel or the Owners covered by such insurance. |
382 |
effect repairs and settlement of costs and expenses |
|
439 |
Insurance policies shall cover the Owners and the |
383 |
incurred thereby in respect of all other repairs not |
|
440 |
Charterers according to their respective interests. |
384 |
covered by the insurances and/or not exceeding any |
|
441 |
(b) During the Charter Period the Vessel shall be kept |
385 |
possible franchise(s) or deductibles provided for in the |
|
442 |
insured by the Charterers at their expense against |
386 |
insurances. |
|
443 |
Protection and Indemnity risks (and any risks against |
387 |
All time used for repairs under the provisions of sub- |
|
444 |
which it is compulsory to insure for the operation of the |
388 |
clause 13(a) and for repairs of latent defects according |
|
445 |
Vessel, including maintaining financial security in |
389 |
to Clause 3(c) above, including any deviation, shall be |
|
446 |
accordance with sub-clause 10(a)(iii)) in such form as |
390 |
for the Charterers’ account. |
|
447 |
the Owners shall in writing approve which approval shall |
391 |
(b) If the conditions of the above insurances permit |
|
448 |
not be unreasonably withheld. |
392 |
additional insurance to be placed by the parties, such |
|
449 |
(c) In the event that any act or negligence of the |
393 |
cover shall be limited to the amount for each party set |
|
450 |
Charterers shall vitiate any of the insurance herein |
394 |
out in Box 30 and Box 31, respectively. The Owners or |
|
451 |
provided, the Charterers shall pay to the Owners all |
395 |
the Charterers as the case may be shall immediately |
|
452 |
losses and indemnify the Owners against all claims and |
396 |
furnish the other partyOwners with particulars of any |
|
453 |
demands which would otherwise have been covered by |
|
additional |
|
454 |
such insurance. |
397 |
insurance effected, including copies of any cover notes |
|
|
|
398 |
or policies and the written consent of the insurers of |
|
455 |
(d) The Charterers shall, subject to the approval of the |
399 |
any such required insurance in any case where the |
|
456 |
Owners or Owners’ Underwriters, effect all insured |
400 |
consent of such insurers is necessary. |
|
457 |
repairs, and the Charterers shall undertake settlement |
401 |
(c) The Charterers shall upon the request of the |
|
458 |
of all miscellaneous expenses in connection with such |
402 |
Owners, provide information and promptly execute such |
|
459 |
repairs as well as all insured charges, expenses and |
403 |
documents as may be required to enable the Owners to |
|
460 |
liabilities, to the extent of coverage under the insurances |
404 |
comply with the insurance provisions of the Financial |
|
461 |
provided for under the provisions of sub-clause 14(a). |
405 |
Instrument (if any). |
|
462 |
The Charterers to be secured reimbursement through |
|
|
|
463 |
the Owners’ Underwriters for such expenditures upon |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
464 |
presentation of accounts. |
|
525 |
notified immediately to the Owners. |
|
|
|
526 |
The Charterers warrant that they will not permit the |
465 |
(e) The Charterers to remain responsible for and to |
|
527 |
Vessel to commence a voyage (including any preceding |
466 |
effect repairs and settlement of costs and expenses |
|
528 |
ballast voyage) which cannot reasonably be expected |
467 |
incurred thereby in respect of all other repairs not |
|
529 |
to be completed in time to allow redelivery of the Vessel |
468 |
covered by the insurances and/or not exceeding any |
|
530 |
within the Charter Period. Notwithstanding the above, |
469 |
possible franchise(s) or deductibles provided for in the |
|
531 |
should the Charterers fail to redeliver the Vessel within |
470 |
insurances. |
|
532 |
The Charter Period, the Charterers shall pay the daily |
|
|
|
533 |
equivalent to the rate of hire stated in Box 22 plus 10 |
471 |
(f) All time used for repairs under the provisions of |
|
534 |
per cent. or to the market rate, whichever is the higher, |
472 |
sub-clauses 14(d) and 14(e) and for repairs of latent |
|
535 |
for the number of days by which the Charter Period is |
473 |
defects according to Clause 3 above, including any |
|
536 |
exceeded. All other terms, conditions and provisions of |
474 |
deviation, shall be for the Charterers’ account and shall |
|
537 |
this Charter shall continue to apply. |
475 |
form part of the Charter Period. |
|
538 |
Subject to the provisions of Clause 10, the Vessel shall |
476 |
The Owners shall not be responsible for any expenses |
|
539 |
be redelivered to the Owners in the same or as good |
477 |
as are incident to the use and operation of the Vessel |
|
540 |
structure, state, condition and class as that in which she |
478 |
for such time as may be required to make such repairs. |
|
541 |
was delivered, fair wear and tear not affecting class |
|
|
|
542 |
excepted. |
479 |
(g) If the conditions of the above insurances permit |
|
543 |
The Vessel upon redelivery shall have her survey cycles |
480 |
additional insurance to be placed by the parties such |
|
544 |
up to date and trading and class certificates valid for at |
481 |
cover shall be limited to the amount for each party set |
|
545 |
least the number of months agreed in Box 17. |
482 |
out in Box 30 and Box 31, respectively. The Owners or |
|
|
|
483 |
the Charterers as the case may be shall immediately |
|
546 |
16. Non-Lien |
484 |
furnish the other party with particulars of any additional |
|
547 |
The Charterers will not suffer, nor permit to be continued, |
485 |
insurance effected, including copies of any cover notes |
|
548 |
any lien or encumbrance incurred by them or their |
486 |
or policies and the written consent of the insurers of |
|
549 |
agents, which might have priority over the title and |
487 |
any such required insurance in any case where the |
|
550 |
interest of the Owners in the Vessel. The Charterers |
488 |
consent of such insurers is necessary. |
|
551 |
further agree to fasten to the Vessel in a conspicuous |
|
|
|
552 |
place and to keep so fastened during the Charter Period |
489 |
(h) Should the Vessel become an actual, constructive, |
|
553 |
a notice reading as follows: |
490 |
compromised or agreed total loss under the insurances |
|
554 |
“This Vessel is the property of (name of Owners). It is |
491 |
required under sub-clause 14(a), all insurance payments |
|
555 |
under charter to (name of Charterers) and by the terms |
492 |
for such loss shall be paid to the Owners, who shall |
|
556 |
of the Charter Party neither the Charterers nor the |
493 |
distribute the moneys between themselves and the |
|
557 |
Master have any right, power or authority to create, incur |
494 |
Charterers according to their respective interests. |
|
558 |
or permit to be imposed on the Vessel any lien |
495 |
(i) If the Vessel becomes an actual, constructive, |
|
559 |
whatsoever.” |
496 |
compromised or agreed total loss under the insurances |
|
|
|
497 |
arranged by the Owners in accordance with sub-clause |
|
560 |
17. Indemnity (See indemnity clauses in Additional |
498 |
14(a), this Charter shall terminate as of the date of such |
|
|
Clauses) |
499 |
loss. |
|
561 |
(a) The Charterers shall indemnify the Owners against |
500 |
(j) The Charterers shall upon the request of the |
|
562 |
any loss, damage or expense incurred by the Owners |
501 |
Owners, promptly execute such documents as may be |
|
563 |
arising out of or in relation to the operation of the Vessel |
502 |
required to enable the Owners to abandon the Vessel |
|
564 |
by the Charterers, and against any lien of whatsoever |
503 |
to the insurers and claim a constructive total loss. |
|
565 |
nature arising out of an event occurring during the |
504 |
(k) For the purpose of insurance coverage against hull |
|
566 |
Charter Period. If the Vessel be arrested or otherwise |
505 |
and machinery and war risks under the provisions of |
|
567 |
detained by reason of claims or liens arising out of her |
506 |
sub-clause 14(a), the value of the Vessel is the sum |
|
568 |
operation hereunder by the Charterers, the Charterers |
507 |
indicated in Box 29. |
|
569 |
shall at their own expense take all reasonable steps to |
508 |
(l) Notwithstanding anything contained in sub-clause |
|
570 |
secure that within a reasonable time the Vessel is |
509 |
10(a), it is agreed that under the provisions of Clause |
|
571 |
released, including the provision of bail. |
510 |
14, if applicable, the Owners shall keep the Vessel’s |
|
572 |
Without prejudice to the generality of the foregoing, the |
511 |
Class fully up to date with the Classification Society |
|
573 |
Charterers agree to indemnify the Owners against all |
512 |
indicated in Box 10 and maintain all other necessary |
|
574 |
consequences or liabilities arising from the Master, |
513 |
certificates in force at all times. |
|
575 |
officers or agents signing Bills of Lading or other |
|
|
|
576 |
documents. |
514 |
15. Redelivery (See Clauses 41 and 42) |
|
|
|
515 |
At the expiration of the Charter Period the Vessel shall |
|
577 |
(b) If the Vessel be arrested or otherwise detained by |
516 |
be redelivered by the Charterers to the Owners at a |
|
578 |
reason of a claim or claims against the Owners, the |
517 |
safe and ice-free port or place as indicated in Box 16, in |
|
579 |
Owners shall at their own expense take all reasonable |
518 |
such ready safe berth as the Owners may direct. The |
|
580 |
steps to secure that within a reasonable time the Vessel |
519 |
Charterers shall give the Owners not less than thirty |
|
581 |
is released, including the provision of bail. |
520 |
(30) running days’ preliminary notice of expected date, |
|
582 |
In such circumstances the Owners shall indemnify the |
521 |
range of ports of redelivery or port or place of redelivery |
|
583 |
Charterers against any loss, damage or expense |
522 |
and not less than fourteen (14) running days’ definite |
|
584 |
incurred by the Charterers (including hire paid under |
523 |
notice of expected date and port or place of redelivery. |
|
585 |
this Charter) as a direct consequence of such arrest or |
524 |
Any changes thereafter in the Vessel’s position shall be |
|
586 |
detention. |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
587 |
18. Lien |
|
648 |
(a) In the event of the Requisition for Hire of the Vessel |
588 |
The Owners to shall have a lien upon all cargoes, sub-hires |
|
649 |
by any governmental or other competent authority |
589 |
and sub-freights belonging or due to the Charterers or |
|
650 |
(hereinafter referred to as “Requisition for Hire”) |
590 |
any sub-charterers and any Bill of Lading freight for all |
|
651 |
irrespective of the date during the Charter Period when |
591 |
claims under this Charter., and the Charterers to have a |
|
652 |
“Requisition for Hire” may occur and irrespective of the |
592 |
lien on the Vessel for all moneys paid in advance and |
|
653 |
length thereof and whether or not it be for an indefinite |
593 |
not earned. |
|
654 |
or a limited period of time, and irrespective of whether it |
|
|
|
655 |
may or will remain in force for the remainder of the |
594 |
19. Salvage |
|
656 |
Charter Period, this Charter shall not be deemed thereby |
595 |
All salvage and towage performed by the Vessel shall |
|
657 |
or thereupon to be frustrated or otherwise terminated |
596 |
be for the Charterers’ benefit and the cost of repairing |
|
658 |
and the Charterers shall continue to pay the stipulated |
597 |
damage occasioned thereby shall be borne by the |
|
659 |
hire in the manner provided by this Charter until the time |
598 |
Charterers. |
|
660 |
when the Charter would have terminated pursuant to |
|
|
|
661 |
any of the provisions hereof. always provided however |
599 |
20. Wreck Removal |
|
662 |
that in the event of “Requisition for Hire” any Requisition |
600 |
In the event of the Vessel becoming a wreck or |
|
663 |
Hire or compensation received or receivable by the |
601 |
obstruction to navigation the Charterers shall indemnify |
|
664 |
Owners shall be payable to the Charterers during the |
602 |
the Owners against any sums whatsoever which the |
|
665 |
remainder of the Charter Period or the period of the |
603 |
Owners shall become liable to pay and shall pay in |
|
666 |
“Requisition for Hire” whichever be the shorter. |
604 |
consequence of the Vessel becoming a wreck or |
|
667 |
(b) In the event of the Owners being deprived of their |
605 |
obstruction to navigation. |
|
668 |
ownership in the Vessel by any Compulsory Acquisition |
|
|
|
669 |
of the Vessel or requisition for title by any governmental |
606 |
21. General Average |
|
670 |
or other competent authority (hereinafter referred to as |
607 |
The Owners shall not contribute to General Average. |
|
671 |
“Compulsory Acquisition”), then, irrespective of the date |
|
|
|
672 |
during the Charter Period when “Compulsory Acqui- |
608 |
22. Assignment, Sub-Charter and Sale (See Clause 62) |
|
673 |
sition” may occur, this Charter shall be deemed |
609 |
(a) The Charterers shall not assign this Charter nor |
|
674 |
terminated as of the date of such “Compulsory |
610 |
sub-charter the Vessel on a bareboat basis except with |
|
675 |
Acquisition”. In such event Charter Hire to be considered |
611 |
the prior consent in writing of the Owners, which shall |
|
676 |
as earned and to be paid up to the date and time of |
612 |
not be unreasonably withheld, and subject to such terms |
|
677 |
such “Compulsory Acquisition”. |
613 |
and conditions as the Owners shall approve. |
|
|
|
614 |
(b) The Owners shall not sell the Vessel during the |
|
678 |
26. War |
615 |
currency of this Charter except with the prior written |
|
679 |
(a) Subject to the provisions of the Financial |
616 |
consent of the Charterers, which shall not be unreason- |
|
|
Instruments (if any) FfFor the purpose of this Clause, the |
617 |
ably withheld, and subject to the buyer accepting an |
|
|
words “War |
618 |
assignment of this Charter. |
|
680 |
Risks” shall include any war (whether actual or |
|
|
|
681 |
threatened), act of war, civil war, hostilities, revolution, |
619 |
23. Contracts of Carriage |
|
682 |
rebellion, civil commotion, warlike operations, the laying |
620 |
*)(a) The Charterers are to procure that all documents |
|
683 |
of mines (whether actual or reported), acts of piracy, |
621 |
issued during the Charter Period evidencing the terms |
|
684 |
acts of terrorists, acts of hostility or malicious damage, |
622 |
and conditions agreed in respect of carriage of goods |
|
685 |
blockades (whether imposed against all vessels or |
623 |
shall contain a paramount clause incorporating any |
|
686 |
imposed selectively against vessels of certain flags or |
624 |
legislation relating to carrier’s liability for cargo |
|
687 |
ownership, or against certain cargoes or crews or |
625 |
compulsorily applicable in the trade; if no such legislation |
|
688 |
otherwise howsoever), by any person, body, terrorist or |
626 |
exists, the documents shall incorporate the Hague-Visby |
|
689 |
political group, or the Government of any state |
627 |
Rules. The documents shall also contain the New Jason |
|
690 |
whatsoever, which may be dangerous or are likely to be |
628 |
Clause and the Both-to-Blame Collision Clause. |
|
691 |
or to become dangerous to the Vessel, her cargo, crew |
629 |
*)(b) The Charterers are to procure that all passenger |
|
692 |
or other persons on board the Vessel. |
630 |
tickets issued during the Charter Period for the carriage |
|
|
|
631 |
of passengers and their luggage under this Charter shall |
|
693 |
(b) The Vessel, unless the written consent of the |
632 |
contain a paramount clause incorporating any legislation |
|
694 |
Owners be first obtained and adequate insurances are |
633 |
relating to carrier’s liability for passengers and their |
|
|
in place (such adequacy to be determined by the |
634 |
luggage compulsorily applicable in the trade; if no such |
|
|
Owners acting reasonably), shall not continue to or go |
635 |
legislation exists, the passenger tickets shall incorporate |
|
695 |
through any port, place, area or zone (whether of land |
636 |
the Athens Convention Relating to the Carriage of |
|
696 |
or sea), or any waterway or canal, where it reasonably |
637 |
Passengers and their Luggage by Sea, 1974, and any |
|
697 |
appears that the Vessel, her cargo, crew or other |
638 |
protocol thereto. |
|
698 |
persons on board the Vessel, in the reasonable |
639 |
*)Delete as applicable. |
|
699 |
judgement of the Owners, may be, or are likely to be, |
|
|
|
700 |
exposed to War Risks. Should the Vessel be within any |
640 |
24. Bank Guarantee |
|
701 |
such place as aforesaid, which only becomes danger- |
641 |
(Optional, only to apply if Box 27 filled in) |
|
702 |
ous, or is likely to be or to become dangerous, after her |
642 |
The Charterers undertake to furnish, before delivery of |
|
703 |
entry into it, the Owners shall have the right to require |
643 |
the Vessel, a first class bank guarantee or bond in the |
|
704 |
the Vessel to leave such area. |
644 |
sum and at the place as indicated in Box 27 as guarantee |
|
|
|
645 |
for full performance of their obligations under this |
|
705 |
(c) The Vessel shall not load contraband cargo, or to |
646 |
Charter. |
|
|
|
|
|
|
|
|
647 |
25. Requisition/Acquisition |
|
|
|
|
|
|
706 |
pass through any blockade, whether such blockade be |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
707 |
imposed on all vessels, or is imposed selectively in any |
|
769 |
the actual expenses of the Brokers and a reasonable |
708 |
way whatsoever against vessels of certain flags or |
|
770 |
fee for their work. |
709 |
ownership, or against certain cargoes or crews or |
|
771 |
If the full hire is not paid owing to breach of the Charter |
710 |
otherwise howsoever, or to proceed to an area where |
|
772 |
by either of the parties the party liable therefor shall |
711 |
she shall be subject, or is likely to be subject to |
|
773 |
indemnify the Brokers against their loss of commission. |
712 |
a belligerent’s right of search and/or confiscation. |
|
774 |
Should the parties agree to cancel the Charter, the |
713 |
(d) If the insurers of the war risks insurance, when |
|
775 |
Owners shall indemnify the Brokers against any loss of |
714 |
Clause 14 is applicable, should require payment of |
|
776 |
commission but in such case the commission shall not |
715 |
premiums and/or calls because, pursuant to the |
|
777 |
exceed the brokerage on one year’s hire. |
716 |
Charterers’ orders, the Vessel is within, or is due to enter |
|
|
|
717 |
and remain within, any area or areas which are specified |
|
778 |
28. Termination (See Clauses 41, 42 and 47) |
718 |
by such insurers as being subject to additional premiums |
|
779 |
(a) Charterers’ Default |
719 |
because of War Risks, then such premiums and/or calls |
|
780 |
The Owners shall be entitled to withdraw the Vessel from |
720 |
shall be reimbursed by the Charterers to the Owners at |
|
781 |
the service of the Charterers and terminate the Charter |
721 |
the same time as the next payment of hire is due. |
|
782 |
with immediate effect by written notice to the Charterers if: |
722 |
(e) The Charterers shall have the liberty: |
|
783 |
(i) the Charterers fail to pay hire in accordance with |
723 |
(i) to comply with all orders, directions, recommend- |
|
784 |
Clause 11. However, where there is a failure to |
724 |
ations or advice as to departure, arrival, routes, |
|
785 |
make punctual payment of hire due to oversight, |
725 |
sailing in convoy, ports of call, stoppages, |
|
786 |
negligence, errors or omissions on the part of the |
726 |
destinations, discharge of cargo, delivery, or in any |
|
787 |
Charterers or their bankers, the Owners shall give |
727 |
other way whatsoever, which are given by the |
|
788 |
the Charterers written notice of the number of clear |
728 |
Government of the Nation under whose flag the |
|
789 |
banking days stated in Box 34 (as recognised at |
729 |
Vessel sails, or any other Government, body or |
|
790 |
the agreed place of payment) in which to rectify |
730 |
group whatsoever acting with the power to compel |
|
791 |
the failure, and when so rectified within such |
731 |
compliance with their orders or directions; |
|
792 |
number of days following the Owners’ notice, the |
732 |
(ii) to comply with the orders, directions or recom- |
|
793 |
payment shall stand as regular and punctual. |
733 |
mendations of any war risks underwriters who have |
|
794 |
Failure by the Charterers to pay hire within the |
734 |
the authority to give the same under the terms of |
|
795 |
number of days stated in Box 34 of their receiving |
735 |
the war risks insurance; |
|
796 |
the Owners’ notice as provided herein, shall entitle |
736 |
(iii) to comply with the terms of any resolution of the |
|
797 |
the Owners to withdraw the Vessel from the service |
737 |
Security Council of the United Nations, any |
|
798 |
of the Charterers and terminate the Charter without |
738 |
directives of the European Community, the effective |
|
799 |
further notice; |
739 |
orders of any other Supranational body which has |
|
800 |
(ii) the Charterers fail to comply with the requirements of: |
740 |
the right to issue and give the same, and with |
|
801 |
(1) Clause 6 (Trading Restrictions) |
741 |
national laws aimed at enforcing the same to which |
|
802 |
(2) Clause 13(a) (Insurance and Repairs) |
742 |
the Owners are subject, and to obey the orders |
|
803 |
provided that the Owners shall have the option, by |
743 |
and directions of those who are charged with their |
|
804 |
written notice to the Charterers, to give the |
744 |
enforcement. |
|
805 |
Charterers a specified number of days grace within |
745 |
(f) In the event of outbreak of war (whether there be a |
|
806 |
which to rectify the failure without prejudice to the |
746 |
declaration of war or not) (i) between any two or more |
|
807 |
Owners’ right to withdraw and terminate under this |
747 |
of the following countries: the United States of America; |
|
808 |
Clause if the Charterers fail to comply with such |
748 |
Russia; the United Kingdom; France; and the People’s |
|
809 |
notice; |
749 |
Republic of China, (ii) between any two or more of the |
|
810 |
(iii) the Charterers fail to rectify any failure to comply |
750 |
countries stated in Box 36, both the Owners and the |
|
811 |
with the requirements of sub-clause 10(a)(i) |
751 |
Charterers shall have the right to cancel this Charter, |
|
812 |
(Maintenance and Repairs) as soon as practically |
752 |
whereupon the Charterers shall redeliver the Vessel to |
|
813 |
possible after the Owners have requested them in |
753 |
the Owners in accordance with Clause 15, if the Vessel |
|
814 |
writing so to do and in any event so that the Vessel’s |
754 |
has cargo on board after discharge thereof at |
|
815 |
insurance cover is not prejudiced. |
755 |
destination, or if debarred under this Clause from |
|
816 |
(b) Owners’ Default |
756 |
reaching or entering it at a near, open and safe port as |
|
817 |
If the Owners shall by any act or omission be in breach |
757 |
directed by the Owners, or if the Vessel has no cargo |
|
818 |
of their obligations under this Charter to the extent that |
758 |
on board, at the port at which the Vessel then is or if at |
|
819 |
the Charterers are deprived of the use of the Vessel |
759 |
sea at a near, open and safe port as directed by the |
|
820 |
and such breach continues for a period of fourteen (14) |
760 |
Owners. In all cases hire shall continue to be paid in |
|
821 |
running days after written notice thereof has been given |
761 |
accordance with Clause 11 and except as aforesaid all |
|
822 |
by the Charterers to the Owners, the Charterers shall |
762 |
other provisions of this Charter shall apply until |
|
823 |
be entitled to terminate this Charter with immediate effect |
763 |
redelivery the end of the Charter Period. |
|
824 |
by written notice to the Owners. |
|
|
|
825 |
(c) Loss of Vessel |
764 |
27. Commission |
|
826 |
This Charter shall be deemed to be terminated if the |
765 |
The Owners to pay a commission at the rate indicated |
|
827 |
Vessel becomes a total loss or is declared as a |
766 |
in Box 33 to the Brokers named in Box 33 on any hire |
|
828 |
constructive or compromised or arranged total loss. For |
767 |
paid under the Charter. If no rate is indicated in Box 33, |
|
829 |
the purpose of this sub-clause, the Vessel shall not be |
768 |
the commission to be paid by the Owners shall cover |
|
830 |
deemed to be lost unless she has either become an |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
831 |
actual total loss or agreement has been reached with |
|
888 |
unless the other party appoints its own arbitrator and |
832 |
her underwriters in respect of her constructive, |
|
889 |
gives notice that it has done so within the 14 days |
833 |
compromised or arranged total loss or if such agreement |
|
890 |
specified. If the other party does not appoint its own |
834 |
with her underwriters is not reached it is adjudged by a |
|
891 |
arbitrator and give notice that it has done so within the |
835 |
competent tribunal that a constructive loss of the Vessel |
|
892 |
14 days specified, the party referring a dispute to |
836 |
has occurred. |
|
893 |
arbitration may, without the requirement of any further |
837 |
(d) Either party shall be entitled to terminate this |
|
894 |
prior notice to the other party, appoint its arbitrator as |
838 |
Charter with immediate effect by written notice to the |
|
895 |
sole arbitrator and shall advise the other party |
839 |
other party in the event of an order being made or |
|
896 |
accordingly. The award of a sole arbitrator shall be |
840 |
resolution passed for the winding up, dissolution, |
|
897 |
binding on both parties as if he had been appointed by |
841 |
liquidation or bankruptcy of the other party (otherwise |
|
898 |
agreement. |
842 |
than for the purpose of reconstruction or amalgamation) |
|
899 |
Nothing herein shall prevent the parties agreeing in |
843 |
or if a receiver is appointed, or if it suspends payment, |
|
900 |
writing to vary these provisions to provide for the |
844 |
ceases to carry on business or makes any special |
|
901 |
appointment of a sole arbitrator. |
845 |
arrangement or composition with its creditors. |
|
902 |
In cases where neither the claim nor any counterclaim |
846 |
(e) The termination of this Charter shall be without |
|
903 |
exceeds the sum of US$50,000 (or such other sum as |
847 |
prejudice to all rights accrued due between the parties |
|
904 |
the parties may agree) the arbitration shall be conducted |
848 |
prior to the date of termination and to any claim that |
|
905 |
in accordance with the LMAA Small Claims Procedure |
849 |
either party might have. |
|
906 |
current at the time when the arbitration proceedings are |
|
|
|
907 |
commenced. |
850 |
29. Repossession (See also Clauses 41, 42 and 47) |
|
|
|
|
In the event the Vessel is due for redelivery pursuant |
|
908 |
*)(b) This Contract shall be governed by and construed |
|
to Clause 41 or Owners have made a request for |
|
909 |
in accordance with Title 9 of the United States Code |
|
redelivery of the Vessel in accordance with the |
|
910 |
and the Maritime Law of the United States and any |
|
applicable provisions of Clause 42.1, |
|
911 |
dispute arising out of or in connection with this Contract |
851 |
In the event of the termination of this Charter in |
|
912 |
shall be referred to three persons at New York, one to |
852 |
accordance with the applicable provisions of Clause 28, |
|
913 |
be appointed by each of the parties hereto, and the third |
853 |
the Owners shall have the right to repossess the Vessel |
|
914 |
by the two so chosen; their decision or that of any two |
854 |
from the Charterers at her current or next port of call, or |
|
915 |
of them shall be final, and for the purposes of enforcing |
855 |
at a port or place convenient to them without hindrance |
|
916 |
any award, judgement may be entered on an award by |
856 |
or interference by the Charterers, courts or local |
|
917 |
any court of competent jurisdiction. The proceedings |
857 |
authorities. Pending physical repossession of the Vessel |
|
918 |
shall be conducted in accordance with the rules of the |
858 |
in accordance with this Clause 29, the Charterers shall |
|
919 |
Society of Maritime Arbitrators, Inc. |
859 |
hold the Vessel as gratuitous bailee only to the Owners and |
|
920 |
In cases where neither the claim nor any counterclaim |
|
the Charterers shall procure that the master and crew |
|
921 |
exceeds the sum of US$50,000 (or such other sum as |
|
follow the directions of the Owners . |
|
922 |
the parties may agree) the arbitration shall be conducted |
860 |
The Owners shall arrange for an authorised represent- |
|
923 |
in accordance with the Shortened Arbitration Procedure |
861 |
ative to board the Vessel as soon as reasonably |
|
924 |
of the Society of Maritime Arbitrators, Inc. current at |
862 |
practicable following the termination of the Charter. The |
|
925 |
the time when the arbitration proceedings are commenced. |
863 |
Vessel shall be deemed to be repossessed by the |
|
|
|
864 |
Owners from the Charterers upon the boarding of the |
|
926 |
*)(c) This Contract shall be governed by and construed |
865 |
Vessel by the Owners’ representative. All arrangements |
|
927 |
in accordance with the laws of the place mutually agreed |
866 |
and expenses relating to the settling of wages, |
|
928 |
by the parties and any dispute arising out of or in |
867 |
disembarkation and repatriation of the Charterers’ |
|
929 |
connection with this Contract shall be referred to |
868 |
Master, officers and crew shall be the sole responsibility |
|
930 |
arbitration at a mutually agreed place, subject to the |
869 |
of the Charterers. |
|
931 |
procedures applicable there. |
|
|
|
932 |
(d) Notwithstanding (a), (b) or (c) above, the parties |
870 |
30. Dispute Resolution (See Clause 65) |
|
933 |
may agree at any time to refer to mediation any |
871 |
*)(a) This Contract shall be governed by and construed |
|
934 |
difference and/or dispute arising out of or in connection |
872 |
in accordance with English law and any dispute arising |
|
935 |
with this Contract. |
873 |
out of or in connection with this Contract shall be referred |
|
936 |
In the case of a dispute in respect of which arbitration |
874 |
to arbitration in London in accordance with the Arbitration |
|
937 |
has been commenced under (a), (b) or (c) above, the |
875 |
Act 1996 or any statutory modification or re-enactment |
|
938 |
following shall apply: |
876 |
thereof save to the extent necessary to give effect to |
|
939 |
(i) Either party may at any time and from time to time |
877 |
the provisions of this Clause. |
|
940 |
elect to refer the dispute or part of the dispute to |
878 |
The arbitration shall be conducted in accordance with |
|
941 |
mediation by service on the other party of a written |
879 |
the London Maritime Arbitrators Association (LMAA) |
|
942 |
notice (the “Mediation Notice”) calling on the other |
880 |
Terms current at the time when the arbitration proceed- |
|
943 |
party to agree to mediation. |
881 |
ings are commenced. |
|
944 |
(ii) The other party shall thereupon within 14 calendar |
882 |
The reference shall be to three arbitrators. A party |
|
945 |
days of receipt of the Mediation Notice confirm that |
883 |
wishing to refer a dispute to arbitration shall appoint its |
|
946 |
they agree to mediation, in which case the parties |
884 |
arbitrator and send notice of such appointment in writing |
|
947 |
shall thereafter agree a mediator within a further |
885 |
to the other party requiring the other party to appoint its |
|
948 |
14 calendar days, failing which on the application |
886 |
own arbitrator within 14 calendar days of that notice and |
|
949 |
of either party a mediator will be appointed promptly |
887 |
stating that it will appoint its arbitrator as sole arbitrator |
|
950 |
by the Arbitration Tribunal (“the Tribunal”) or such |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
951 |
person as the Tribunal may designate for that |
|
973 |
incurred in the mediation and the parties shall share |
952 |
purpose. The mediation shall be conducted in such |
|
974 |
equally the mediator’s costs and expenses. |
953 |
place and in accordance with such procedure and |
|
975 |
(vii) The mediation process shall be without prejudice |
954 |
on such terms as the parties may agree or, in the |
|
976 |
and confidential and no information or documents |
955 |
event of disagreement, as may be set by the |
|
977 |
disclosed during it shall be revealed to the Tribunal |
956 |
mediator. |
|
978 |
except to the extent that they are disclosable under |
957 |
(iii) If the other party does not agree to mediate, that |
|
979 |
the law and procedure governing the arbitration. |
958 |
fact may be brought to the attention of the Tribunal |
|
980 |
(Note: The parties should be aware that the mediation |
959 |
and may be taken into account by the Tribunal when |
|
981 |
process may not necessarily interrupt time limits.) |
960 |
allocating the costs of the arbitration as between |
|
982 |
(e) If Box 35 in Part I is not appropriately filled in, sub-clause |
961 |
the parties. |
|
983 |
30(a) of this Clause shall apply. Sub-clause 30(d) shall |
962 |
(iv) The mediation shall not affect the right of either |
|
984 |
apply in all cases. |
963 |
party to seek such relief or take such steps as it |
|
985 |
*)Sub-clauses 30(a), 30(b) and 30(c) are alternatives; |
964 |
considers necessary to protect its interest. |
|
986 |
indicate alternative agreed in Box 35. |
965 |
(v) Either party may advise the Tribunal that they have |
|
|
|
966 |
agreed to mediation. The arbitration procedure shall |
|
987 |
31. Notices (See Clause 46) |
967 |
continue during the conduct of the mediation but |
|
988 |
(a) Any notice to be given by either party to the other |
968 |
the Tribunal may take the mediation timetable into |
|
989 |
party shall be in writing and may be sent by fax, telex, |
969 |
account when setting the timetable for steps in the |
|
990 |
registered or recorded mail or by personal service. |
970 |
arbitration. |
|
991 |
(b) The address of the Parties for service of such |
971 |
(vi) Unless otherwise agreed or specified in the |
|
992 |
communication shall be as stated in Boxes 3 and 4 |
972 |
mediation terms, each party shall bear its own costs |
|
993 |
respectively. |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART III
PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY
(Optional, only to apply if expressly agreed and stated in Box 37)
1 |
Specifications and Building Contract |
|
62 |
Builders have estimated that the Vessel will be ready for |
2 |
(a) The Vessel shall be constructed in accordance with |
|
63 |
delivery to the Owners as therein provided but the delivery |
3 |
the Building Contract (hereafter called “the Building |
|
64 |
date for the purpose of this Charter shall be the date when |
4 |
Contract”) as annexed to this Charter, made between the |
|
65 |
the Vessel is in fact ready for delivery by the Builders after |
5 |
Builders and the Owners and in accordance with the |
|
66 |
completion of trials whether that be before or after as |
6 |
specifications and plans annexed thereto, such Building |
|
67 |
indicated in the Building Contract. The Charterers shall not |
7 |
Contract, specifications and plans having been counter- |
|
68 |
be entitled to refuse acceptance of delivery of the Vessel |
8 |
signed as approved by the Charterers. |
|
69 |
and upon and after such acceptance, subject to Clause |
9 |
(b) No change shall be made in the Building Contract or |
|
70 |
1(d), the Charterers shall not be entitled to make any claim |
10 |
in the specifications or plans of the Vessel as approved by |
|
71 |
against the Owners in respect of any conditions, |
11 |
the Charterers as aforesaid, without the Charterers’ |
|
72 |
representations or warranties, whether express or implied, |
12 |
consent. |
|
73 |
as to the seaworthiness of the Vessel or in respect of delay |
13 |
(c) The Charterers shall have the right to send their |
|
74 |
in delivery. |
14 |
representative to the Builders’ Yard to inspect the Vessel |
|
75 |
(b) If for any reason other than a default by the Owners |
15 |
during the course of her construction to satisfy themselves |
|
76 |
under the Building Contract, the Builders become entitled |
16 |
that construction is in accordance with such approved |
|
77 |
under that Contract not to deliver the Vessel to the Owners, |
17 |
specifications and plans as referred to under sub-clause |
|
78 |
the Owners shall upon giving to the Charterers written |
18 |
(a) of this Clause. |
|
79 |
notice of Builders becoming so entitled, be excused from |
19 |
(d) The Vessel shall be built in accordance with the |
|
80 |
giving delivery of the Vessel to the Charterers and upon |
20 |
Building Contract and shall be of the description set out |
|
81 |
receipt of such notice by the Charterers this Charter shall |
21 |
therein. Subject to the provisions of sub-clause 2(c)(ii) |
|
82 |
cease to have effect. |
22 |
hereunder, the Charterers shall be bound to accept the |
|
83 |
(c) If for any reason the Owners become entitled under |
23 |
Vessel from the Owners, completed and constructed in |
|
84 |
the Building Contract to reject the Vessel the Owners shall, |
24 |
accordance with the Building Contract, on the date of |
|
85 |
before exercising such right of rejection, consult the |
25 |
delivery by the Builders. The Charterers undertake that |
|
86 |
Charterers and thereupon |
26 |
having accepted the Vessel they will not thereafter raise |
|
87 |
(i) if the Charterers do not wish to take delivery of the Vessel |
27 |
any claims against the Owners in respect of the Vessel’s |
|
88 |
they shall inform the Owners within seven (7) running days |
28 |
performance or specification or defects, if any. |
|
89 |
by notice in writing and upon receipt by the Owners of such |
29 |
Nevertheless, in respect of any repairs, replacements or |
|
90 |
notice this Charter shall cease to have effect; or |
30 |
defects which appear within the first 12 months from |
|
91 |
(ii) if the Charterers wish to take delivery of the Vessel |
31 |
delivery by the Builders, the Owners shall endeavour to |
|
92 |
they may by notice in writing within seven (7) running days |
32 |
compel the Builders to repair, replace or remedy any defects |
|
93 |
require the Owners to negotiate with the Builders as to the |
33 |
or to recover from the Builders any expenditure incurred in |
|
94 |
terms on which delivery should be taken and/or refrain from |
34 |
carrying out such repairs, replacements or remedies. |
|
95 |
exercising their right to rejection and upon receipt of such |
35 |
However, the Owners’ liability to the Charterers shall be |
|
96 |
notice the Owners shall commence such negotiations and/ |
36 |
limited to the extent the Owners have a valid claim against |
|
97 |
or take delivery of the Vessel from the Builders and deliver |
37 |
the Builders under the guarantee clause of the Building |
|
98 |
her to the Charterers; |
38 |
Contract (a copy whereof has been supplied to the |
|
99 |
(iii) in no circumstances shall the Charterers be entitled to |
39 |
Charterers). The Charterers shall be bound to accept such |
|
100 |
reject the Vessel unless the Owners are able to reject the |
40 |
sums as the Owners are reasonably able to recover under |
|
101 |
Vessel from the Builders; |
41 |
this Clause and shall make no further claim on the Owners |
|
102 |
(iv) if this Charter terminates under sub-clause (b) or (c) of |
42 |
for the difference between the amount(s) so recovered and |
|
103 |
this Clause, the Owners shall thereafter not be liable to the |
43 |
the actual expenditure on repairs, replacement or |
|
104 |
Charterers for any claim under or arising out of this Charter |
44 |
remedying defects or for any loss of time incurred. |
|
105 |
or its termination. |
45 |
Any liquidated damages for physical defects or deficiencies |
|
106 |
(d) Any liquidated damages for delay in delivery under the |
46 |
shall accrue to the account of the party stated in Box 41(a) |
|
107 |
Building Contract and any costs incurred in pursuing a claim |
47 |
or if not filled in shall be shared equally between the parties. |
|
108 |
therefor shall accrue to the account of the party stated in |
48 |
The costs of pursuing a claim or claims against the Builders |
|
109 |
Box 41(c) or if not filled in shall be shared equally between |
49 |
under this Clause (including any liability to the Builders) |
|
110 |
the parties. |
50 |
shall be borne by the party stated in Box 41(b) or if not |
|
|
|
51 |
filled in shall be shared equally between the parties. |
|
111 |
3. Guarantee Works |
|
|
|
112 |
If not otherwise agreed, the Owners authorise the |
52 |
2. Time and Place of Delivery |
|
113 |
Charterers to arrange for the guarantee works to be |
53 |
(a) Subject to the Vessel having completed her |
|
114 |
performed in accordance with the building contract terms, |
54 |
acceptance trials including trials of cargo equipment in |
|
115 |
and hire to continue during the period of guarantee works. |
55 |
accordance with the Building Contract and specifications |
|
116 |
The Charterers have to advise the Owners about the |
56 |
to the satisfaction of the Charterers, the Owners shall give |
|
117 |
performance to the extent the Owners may request. |
57 |
and the Charterers shall take delivery of the Vessel afloat |
|
|
|
58 |
when ready for delivery and properly documented at the |
|
118 |
4. Name of Vessel |
59 |
Builders’ Yard or some other safe and readily accessible |
|
119 |
The name of the Vessel shall be mutually agreed between |
60 |
dock, wharf or place as may be agreed between the parties |
|
120 |
the Owners and the Charterers and the Vessel shall be |
61 |
hereto and the Builders. Under the Building Contract the |
|
|
|
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART III
PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY
(Optional, only to apply if expressly agreed and stated in Box 37)
|
|
|
|
|
121 |
painted in the colours, display the funnel insignia and fly |
|
128 |
shall bear all survey expenses and all other costs, if any, |
122 |
the house flag as required by the Charterers. |
|
129 |
including the cost of docking and undocking, if required, |
|
|
|
130 |
as well as all repair costs incurred. The Charterers shall |
123 |
5. Survey on Redelivery |
|
131 |
also bear all loss of time spent in connection with any |
124 |
The Owners and the Charterers shall appoint surveyors |
|
132 |
docking and undocking as well as repairs, which shall be |
125 |
for the purpose of determining and agreeing in writing the |
|
133 |
paid at the rate of hire per day or pro rata. |
126 |
condition of the Vessel at the time of re-delivery. |
|
|
|
127 |
Without prejudice to Clause 15 (Part II), the Charterers |
|
|
|
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART IV
HIRE/PURCHASE AGREEMENT
(Optional, only to apply if expressly agreed and stated in Box 42)
1 |
On expiration of this Charter and provided the |
|
27 |
shall be for Sellers’ account. |
|
Charterers |
|
28 |
In exchange for payment of the last month’s hire |
2 |
have fulfilled their obligations according to Part I and II |
|
29 |
instalment the Sellers shall furnish the Buyers with a |
3 |
as well as Part III, if applicable, it is agreed, that on |
|
30 |
Bill of Sale duly attested and legalized, together with a |
4 |
payment of the final payment of hire as per Clause 11 |
|
31 |
certificate setting out the registered encumbrances, if |
5 |
the Charterers have purchased the Vessel with |
|
32 |
any. On delivery of the Vessel the Sellers shall provide |
6 |
everything belonging to her and the Vessel is fully paid |
|
33 |
for deletion of the Vessel from the Ship’s Register and |
7 |
for. |
|
34 |
deliver a certificate of deletion to the Buyers. |
8 |
In the following paragraphs the Owners are referred to |
|
35 |
The Sellers shall, at the time of delivery, hand to the |
9 |
as the Sellers and the Charterers as the Buyers. |
|
36 |
Buyers all classification certificates (for hull, engines, |
10 |
The Vessel shall be delivered by the Sellers and taken |
|
37 |
anchors, chains, etc.), as well as all plans which may |
11 |
over by the Buyers on expiration of the Charter. |
|
38 |
be in Sellers’ possession. |
12 |
The Sellers guarantee that the Vessel, at the time of |
|
39 |
The Wireless Installation and Nautical Instruments, |
13 |
delivery, is free from all encumbrances and maritime |
|
40 |
unless on hire, shall be included in the sale without any |
14 |
liens or any debts whatsoever other than those arising |
|
41 |
extra payment. |
15 |
from anything done or not done by the Buyers or any |
|
42 |
The Vessel with everything belonging to her shall be at |
16 |
existing mortgage agreed not to be paid off by the time |
|
43 |
Sellers’ risk and expense until she is delivered to the |
17 |
of delivery. Should any claims, which have been incurred |
|
44 |
Buyers, subject to the conditions of this Contract and |
18 |
prior to the time of delivery be made against the Vessel, |
|
45 |
the Vessel with everything belonging to her shall be |
19 |
the Sellers hereby undertake to indemnify the Buyers |
|
46 |
delivered and taken over as she is at the time of delivery, |
20 |
against all consequences of such claims to the extent it |
|
47 |
after which the Sellers shall have no responsibility for |
21 |
can be proved that the Sellers are responsible for such |
|
48 |
possible faults or deficiencies of any description. |
22 |
claims. Any taxes, notarial, consular and other charges |
|
49 |
The Buyers undertake to pay for the repatriation of the |
23 |
and expenses connected with the purchase and |
|
50 |
Master, officers and other personnel if appointed by the |
24 |
registration under Buyers’ flag, shall be for Buyers’ |
|
51 |
Sellers to the port where the Vessel entered the Bareboat |
25 |
account. Any taxes, consular and other charges and |
|
52 |
Charter as per Clause 3 (Part II) or to pay the equivalent |
26 |
expenses connected with closing of the Sellers’ register, |
|
53 |
cost for their journey to any other place. |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART V
PROVISIONS TO APPLY FOR VESSELS REGISTERED IN A BAREBOAT CHARTER REGISTRY
(Optional, only to apply if expressly agreed and stated in Box 43)
1 |
1. Definition |
|
17 |
3. Termination of Charter by Default |
2 |
For the purpose of this PART V, the following terms shall |
|
18 |
If the Vessel chartered under this Charter is registered |
3 |
have the meanings hereby assigned to them: |
|
19 |
in a Bareboat Charter Registry as stated in Box 44, and |
4 |
“The Bareboat Charter Registry” shall mean the registry |
|
20 |
if the Owners shall default in the payment of any amounts |
5 |
of the State whose flag the Vessel will fly and in which |
|
21 |
due under the mortgage(s) specified in Box 28, the |
6 |
the Charterers are registered as the bareboat charterers |
|
22 |
Charterers shall, if so required by the mortgagee, direct |
7 |
during the period of the Bareboat Charter. |
|
23 |
the Owners to re-register the Vessel in the Underlying |
8 |
“The Underlying Registry” shall mean the registry of the |
|
24 |
Registry as shown in Box 45. |
9 |
state in which the Owners of the Vessel are registered |
|
25 |
In the event of the Vessel being deleted from the |
10 |
as Owners and to which jurisdiction and control of the |
|
26 |
Bareboat Charter Registry as stated in Box 44, due to a |
11 |
Vessel will revert upon termination of the Bareboat |
|
27 |
default by the Owners in the payment of any amounts |
12 |
Charter Registration. |
|
28 |
due under the mortgage(s), the Charterers shall have the |
|
|
|
29 |
right to terminate this Charter forthwith and without |
13 |
2. Mortgage |
|
30 |
prejudice to any other claim they may have against the |
14 |
The Vessel chartered under this Charter is financed by |
|
31 |
Owners under this Charter. |
15 |
a mortgage and the provisions of Clause 12(b) (Part II) |
|
|
|
16 |
shall apply. |
|
|
|
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
EXECUTION VERSION
ADDITIONAL CLAUSES TO BARECON 2001
CLAUSE 32 – CHARTER PERIOD
32.1 |
The period of this Charter (the “Charter Period”) shall, subject to the terms of this Charter, continue for a period of seven (7) years starting from the Commencement Date. |
32.2 |
Notwithstanding the fact that the Charter Period shall commence on the Commencement Date, this Charter shall be: |
(a) |
in full force and effect; and |
(b) |
valid, binding and enforceable against the parties hereto, |
with effect from the date hereof until the end of the Charter Period (subject to the terms of this Charter).
CLAUSE 33 – CANCELLATION
33.1 |
If: |
(a) |
the Vessel is not delivered by the Charterers as sellers to the Owners as buyers under the MOA by the Cancelling Date (or such later date as the parties to the MOA may agree); |
(b) |
it becomes unlawful for the Charterers as sellers and the Owners as buyers to perform or comply with any or all of their obligations under the MOA; or |
(c) |
the MOA expires, is cancelled, terminated, rescinded or suspended or otherwise ceases to remain in full force and effect for any reason (in whole or in part), |
then this Charter shall immediately terminate and be cancelled (without prejudice to Clause 57 (Indemnities) and without the need for either the Owners or the Charterers to take any action whatsoever), provided that the Owners shall be entitled to retain all fees and expenses paid by the Charterers pursuant to Clause 44 (Fees and Expenses) (and without prejudice to Clause 44 (Fees and Expenses) and any clause of the MOA, if such fees have not been paid, the Charterers shall forthwith pay such fees and expenses to the Owners in accordance with Clause 44 (Fees and Expenses)) and such payment shall be irrevocable and unconditional and is acknowledged by the Charterers to be proportionate as to amount, having regard to the legitimate interest of the Owners, in protecting against the Owners’ risk of the Charterers failing to perform its obligations under this Charter. For the avoidance of doubt, the termination of the Charter shall not prejudice the operation of any provision of any Leasing Document which is expressed to survive the termination or cancellation of this Charter.
CLAUSE 34 – DELIVERY AND CHARTER OF VESSEL
34.1 |
This Charter is part of a transaction involving the sale, purchase and charter back of the Vessel and constitutes one of the Leasing Documents. |
34.2 |
The obligation of the Owners to charter the Vessel to the Charterers hereunder is subject to and conditional upon: |
(a) |
no Termination Event or Potential Termination Event having occurred on the date of this Charter and on the Commencement Date; |
(b) |
the representations and warranties contained in Clause 48 (Representations and Warranties) being true and correct on the date hereof and on the Commencement Date; |
(c) |
the Vessel being delivered to the Head Sellers pursuant to the Shipbuilding Contract; |
(d) |
the Vessel being delivered to the Charterers under the Head MOA; |
(e) |
the Vessel being delivered to the Owners pursuant to the MOA; |
(f) |
the Delivery occurring on or before the Cancelling Date; and |
(g) |
the Owners having received from the Charterers: |
(i) |
on or before the date falling one (1) Business Day prior to the Prepositioning Date (or such other period as the Owners may otherwise agree), the documents or evidence set out in Part A of Schedule 2 (Conditions Precedent) in form and substance satisfactory to them; and |
(ii) |
on the Commencement Date and prior to or simultaneously with the Owners executing a dated and timed copy of the protocol of delivery and acceptance evidencing delivery of the Vessel under the MOA and a dated and timed copy of the Acceptance Certificate, the documents or evidence set out in Part B of Schedule 2 (Conditions Precedent) in form and substance satisfactory to them, |
and if any of the documents listed in sub-paragraph (g) above are not in the English language then they shall be accompanied by an English translation where required by the Owners.
34.3 |
On delivery to and acceptance by the Owners (in their capacity as buyers) of the Vessel from the Charterers (in their capacity as sellers) under the MOA, the Vessel shall be deemed to have been delivered to, and accepted without reservation by, the Charterers under this Charter and the Charterers shall become and be entitled to the possession and use of the Vessel on and subject to the terms and conditions of this Charter on the same day as the delivery date of the Vessel under the MOA. |
34.4 |
On Delivery, as evidence of the commencement of the Charter Period, the Charterers shall sign and deliver to the Owners, the Acceptance Certificate. The Charterers shall be deemed to have accepted the Vessel under this Charter, and the commencement of the Charter Period having started, on Delivery even if, for whatever reason, the Acceptance Certificate is not signed. |
34.5 |
The Charterers shall not be entitled for any reason whatsoever to refuse to accept delivery of the Vessel under this Charter once the Vessel has been delivered to and accepted by the Owners (in their capacity as buyers) from the Charterers (in their capacity as sellers) under the MOA, and the Owners shall not be liable for any losses, costs or expenses whatsoever or howsoever arising including without limitation, any loss of profit or any loss or otherwise: |
(a) |
resulting directly or indirectly from any defect or alleged defect in the Vessel or any failure of the Vessel; or |
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(b) |
arising from any delay in the commencement of the Charter Period or any failure of the Charter Period to commence. |
34.6The Owners shall not be obliged to deliver the Vessel to the Charterers with any bunkers and unused lubricating oils and hydraulic oils and greases in storage tanks and unopened drums of the Vessel except for such items which are already on the Vessel on Delivery. The Owners shall not be responsible for the fitness, quality or quantity of any such bunkers and unused lubricating oils and hydraulic oils and greases and the Charterers shall make no claim against Owners in respect of the same.
34.7 |
The Charterers shall procure receipt by the Owners of the conditions subsequent set out in Part C of Schedule 2 in a form and substance satisfactory to the Owners within the time periods permitted therein. |
CLAUSE 35 – QUIET ENJOYMENT
35.1 |
Subject to the terms of any QEL and provided that: |
(a) |
the Charterers do not breach any term of this Charter or any other Leasing Document to which they are a party; and |
(b) |
no Termination Event or Total Loss has occurred, |
the Owners hereby agree not to disturb or interfere with the Charterers’ lawful use, possession and quiet enjoyment of the Vessel during the Charter Period.
CLAUSE 36 – CHARTERHIRE AND ADVANCE CHARTERHIRE
36.1 |
In consideration of the Owners agreeing to charter the Vessel to the Charterers under this Charter at the request of the Charterers, the Charterers hereby irrevocably and unconditionally agree to pay to the Owners the Charterhire, the Advance Charterhire and all other amounts payable under this Charter in accordance with the terms of this Charter. |
36.2 |
The Charterers shall pay to the Owners on the Commencement Date, an amount which is equal to the difference between the Purchase Price and the Owners’ Costs as of the Commencement Date (the “Advance Charterhire”). The Charterers shall be deemed to have paid the Advance Charterhire to the Owners on the Commencement Date by the Owners (as buyers under the MOA) setting off an amount equal to the Advance Charterhire against a corresponding amount of the Purchase Price payable by the Owners to the Charterers (as sellers) under the MOA. |
36.3 |
The Advance Charterhire shall not bear interest and shall be non-refundable. |
36.4 |
Following Delivery and commencing from the Commencement Date, the Charterers shall pay Charterhire in arrears in quarterly instalments on each Payment Date. Each instalment shall consist of: |
(a) |
a capital element of Charterhire (the “Fixed Charterhire”) which shall be in an amount equivalent to 1/28 of the difference between the Opening Capital Balance and the Expiry Owners’ Costs; and |
(b) |
a variable element of Charterhire (the “Variable Charterhire”) which shall be calculated by applying the aggregate of: |
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(i) |
the applicable Interest Rate for the relevant Hire Period; and |
(ii) |
the Margin, |
to the Owners’ Costs on the immediately preceding Payment Date (or, in the case of the First Payment Date only, on the Commencement Date) for the Hire Period ending on the relevant Payment Date by reference to the actual number of days elapsed.
36.5 |
Charterhire shall be payable in arrears on the following dates (each a “Payment Date”): |
(a) |
the first instalment of Charterhire shall be payable on the date falling three (3) months after the Commencement Date (the “First Payment Date”); and |
(b) |
each subsequent instalment of Charterhire (other than the last instalment of Charterhire) shall be payable quarterly thereafter, with the final instalment of Charterhire payable on the last day of the Charter Period, |
such that there are a total of twenty eight (28) Payment Dates during the Charter Period.
36.6 |
Payment of Charterhire on any Payment Date shall be made in same day available funds and received by the Owners by not later than 5.00 pm (Shanghai time). Any payment of Charterhire which is due to be made on a Payment Date which is not also a Business Day shall be made on the previous Business Day instead. |
36.7 |
Time of payment of the Charterhire and any other payments by the Charterers under this Charter shall be of the essence. |
36.8 |
All payments of the Charterhire and any other moneys payable hereunder shall be made in Dollars. |
36.9 |
All payments of the Charterhire and any other moneys payable hereunder shall be payable by the Charterers to the Owners’ designated bank account as the Owners may notify the Charterers in writing from time to time. |
36.10 |
Payment of the Charterhire and any other amounts under this Charter shall be at the Charterers’ risk until receipt by the Owners. |
36.11 |
The Vessel shall not at any time be deemed off-hire and the Charterers’ obligation to pay the Charterhire and any other amounts payable under this Charter (including but not limited to the Termination Sum or the Total Loss Termination Sum) in Dollars shall be absolute and unconditional under any and all circumstances and shall not be affected by any circumstances of any nature whatsoever including but not limited to: |
(a) |
(except in the case of the Advance Charterhire) any set off, counterclaim, recoupment, defence, claim or other right which the Charterers may at any time have against the Owners or any other person for any reason whatsoever including, without limitation, any act, omission or breach on the part of the Owners under this Charter or any other agreement at any time existing between the Owners and the Charterers; |
(b) |
any change, extension, indulgence or other act or omission in respect of any indebtedness or obligation of the Charterers, or any sale, exchange, release or surrender of, or other dealing in, any security for any such indebtedness or obligation; |
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(c) |
any title defect or encumbrance or any dispossession of the Vessel by title paramount or otherwise; |
(d) |
any defect in the seaworthiness, condition, value, design, merchantability, operation or fitness for use of the Vessel or the ineligibility of the Vessel for any particular trade or for registration or documentation under the laws of any relevant jurisdiction; |
(e) |
the Total Loss or any damage to or forfeiture or court marshall’s or other sale of the Vessel if the Termination Sum, Total Loss Termination Sum or any part thereof remains due; |
(f) |
any libel, attachment, levy, detention, sequestration or taking into custody of the Vessel or any restriction or prevention of or interference with or interruption or cessation in, the use or possession thereof by the Charterers; |
(g) |
any insolvency, bankruptcy, reorganization, arrangement, readjustment, dissolution, liquidation or similar proceedings by or against the Charterers and any other Obligors; |
(h) |
any invalidity, unenforceability, lack of due authorization or other defects, or any failure or delay in performing or complying with any of the terms and provisions of this Charter or any of the Leasing Documents by any party to this Charter or any other person; |
(i) |
any enforcement or attempted enforcement by the Owners of their rights under this Charter or any of the Leasing Documents executed or to be executed pursuant to this Charter; |
(j) |
any loss of use of the Vessel due to deficiency or default or strike of officers or crew, fire, breakdown, damage, accident, defective cargo or any other cause which would or might but for this provision have the effect of terminating or in any way affecting any obligation of the Charterers under this Charter; or |
(k) |
any prevention, delay, deviation or disruption in the use of the Vessel resulting from the wide outbreak of any viruses (including the 2019 novel coronavirus), including but not limited to those caused by: |
(i) |
closure of ports; |
(ii) |
prohibitions or restrictions against the Vessel calling at or passing through certain ports; |
(iii) |
restriction in the movement of personnel and/or shortage of labour affecting the operation of the Vessel or the operation of the ports (including stevedoring operations); |
(iv) |
quarantine regulations affecting the Vessel, its cargo, the crew members or relevant port personnel; |
(v) |
fumigation or cleaning of the Vessel; or |
(vi) |
any claims raised by any sub-charterer or manager of the Vessel that a force majeure event or termination event (or any other analogous event howsoever called) has occurred under the relevant charter agreement or management agreement (as the case may be) of the Vessel as a result of the outbreak of such viruses. |
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36.12 |
All stamp duty, value added tax (for the avoidance of doubt, including without limitation, goods and services tax), withholding or other taxes and import and export duties and all other similar types of charges (for the avoidance of doubt any Owner’s income tax liabilities) which may be levied or assessed on or in connection with: |
(a) |
the operation of this Charter in respect of the hire and all other payments to be made pursuant to this Charter and the remittance thereof to the Owners; and |
(b) |
the import, export, purchase, delivery and re-delivery of the Vessel, |
shall be borne by the Charterers. The Charterers shall pay, if applicable, value added tax and other similar tax levied on any Charterhire and other payments payable under this Charter by addition to, and at the time of payment of, such amounts.
CLAUSE 37 – CHANGES TO INTEREST RATE, DEFAULT INTEREST
37.1 |
If, in relation to any determination of the Interest Rate prior to a Screen Rate Replacement Event: |
(a) |
the Owners determine (which determination shall be conclusive and binding) that by reason of circumstances affecting the Relevant Interbank Market generally, adequate and fair means do not or will not exist for ascertaining LIBOR at the beginning of that Hire Period or the same does not reflect the cost of funding of the Owners; and |
(b) |
the Owners determine (which determination shall be conclusive and binding) that by reason of circumstances affecting the Relevant Interbank Market generally, deposits in Dollars in the required amount for the 3-month period commencing on the first day of that Hire Period are not available to it in the Relevant Interbank Market or from whatever sources it may select to obtain funds for that Hire Period, |
the Owners shall promptly notify the Charterers accordingly.
37.2 |
Immediately following the notification referred to in Clause 37.1 above, the Owners and the Charterers, shall negotiate in good faith with a view to agreeing upon a substitute basis for determining the Interest Rate for that Hire Period. |
37.3 |
If a substitute basis is not so agreed pursuant to Clause 37.2 above or after the occurrence of a Screen Rate Replacement Event but prior to the making of any necessary amendment or waiver in accordance with Clause 37.4 below, the Interest Rate shall be the rate per annum equal to the cost certified by the Owners (expressed as an annual rate of interest) of funding the Owners’ Costs during the relevant Hire Period (as reasonably determined by the Owners). |
37.4 |
On or at any time after the occurrence of a Screen Rate Replacement Event, the Owners are entitled to make any amendment or waiver to the terms of the Leasing Documents (at the Charterers’ cost) which relates to: |
(a) |
providing for the use of a Replacement Benchmark in relation to Dollars in place of (or in addition to) that Screen Rate; and |
(b)
(i) |
aligning any provision of any Leasing Document to the use of that Replacement Benchmark; |
6
(ii) |
enabling that Replacement Benchmark to be used for the calculation of the Interest Rate under this Charter (including, without limitation, any consequential changes required to enable that Replacement Benchmark to be used for the purposes of this Charter); |
(iii) |
implementing market conventions applicable to that Replacement Benchmark; |
(iv) |
providing for appropriate fallback (and market disruption) provisions for that Replacement Benchmark; or |
(v) |
subject to Clause 37.5 below, adjusting the pricing to reduce or eliminate, to the extent reasonably practicable, any transfer of economic value from one Party to another as a result of the application of that Replacement Benchmark (and if any adjustment or method for calculating any adjustment has been formally designated, nominated or recommended by the Relevant Nominating Body, the adjustment shall be determined on the basis of that designation, nomination or recommendation), |
and pending any such amendment or waiver and the Replacement Benchmark being utilised under the Leasing Documents to calculate the Interest rate, Clause 37.3 shall apply to the calculation of the Interest Rate.
37.5 |
Upon the Owners’ written notification to the Charterers of the Owners’ intention to negotiate a Replacement Benchmark, the Owners and the Charterers shall enter into negotiations in good faith with a view to agreeing the use of a Replacement Benchmark in relation to dollars in place of that Screen Rate. Such negotiation shall be carried out by each Party in consideration of the then prevailing market practice (including without limitation, SOFR compounded in arrears), factoring into account the economics of the transaction contemplated therein and in particular the Margin initially agreed between Parties. It is hereby agreed that, if the use of a Replacement Benchmark in relation to dollars is not so agreed within ninety (90) days of the Owner’s written notification to the Charterers and the Replacement Benchmark proposed by and acceptable to the Owners is not: |
(a) |
generally accepted in the international or any relevant domestic syndicated loan markets as the appropriate successor to the Screen Rate which is subject to replacement at any relevant time; and/or |
(b) |
SOFR; |
and the rates offered by such Replacement Benchmark are substantially higher than those referred to in paragraphs (a) and (b) of this Clause 37.5, then the Charterers shall have the option to purchase back the Vessel from the Owners by paying the Mandatory Sale Price subject to the Owners receiving from the Charterers a notice in writing not earlier than ninety (90) days of the intended Mandatory Sale Date, and this Charter shall terminate in accordance with the procedures set out in Clause 55A (Mandatory Sale).
37.6 |
If the Charterers fail to make any payment due under this Charter on the due date, they shall pay additional interest on such late payment at a rate which is equal to two per cent. (2%) per annum above the applicable Interest Rate for the relevant Hire Period and the Margin which shall apply prior to, during or following Delivery and shall accrue on a daily basis from the date on which such payment became due up to and excluding the date of payment thereof, and the Charterers and the Owners agree that such default rate is proportionate as to amount, having |
7
regard to the legitimate interest of the Owners, in protecting against the Owners’ risk of the Charterers failing to perform its obligations under this Charter.
37.7 |
All interest (including default interest) and any other payments under this Charter which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a three hundred and sixty (360) days’ year. |
CLAUSE 38 – POSSESSION OF VESSEL
38.1 |
The Charterers shall not, without the prior written consent of the Owners, assign, mortgage or pledge the Vessel or any interest therein and shall not permit the creation or existence of any Security Interest thereon (including for any monies paid in advance and not earned, and for any claims for damages arising from any breach by the Owners of this Charter and other amounts due to the Charterers under this Charter) except for the Permitted Security Interests. |
38.2 |
The Charterers shall promptly notify any party (including without limitation, any sub-charterer) (as the Owners may request) in writing that the Vessel is the property of the Owners and the Charterers shall provide the Owners with a copy of such written notification and evidence that such party has received such written notification. |
38.3 |
If the Vessel is arrested, seized, impounded, forfeited, detained or taken out of their possession or control (whether or not pursuant to any distress, execution or other legal process), the Charterers shall procure the immediate release of the Vessel (whether by providing bail or procuring the provision of security or otherwise do such lawful things as the circumstances may require) and shall immediately notify the Owners of such event and shall indemnify the Owners against all losses, costs or charges incurred by the Owners by reason thereof in re-taking possession or otherwise in re-acquiring the Vessel. |
38.4 |
The Charterers shall pay and discharge or cause any sub-charterer of the Vessel to pay and discharge all obligations and liabilities whatsoever which have given or may give rise to liens on or claims enforceable against the Vessel. The Charterers shall take all reasonable steps to prevent (and shall procure that a sub-charterer shall take all reasonable steps to prevent) an arrest of the Vessel. |
CLAUSE 39 – INSURANCE
39.1 |
The Charterers shall procure that insurances for the Vessel are effected: |
(a) |
in Dollars; |
(b) |
in the case of fire and usual hull and machinery, marine risks and war risks (including blocking and trapping), on an agreed value basis of at least the higher of (i) one hundred per cent (100%) of then applicable Fair Market Value of the Vessel and (ii) one hundred and twenty per cent (120%) of the then prevailing Owners’ Costs; |
(c) |
in the case of oil pollution liability risks, for an aggregate amount equal to the higher of (i) US$1,000,000,000 or (ii) the highest level of cover from time to time available under basic protection and indemnity club entry and in the international marine insurance market; |
(d) |
in the case of protection and indemnity risks, in respect of the full tonnage of the Vessel and with a protection and indemnity club which is a member of the International Group of Protection and Indemnity Clubs; |
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(e) |
through brokers approved by the Owners and with first class international insurers and/or underwriters acceptable to the Owners and having a Standard & Poor’s rating of BBB+ or above, a Moody’s rating of A or above or an AM Best rating of A- or above or otherwise acceptable to the Owners; and |
(f) |
otherwise on terms and in form acceptable to the Owners. |
39.2 |
In addition to the terms set out in Clause 13(a) (Insurance and Repairs), the Charterers shall procure that the Obligatory Insurances shall: |
(a) |
subject always to paragraph (b), name the Owners, the Charterers and the Approved Technical Manager as the only named assureds unless the interest of every other named assured or co-assured is limited: |
(i) |
in respect of any Obligatory Insurances for hull and machinery and war risks; |
(A) |
to any provable out-of-pocket expenses that they have incurred and which form part of any recoverable claim on underwriters; and |
(B) |
to any third party liability claims where cover for such claims is provided by the policy (and then only in respect of discharge of any claims made against them); and |
(ii) |
in respect of any Obligatory Insurances for protection and indemnity risks, to any recoveries they are entitled to make by way of reimbursement following discharge of any third party liability claims made specifically against them, |
and every other named assured or co-assured has undertaken in writing to the Owners or the Owners’ Financiers (if any) (in such form as they may require) that any deductible shall be apportioned between the Charterers and every other named assured or co-assured (save for the Owners or the Owners’ Financiers (if any)) in proportion to the gross claims made by or paid to each of them and that they shall do all things necessary and provide all documents, evidence and information to enable the Owners and the Owners’ Financiers (if any) in accordance with the terms of the loss payable clause, to collect or recover any moneys which at any time become payable in respect of the Obligatory Insurances;
(b) |
whenever the Owners require in respect of any Owners’ Financiers: |
(i) |
in respect of fire and other usual marine risks and war risks, name (or be amended to name) the same as additional named assured for their rights and interests, warranted no operational interest and with full waiver of rights of subrogation against such Owners’ Financier, but without such financiers thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance; |
(ii) |
in relation to protection and indemnity risks, name (or be amended to name) the same as additional insured or co-assured for their rights and interests to the extent permissible under the relevant protection and indemnity club rules; and |
(iii) |
name the Owners’ Financiers (if any) and the Owners as respectively the first ranking loss payee and the second ranking loss payee (and in the absence of any Owners’ Financiers, the Owners as first ranking loss payee) in accordance with the terms of the relevant loss payable clauses approved by the Owners’ Financiers and the Owners with |
9
such directions for payment in accordance with the terms of such relevant loss payable clause, as the Owners and the Owners’ Financiers (if any) may specify;
(c) |
provide that all payments by or on behalf of the insurers under the Obligatory Insurances to the Owners and/or the Owners’ Financiers (as applicable) shall be made without set-off, counterclaim, deduction or condition whatsoever; |
(d) |
provide that such Obligatory Insurances shall be primary without right of contribution from other insurances which may be carried by the Owners or the Owners’ Financiers (if any); |
(e) |
provide that the Owners and/or the Owners’ Financiers (if any) may make proof of loss if the Charterers fail to do so; and |
(f) |
provide that if any Obligatory Insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of the Owners and/or the Owners’ Financiers (if any), or if any Obligatory Insurance is allowed to lapse for non-payment of premium, such cancellation, change or lapse shall not be effective with respect to the Owners and/or the Owners’ Financiers (if any) for thirty (30) days after receipt by the Owners and/or the Owners’ Financiers (if any) of prior written notice from the insurers of such cancellation, change or lapse. |
39.3 |
The Charterers shall: |
(a) |
at least fourteen (14) days prior to Delivery (or such shorter period agreed by the parties), notify in writing the Owners of the terms and conditions of all Insurances; |
(b) |
at least fourteen (14) days before the expiry of any Obligatory Insurance or otherwise before the change of appointment of any brokers (or other insurers) and any protection and indemnity or war risks association through which Obligatory Insurances are taken from time to time pursuant to this Clause 39 (Insurance), notify the Owners of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom the Charterers propose to renew or obtain that Obligatory Insurance and of the proposed terms of such renewed or new insurance cover and obtain the Owners’ approval to such matters; |
(c) |
at least seven (7) days before the expiry of any Obligatory Insurance, procure that such Obligatory Insurance is renewed or to be renewed on its expiry date in accordance with the provisions of this Charter; |
(d) |
procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal or the effective date of the new insurance and protection and indemnity cover notify the Owners in writing of the terms and conditions of the renewal; and |
(e) |
as soon as practicable after the expiry of any Obligatory Insurance and within thirty (30) days after such expiry, deliver to the Owners a letter of undertaking as required by this Charter in respect of such Insurances for the Vessel as renewed pursuant to Clause 39.3 together with copies of the relevant policies or cover notes or entry certificates duly endorsed with the interest of the Owners and/or the Owners’ Financiers (if any). |
39.4 |
The Charterers shall ensure that all insurance companies and/or underwriters, and/or insurance brokers (if any) provide the Owners with copies (or upon the Owners’ request, originals) of policies, cover notes and certificates of entry relating to the Obligatory Insurances |
10
which they are to effect or renew and letter or letters of undertaking in a form required by the Owners or the Owners’ Financiers (if any) and including undertakings by the insurance companies and/or underwriters that:
(a) |
they will have endorsed on each policy, immediately upon issuance, a loss payable clause and a notice of assignment complying with the provisions of this Charter and the Financial Instruments; |
(b) |
they will hold the benefit of such policies and such insurances, to the order of the Owners and/or the Owners’ Financiers (if any) and/or such other party in accordance with the said loss payable clause; |
(c) |
they will advise the Owners and the Owners’ Financiers (if any) promptly of any material change to the terms of the Obligatory Insurances of which they are aware; |
(d) |
they will notify the Owners and the Owners’ Financiers (if any) not less than fourteen (14) days before the expiry of the Obligatory Insurances, in the event of their not having received notice of renewal instructions from the Charterers and, in the event of their receiving instructions to renew, they will promptly notify the Owners and the Owners’ Financiers (if any) of the terms of the instructions; and |
(e) |
if any of the Obligatory Insurances form part of any fleet cover, the Charterers shall procure that the insurance broker(s), or leading insurer, as the case may be, undertakes to the Owners and the Owners’ Financiers (if any) that such insurance broker or insurer will not set off against any sum recoverable in respect of a claim relating to the Vessel under such Obligatory Insurances any premiums due in respect of any other vessel under any fleet cover of which the Vessel forms a part or any premium due for other insurances, they waive any lien on the policies, or any sums received under them, which they might have in respect of such premiums, and they will not cancel such Obligatory Insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of the Vessel forthwith upon being so requested by the Owners or the Owners’ Financiers (if any) and where practicable. |
39.5 |
The Charterers shall ensure that any protection and indemnity and/or war risks associations in which the Vessel is entered provides the Owners and the Owners’ Financiers (if any) with: |
(a) |
a copy of the certificate of entry for the Vessel as soon as such certificate of entry is issued; |
(b) |
a letter or letters of undertaking in such form as may be required by the Owners or the Owners’ Financiers (if any) or in such association’s standard form; and |
(c) |
a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to the Vessel. |
39.6 |
The Charterers shall ensure that all policies relating to the Obligatory Insurances are deposited with the approved brokers (if any) through which the insurances are effected or renewed. |
39.7 |
The Charterers shall procure that all premiums or other sums payable in respect of the Obligatory Insurances are punctually paid and produce all relevant receipts when so required by the Owners. |
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39.8 |
The Charterers shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect. |
39.9 |
The Charterers shall neither do nor omit to do (nor permit to be done or not to be done) any act or thing which would or might render any Obligatory Insurance invalid, void, voidable or unenforceable or render any sum payable under an Obligatory Insurance repayable in whole or in part and, in particular: |
(a) |
the Charterers shall procure that all necessary action is taken and all requirements are complied with which may from time to time be applicable to the Obligatory Insurances, and (without limiting the obligations contained in this Clause) ensure that the Obligatory Insurances are not made subject to any exclusions or qualifications to which the Owners have not given their prior approval (unless such exclusions or qualifications are made in accordance with the rules of a protection and indemnity association which is a member of the International Group of Protection and Indemnity Clubs); |
(b) |
the Charterers shall not make or permit any changes relating to the classification or the classification society of the Vessel or, subject to procuring the provision of a replacement manager’s undertaking in substantially the same form as the Manager’s Undertaking, any changes to the manager or operator of the Vessel unless such changes have, if required, first been approved by the underwriters of the Obligatory Insurances and the Owners or the Owners’ Financiers (if any); |
(c) |
the Charterers shall procure that all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Vessel is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation) are made and the Charterers shall promptly provide the Owners with copies of such declarations and a copy of its valid certificate of financial responsibility; and |
(d) |
the Charterers shall not employ the Vessel, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the Obligatory Insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify. |
39.10 |
The Charterers shall not make or agree to any material alteration to the terms of any Obligatory Insurance nor waive any right relating to any Obligatory Insurance without the prior written consent of the Owners. |
39.11 |
The Charterers shall not settle, compromise or abandon any claim under any Obligatory Insurance for Total Loss or for a Major Casualty, and shall do all things necessary and provide all documents, evidence and information to enable the Owners to collect or recover any moneys which at any time become payable in respect of the Obligatory Insurances. |
39.12 |
The Charterers shall provide the Owners upon written request, copies of all material communications between the Charterers and: |
(a) |
the approved brokers; |
(b) |
the approved protection and indemnity and/or war risks associations; and |
12
(c) |
the approved insurers and/or underwriters, |
which relate directly or indirectly to:
(i) |
the Charterers’ obligations relating to the Obligatory Insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and |
(ii) |
any credit arrangements made between the Charterers and any of the persons referred to in paragraphs (a) or (b) above relating wholly or partly to the effecting or maintenance of the Obligatory Insurances; and |
(iii) |
any communication with any party involved in case of a claim under any of the Vessel’s insurances. |
39.13 |
The Charterers shall promptly provide the Owners (or any persons which they may designate) with any information which the Owners may request for the purpose of: |
(a) |
obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the Insurances (including but not limited to the report obtained under Clause 39.16); or |
(b) |
effecting, maintaining or renewing any such insurances as are referred to in Clause 13(a) (Insurance and Repairs) or this Clause 39 (Insurance) or dealing with or considering any matters relating to any such insurances; |
39.14 |
The Charterers shall upon demand fully indemnify the Owners (including if requested by the Owners, make direct payment to the relevant insurer or broker for the same) in respect of all premiums and other expenses which are incurred by: |
(a) |
the Owners in connection with or with a view to effecting, maintaining or renewing an innocent owners interest insurance and an innocent owners additional perils insurance or any similar protective shipowner insurance that is taken out in respect of the Vessel; and/or |
(b) |
the Owners’ Financiers (if any) in connection with or with a view to effecting, maintaining or renewing a mortgagee’s interest insurance, a mortgagee’s additional perils insurance, all protection and indemnity insurance that is taken out in respect of the Vessel, |
in each case as referred to in paragraphs (a) and (b) above, in an amount not exceeding one hundred and twenty per cent (120%) of the Owners’ Costs from time to time and on such other terms, through such insurers and generally in such manner as the Owners or the Owners’ Financiers (as the case may be) may from time to time consider appropriate.
39.15 |
The Charterers shall be solely responsible for and indemnify the Owners in respect of all loss or damage to the Vessel (insofar as the Owners shall not be reimbursed by the proceeds of any insurance in respect thereof) however caused occurring at any time or times before physical possession thereof is retaken by the Owners, with only reasonable wear and tear to the Vessel excepted. |
39.16 |
The Charterers shall reimburse or indemnify the Owners for any expenses incurred or to be incurred by the Owners in obtaining a detailed report signed by an independent firm of marine insurance brokers approved by the Owners dealing with the Obligatory Insurances and stating the opinion of such firm as to the adequacy of the Obligatory Insurances: |
13
(a) |
when an agreed form of such detailed report satisfactory to the Owners is obtained as a condition precedent requirement under Part A of Schedule 2 (Conditions Precedent) of this Charter; |
(b) |
when the Owners procure the issuance of such detailed report no more than once every calendar year, unless a Termination Event has occurred in which case such reports may be procured at the Charterer’s cost at any such time; and |
(c) |
further from time to time upon the Owners’ demand where, in the Owners’ opinion, at any time during the Charter Period there has been a material change in the terms of the Insurances and/or a change in the circumstances which would materially adversely affect the adequacy of the Obligatory Insurances. |
39.17 |
The Charterers shall: |
(a) |
keep the Vessel insured at their expense against such other risks (not including loss of hire or earnings risks) which the Owners and the Owners’ Financiers (if any) consider reasonable for a prudent shipowner or operator to insure against for trading, management, operational and/or safety purposes at the relevant time (as notified by the Owners) and which risks are, at that time, generally insured against as market practice by owners or operators of vessels similar to the Vessel and having regard to the availability of such cover in the insurance market at that time; and |
(b) |
upon demand fully indemnify the Owners in respect of all premiums and other expenses incurred by the Owners in respect of any other insurances which the Owners deem necessary and takes out in respect of the Vessel. |
CLAUSE 40 – WARRANTIES RELATING TO VESSEL
40.1 |
It is expressly agreed and acknowledged that the Owners are not the manufacturer or original supplier of the Vessel but that the Owners (in their capacity as buyers) have purchased the Vessel from the Charterers (in their capacity as sellers) pursuant to the MOA at the request of the Charterers, for the purpose of then chartering the Vessel to the Charterers hereunder and that no condition, term, warranty or representation of any kind is or has been given to the Charterers by or on behalf of the Owners in respect of the Vessel (or any part thereof). |
40.2 |
All conditions, terms or warranties express or implied by the law relating to the specifications, quality, description, merchantability or fitness for any purpose of the Vessel (or any part thereof) or otherwise are hereby expressly excluded. |
40.3 |
The Charterers agree and acknowledge that the Owners shall not be liable for any claim, loss, damage, expense or other liability of any kind or nature caused directly or indirectly by the Vessel or by any inadequacy thereof or the use or performance thereof or any repairs thereto or servicing thereof and the Charterers shall not by reason thereof be released from any liability to pay any Charterhire or other payment due under this Charter. |
CLAUSE 41 – TERMINATION AND REDELIVERY
41.1 |
Upon termination of the leasing of the Vessel under this Charter pursuant to Clause 47.2, the Charterers shall be obliged to pay the Owners the Termination Sum on the Termination Date and it is hereby agreed by the parties hereto that: |
14
(a) |
without prejudice to Clause 42.2, the obligation to pay the Termination Sum is a continuing obligation and shall survive the termination of the leasing of the Vessel under this Charter and shall continue in full force and effect until irrevocably and unconditionally paid in full; |
(b) |
payment of the Termination Sum is deemed to be proportionate as to amount, having regard to the legitimate interest of the Owners, in protecting against the Owners’ risk of the Charterers failing to perform its obligations under this Charter; and |
(c) |
the Termination Sum shall, depending on the nature of the Termination Event(s) on the basis of which the Owners serve a Termination Notice, be either an obligation to pay damages following acceptance by the Owners of a breach of condition by the Charterers or an obligation to pay an agreed sum in specified circumstances which do not involve a breach of contract by the Charterers. |
41.2 |
If the Charterers fail to make any payment of the Termination Sum on the Termination Date 37.6 shall apply and the Owners shall be entitled to exercise their rights under Clause 42 (Sale of Vessel by the Owners in the event of Non-Payment of Termination Sum). |
41.3 |
Concurrently with the unconditional and irrevocable payment of the Termination Sum in full pursuant to the terms of this Charter, this Charter shall terminate and the Owners shall (save in the event of Total Loss or in the event that the Vessel has been sold or contracted to be sold pursuant to Clause 42 (Sale of Vessel by the Owners in the event of Non-Payment of Termination Sum)), at the cost of the Charterers, transfer the legal and beneficial ownership of the Vessel on an “as is where is” basis to the Charterers or their nominees free from any registered mortgages, encumbrances, liens, debts or claims incurred or permitted by the Owners (save for those liens, encumbrances and debts incurred by the Charterers or arising out of or in connection with this Charter), and shall execute a bill of sale and a protocol of delivery and acceptance evidencing the same and such sale shall be completed otherwise in accordance with Clause 56.1(a) and 56.1(b). |
41.4 |
The Charterers hereby undertake to indemnify the Owners against any claims incurred in relation to the Vessel prior to such transfer of ownership. Any taxes, notarial, consular and other costs, charges and expenses connected with closing of the Owners’ register shall be for the Charterers’ account. |
41.5 |
On natural expiration of this Charter, unless the Purchase Option Price or the Mandatory Sale Price is paid by the Charterers in accordance with Clause 56 (Sale of the Vessel), the Charterers shall re-deliver the Vessel to the Owners in accordance with Clause 41.6 and shall ensure that they have fulfilled their obligations under this Charter and made payment of all Charterhire and all other moneys pursuant to the terms of this Charter. In such case, the Charterers shall give the Owners not less than 30/20/10/5 running days’ preliminary notice of expected date and range of ports or places of redelivery not less than 5/3/2/1/ running days’ definite notice of expected date and port or place of redelivery. Any changes thereafter in the Vessel’s position shall be notified immediately to the Owners. |
41.6 |
If the Charterers are required to redeliver the Vessel to the Owners pursuant to the terms of this Charter, the Vessel shall be redelivered and taken over safely afloat at a safe and accessible berth or anchorage in such location as the Owners may reasonably require (which, for the avoidance of doubt, shall exclude any war listed area declared by the Joint War Committee). The Charterers shall ensure that, at the time of redelivery to the Owners, the Vessel: |
15
(a) |
be in an equivalent class as she was as at the Commencement Date and without any recommendations or conditions and with valid certificates for not less than six (6) months and free of average damage affecting the Vessel’s classification and in the same or as good structure, state, condition and classification as that in which she was deemed on the Commencement Date, fair wear and tear not affecting the Vessel’s classification excepted; |
(b) |
has passed her 5-year special survey (if applicable), and subsequent second intermediate surveys and drydock at the Charterers’ time and expense without any overdue recommendations or conditions to the satisfaction of the Approved Classification Society; |
(c) |
‘has her survey cycles up-to-date and trading and class certificate valid for at least the number of months agreed in Box 17; |
(d) |
be re-delivered to the Owners together with all spare parts and spare equipment as were on board at the time of Delivery, and any such spare parts and spare equipment on board at the time of re-delivery shall be taken over by the Owners free of charge; |
(e) |
be free of any cargo and Security Interest (save for the Security Interests granted pursuant to the Financial Instruments, if any) subject to the terms of any sub-charter which the Owners have approved pursuant to the terms of this Charter; |
(f) |
be free of any crew and officers unless otherwise instructed by the Owners; |
(g) |
be free of any charter or other employment (unless the Owners wish to retain the continuance of any prevailing charter or as otherwise agreed by the Owners in their absolute discretion or unless such sub-charter has been approved by the Owners pursuant to the terms of this Charter); and |
(h) |
have such amount of bunkers on board the Vessel as would be sufficient to enable the Vessel to sail to the nearest bunker port in compliance with all bunkering fuel content regulations then applicable in such place of redelivery. |
41.7 |
The Charterers warrant that they will not permit (or request any sub-charterer not to) the Vessel to commence a voyage (including any preceding ballast voyage) which cannot reasonably be expected to be completed in time to allow redelivery of the Vessel within any time period required by this Clause 41 (Termination and Redelivery). Notwithstanding the above, should the Charterers fail to redeliver the Vessel within any time period required by this Clause 41 (Termination and Redelivery), the Charterers shall pay the daily equivalent to the rate of Charterhire plus ten per cent. (10%) or to the market rate, whichever is the higher, for the number of days by which the Charter Period is exceeded. |
41.8 |
If the Charterers are required to redeliver the Vessel to the Owners pursuant to the terms of this Charter other than pursuant to Clause 42.1(a), the Owners and Charterers shall mutually appoint a surveyor (the “Joint Surveyor”) for the purpose of determining and agreeing in writing the condition of the Vessel at the time of such redelivery. The Charterers shall provide the Joint Surveyor with all such facilities and access to the Vessel as may be required to enable the Joint Surveyor to conduct its survey of the Vessel and shall take all such actions as may be reasonably recommended by the Joint Surveyor to ensure that the Vessel shall be redelivered in accordance with Clause 41.6. |
16
41.9 |
If the Charterers are required to redeliver the Vessel to the Owners pursuant to Clause 42.1(a), the Owners shall appoint surveyors (the “Owners’ Surveyor”) for the purpose of determining and agreeing in writing the condition of the Vessel at the time of such redelivery. The Charterers shall provide the Owners’ Surveyor with all such facilities and access to the Vessel as may be required to enable the Owners’ Surveyor to conduct its survey of the Vessel and shall take all such actions as may be reasonably recommended by the Owners’ Surveyor to ensure that the Vessel shall be redelivered in accordance with Clause 41.6. |
41.10 |
The Owners shall not be obliged to accept redelivery of the Vessel until the Owners are reasonably satisfied that all conditions for the redelivery of the Vessel under this Charter (including without limitation, Clause 41.6) are met, and the Vessel shall (if the redelivery is at the end of the Charter Period) continue to be on-hire under the terms of this Charter until such redelivery. The Owners reserve all rights to recover from the Charterers any costs, expense and/or liabilities incurred or suffered by them (including without limitation, the costs of any repairs which may be required to restore the Vessel to the condition required by Clause 41.6 as a result of the Vessel not being redelivered in accordance with the terms of this Charter. |
41.11 |
The Owners shall, at the time of the redelivery of the Vessel, take over all bunkers, lubricating oil, unbroached provisions, paints, ropes, other consumable stores and spare parts in the Vessel at no cost to the Owners. |
CLAUSE 42 – SALE OF VESSEL BY THE OWNERS IN THE EVENT OF NON-PAYMENT OF TERMINATION SUM
42.1 |
The Charterers agree that should the Termination Sum not be paid on the Termination Date: |
(a) |
save as required to comply with this Clause 42.1, the Charterers’ right to possess and operate the Vessel shall immediately cease and (without in any way affecting the Charterers’ obligation to pay the Charterer the Termination Sum and comply with its other obligations under this Charter) the Charterers shall hold the Vessel as gratuitous bailee only to the Owners, the Charterers shall procure that the master and crew follow the orders and directions of the Owners and the Charterers shall, upon the Owners’ request (at Owners’ sole discretion), be obliged to immediately (and at the Charterers’ own cost) redeliver the Vessel to the Owners at such ready and nearest safe port or location as the Owners may require and for the avoidance of doubt, any such redelivery shall not extinguish the Owners’ right to recover the Termination Sum from the Charterers under this Charter; |
(b) |
the Owners shall be entitled (at Owners’ sole discretion) to operate the Vessel as they may require and may create whatsoever interests thereon, including without limitation charterparties or any other form of employment contracts provided that the Earnings of the Vessel during such period less its operational expenses (the “Net Trading Proceeds”) shall be applied against the Termination Sum and any other amounts payable under the Leasing Documents pursuant to Clause 64 (General Application of Proceeds) provided, that if such use of the Vessel results in the Owners suffering a loss then such losses shall be included in the indemnities contained in Clause 57 (Indemnities) and be added to the Termination Sum; and |
(c) |
the Owners shall be entitled (at Owners’ sole discretion) to immediately thereafter sell the Vessel to any person on such terms as they deem fit, save that if required by the Charterers or the Guarantor and if agreed by the Owners, the Charterers or the Guarantor may within such reasonable time as specified by the Owners (the “Nomination Period”) first nominate or |
17
identify a purchaser for the Vessel (a “Nominated Purchaser”) and the Owners may sell the Vessel to such Nominated Purchaser subject to all the following conditions being satisfied:
(i)the Nominated Purchaser is acceptable to the Owners; and
(ii) |
the price to be paid by the Nominated Purchaser (after deducting any commissions, taxes and other costs of sale) is equal to or more than the applicable Termination Sum (unless otherwise agreed by the Owners in their absolute discretion) unless the shortfall is paid by any Obligor or member of the Group on or before such sale, |
and any net sale proceeds (after deducting all fees, taxes, disbursements and any other costs and expenses incurred by the Owners in connection with such sale) (the “Net Sales Proceeds”) derived from any such sale to a Nominated Purchaser or any other person shall be applied towards reduction of the Termination Sum in accordance with Clause 64 (General Application of Proceeds). If the Net Sales Proceeds are not sufficient to settle the Termination Sum in full, the Charterers shall remain liable to pay the shortfall and default interest shall continue to accrue on the unpaid portion of the Termination Sum in accordance with Clause 37.6. The above is without prejudice to all of the Owners’ rights under the Leasing Documents (including to sell the Vessel to any person they deem fit) should there be no agreement as to the Nominated Purchaser.
42.2 |
Notwithstanding Clause 42.1, the Owners may, by written notice to the Charterers at any time after the expiry of the Nomination Period (if applicable pursuant to Clause 42.1(c) above), elect to retain the Vessel instead of selling the Vessel under Clause 42.1(c) above (with such option to elect to retain the Vessel to take effect from such date as they may nominate after the expiry of the Nomination Period Period (if applicable pursuant to Clause 42.1(c) above) (regardless of date of the notice)), and in doing so, the Owners shall first obtain the Fair Market Value of the Vessel (after deducting any commissions, taxes and costs which would be likely to be incurred in connection with a sale of the Vessel) not later than ten (10) days after the date of such nomination and if the Fair Market Value (less such deductions) of the Vessel is less than the Termination Sum as of the date of the determination of the Fair Market Value, the Charterers shall immediately pay the difference to the Owners upon the Owners’ demand. If the Fair Market Value of the Vessel (subject to the aforesaid deductions) exceeds the Termination Sum as at such date, the Owners shall within thirty (30) days (of the date of the notice) pay the difference to the Charterers. |
CLAUSE 43 – TOTAL LOSS
43.1 |
Throughout the Charter Period, the Charterer shall bear the full risk of any Total Loss of or any other damage to the Vessel howsoever arising. If the Vessel becomes a Total Loss after Delivery, the Charterer shall, subject to Clause 43.2, pay the Total Loss Termination Sum to the Owners on the Total Loss Payment Date. Upon such receipt by the Owners of the Total Loss Termination Sum, this Charter shall terminate (without prejudice to any provision of this Charter expressed to survive termination) but until such receipt, the Charterers shall remain liable to make all payments of Charterhire and all other amounts to the Owners under this Charter, notwithstanding that the Vessel has become a Total Loss. |
43.2 |
Any Total Loss Proceeds unconditionally received by the Owners (or the Owners’ Financiers in accordance with the terms of the relevant loss payable clause) shall be applied in accordance with Clause 64 (General Application of Proceeds) and shall satisfy the obligation of the Charterers to pay the Total Loss Termination Sum to the extent received by the Owners or the |
18
Owners’ Financiers in accordance with the terms of the relevant loss payable clause). The obligation of the Charterers to pay the Total Loss Termination Sum shall remain unaffected and exist regardless of whether any of the insurers have agreed or refused to meet or has disputed in good faith, the claim for Total Loss.
43.3 |
If the Total Loss Proceeds unconditionally received by the Owners or the Owners’ Financiers in accordance with the terms of the relevant loss payable clause) are less than the Total Loss Termination Sum, the Charterers shall pay such shortfall to the Owner on the Total Loss Payment Date. |
43.4 |
The Owners shall have no obligation to supply to the Charterers with a replacement vessel following the occurrence of a Total Loss. |
CLAUSE 44 – FEES AND EXPENSES
44.1 |
The Charterers shall pay to the Owners a non-refundable arrangement fee (the “Arrangement Fee”) in the amount and at the times agreed in the Fee Letter. |
44.2 |
All costs and expenses including, but not limited to documented legal costs, expenses and other disbursements reasonably incurred by the Owners and each of their legal counsels in relation to preparing, negotiating and executing this Charter and the Leasing Document, shall be for the account of the Charterers (regardless of whether the transaction contemplated by the Leasing Documents actually completes). |
44.3 |
If: |
(a) |
the Charterers request an amendment, waiver or consent; |
(b) |
the Charterers make a request to re-register the Vessel in another Flag State; or |
(c) |
an amendment is required to address the fact that the Screen Rate is not or is likely not to be available for Dollars, |
the Charterers shall, on demand, reimburse the Owners for the amount of all costs and expenses (including legal fees) incurred by the Owners in responding to, evaluating, negotiating or complying with that request or requirement (including, for the avoidance of doubt, any amounts the Owners have to pay under the terms of the Financial Instruments).
44.4 |
All documented costs and expenses incurred by the Owners in relation to the acquisition, registration of title of the Vessel in the Owners’ name in the Flag State together with any and all fees (including but not limited to any vessel registration and tonnage fees and the Owners’ initial and ongoing registration and maintenance costs if required to be registered as a foreign maritime entity or the appointment of resident agents under the laws of the Flag State) payable by the Owners to register, maintain and/or renew such registration, shall be for the account of the Charterers. Without prejudice to the foregoing, if the Flag State requires the Owners to establish a physical presence or office in the jurisdiction of such Flag State, all fees, costs and expenses payable by the Owners to establish and maintain such physical presence or office shall be for the account of the Charterers. The Charterers shall promptly provide the Owners with evidence of payment of the annual register/tonnage tax amounts payable to the Flag State or any other aforesaid costs, expenses and/or taxes when the same fall due. |
19
44.5 |
All documented costs and expenses (including legal fees) incurred by the Owners in relation to the transfer of title of the Vessel by the Owners to the Charterers and the re-delivery of the Vessel by the Charterers to the Owners pursuant to Clause 41 (Termination and Redelivery) shall be for the account of the Charterers. |
44.6 |
The Charterers shall, on demand, pay to the Owners the amount of all documented costs and expenses (including legal fees) incurred by the Owners in connection with the enforcement of, or the preservation of any rights under, any Leasing Document, including, without limitation, any action brought by the Owners to arrest or recover possession of the Vessel, and with any proceedings instituted by or against the Owners as a consequence of it entering into a Leasing Document or enforcing those rights. |
CLAUSE 45 – NO WAIVER OF RIGHTS
45.1 |
No neglect, delay, act, omission or indulgence on the part of either Party in enforcing the terms and conditions of this Charter or any other Leasing Document (to which they are party to) shall prejudice the strict rights of that Party or be construed as a waiver thereof nor shall any single or partial exercise of any right of either party preclude any other or further exercise thereof. |
45.2 |
No right or remedy conferred upon either Party by this Charter or any other Leasing Document shall be exclusive of any other right or remedy provided for herein or by law and all such rights and remedies shall be cumulative. |
CLAUSE 46 – NOTICES
46.1 |
Any notice, certificate, demand or other communication to be served, given, made or sent under or in relation to this Charter shall be in English and in writing and (without prejudice to any other valid method or giving, making or sending the same) shall be deemed sufficiently given or made or sent if sent by registered post or by email to the following respective address: |
(a) |
to the Owners: |
c/o CMB Financial Leasing Co., Ltd. 21F, China Merchants Bank Building No. 1088 Lujiazui Ring Road Shanghai 200120 The People’s Republic of China Attention: Email: Tel: |
(b) |
to the Charterers: |
c/o OET CHARTERING INC. Ethnarchou Makariou & D. Falireos Str. 2 185 47, Neo Faliro, Piraeus, Greece Attention: Email: Tel: |
or, if a party hereto changes its address or email address, to such other address (or email address) as that party may notify to the other.
20
46.2 |
Any such communication shall be deemed to have reached the party to whom it was addressed (a) when delivered (in case of a registered letter), or (b) when actually received in readable form (in case of an email). A notice or other such communication received on a non-working day or after 5.00 p.m. in the place of receipt shall be deemed to be served on the next following working day in such place. |
CLAUSE 47 – TERMINATION EVENTS
47.1 |
The Owners and the Charterers hereby agree that any of the following events shall constitute a Termination Event: |
(a) |
any Obligor fails to pay or the Owners do not receive on the due date any amount payable pursuant to a Leasing Document, unless such failure to pay is caused by a technical error and payment is made within three (3) Business Days of its due date; |
(b) |
the Charterers breach or omit to observe or perform or procure the performance of any of the undertakings in Clauses 50.1(f), Clause 51 (Financial Covenants), Clause 52 (Valuations), 53.1(b), 53.1(c) and failed to remedy the breach in relation to the Delisting in Clause 50.1(i) above; |
(c) |
the Charterers fail to obtain and/or maintain the Insurances required under Clause 39(Insurance) in accordance with the provisions thereof (or any insurer in respect of such Insurances cancels the Insurances or disclaims liability with respect thereto); |
(d) |
any Obligor commits any other breach of, or omits to observe or perform, any of their other obligations or undertakings in any Leasing Document (other than a breach referred to in paragraphs (a) to (c) above) or any Approved Manager breaches any provision of, or omits to observe or perform, any of their obligations or undertakings in any Manager’s Undertaking unless such breach or omission is in the reasonable opinion of the Owners, remediable and the relevant Obligor or Approved Manager remedies such breach or omission to the satisfaction of the Owners within fifteen (15) Business Days of the earlier of (i) the date of the notice thereof from the Owners or (ii) upon the relevant Obligor or Approved Manager becoming aware of the same; |
(e) |
any representation or warranty made by or on behalf of an Obligor, in or pursuant to any Leasing Document to which it is a party, in the reasonable opinion of the Owners, proves to be materially untrue or misleading when it is made; |
(f) |
any of the following occurs in relation to any Financial Indebtedness of any Obligor: |
(i) |
any Financial Indebtedness is not paid when due or not paid within any originally applicable grace period; |
(ii) |
any Financial Indebtedness is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described) and following the expiry of any applicable grace period; |
(iii) |
any commitment for any Financial Indebtedness is cancelled or suspended by any of its creditors as a result of an event of default (however described) and following the expiry of any applicable grace period; |
21
(iv) |
any of its creditors becomes entitled to declare any Financial Indebtedness due and payable prior to its specified maturity as a result of an event of default (however described) and following the expiry of any applicable grace period; or |
(v) |
any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of such Obligors ceases to be available or becomes capable of being terminated or declared due and payable or cash cover is required or becomes capable of being required, as a result of any termination event or event of default (howsoever defined), |
provided that no Termination Event will occur under this paragraph (f) in respect of the Guarantor if the aggregate amount of Financial Indebtedness falling within sub-paragraphs (i) to (v) above (for the Guarantor) is less than US$10,000,000 (or its equivalent in any other currency or currencies);
(g) |
any of the following occurs in relation to any Obligor: |
(i) |
it becomes unable to pay its debts as they fall due; |
(ii) |
any administrative or other receiver is appointed over all or a substantial part of its assets unless as part of a solvent reorganisation which has been approved in writing by the Owners; |
(iii) |
it makes any formal declaration of bankruptcy or any formal statement to the effect that it is insolvent or likely to become insolvent or a winding up or administration order is made in relation to it, or its members or directors of pass a resolution to the effect that it should be wound up, placed in administration or cease to carry on business or it makes any formal statement to the effect that it is reasonably likely to become insolvent; |
(iv) |
a petition is presented in any Relevant Jurisdiction for its winding up or administration, or the appointment of a provisional liquidator over it, unless the petition is being contested in good faith and on substantial grounds and is dismissed or withdrawn within twenty one (21) days of the presentation of the petition; |
(v) |
it petitions a court, or presents any proposal for, any form of judicial or non-judicial suspension or deferral of payments, reorganisation of its debt (or certain of its debt) or arrangement with all or a substantial proportion (by number or value) of their creditors or of any class of them or any such suspension or deferral of payments, reorganisation or arrangement is effected by court order, contract or otherwise; |
(vi) |
any meeting of its members or directors is summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraphs (ii), (iii), (iv) or (v) above; |
(vii) |
in a country other than England and Wales, any event occurs or any procedure is commenced which is similar to any of the foregoing described in paragraphs (ii), (iii), (iv) or (v) above; |
22
(viii) |
any expropriation, attachment, sequestration, distress or execution (or any analogous process in any jurisdiction) affects any of its asset or assets (other than a Total Loss of the Vessel); |
(ix) |
it fails to comply with or pay any sum due from it under any final judgment or any final order made or given by a court or tribunal of competent jurisdiction unless the aggregate sum is less than US$10,000,000 in aggregate in respect of the Guarantor; or |
(x) |
if it suspends or ceases to carry on (or threatens to suspend or cease carrying on) all or a material part of its business, |
provided that in the case of an Obligor other than the Charterers and the Guarantor, the occurrence of any of the above events falling within sub-paragraphs (i) to (x) above in respect of such Obligor shall be a Termination Event only if it has or is reasonably likely to have a Material Adverse Effect.
(h) |
any consent, approval, authorisation, license or permit necessary to enable the Charterers to operate or charter the Vessel or to enable any Obligor to (i) comply with any provision of a Leasing Document to which it is a party or (ii) ensure that the obligations of that Obligor or Approved Manager under such Leasing Document are legal, valid, binding or enforceable, is not granted, expires without being renewed, is revoked or becomes, at the relevant time, expressly liable to or otherwise subject to automatic revocation or any condition of such a consent, approval, authorisation, license or permit is not fulfilled or waived within any applicable grace period (resulting in such consent, approval, authorisation, licence or permit being, at the relevant time, subject to automatic revocation or expiration); |
(i) |
any event or circumstance occurs which has or is reasonably likely to have a Material Adverse Effect; |
(j) |
an Obligor suspends or ceases carrying on its business; |
(k) |
the Security Interest constituted by any Security Document is in any way imperilled or in jeopardy or this Charter or any Leasing Document or any Security Interest created by a Security Document: |
(i) |
is cancelled, terminated, rescinded or suspended or otherwise ceases to remain in full force and effect for any reason or no longer constitutes valid, binding and enforceable obligations of any party to that document for any reason whatsoever; or |
(ii) |
is amended or varied without the prior written consent of the Owners, except for any amendment or variation which is expressly permitted by this Charter or any other relevant Leasing Document; |
(l) |
any Obligor or any Approved Manager rescinds, repudiates (or purports to rescind or repudiates or purports to repudiate) a Leasing Document; |
(m) |
it is or has become: |
(i) |
unlawful or prohibited, whether as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or |
23
(ii) |
contrary to, or inconsistent with, any regulation, |
for any Obligor or Approved Manager to maintain or give effect to any of its obligations under any Leasing Document;
(n) |
if it becomes unlawful in any applicable jurisdiction for the Owners to perform any of their obligations as contemplated by this Charter or any other Leasing Document to which they are a party; |
(o) |
any Termination Event (as defined in applicable Other Charter) occurs and is continuing under any Other Charter; |
(p) |
if as a result of any Sanctions, the Owners or the Owners’ Financiers are prohibited from performing any of their obligations under the Leasing Documents, the Financial Instruments or the transactions contemplated under each of these respective documents; |
(q) |
any lease, hire purchase agreement, charter or any other financing arrangement in respect of any Fleet Vessel (other than the Vessel and the Other Vessel) is terminated, cancelled or repudiated by the relevant lessor or owner or financier as a consequence of any termination event or event of default (howsoever defined therein). |
(r) |
if any Obligor: |
(i) |
is or becomes a Prohibited Person; |
(ii) |
is owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person; |
(iii) |
owns or controls a Prohibited Person; |
(iv) |
has a Prohibited Person serving as a director, officer or employee; or |
(r)a Change of Control occurs without the prior written consent of the Owners.
47.2 |
Notwithstanding and without prejudice to Clause 33 (Cancellation), upon the occurrence of any Termination Event which is continuing, the Owners may issue a written notice to the Charterers terminating this leasing of the Vessel under this Charter and demanding payment of the Termination Sum (the “Termination Notice”), whereupon the Charterers shall be obliged to pay the Termination Sum to the Owners on the date specified by the Owners in their sole discretion in the Termination Notice (the “Termination Date”). |
47.3 |
For the avoidance of doubt, notwithstanding any action taken by the Owners following a Termination Event, the Charterers shall remain liable for the outstanding obligations on their part to be performed under this Charter including but not limited to all insurance, operational and maintenance covenants until such time as the Vessel is redelivered to the Owners in accordance with Clause 42 (Sale of Vessel by the Owners in the event of Non-Payment of Termination Sum), or the title is transferred to the Charterers in accordance with Clause 41.3 or the Vessel is sold in accordance with Clause 42 (Sale of Vessel by the Owners in the event of Non-Payment of Termination Sum). |
47.4 |
Without limiting the generality of the foregoing or any other rights of the Owners, if a Termination Event occurs and it is continuing, the Charterers agree and acknowledge that the |
24
Owners shall have the sole and exclusive right and power to (i) settle, compromise, compound, adjust or defend any action, suit or proceeding relating to or pertaining to the Vessel and this Charter, (ii) make proof of loss, appear in and prosecute any action arising from any policy or policies of insurance maintained pursuant to this Charter, and settle, adjust or compromise any claims for loss, damage or destruction under, or take any other action in respect of, any such policy or policies and/or change or appoint a new manager for the Vessel and the appointment of any originally appointed manager may be terminated immediately without any recourse to the Owners.
47.5 |
Each Termination Event shall either be a breach of condition by the Charterers where it involves a breach of this Charter or any of the other Leasing Document by the Charterers or shall otherwise be an agreed terminating event, the occurrence of which gives rise to a right of the Owners to terminate the leasing of the Vessel under this Charter and to exercise its rights under this clause. |
CLAUSE 48 – REPRESENTATIONS AND WARRANTIES
48.1 |
The Charterers represent and warrant to the Owners, save as otherwise stated in this Clause, as of the date hereof, and on each day henceforth until the last day of the Charter Period, as follows: |
(a) |
each of the Obligors is duly incorporated and validly existing under the laws of its jurisdiction of incorporation; |
(b) |
each Obligor and each Approved Manager has the corporate capacity and has taken all corporate actions to obtain and maintain all consents, approvals, authorisations, licenses or permits necessary or desirable for it: |
(i) |
to enable it lawfully to enter into, exercise its rights and comply with and perform its obligations under each of the Leasing Documents to which it is a party; and |
(ii) |
to make each of the Leasing Documents to which it is a party admissible in evidence in its Relevant Jurisdictions; |
(c) |
all consents, approvals, authorisations, licences or permits referred to in Clause 48(b) remain in full force and effect and nothing has occurred which makes any of them liable to revocation; |
(d) |
each Leasing Document to which an Obligor and Approved Manager is a party constitutes such Obligor’s and Approved Manager’s legal, valid and binding obligations enforceable against such party (and where expressed to be a deed, shall be enforceable as a deed) in accordance with its respective terms; |
(e) |
the entry into and performance by each Obligor and the transactions contemplated by, each Leasing Document to which such Obligors and Approved Manager is a party do not and will not conflict with: |
(i) |
any law or regulation applicable to it (including Anti-Money Laundering Laws, Anti-Bribery and Anti-Corruption Laws, Sanctions or laws relating to anti-trust or collusion and laws relating to human rights violation); |
(ii) |
its constitutional documents; and |
25
(iii) |
any agreement or instrument binding upon it or any of its assets or constitute a default or termination event (however described) under any such agreement or instrument; |
(f) |
the choice of governing law as stated in each Leasing Document and the agreement by the relevant parties thereto to refer disputes to the relevant courts or tribunals as stated in such Leasing Document are valid and binding against such parties; |
(g) |
under the laws of the Relevant Jurisdictions of each Obligor and Approved Manager it is not necessary for any of the Leasing Documents to which it is a party to be registered, filed, recorded, notarised or enrolled with any court or other authority in that jurisdiction or that any stamp, registration, notarial or similar taxes or fees be paid on or in relation to the Leasing Documents to which it is a party or the transactions contemplated by those Leasing Documents except payment of associated fees which registration, filings, taxes and fees will be made and paid promptly after the date of the relevant Leasing Documents to which it is a party; |
(h) |
each Security Document to which an Obligor or Approved Manager is a party does now or, as the case may be, will upon execution and delivery create, the Security Interests it purports to create over any assets to which such Security Interest, by its terms, relates, and such Security Interests will, when created or intended to be created, be valid and effective; |
(i) |
no party has any Security Interest (other than the Permitted Security Interests) or any other interest, right or claim over, in or in relation to the Vessel, this Charter, any moneys payable under any Leasing Document or over any assets which are, the subject of the Security Interests created or intended to be created by the Security Documents; |
(j) |
the obligations of each Obligor, under each Leasing Document to which it is a party, are the direct, general and unconditional obligations of such Obligor and rank at least pari passu with all other present and future unsecured and unsubordinated creditors of each Obligor save for any obligation which is mandatorily preferred by law and not by virtue of any contract; |
(k) |
all payments which an Obligor is liable to make under any Leasing Document to which such Obligor is a party may be made by such party without deduction or withholding for or on account of any tax payable under the laws of their jurisdiction of incorporation; |
(l) |
no Obligor has failed to pay all taxes applicable to, or imposed on or in relation to it, its business or if applicable, the Vessel; |
(m) |
no Obligor has breached any law or regulation which breach has or is reasonably likely to have a Material Adverse Effect; |
(n) |
in relation to the Shipbuilding Contract: |
(i) |
all amounts due and payable to the Shipbuilding Contract on or prior to the date hereof have been fully and irrevocably paid to the Builder (receipt of which have been duly acknowledged by the Builder) and there are no outstanding amounts as at the date hereof which are due, owing or payable to the Builder thereunder; and |
(ii) |
on Delivery of the Vessel, there are no unresolved disputes and/or pending claims for payment between the Builder and the Charterers in respect of the Shipbuilding Contract or the Vessel (unless where notified to the Owners and where accepted by the Owners in writing prior to Delivery); |
26
(o) |
to the best of the Charterers’ knowledge, as at the date of this Charter, no Builder’s default nor buyer’s default under the Shipbuilding Contract has occurred which has not been waived unconditionally which will adversely affect the transfer of title of the Vessel under the MOA and/or chartering of the Vessel under this Charter; |
(p) |
no Obligor or other member of the Group, nor any of their subsidiaries, directors or officers, affiliates or any employee, has engaged in any activity or conduct which would violate any Anti-Bribery and Anti-Corruption Laws, laws pertaining to anti-terrorism or Anti-Money Laundering Laws in any applicable jurisdiction and each Obligor and Group member has instituted and maintained policies and procedures designed to prevent violation of such laws, regulations and rules; |
(q) |
no Obligor or other member of the Group, nor any of their subsidiaries, directors or officers, affiliates or employees, has taken or will take any action in furtherance of an offer, payment, promise to pay or authorisation or approval of the payment or giving of money, property, gifts or anything else of value, directly or indirectly, to any government official (which shall include without limitation, any officer or employee of a government or government owned or controlled entity or of a public international organisation or any person acting in an official capacity for and on behalf of the foregoing or any political party or party official or candidate for public office) to influence official action or secure an improper advantage; |
(r) |
no Environmental Claim has been made against any Obligor or any other member of the Group; |
(s) |
no Environmental Incident has occurred and no person has claimed that an Environmental Incident has occurred; |
(t) |
no Termination Event or Potential Termination Event has occurred and is continuing or might reasonably be expected to result from the entry into and performance of this Charter or any other Leasing Document and no other event or circumstance is outstanding which constitutes a default or a termination event (however described) under any other agreement or instrument which is binding on it or to which its assets are subject; |
(u) |
no litigation, arbitration or administrative proceedings or investigations (including proceedings or investigations relating to any alleged or actual breach of the ISM Code or of the ISPS Code) of or before any court, arbitral body or agency have been started against any Obligor which has or is reasonably likely to have a Material Adverse Effect; |
(v) |
the consolidated financial statements delivered pursuant to Clause 49.1(a) are prepared in accordance with IFRS consistently applied and give a true and fair view of (if audited) or fairly represent (if unaudited) the financial condition of each of the Charterers and the Guarantor as at the end of the period to which such financial statements relate; |
(w) |
since the date of the Original Financial Statements or as the case may be, the date of any more recent financial statements delivered pursuant to Clause 49.1(a), there has been no material adverse change in each of the Charterers and the Guarantor or the Group’s business, assets or financial condition; |
(x) |
in relation to any information provided by any Obligor (including any information in relation to the Shipbuilding Contract) for the purposes of this Charter: |
27
(i) |
such information was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated; |
(ii) |
any financial projections contained in such information have been prepared on the basis of recent historical information and on the basis of reasonable assumptions, and |
(iii) |
nothing has occurred or been omitted from any such information and no information has been given or withheld that results in any such information being untrue or misleading; |
(y) |
no corporate action, legal proceeding or other procedure or step described in Clause 47.1(g) or circumstances described in Clause 47.1(f) has been taken or exists or, to their knowledge, threatened in relation to an Obligor; |
(z) |
no Obligors, nor any of its assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement); |
(aa) |
for the purposes of the Regulation, the centre of main interest (as that term is used in Article 3(1) of the Regulation) of each Obligor is situated in its jurisdiction of incorporation and it has no “establishment” (as that term is used in Article 2(10) of the Regulation) in any other jurisdiction; |
(bb) |
no Obligor is a US Tax Obligor and none of them have established a place of business in the United States of America; |
(cc) |
no Obligor has established a place of business in the United Kingdom; |
(dd) |
no Obligor, Approved Manager, sub-charterer and no member of the Group: |
(i) |
is a Prohibited Person; |
(ii) |
is owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person; |
(iii) |
owns or controls a Prohibited Person; or |
(iv) |
has a Prohibited Person serving as a director, officer or, to the best of its knowledge, employee; |
(ee) |
no Obligor nor its respective directors, member, officers and employee, member of the Group, nor any sub-charterer is in breach of applicable Sanctions, has been or is currently being investigated on compliance with Sanctions, have received notice or are aware of any claim, action, suit or proceeding against any of them with respect to Sanctions, or have taken any action to evade the application of Sanctions; and |
(ff) |
any factual information provided by the Charterers (or on their behalf) to the Owners was true and accurate (including all information in relation to the Shipbuilding Contract) as at the date it was provided or as the date at which such information was stated. |
28
CLAUSE 49 – GENERAL INFORMATION UNDERTAKINGS
49.1 |
The Charterers undertake that they shall comply or procure compliance with the following information undertakings commencing from the date hereof and up to the last day of the Charter Period: |
(a) |
they will send to the Owners: |
(i) |
as soon as possible, but in no event later than ninety (90) days after the end of the first half of each financial year of each of the Charterers and the Guarantor, the unaudited semi-annual combined financial accounts of the Guarantor and the unaudited management accounts of the Charterers; |
(ii) |
as soon as possible, but in no event later than one hundred and eighty (180) days after the end of each financial year of the Guarantor, the audited annual combined financial accounts of the Guarantor and the unaudited management accounts of the Charterers, |
(b) |
they will procure that each set of financial statements delivered pursuant to Clause 49.1(a) shall be in English and certified by a duly authorised officer of the relevant company as giving a true and fair view (if audited) or fairly representing (if unaudited) its financial condition and operations as at the date as at which those financial statements were drawn up; |
(c) |
they will promptly provide to the Owners, copies of all notices and minutes relating to any of their extraordinary shareholders’ meetings which are despatched to the shareholders or to their creditors or any class thereof and its constitutional documents where these have been amended or varied (to the extent not contrary to the other provisions of this Charter); |
(d) |
they will provide the Owners as soon as reasonably practicable upon becoming aware of them, the details of: |
(i) |
any litigation, arbitration or administrative proceedings or investigations relating to any alleged or actual breach of any Sanctions, laws pertaining to anti-terrorism or Anti-Money Laundering Laws which are current or pending against any Obligor, Approved Manager, other member of the Group, or, to the best knowledge of the Charterers, any sub-charterer; |
(ii) |
any litigation, arbitration or administrative proceedings or investigations relating to any other matters not referred to in paragraph (i) above (including proceedings or investigations relating to any alleged or actual breach of the ISM Code or of the ISPS Code) in relation to an Obligor; and |
(iii) |
any Termination Event or Potential Termination Event that has occurred (and the steps, if any, being taken to remedy it); |
(e) |
they will, promptly upon a request by the Owners, supply to the Owners a certificate signed by an officer on its behalf certifying that no Termination Event or Potential Termination Event has occurred (or if a Termination Event or Potential Termination Event has occurred, specifying the nature of the Potential Termination Event or Termination Event (and the steps, if any, being taken to remedy it); |
(f) |
they will, as soon as practicable upon the request of the Owners, provide the Owners with any additional financial or other information relating to: |
29
(i) |
themselves, any Obligor and/or the Vessel (including, but not limited to the condition and location of the Vessel, its Earnings and its Insurances); |
(ii) |
the Security Interests relating to any Leasing Documents; |
(iii) |
compliance of each Obligor and any Approved Manager with the terms of the Leasing Documents; |
(iv) |
the financial condition, business and operations of the Obligors; or |
(v) |
to any other matter relevant to, or to any provision of any Leasing Document to which it is a party, |
which may reasonably be requested by the Owners at any time;
(g) |
they shall provide details of the Vessel’s management and employment status (including the entry into any pooling arrangements) at least every six (6) months to the Owners upon a request by the Owners; and |
(h) |
they shall as soon as reasonable practicable notify the Owners in writing if any payments which they or any other Obligor, is liable to make under any Leasing Document is subject to deduction or withholding or any other tax whatsoever; |
CLAUSE 50 – GENERAL UNDERTAKINGS
50.1 |
The Charterers undertake that they shall comply or procure compliance with the following general undertakings commencing from the date hereof and up to the last day of the Charter Period: |
(a) |
they will, and will procure that each other Obligor and each Approved Manager shall, obtain and promptly renew or procure the provision or renewal of and provide copies of, from time to time, any necessary consents, approvals, authorisations, licenses or permits of any regulatory body or authority for the transactions contemplated under each Leasing Document to which any Obligor and each Approved Manager is a party (including without limitation the sale, chartering and operation of the Vessel); |
(b) |
they will at their own cost, and will procure and each other Obligor and each Approved Manager, will: |
(i) |
ensure that any Leasing Document to which they are a party validly creates the obligations and the Security Interests which such Leasing Document purports to create; and |
(ii) |
without limiting the generality of paragraph (i), promptly register, file, record or enrol any Leasing Document to which they are a party with any court or authority in all Relevant Jurisdictions, pay any stamp duty, registration or similar tax in all Relevant Jurisdictions in respect of any Leasing Document to which they are a party, give any notice or take any other step which, is or has become necessary or desirable for any such Leasing Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which such Leasing Document creates; |
30
(c) |
they will not, and will procure each other Obligor and Approved Manager will not, create or permit to subsist any Security Interest over any of its assets which are, the subject of the Security Interests created or intended to be created by the Security Documents, unless with the prior written approval of the Owners and save for Permitted Security Interests; |
(d) |
they will not, and will procure each Obligor will not, change the location of its centre of main interest (as that term is used in Article 3(1) of the Regulation) from that stated in relation to it under 48.1(aa) and it will create no “establishment” (as that term is used in Article 2(10) of the Regulation) in any other jurisdiction; |
(e) |
except with the Owners’ prior written consent, they will not, and will procure each other Obligor will not, make a substantial change to the general nature of their respective businesses from that carried on at the date of this Charter; |
(f) |
except with the Owners’ prior written consent or where expressly permitted under the Leasing Documents, they will not enter into any merger, amalgamation, demerger, solvent reorganisation or corporate reconstruction; |
(g) |
they will not: |
(i) |
enter into any borrowing except for loans from affiliates which are unsecured and fully subordinated to the Owners; |
(ii) |
incur any liabilities or obligations to any party except for those reasonably incurred in the ordinary course of operating, chartering, repairing and maintaining the Vessel; |
(iii) |
be the creditor in respect of any loan or any form of credit to any person; |
(iv) |
give or allow any to be outstanding any guarantee or indemnity to or for the benefit of any person in respect of any obligation of any other person or enter into any document under which they assume any liability of any other person other than any guarantee or indemnity given under the Leasing Documents; |
(v) |
enter into any material agreement other than the Leasing Documents or any other agreement expressly allowed under any term of the Leasing Documents; |
(vi) |
enter into a single transaction or a series of transactions (whether related or not) to sell, lease, transfer or otherwise dispose of any asset (including without limitation the Vessel, its Earnings or its Insurances); and |
(vii) |
without prejudice to the above sub-paragraphs (i) to (vi), enter into any transaction (whether with another member of the Group or otherwise) which are, in any respect, less favourable than those which they could obtain an a bargain made at arms’ length; |
(h) |
they will not, and shall procure that the Guarantor shall not, following the occurrence of a Termination Event which is continuing or where any of the following would result in the occurrence of a Potential Termination Event or Termination Event: |
(i) |
declare, make or pay any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (whether in cash or in kind) on or in respect of its shares (or any class of its shares including any preferred shares); |
31
(ii) |
repay or distribute any dividend or share premium reserve; |
(iii) |
pay any management, advisory or other fee to or to the order of any of its shareholders; or |
(iv) |
redeem, repurchase, defease, retire or repay any of their shares or resolve to do so; and |
(i) |
they shall procure that a Delisting shall not occur provided that if a Delisting shall occur, then the Charterers shall, promptly and in any event no later than the date falling thirty (30) days from the date of such Delisting, make such prepayments or provide additional security to the satisfaction of the Owners. |
CLAUSE 51 – FINANCIAL COVENANTS
51.1 |
The Charterers undertake that they shall procure that the Guarantor shall comply with the following financial covenants during the Charter Period: |
(a) |
the Guarantor’s Leverage Ratio shall not exceed seventy five per cent (75%). |
(b) |
the Guarantor shall maintain Liquid Assets (free of any Security and inclusive of any balances in time deposits) in an amount of not less than the higher of (i) $10,000,000 on an aggregate basis and (ii) $750,000 per Fleet Vessel; |
(c) |
the Guarantors’ Consolidated Net Worth shall not be less than $100,000,000. |
51.2 |
In this Clause 51 (Financial Covenants): |
“Accounting Information” means the annual audited combined financial accounts and the unaudited semi-annual combined financial accounts to be provided to the Owner in accordance with this Charter.
“Adjusted Total Assets” means, at any date, the amount which would be shown as “Total Assets” under the heading “ASSETS” in the balance sheet of the most recent Accounting Information as adjusted for the aggregate difference (positive or negative) between the book value (being the fixed asset value as per the most recent Accounting Information) and the Fleet Market Value minus the Liquid Assets.
“Consolidated Net Worth” means the aggregate of the Consolidated Market Value Adjusted Total Assets less the Consolidated Total Liabilities.
“Consolidated Net Worth” means the aggregate of the Consolidated Market Value Adjusted Total Assets less the Consolidated Total Liabilities.
“Consolidated Current Assets” means the aggregate of the cash and marketable securities, trade and other receivables from persons other than a member of the Group realisable 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, in each case in relation to the Group, as stated in the then most recent and relevant Accounting Information.
“Consolidated Market Value Adjusted Tangible Fixed Assets” means the Fleet Market Value plus the book value (less depreciation computed in accordance with the IFRS consistently
32
applied) on a consolidated basis of all other tangible fixed assets of the Group (excluding the Fleet Vessels), as stated in the then most recent and relevant Accounting Information.
“Consolidated Market Value Adjusted Total Assets” means, at any relevant time, the aggregate of Consolidated Current Assets and Consolidated Market Value Adjusted Tangible Fixed Assets.
“Consolidated Total Liabilities” means the aggregate (as of the date of calculation) of all obligations of the Guarantor then outstanding for the payment or repayment of money as stated under “Total Liabilities” in the financial statements or, as the case may be, management accounts, then most recently required to be delivered pursuant to this Charter including, without limitation:
(a) |
any amounts payable by the Guarantor under leases or similar arrangements over their respective periods; |
(b) |
any credit to the Guarantor from a supplier of goods or under any instalment purchase or other similar arrangement; |
(c) |
the aggregate amount then outstanding of liabilities and obligations of third parties to the extent that they are guaranteed by the Guarantor; |
(d) |
any contingent liabilities (including any taxes or other payments under dispute or arbitration) which have been or should be recorded in the notes to the Guarantor’s financial statements or, as the case may be, management accounts; and |
(e)any deferred tax liabilities.
“Fleet Market Value” means the aggregate Fair Market Value of the Fleet Vessels, and for the purpose of ascertaining the Fair Market Value of the Fleet Vessel, the definition of Fair Market Value in Clause 66 (Definitions) shall apply.
“Leverage Ratio” means, at any date, the ratio (expressed as a percentage) of:
(i) |
the Total Liabilities minus Liquid Assets; and |
(ii) |
the Adjusted Total Assets. |
“Liquid Assets” means, at any date, the amount of cash and cash equivalents which would be shown as “Cash and Cash Equivalents” under the heading “ASSETS” in the balance sheet of the most recent Accounting Information.
“Total Liabilities” means, at any date, the amount which would be shown as “Total current liabilities” plus the amount which would be shown as “Total non-current liabilities”, both under the heading “LIABILITIES AND SHAREHOLDERS’EQUITY” in the balance sheet of the most recent Accounting Information (which, for the avoidance of doubt, shall include potential leasing liabilities and shall only exclude shareholder loans when subordinated, non-interest bearing and not callable at will (minimum one year notice)).
51.3 |
The Charterers shall promptly notify the Owners if the Guarantor agrees to provide any new financial covenants to a creditor (or to amend existing ones such that they materially differ from the financial covenants under Clause 51.1 above placing such creditor in a position which |
33
is comparatively more favourable in terms of the financial covenants than the position of the Owners) under the agreements entered into or to be entered into in connection with any Financial Indebtedness owed by the Guarantor or a Group member to such creditor and agrees that it will and shall procure the Guarantor will promptly enter into such necessary documentation as may be required to amend and supplement (as applicable) this Charter and any applicable Leasing Document so as to reflect and incorporate such more favourable financial covenants into this Charter and any applicable Leasing Document (as the case may be).
CLAUSE 52 – VALUATIONS
52.1 |
The Charterers undertake that they shall comply or procure compliance with the following undertakings commencing from the date hereof and up to the last day of the Charter Period: |
(a) |
they shall at their cost: |
(i) |
provide to the Owners valuations of the Vessel (to be addressed to the Owners) to enable the Owners to determine the Initial Market Value of the Vessel; |
(ii) |
at least once per calendar year as requested by the Owners, provide to the Owners valuations of the Vessel (to be addressed to the Owners) to enable the Owners to determine the Fair Market Value of the Vessel; and |
(iii) |
at any time as requested by the Owners following the occurrence of a Termination Event or a Potential Termination Event, provide to the Owners valuations of the Vessel (to be addressed to the Owners) to enable the Owners to determine the Fair Market Value of the Vessel; and |
(b) |
if at any time, the Vessel’s Fair Market Value falls below an amount equivalent to one hundred and eighteen per cent (118%) of the Owners’ Costs (the “LTV Breach”, and the said difference between the Fair Market Value and the Owners’ Costs shall be referred to as the “shortfall” for the purposes of this paragraph) then the Charterers shall, promptly and in any event no later than the date falling thirty (30) days from the date which the valuations relating to the Vessel’s Fair Market Value are received by the Owners, make payment in an amount such as to eliminate the shortfall which payment shall be applied in the Owners’ sole discretion. |
CLAUSE 53 – VESSEL UNDERTAKINGS
53.1 |
The Charterers undertake that they shall comply or procure compliance with the following Vessel and Sanctions related undertakings commencing from the date hereof and up to the last day of the Charter Period: |
(a) |
they will notify the Owners promptly upon becoming aware: |
(i) |
that any Environmental Claim has been made against the Charterers or in connection with the Vessel, or that any Environmental Incident has occurred; |
(ii) |
of any arrest or detention of the Vessel or any exercise or purported exercise of any lien on that Vessel or its Earnings or any requisition of the Vessel for hire; |
(iii) |
any modification or alteration of the Vessel of a value in excess of $1,000,000; |
34
(iv) |
any casualty or occurrence as a result of which the Vessel has become or is, by the passing of time or otherwise, likely to become, a Major Casualty; and |
(v) |
that a Total Loss has occurred, |
and will keep the Owners fully up-to-date with all developments;
(b) |
they will comply, and will procure that each other Obligor, each other member of the Group, and any sub-charterer will comply, with all Sanctions and all laws and regulations relating to them, the Vessel and its construction, ownership, employment, operation, management and registration, including the ISM Code, the ISPS Code (including the maintenance of an ISSC), all Environmental Laws, all Anti-Money Laundering Laws, laws pertaining to anti-terrorism, Anti-Bribery and Anti-Corruption Laws and the laws of the Vessel’s registry, and in particular, they shall effect and maintain a sanctions compliance policy which, inter alia, implements the recommendations of the Sanctions Advisory, to ensure compliance with all such laws and regulations implemented from time to time, including, without limitation they will, and will procure that each other Obligors, each other member of the Group and each sub-charterer will: |
(i) |
conduct their activities in a manner consistent with US and UN sanctions, as applicable; |
(ii) |
have sufficient resources in place to ensure execution of and compliance with their own sanctions policies by their personnel, e.g., direct hires, contractors, and staff; |
(iii) |
ensure subsidiaries and affiliates comply with the relevant policies, as applicable; |
(iv) |
have relevant controls in place to monitor automatic identification system (AIS) transponders; |
(v) |
have controls in place to screen and assess onboarding or offloading cargo in areas they determine to present a high risk; |
(vi) |
have controls to assess authenticity of bills of lading, as necessary; and |
(vii) |
have controls in place consistent with the Sanctions Advisory, |
(c) |
without limiting Clause 53.1(b), they will procure that: |
(i) |
the Vessel shall not be constructed, operated, employed, managed, used by or for the benefit of a Prohibited Person or in trading to or from a Prohibited Country, including calling at any port of a Prohibited Country; |
(ii) |
the Vessel shall not be used in any manner contrary to Sanctions, or in a manner that creates a risk that an Obligor will become a Prohibited Person; |
(iii) |
notwithstanding any other provision of this paragraph (c), the Vessel shall not be used in trading in any manner that creates a risk that the Vessel will become a Sanctioned Ship; |
(iv) |
the Vessel shall not be traded in any manner which would trigger the operation of any sanctions limitation or exclusion clause (or similar) in the Insurances or in any manner |
35
which would result or would reasonably be expected to result in any Obligor or the Owners becoming a Prohibited Person; and
(v) |
that each charterparty in respect of the Vessel shall contain, for the benefit of the Owners, language which gives effect to the provisions of Clause 53.1(c) as regards Sanctions and of this Clause and which permits refusal of employment or voyage orders if compliance would result in a breach of Sanctions and which prohibits trading to any Prohibited Country; |
(d) |
they will, promptly notify the Owners and provide all information which may be relevant for the purposes of ascertaining whether the Obligors, the Approved Manager and any sub-charterer are in compliance with all laws and regulations and Sanctions applicable to and/or binding on them, and in particular, they shall notify the Owners in writing immediately upon being aware that any of the Charterers’ shareholders, directors, officers or employees is a Prohibited Person or has otherwise become a target of any Sanctions; |
(e) |
save with the Owners’ prior consent in writing (such consent not to be unreasonably withheld) they shall not agree or enter into, and shall procure that the Builder does not agree or enter into, any transaction, agreement, document or do or omit to do anything which will have the effect of varying, amending, supplanting or waiving any term of the Shipbuilding Contract relating to the Builder’s Warranties in a material manner; |
(f) |
save with the Owners’ prior consent in writing, they shall not agree or enter into, and shall procure that each Approved Manager does not agree or enter into, any transaction, arrangement, document or do or omit to do anything which will have the effect of varying, amending, supplementing or waiving any term of the relevant management agreement which would result in an annual increase of the management fee to more than twenty per cent. (20%) of the management fee payable under the relevant management agreement as at the date of this Charter; |
(g) |
they shall not: |
(i) |
change an Approved Manager unless such change in appointment is approved in writing by the Owners (such approval not to be unreasonably withheld or delayed) and provided that such substitute Approved Manager has (prior to accepting its appointment) entered into an undertaking in a form substantially similar to the Manager’s Undertaking or in such other form as may be acceptable to the Owners; or |
(ii) |
terminate or otherwise assign or transfer the relevant management agreement unless with the prior approval in writing by the Owners (such approval not to be unreasonably withheld or delayed); |
(h) |
with effect from and following Delivery, ensure that the Vessel will be registered in the Flag State under the name of the Owners; |
(i) |
the Vessel shall be classed with an Approved Classification Society upon Delivery at the highest classification available for vessels of its type and be free of all overdue recommendations or conditions, and maintain such class during the Charter Period; |
36
(j) |
unless with the Owners’ prior written consent (such consent not to be unreasonably withheld or delayed save that such qualification shall not apply following the occurrence of a Termination Event), they shall not deactivate or lay up the Vessel; |
(k) |
they shall not make any structural change to the Vessel without the prior written consent of the Owners other than a structural change that: |
(i) |
is mandatorily required by any applicable law and regulation; or |
(ii) |
relates to the installation of exhaust gas cleaning systems (scrubbers) and/or ballast water treatment systems (and in the case of the ballast water treatment system, the Charterers shall ensure that the same is installed and a USCG certificate of compliance regarding the same issued on a date prior to 1 July 2022); or |
(iii) |
would not, in the Owners’ reasonable opinion: |
(A) |
have a material adverse effect on the Vessel’s fitness for purpose; |
(B) |
materially alter the structure, type or performance characteristics of the Vessel; and/or |
(C) |
materially diminish the value of the Vessel or have a material adverse effect on the safety, performance or marketability of the Vessel, |
and the Charterers shall provide the Owners with at least fifteen (15) days prior written notice of the commencement of any such alterations (as well as notification of such alterations being completed promptly after such completion) and shall provide the Owners with all information (including without limitation, any plans for the proposed modifications, repairs, replacement, installation or alteration, valuation reports and confirmation of class from the Approved Classification Society) as the Owners may require for the purposes of determining the matters set out in paragraphs (i) to (iii) above together with evidence that the Obligatory Insurances have been appropriately updated, and shall indemnify the Owners against all costs and expenses incurred by the Owners in connection with all such proposed modifications, repairs, replacement, installation or alteration of the Vessel and if such modification, repair or replacement or installation is approved or satisfies the requirements of this Clause, once effected, shall form part of the Vessel;
(l) |
they will procure that each Approved Manager shall, upon the request of the Owners at the expense of the Charterers, furnish the Owners with an inspection report setting out such matters relating to the condition of the Vessel as the Owners may require on an annual basis and if a Termination Event occurs, at such other frequency as the Owners may otherwise require; |
(m) |
subject to the other terms of this Charter, the Charterers may freely sub-charter the Vessel save that the Owners’ prior written consent shall be required: |
(i) |
to any sub-bareboat or demise charter of the Vessel; |
(ii) |
to any other employment of the Vessel which would constitute an Assignable Sub-Charter (and upon the Owners’ consent the Charterers shall assign their rights and interests in such Assignable Sub-Charter to the Owners); and |
37
(iii) |
to any employment of the Vessel which does not permit a transfer of the registered ownership of the Vessel without the consent of the applicable sub-charterer; |
(n) |
they shall procure that all Earnings in connection with the Vessel are paid into the Operating Account and that the Charterers facilitate access by the Owners to information relating to the Operating Account; |
(o) |
they shall ensure that a minimum amount of $500,000 is maintained in the Operating Account at all times during the Charter Period; and |
(p) |
they shall, upon the request of the Owners and at the cost of the Charterers, on or before 31st July in each calendar year, supply or procure the supply to the Owners all information necessary in order for the Owners to comply with its or any Owners’ Financiers’ obligations under the Poseidon Principles in respect of the preceding year, including, without limitation, all ship fuel oil consumption data required to be collected and reported in accordance with Regulation 22A of Annex VI and any Statement of Compliance relating to the Vessel for the preceding calendar year and, for the avoidance of doubt, such information shall be “Confidential Information” for the purposes of Clause 63 (Confidentiality) but the Charterers acknowledge that, in accordance with the Poseidon Principles, such information will form part of the information published regarding the Owners’ and/or Owners’ Financiers’ portfolio climate alignment. |
(q) |
they shall procure that the Vessel is free of encumbrances and liens (save for those created by the Owners or otherwise permitted in writing under the terms of this Charter). |
CLAUSE 54 – INSPECTION OF VESSEL
54.1 |
Without prejudice to Clause 54.2 below, the Owners shall be entitled to inspect or survey the Vessel or instruct a duly authorized surveyor to carry out such survey on their behalf: |
(a) |
to ascertain the condition of the Vessel and satisfy themselves that the Vessel is being properly repaired and maintained; |
(b) |
in dry-dock if the Charterers have not dry-docked the Vessel in accordance with Clause 10(g) (Periodical Dry-docking); |
(c) |
as may be required for classification purposes; and |
(d) |
for any other commercial reason they consider necessary, |
and in doing so, the Charterers shall afford the Owners or their authorised surveyor with all proper facilities in relation to such inspection or survey.
54.2 |
The Owners shall be entitled to exercise its rights of inspection or survey as described under Clause 54.1 (Inspection of Vessel) once a year (subject to provision of reasonable prior notice) without interference to the operation of the Vessel save that upon the occurrence of a Termination Event or Potential Termination Event, the Owners shall have the right to inspect or survey the Vessel at any time (and for the avoidance of doubt, more than once a year). |
54.3 |
The documented costs and fees for any inspection and survey permitted under this Clause shall be paid by the Charterers. |
38
54.4 |
All time used in respect of inspection, survey or repairs pursuant to this Clause shall be for the Charterers’ account and form part of the Charter Period. |
54.5 |
The Charterers shall also permit the Owners to inspect the Vessel’s log books or survey reports whenever requested and shall whenever required by the Owners furnish them with full information regarding any casualties or other accidents or damage to the Vessel. |
CLAUSE 55 – PURCHASE OPTION
55.1 |
The Charterers shall have the option (the “Purchase Option”) to purchase the Vessel on each anniversary date on and from the first (1st) anniversary of the Commencement Date as specified in the Purchase Option Notice (as hereinafter defined) at the applicable Purchase Option Price, subject to the other terms of this Clause 55 (Purchase Option). |
55.2 |
The Purchase Option shall be exercisable only: |
(a) |
upon the Charterers providing not less than sixty (60) days’ written notice (the “Purchase Option Notice”) to purchase the Vessel on a date specified therein (the “Purchase Option Date”) which shall fall on an anniversary of the Commencement Date on or after the first (1st) anniversary of the Commencement Date or on the last day of the Charter Period (as the case may be) subject to Clause 60.1 (unless otherwise agreed by the Owners); and |
(b) |
in the absence of the occurrence of a Potential Termination Event or a Termination Event on or prior to either the date of the Purchase Option Notice or the Purchase Option Date. |
55.3 |
The Purchase Option Notice shall be signed by a duly authorised officer or attorney of the Charterers and, once delivered to the Owners, will in each case be irrevocable and the Charterers shall be bound to pay to the Owners the Purchase Option Price on the Purchase Option Date. |
55.4 |
The sale of the Vessel pursuant to the Charterers’ exercise of the Purchase Option shall be conducted in accordance with Clause 56 (Sale of the Vessel). |
55.5 |
If the Charterers do not exercise the Purchase Option on or before the expiration of the Charter Period: |
(a) |
the Charterers shall pay the Option Premium to Owners on the last day of the Charter Period; |
(b) |
the Charterers shall on the last day of the Charter Period re-deliver the Vessel to the Owners in accordance with Clause 41.6 and shall ensure that they have fulfilled their obligations under this Charter and made payment of the Option Premium, all Charterhire and all other moneys pursuant to the terms of this Charter; and |
(c) |
the Owners shall be entitled (at Owners’ sole discretion) to sell or operate the Vessel as they may require. For the avoidance of doubt, the Charterers agree that should the Option Premium not be paid or not be paid in full on its due date for payment under the terms of this Charter, any net proceeds deriving from the sale or operation of the Vessel by the Owners shall not be applied towards reduction of the unpaid Option Premium, Charterhire or any other moneys due pursuant to the terms of this Charter. |
CLAUSE 55A – MANDATORY SALE
39
If the Mandatory Sale Price becomes payable in accordance with Clause 37.5 (Changes to Interest Rate, Default Interest), the same shall be payable in consideration of the purchase and transfer of the legal and beneficial title of the Vessel pursuant to Clause 56 (Sale of the Vessel). The day on which the Mandatory Sale Price is paid pursuant to Clause 37.5 (Changes to Interest Rate, Default Interest) is a “Mandatory Sale Date” and such transfer of the Vessel provided therein is a “Mandatory Sale”.
CLAUSE 56 – SALE OF THE VESSEL
56.1 |
The sale of the legal and beneficial interest and title in the Vessel pursuant to the Charterers’ exercise of, as the case may be, the Charterers’ Purchase Option under Clause 55 (Purchase Option) or pursuant to Clause 41.3, or the completion of a Mandatory Sale under Clause 55A (Mandatory Sale) shall be on an “as is where is” and subject to the following terms and conditions: |
(a) |
no condition, warranty or representation of any kind is or has been given by or on behalf of the Owners in respect of the Vessel or any part thereof, and accordingly the Charterers hereby confirm that they have not, in entering into this Charter, relied on any condition, warranty or representation by the Owners or any person on the Owners’ behalf, express or implied, whether arising by law or otherwise in relation to the Vessel or any part thereof, including, without limitation, warranties or representations as to the description, suitability, quality, merchantability, fitness for any purpose, value, state, condition, appearance, safety, durability, design or operation of any kind or nature of the Vessel or any part thereof, and the benefit of any such condition, warranty or representation by the Owners is hereby irrevocably and unconditionally waived by the Charterers to the extent permissible under applicable law, and the Charterers hereby also waive any rights which they may have in tort in respect of any of the matters referred to above and irrevocably agree that the Owners shall have no greater liability in tort in respect of any such matter than they would have in contract after taking account of all of the foregoing exclusions. No third party making any representation or warranty relating to the Vessel or any part thereof is the agent of the Owners nor has any such third party authority to bind the Owners thereby. Notwithstanding anything contained above, nothing contained herein is intended to obviate, remove or waive any rights or warranties or other claims relating thereto which the Charterers (or their nominee) or the Owners may have against the manufacturer or supplier of the Vessel or any third party; |
(b) |
the Vessel shall be free from any registered mortgages incurred by the Owners (save for those mortgages, liens, encumbrances and debts arising out of or in connection with this Charter or the Leasing Documents); |
(c) |
the Purchase Option Price, Termination Sum or Mandatory Sale Price (as applicable) shall be paid by (or on behalf of) the Charterers to the Owners together with (without double counting) unpaid amounts of Charterhire, Breakfunding Costs (if applicable), default interest accruing under Clause 37.637.5 (if applicable), fees, expenses and any other moneys owing by or accrued or due from the Charterers under this Charter on or prior to the Purchase Option Date or the Termination Date or the Mandatory Sale Date (as the case may be) which remain unpaid; and |
(d) |
concurrently with the Owners receiving irrevocable payment of the Purchase Option Price or the Termination Sum or the Mandatory Sale Price (as applicable) and all other moneys payable under this Charter in full pursuant to the terms of this Charter, the Owners shall (save in the event of Total Loss) (at Charterers’ cost) transfer the legal and beneficial ownership of the Vessel on an “as is where is” basis to the Charterers or their nominees and shall (at Charterers’ |
40
cost) execute a bill of sale and a protocol of delivery and acceptance evidencing the same and any other document strictly necessary to transfer the title of the Vessel, as well as procure the relevant ship registry to issue a certificate of title or any other evidence provided in accordance with the practice of such registry showing that the Vessel shall be free from any registered mortgages in favour of the Owners, to the Charterers and the relevant ship registry of the Vessel under the Charterers’ flag of choice (and to the extent required for such purposes, the Vessel shall be deemed first to have been redelivered to the Owners), provided that the Owners shall not be obliged to do anything which would (in its reasonable opinion) constitute a breach of the applicable QEL (if any). Any fees (including legal fees), costs or disbursements incurred by the Owners in connection with the Charterers’ exercise of the Purchase Option or transfer of the Vessel following payment of the Termination Sum or Mandatory Sale Price (as the case may be) shall be indemnified or reimbursed by the Charterers to the Owners upon the Owners’ demand on or prior to the Purchase Option Date or date of payment of the Termination Sum or Mandatory Sale Date (as applicable).
CLAUSE 57 – INDEMNITIES
57.1 |
The Charterers shall pay such amounts to the Owners, on the Owners’ demand, in respect of all documented claims, expenses, liabilities, losses, taxes, fees (including but not limited to any vessel registration and tonnage fees) suffered or incurred by or imposed on the Owners arising from this Charter and any Leasing Document, whether prior to, during or after termination of the leasing of this Charter, including without limitation: |
(a) |
as a result of incorporating the Owners in the relevant jurisdiction selected by the Charterers or required for the purpose of flying the flag of the Vessel in a particular jurisdiction; |
(b) |
in connection with delivery, possession, performance, control, registration, repair, survey, insurance, maintenance, manufacture, purchase, ownership or operation of the Vessel (including but not limited to any social security contributions); |
(c) |
in connection with the prevention or release of liens or detention of or requisition, use, operation, redelivery, sale or disposal of the Vessel (or any part of it) and/or whether prior to, during or after termination; |
(d) |
in connection with delay in the scheduled delivery date of the Vessel under the Shipbuilding Contract; |
(e) |
in connection with or following the occurrence of a Termination Event or Potential Termination Event (including without limitation, by reason thereof in re-taking possession or otherwise in acquiring the Vessel pursuant to Clause 38.3). |
Without prejudice to its generality, this Clause covers any claims, expenses, liabilities and losses which arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code, the ISPS Code, the MARPOL Protocol, any Environmental Law or any Sanctions.
57.2 |
The Charterers hereby irrevocably agree to indemnify and hold harmless the Owners against all consequences or liabilities arising from the master, officers or agents signing bills of lading or other documents and any claim, expense, liability or loss incurred by the Owners in liquidating or employing deposits from the Owners’ Financiers or third parties to fund the acquisition of the Vessel pursuant to the MOA, the Head MOA and/or the Shipbuilding Contract. |
41
57.3 |
Notwithstanding anything to the contrary herein (but subject and without prejudice to Clause 33 (Cancellation)) and without prejudice to any right to damages or other claim which the Charterers may have at any time against the Owners under this Charter, the indemnities provided by the Charterers in favour of the Owners shall continue in full force and effect notwithstanding any breach of the terms of this Charter or termination of this Charter pursuant to the terms hereof or termination of this Charter by the Owners. |
57.4 |
All rights which the Charterers have at any time (whether in respect of this Charter or any other transaction) against any Obligors shall be fully subordinated to the rights of the Owners under the Leasing Documents and until the end of this Charter and unless the Owners otherwise direct, the Charterers shall not exercise any rights which it may have (whether in respect of this Charter or any other transaction) by reason of performance by it of its obligations under any Leasing Document or by reason of any amount becoming payable, or liability arising, under this Clause: |
(a) |
to be indemnified by any Obligor; |
(b) |
to claim any contribution from any third party providing security for, or any other guarantor of, any Obligor under any Leasing Document; |
(c) |
to take any benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of any Obligor under any Leasing Document or of any other guarantee or security taken pursuant to, or in connection with, any Leasing Document by any Obligors; |
(d) |
to bring legal or other proceedings for an order requiring any Obligor to make any payment, or perform any obligation, in respect of any Leasing Document; |
(e) |
to exercise any right of set-off against any Obligor; and/or |
(f) |
to claim or prove as a creditor of any Obligor, |
and if the Charterers receive any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to the extent necessary to enable all amounts which may be or become payable to the Owners by any Obligor or in connection with any Leasing Document to be repaid in full on trust for the Owners and shall promptly pay or transfer the same to the Owners.
CLAUSE 58 – NO SET-OFF OR TAX DEDUCTION
58.1 |
All Charterhire and any payment made from the Charterers to enable the Owners to pay all amounts under a Leasing Document shall be paid punctually and: |
(a) |
without any form of set-off, cross claim, condition or counterclaim; |
(b) |
free and clear of any tax deduction or withholding unless required by law; and |
(c) |
net of any bank charges or bank fees. |
58.2 |
Without prejudice to Clause 58.1, if the Owners are required by law to make a tax deduction from any payment: |
(a) |
the Owners shall notify the Charterers as soon as they become aware of the requirement; and |
42
(b) |
the amount due in respect of the payment shall be increased by the amount necessary to ensure that the Owners receive and retain (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which they would otherwise have received. |
58.3 |
The Charterers shall (within three (3) Business Days of demand by Owners) pay to the Owners an amount equal to the loss, liability or cost which the Owners determine will be or has been (directly or indirectly) suffered for or on account of tax by the Owners in respect of a Leasing Document. |
58.4 |
Clause 58.3 shall not apply: |
(a) |
with respect to any tax assessed on the Owners under the law of the jurisdiction in which the Owners are incorporated or, if different, the jurisdiction (or jurisdictions) in which the Owners are treated as resident for tax purposes if that tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by the Owners; or |
(b) |
to the extent a loss, liability or cost is compensated for by an increased payment under Clause 58.2. |
58.5 |
Notwithstanding any other provision to this Charter, if any deduction or withholding or other tax is or will be required to be made by the Charterers or the Owners in respect of a payment to the Owners as a result of the Owners being incorporated in a particular jurisdiction, the Owners shall have the right to transfer their interest in the Vessel (and this Charter) to any person nominated by the Owners and all costs in relation to such transfer shall be for the account of the Charterers. |
58.6 |
If the Charterers compensate the Owners by an increased payment pursuant to Clauses 58.2 or 58.3 and the Owners determine that they have obtained and utilized a tax credit attributable to this increased payment, the Owners shall reimburse the Charterers that increased payment (or part thereof if the tax credit is attributable to only part of such increased payment). |
CLAUSE 59 – INCREASED COSTS
59.1 |
This Clause 59 (Increased Costs) applies if the Owners notify the Charterers that they consider that as a result of: |
(a) |
the introduction or alteration after the date of this Charter of a law or an alteration after the date of this Charter in the manner in which a law is interpreted or applied (disregarding any effect which relates to the application to payments under this Charter of a tax on the Owners’ overall net income); or |
(b) |
complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which the Owners allocates capital resources to their obligations under this Charter) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Charter, |
the Owners (or a parent company of them) has incurred or will incur an “increased cost”.
59.2 |
In this Clause 59 (Increased Costs), “increased cost” means, in relation to the Owners: |
43
(a) |
an additional or increased cost incurred as a result of, or in connection with, the Owners or the Owners’ parent company having entered into, or being a party to, this Charter, or funding the acquisition of the Vessel pursuant to the MOA or performing their obligations under this Charter (including as a result of, or in connection with, incorporating itself in a particular jurisdiction as requested by the Charterers or in order to fly a particular flag in respect of the Vessel); |
(b) |
an additional or increased cost of funding or financing the acquisition of the Vessel pursuant to the MOA; or |
(c) |
a liability to make a payment or a return forgone, which is calculated by reference to any amounts received or receivable by the Owners under this Charter, |
and for the purposes of this Clause, the Owners may in good faith allocate or spread costs an/or losses among their assets and liabilities (or any class of their assets and liabilities) on such basis as they consider appropriate.
59.3 |
Subject to the terms of Clause 59.1, the Charterers shall pay to the Owners, upon receipt of the Owners’ demand and any evidence thereto (where available to the Owners), the amounts which the Owners from time to time notify the Charterers to be necessary to compensate the Owners for the increased cost. |
CLAUSE 60 – MISCELLANEOUS
60.1 |
Unless otherwise expressly stated to the contrary in this Charter, any payment which is due to be made on a day which is not a Business Day shall be made on the preceding Business Day instead. |
60.2 |
If, at any time, any provision of any Leasing Document is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions under the law of that jurisdiction nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired. |
60.3 |
The Charterers waive any rights of sovereign immunity which they or any of their properties may enjoy in any jurisdiction and subjects itself to civil and commercial law with respect to their obligations under this Charter. |
60.4 |
No term of this Charter is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Charter. |
60.5 |
This Charter and each other Leasing Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Charter or that Leasing Document, as the case may be. |
CLAUSE 61 – FATCA
61.1 |
Defined terms |
For the purposes of this Clause 61 (FATCA), the following terms shall have the following meanings:
44
“Code” means the United States Internal Revenue Code of 1986, as amended.
“FATCA” means:
(a) |
sections 1471 to 1474 of the Code or any associated regulations; |
(b) |
any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or |
(c) |
any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the IRS, the US government or any governmental or taxation authority in any other jurisdiction. |
“FATCA Deduction” means a deduction or withholding from a payment under this Charter or the Leasing Documents required by or under FATCA.
“FATCA Exempt Party” means a Relevant Party that is entitled under FATCA to receive payments free from any FATCA Deduction.
“FATCA Non-Exempt Party” means any Relevant Party who is not a FATCA Exempt Party.
“IRS” means the United States Internal Revenue Service or any successor taxing authority or agency of the United States government.
“Relevant Party” means any of the parties to this Charter and the Leasing Documents.
61.2 |
FATCA Information |
(a) |
Subject to paragraph (c) below, each Relevant Party shall, on the date of this Charter, and thereafter within ten (10) Business Days of a reasonable request by another Relevant Party: |
(i) |
confirm to that other party whether it is a FATCA Exempt Party or is not a FATCA Exempt Party; and |
(ii) |
supply to the requesting party (with a copy to all other Relevant Parties) such other form or forms (including IRS Form W-8 or Form W-9 or any successor or substitute form, as applicable) and any other documentation and other information relating to its status under FATCA (including its applicable “pass thru percentage” or other information required under FATCA or other official guidance including intergovernmental agreements) as the requesting party reasonably requests for the purpose of the requesting party’s compliance with FATCA. |
(b) |
If a Relevant Party confirms to any other Relevant Party that it is a FATCA Exempt Party or provides an IRS Form W-8 or W-9 to showing that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, or that the said form provided has ceased to be correct or valid, that party shall so notify all other Relevant Parties or provide the relevant revised form, as applicable, reasonably promptly. |
(c) |
Nothing in this Clause shall oblige any Relevant Party to do anything which would or, in its reasonable opinion, might constitute a breach of any law or regulation, any policy of that party, |
45
any fiduciary duty or any duty of confidentiality, or to disclose any confidential information (including, without limitation, its tax returns and calculations); provided, however, that nothing in this paragraph shall excuse any Relevant Party from providing a true, complete and correct IRS Form W-8 or W-9 (or any successor or substitute form where applicable). Any information provided on such IRS Form W-8 or W-9 (or any successor or substitute forms) shall not be treated as confidential information of such party for purposes of this paragraph.
(d) |
If a Relevant Party fails to confirm its status or to supply forms, documentation or other information requested in accordance with the provisions of this Charter or the provided information is insufficient under FATCA, then: |
(i) |
if that party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such party shall be treated for the purposes of this Charter and the Leasing Documents as if it is a FATCA Non-Exempt Party; and |
(ii) |
if that party failed to confirm its applicable passthru percentage then such party shall be treated for the purposes of this Charter and the Leasing Documents (and payments made thereunder) as if its applicable passthru percentage is 100%, |
until (in each case) such time as the party in question provides sufficient confirmation, forms, documentation or other information to establish the relevant facts.
61.3 |
FATCA Deduction and gross-up by Relevant Party. |
(a) |
If the representation made by the Charterers under 48.1(bb) proves to be untrue or misleading such that the Charterers are required to make a FATCA Deduction, the Charterers shall make the FATCA Deduction and any payment required in connection with that FATCA Deduction within the time allowed and in the minimum amount required by FATCA. |
(b) |
If the Charterers are required to make a FATCA Deduction then the Charterers shall increase the payment due from them to the Owners to an amount which (after making any FATCA Deduction) leaves an amount equal to the payment which would have been due if no FATCA Deduction had been required. |
(c) |
The Charterers shall promptly upon becoming aware that they must make a FATCA Deduction (or that there is any change in the rate or basis of a FATCA Deduction) notify the Owners accordingly. Within thirty (30) days of the Charterers making either a FATCA Deduction or any payment required in connection with that FATCA Deduction, the Charterers shall deliver to the Owners evidence reasonably satisfactory to the Owners that the FATCA Deduction has been made or (as applicable) any appropriate payment paid to the relevant governmental or taxation authority. |
61.4 |
FATCA Deduction by Owners. |
The Owners may make any FATCA Deduction they are required by FATCA to make, and any payment required in connection with that FATCA Deduction, and the Owners shall not be required to increase any payment in respect of which they make such a FATCA Deduction or otherwise compensate the recipient for that FATCA Deduction.
46
61.5 |
FATCA Mitigation. |
Notwithstanding any other provision to this Charter, if a FATCA Deduction is or will be required to be made by any party under Clause 61.4 in respect of a payment to the Owners as a result of the Owners not being a FATCA Exempt Party, the Owners shall have the right to transfer their interest in the Vessel (and this Charter) to any person nominated by the Owners and all costs in relation to such transfer shall be for the account of the Charterers.
CLAUSE 62 – ASSIGNMENT, TRANSFER AND REFINANCING
62.1 |
The Charterers shall not assign or transfer (whether by novation or otherwise) their rights and/or obligations under this Charter or any other Leasing Document. |
62.2 |
The Charterers acknowledge that, at any time during the Charter Period: |
(a) |
the Owners are entitled to enter into certain funding arrangements in relation to the Vessel with the Owners’ Financiers in order to refinance the then outstanding Owners’ Costs (or part thereof), which funding arrangements may be secured, inter alia, by the relevant Financial Instruments; |
(b) |
the Owners may do any of the following as security for the funding arrangements referred to in paragraph (a) above, in each case without consent of the Charterers but with notice to the Charterers: |
(i) |
execute a ship mortgage over the Vessel or any other Financial Instrument in favour of the Owners’ Financiers; |
(ii) |
assign their rights and interests to, in or in connection with this Charter and/or any other Leasing Document in favour of the Owners’ Financiers; |
(iii) |
assign their rights and interests to, in or in connection with the Insurances, the Earnings and the Requisition Compensation of the Vessel in favour of the Owners’ Financiers; and |
(iv) |
enter into any other document or arrangement which is necessary to give effect to such financing arrangements. |
62.3 |
The Charterers undertake to comply, and provide such information and documents reasonably required to enable the Owners to comply, with all such instructions or directions in regard to the employment, insurances, operation, repairs and maintenance of the Vessel as laid down in any Financial Instrument or as may be reasonably directed from time to time during the currency of this Charter by the Owners’ Financiers in conformity with any Financial Instrument. The Charterers further agree and acknowledge for themselves all relevant terms, conditions and provisions of each Financial Instrument (if any) and agree to acknowledge this in writing in any form that may be reasonably required by the Owners’ Financiers subject to not imposing to the Charterers any more onerous obligations than those included in the Leasing Documents. The Charterers further agree to enter into any required acknowledgements of assignments and other customary documents as may be required in connection with the Financing Documents. |
62.4 |
The Owners shall, if requested by the Charterers or any applicable sub-charterer, procure that on or around the time a mortgage over the Vessel is executed in favour of Owners’ Financiers, the Owners’ Financiers shall enter into a QEL with the Owners and the Charterers or any |
47
applicable sub-charterer (in a form to be agreed among the Owners’ Financiers, the Owners, the Charterers and any applicable sub-charterer).
62.5 |
During the Charter Period, the Owners may procure a: |
(a) |
change in the registered ownership of the Vessel; and/or |
(b) |
assign or transfer by novation of any of its rights and obligations under any of the Leasing Documents, |
without the consent of the Charterers to any other financial institution, trust, fund, leasing company or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets provided always that such change of ownership or transfer shall not disturb or interfere with the Charterers’ lawful use, possession and quiet enjoyment of the Vessel during the Charter Period. The Charterers shall be liable to the aforesaid new owner of the Vessel for its performance of all obligations under this Charter (as novated) after any such change of the registered ownership from the Owners to such new owner and the Charterers shall procure that any party to a Leasing Document:
(i) |
becomes liable to the new of owner of the Vessel for its performance of all obligations pursuant to such Leasing Document; and |
(ii) |
enters into all necessary documents or takes any necessary actions required for such Leasing Document and any Security Interest created thereunder remaining in full force and effect (or to be novated and/or re-executed) as from the completion of the relevant sale. |
62.6 |
The Charterers agree and undertake to enter into any such usual documents and provide all necessary assistance as the Owners shall require to complete or perfect the transfer of the Vessel (with the benefit and burden of this Charter) or any novation or assignment made pursuant to this Clause 62 (Assignment, Transfer and Re-financing) at no cost for the Charterers. |
CLAUSE 63 – CONFIDENTIALITY
The Parties agree to keep the terms and conditions of this Charter and any other Leasing Document (the “Confidential Information”) strictly confidential, provided that a Party may disclose Confidential Information in the following cases:
(a) |
it is already known to the public or becomes available to the public other than through the act or omission of the disclosing Party; |
(b) |
it is required to be disclosed under the applicable laws of any Relevant Jurisdiction or by a governmental order, decree, regulation or rule; |
(c) |
in filings with a court or arbitral body in proceedings in which the Confidential Information is relevant and in discovery arising out of such proceedings; |
(d) |
to any other party to a Leasing Document; |
48
(e) |
to (or through) whom a Party assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Leasing Document (as permitted by the terms thereof) provided that such person shall undertake that it would not disclose Confidential information to any other party save for circumstances arising which are similar to those described under this Clause; |
(f) |
to any of the following persons (on a need to know basis): |
(i) |
a shareholder or an Affiliate of either Party or a party referred to in paragraph (d); |
(ii) |
its board of directors, employees or its shareholders; |
(iii) |
professional advisers retained by a disclosing party; |
(iv) |
any rating agencies; |
(v) |
the Approved Classification Society; |
(vi) |
the ship registry of the Flag State; and |
(vii) |
in the case of the disclosing party being the Owners, persons advising on, providing or considering the provision of financing to the Owners or an Affiliate of the Owners, |
provided that the disclosing party shall exercise due diligence to ensure that no such person shall disclose Confidential Information to any other party save for circumstances arising which are similar to those described under this Clause or such other circumstances as may be permitted by all Parties;
(g) |
to any person which is a classification society or other entity which the Owners or the Owners’ Financiers have engaged to make the calculations necessary to enable the Owners and/or the Owners’ Financiers to comply with their reporting obligations under the Poseidon Principles; or |
(h) |
with the prior written consent of all Parties and if required by any Party, subject to a corresponding confidentiality undertaking obtained from the party to whom the Confidential Information is disclosed to. |
CLAUSE 64 – GENERAL APPLICATION OF PROCEEDS
64.1 |
Any Net Trading Proceeds, Net Sales Proceeds, Total Loss Proceeds, any proceeds realised by the Owners in connection with the enforcement of the Security Documents (unless otherwise specified in the Security Documents) and any proceeds received by the Owners from any Other Owner (as trustee for the Owners) shall be applied in the following order of application against amounts payable under the Leasing Documents: |
(a) |
firstly, in or towards any amounts outstanding under the Leasing Documents other than the Termination Sum (including but not limited to any costs and expenses incurred in the enforcement of the Security Documents, to the extent these are not covered under the Termination Sum); |
49
(b) |
secondly, in or towards satisfaction of the Charterers’ obligation to pay the Termination Sum (or such portion of it that then remains unpaid) in any order of application in the amounts comprising the Termination Sum as the Owners may determine; and |
(c) |
thirdly, upon satisfaction in full of all amounts payable to the Owners under the Leasing Documents, in payment of any surplus to the Charterers, but subject always to the terms of the General Assignment. |
CLAUSE 65 – GOVERNING LAW AND ENFORCEMENT
65.1 |
This Charter, and any non-contractual obligations arising out of or in connection with it, shall be governed by English law. |
65.2 |
Any dispute arising out of or in connection with any Leasing Document (including a dispute regarding the existence, validity or termination of any Leasing Document or any non-contractual obligation arising out of or in connection with any Leasing Document) (a “Dispute”) shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause. |
65.3 |
The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. The reference shall be to three (3) arbitrators. A Party wishing to refer the Dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other Party requiring the other Party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other Party appoints its own arbitrator and give notice that it has done so within the fourteen (14) days specified. If the other Party does not appoint its own arbitrator and give notice that it has done so within the fourteen (14) days specified, the Party referring a Dispute to arbitration may, without the requirement of any further prior notice to the other Party, appoint its arbitrator as sole arbitrator and shall advise the other Party accordingly. The award of a sole arbitrator shall be binding on both Parties as if he had been appointed by agreement. Nothing herein shall prevent the Parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. |
65.4 |
In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 (or such other sum as the Parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. |
CLAUSE 66 – DEFINITIONS
66.1 |
In this Charter the following terms shall have the meanings ascribed to them below: |
“Acceptance Certificate” means a certificate substantially in the form set out in Schedule 1 (Acceptance Certificate) to be signed by the Charterers at Delivery.
“Account Bank” means ABN AMRO Bank N.V., Netherlands or such other bank approved by the Owners.
50
“Account Charge” means the document creating charge(s) over the Operating Account executed or to be executed by the Charterers in favour of the Owners.
“Advance Charterhire” has the meaning as defined under Clause 36.2 of the Charter.
“Affiliate” means in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.
“Annex VI” means Annex VI of the Protocol of 1997 to amend the International Convention for the Prevention of Pollution from Ships 1973 (Marpol), as modified by the Protocol of 1978 relating thereto.
“Anti-Bribery and Anti-Corruption Laws” means the US Foreign Corrupt Practices Act of 1977 as amended and the rules and regulations thereunder, the UK Bribery Act of 2010, and/or any similar laws, rules or regulations issued, administered or enforced by the United States, United Kingdom, the European Union or any of its member states, or any other country or governmental agency having jurisdiction over the Owners or any Obligors or their respective subsidiaries.
“Anti-Money Laundering Laws” means all applicable financial record-keeping and reporting requirements, anti-money laundering statutes (including all applicable rules and regulations thereunder) and all applicable related or similar laws, rules, regulations or guidelines, of all jurisdictions including and without limitation, the United States of America, the United Kingdom, Greece, the Republic of the Marshall Islands, Hong Kong and the People’s Republic of China and which in each case are:
(a) |
issued, administered or enforced by any governmental agency having jurisdiction over the Charterers or any other Obligors or their respective subsidiaries; |
(b) |
of any jurisdiction in which the Charterers or any other Obligor conducts business; or |
(c) |
to which the Charterers or any other Obligor is subjected or subject to. |
“Approved Classification Society” means the classification society stipulated in the Shipbuilding Contract or any other classification society which is a member of the International Association of Classification Societies and approved by the Owners in writing.
“Approved Commercial Manager” means OET Chartering Inc. or any other reputable ship management company as may be approved by the Owners in writing prior to its appointment as commercial manager of the Vessel in accordance with this Charter.
“Approved Manager” means the Approved Commercial Manager or the Approved Technical Manager.
“Assignable Sub-charter” means any period time charters relating to the Vessel, whether or not already in existence.
“Approved Technical Manager” means Kyklades Maritime Corporation or any other reputable ship management company as may be approved by the Owners in writing prior to its appointment as technical manager of the Vessel in accordance with this Charter.
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“Approved Valuer” means Clarksons Platou, Simpson Spence Young, Braemar ACM, Arrow, Fearnleys, Maersk Brokers or such other independent and reputable shipbroker nominated by the Charterers and approved by the Owners.
“Arrangement Fee” has the meaning as defined under Clause 44.1.
“Breakfunding Costs” means all breakfunding costs and expenses incurred or payable by the Owners when a repayment or prepayment under the relevant funding arrangement entered into by the Owners for the purpose of financing the Purchase Price (or any part thereof) does not fall on a Payment Date, a Purchase Option Date or a date specified by the Owners in any Termination Notice.
“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for business in the principal business centres of Shanghai, Singapore, Amsterdam and Piraeus or:
(a) |
in respect of a day on which a payment is required to be made or other dealing is due to take place under this Agreement in Dollars, a day on which banks are open in New York City; and |
(b) |
in respect of any Quotation Day or any date on which LIBOR or (if applicable) any Replacement Benchmark is to be determined, a day on which banks are open in London. |
“Builder” has the meaning ascribed to such term in the MOA.
“Builder’s Warranties” means the guarantees and/or warranties provided by the Builder to the Head Sellers under Article IX of the Shipbuilding Contract and assigned by the Head Sellers to the Charterers which the Charterers will on-assign to the Owners pursuant to the Builder’s Warranties Assignment.
“Builder’s Warranties Assignment” means the tripartite assignment executed between (a) the Head Sellers (b) the Charterers and (c) the Owners in relation to the Builder’s Warranties in relation to the Vessel.
“Cancelling Date” has the meaning ascribed to such term in the MOA.
“Change of Control” means:
(a) |
the Guarantor ceasing to directly own one hundred percent (100%) of the shares in the Charterers; or |
(b) |
Mr. Ioannis Alafouzos and Mr. Themistoklis Alafouzos cease to hold less than 35% of the shares (directly or indirectly) of the Guarantor. |
“Charter Period” means the period described in Clause 32.1 unless it is terminated earlier in accordance with the provisions of this Charter.
“Charterhire” means each of, as the context may require, all of the instalments of hire payable hereunder on each applicable Payment Date comprising in each case both Fixed Charterhire and Variable Charterhire, as further detailed in Clause 36.
“Commencement Date” means the date on which Delivery takes place.
52
“Delisting” means the Guarantor ceasing to be listed on the Oslo Stock Exchange (Oslo Børs).
“Delivery” means the physical and legal delivery of the Vessel from the Owners to the Charterers pursuant to the terms of this Charter.
“Dollars” and “US$” mean the lawful currency for the time being of the United States of America.
“Earnings” means all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Charterers and which arise out of the use or operation of the Vessel, including (but not limited to):
(a) |
all freight, hire and passage moneys; |
(b) |
any compensation payable in the event of requisition of the Vessel for hire; |
(c) |
any remuneration for salvage and towage services; |
(d) |
any demurrage and detention moneys; |
(e) |
damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of the Vessel; |
(f) |
all moneys which are at any time payable to the Charterers in relation to general average contribution; and |
(g) |
if and whenever the Vessel is employed on terms whereby any moneys falling within paragraphs (a) to (f) are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to the Vessel. |
“Environmental Claim” means any claim by any governmental, judicial or regulatory authority or any other person which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law and, for this purpose, “claim” includes a claim for damages, compensation, contribution, injury, fines, losses and penalties or any other payment of any kind, including in relation to clean-up and removal, whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset.
“Environmental Incident” means:
(a) |
any release, emission, spill or discharge of Environmentally Sensitive Material whether within the Vessel or from the Vessel into any other vessel or into or upon the air, water, land or soils (including the seabed) or surface water; or |
(b) |
any incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, water, land or soils (including the seabed) or surface water from a vessel other than the Vessel and which involves a collision between the Vessel and such other vessel or some other incident of navigation or operation, in either case, in connection with which the Vessel is actually or potentially liable to be arrested, attached, detained or injuncted and/or the Vessel and/or any Obligors and/or any |
53
operator or manager of the Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or
(c) |
any other incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, water, land or soils (including the seabed) or surface water otherwise than from the Vessel and in connection with which the Vessel is actually or potentially liable to be arrested and/or where any Obligors and/or any operator or manager of the Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action. |
“Environmental Law” means any present or future law relating to pollution or protection of human health or the environment, to conditions in the workplace, to the carriage, generation, handling, storage, use, release or spillage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material.
“Environmentally Sensitive Material” means and includes all contaminants, oil, oil products, toxic substances and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous.
“Expiry Owners’ Costs” means an amount equal to sixty five per cent. (65%) of the Opening Capital Balance.
“Fair Market Value” means the value of the Vessel determined as follows:
(a) |
subject to sub-paragraph (b) below, the arithmetic mean of the valuations shown by two (2) valuation reports each addressed to the Buyers and prepared at the Sellers’ cost: |
(i) |
on a date no earlier than thirty (30) days prior to the relevant date of valuation; |
(ii) |
by Approved Valuers one nominated by the Owners and the other nominated by the Charterers (but with the report addressed to the Owners); |
(iii) |
without physical inspection of the Vessel; and |
(iv) |
on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, without taking into account any charter; and |
(b) |
if there is a discrepancy of five per cent. (5%) or more between the market valuations shown on the two (2) valuation reports obtained pursuant to paragraph (a) above (using the lower valuation figure as the denominator), then a third valuation shall be obtained and prepared on the same terms and conditions as set out under paragraph (a) above (except that the third valuation report additionally required under this sub-paragraph (b) shall be prepared by an Approved Valuer nominated by the Owners), with the arithmetic mean taken from the valuations shown by such three (3) valuation reports. |
“Fee Letter” mean the fee letter referred to under Clause 44.1 for payment of the Arrangement Fee.
54
“Financial Indebtedness” means, in relation to a person (the “debtor”), a liability of the debtor:
(a) |
for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor; |
(b) |
under any loan stock, bond, note or other security issued by the debtor; |
(c) |
under any acceptance credit, guarantee or letter of credit facility made available to the debtor; |
(d) |
under a financial lease, a deferred purchase consideration arrangement (other than deferred payments for assets or services obtained on normal commercial terms in the ordinary course of business) or any other agreement having the commercial effect of a borrowing or raising of money by the debtor; |
(e) |
under any foreign exchange transaction, any interest or currency swap 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 paragraphs (a) to (e) if the references to the debtor referred to the other person. |
“Financial Instruments” means the applicable loan or facility agreement entered into between the Owners (or their affiliate) and the Owners’ Financiers and any mortgage, deed of covenants, assignment in respect of any of the Leasing Documents, assignment in respect of Earnings, Insurances and Requisition Compensation, manager’s undertaking and subordination (including assignment of manager’s interests in the Insurances) or any other financial security instruments granted by the Owners to the Owners’ Financiers as security for the financing or refinancing of the Owners’ acquisition of the Vessel.
“First Payment Date” shall have the meaning as defined under 36.5(a).
“Fixed Charterhire” shall have the meaning as defined under Clause 36.4(a).
“Flag State” means the flag state named in Box 5 of this Charter or any other state or jurisdiction approved in writing by the Owners (whose approval shall not be unreasonably withheld or delayed).
“Fleet Vessel” means any ship or vessel (including, but not limited to, the Vessel and the Other Vessel) from time to time wholly leased, hired, chartered or financed under any lease, hire purchase agreement, charter or any other financing arrangement by affiliates of the Owners and/or the Other Owner to subsidiaries or affiliates of the Guarantor.
“General Assignment” means the assignment agreement executed or to be executed between the Charterers and the Owners in respect of the Vessel, pursuant to which the Charterers shall, inter alia, assign its rights under:
(a) |
the Earnings, Insurances, Requisition Compensation in respect of the Vessel; and |
(b) |
any Assignable Sub-charter; |
55
in favour of the Owners.
“Group” means the Guarantor and its Subsidiaries (whether directly or indirectly owned) from time to time.
“Guarantee” means the guarantee executed by the Guarantor in favour of the Owners on or about the date hereof.
“Guarantor” means Okeanis Eco Tankers Corp., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with registration number 96382 and its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Republic of the Marshall Islands MH 96960.
“Head MOA” means the memorandum of agreement dated 29 June 2021 and made between the Charterers (in their capacity as buyers) and the Head Sellers (in their capacity as sellers), pursuant to which the Head Sellers agreed to sell and the Charterers agreed to purchase the Vessel upon the terms and conditions set out therein.
“Head Sellers” means Felton Enterprises S.A., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with registration number 106138 and registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro MH 96960.
“Hire Period” means (i) in the case of the first Hire Period, the period commencing on the Commencement Date and ending on the First Payment Date; and (ii) in the case of each subsequent Payment Date, the period of commencing on the last day of the preceding Hire Period and ending on the next occurring Payment Date.
“Holding Company” means, in relation to a person, any other person in relation to which (i) it is a Subsidiary or (ii) it is a Subsidiary of a Subsidiary.
“IAPPC” means a valid international air pollution prevention certificate for the Vessel issued pursuant to the MARPOL Protocol.
“IFRS” means International Financing Reporting Standards.
“Initial Market Value” has the meaning ascribed to such term in the MOA.
“Insurances” means:
(a) |
all policies and contracts of insurance, including entries of the Vessel in any protection and indemnity or war risks association, which are effected in respect of the Vessel or otherwise in relation to it whether before, on or after the date of this Charter; and |
(b) |
all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium and any rights in respect of any claim whether or not the relevant policy, contract of insurance or entry has expired on or before the date of this Charter. |
“Interest Rate” means:
56
(a) |
subject to Clause 37.1, for any Hire Period of which the Quotation Day falls before the occurrence of a Screen Rate Replacement Event, LIBOR; |
(b) |
for any Hire Period of which the Quotation Day falls on or after the occurrence of a Screen Rate Replacement Event but before a Replacement Benchmark is implemented pursuant to Clause 37.4, in accordance with Clause 37.3 (unless otherwise agreed by the Owners); and |
(c) |
for any Hire Period of which the Quotation Day falls on or after a Replacement Benchmark is implemented pursuant to Clause 37.4, the rate of interest determined under the Replacement Benchmark. |
“ISM Code” means the International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organisation Assembly as Resolutions A.741 (18) and A.788 (19), as the same may be amended or supplemented from time to time (and the terms “safety management system”, “Safety Management Certificate” and “Document of Compliance” have the same meanings as are given to them in the ISM Code).
“ISPS Code” means the International Ship and Port Security Code as adopted by the Conference of Contracting Governments to the Safety of Life at Sea Convention 1974 on 13 December 2002 and incorporated as Chapter XI-2 of the Safety of Life at Sea Convention 1974, as the same may be supplemented or amended from time to time.
“ISSC” means a valid international ship security certificate for the Vessel issued pursuant to the ISPS Code.
“Joint Surveyor” shall have the meaning as defined under Clause 41.8.
“Leasing Documents” means this Charter, the Guarantee, the MOA, the Fee Letter, any QEL the Security Documents, any other document designated as a “Leasing Document” as agreed between the Charterers and the Owners and each, as the context may require, the “Leasing Document”.
“LIBOR” means, in relation to a Hire Period:
(a) |
the applicable Screen Rate as of the Specified Time for dollars and for a period equal in length to the Hire Period; or |
(b) |
as otherwise determined pursuant to Clause 37 (Changes to Interest Rate, Default Interest), |
and if, in either case, that rate is less than zero, LIBOR shall be deemed to be zero.
“Major Casualty” means any casualty to the Vessel in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds US$2,000,000 or the equivalent in any other currency.
“Manager’s Undertaking” means, in relation to an Approved Manager, a letter of undertaking to be executed by that Approved Manager in favour of the Owners subordinating the rights of that Approved Manager against the Vessel and the Charterers to the rights of the Owners.
57
“Mandatory Sale” has the meaning given to that term in Clause 55A.
“Mandatory Sale Date” has the meaning given to that term in Clause 55A.
“Mandatory Sale Price” means, in respect of the Mandatory Sale Date, the aggregate of:
(a) |
the Owners’ Costs prevailing as at the Mandatory Sale Date; |
(b) |
any Charterhire accrued but unpaid as at the date of payment of the Mandatory Sale Price; |
(c) |
any Breakfunding Costs including any Swap Costs; |
(d) |
any documented legal or other costs incurred by the Owners in connection with the exercise of the Mandatory Sale; and |
(e) |
aside from the amounts described under paragraphs (a) to (d) above, any other moneys due and owing under the Leasing Documents at the Mandatory Sale Date. |
“Margin” means two point four five per cent. (2.45%) per annum.
“MARPOL Protocol” means Annex VI (Regulations for the Prevention of Air Pollution from Ships) to the International Convention for the Prevention of Pollution from Ships 1973 (as amended in 1978 and 1997).
“Material Adverse Effect” means, in the reasonable opinion of the Owners, a material adverse effect on:
(a) |
the business, operations, property, condition (financial or otherwise) of any Obligor or the Group (taken as a whole); or |
(b) |
the ability of any Obligor to perform its obligations under any Leasing Document to which it is a party; or |
(c) |
the validity or enforceability of, or the effectiveness or ranking of any Security Interests granted pursuant to, any of the Leasing Documents or the rights or remedies of the Owners under any of the Leasing Documents. |
“MOA” means the memorandum of agreement dated on or about the date of this Charter and made between the Owners (in their capacity as buyers) and the Charterers (in their capacity as sellers), pursuant to which the Charterers agree to sell and the Owners agree to purchase the Vessel upon the terms and conditions set out therein.
“Net Sales Proceeds” has the meaning given to it under Clause 42.1(c).
“Net Trading Proceeds” has the meaning given to it under Clause 42.1(b).
“Nominated Purchaser” has the meaning given to it under Clause 42.1(c).
“Obligatory Insurances” means any insurances of the Vessel required to be effected by or on behalf of the Charterers pursuant to Clause 39.
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“Obligors” means:
(a) |
the Charterers; |
(b) |
the Guarantor; |
(c) |
the Approved Managers as at the date of this Charter which is an entity within the Group; |
(d) |
any sub-charterer of the Vessel which is an entity within the Group; and |
(e) |
any other party providing security for the Charterers’ obligations under this Charter pursuant to a Security Document or otherwise (except any Approved Manager or sub-charterer which are not entities within the Group). |
“Opening Capital Balance” shall have the same meaning as defined under the MOA.
“Operating Account” means an interest bearing account opened or to be opened in the name of the Charterers with the Account Bank.
“Option Premium” means an amount of US$1,500,000.
“Original Financial Statements” means in relation to the Guarantor, its audited consolidated financial statements for the fiscal year ended 31 December 2020 and its unaudited consolidated financial statements for the fiscal year ended 31 December 2021.
“Original Jurisdiction” means, in relation to an Obligor, the jurisdiction under whose laws they are incorporated as at the date of this Charter.
“Other Charters” means, in relation to each Other Vessel, each bareboat charterparty dated on or around the date of this Charter which is entered into between each applicable Other Owner and each applicable Other Charterer.
“Other Charterer” means, in relation to an Other Vessel, Theta Navigation Ltd.
“Other Leasing Documents” means the Leasing Documents as defined in the Other Charter.
“Other Owner” means, in relation to an Other Vessel, Sea 290 Leasing Co. Limited.
“Other Vessel” means each, or as the context may require, Hull Number 3212.
“Owners’ Costs” means, on any relevant date, (i) the Opening Capital Balance minus (ii) the aggregate Fixed Charterhire which has been paid by the Charterers and received by the Owners as at such date.
“Owners’ Financier” means any financier providing financing or refinancing facilities to the Owners or any affiliate of the Owners in respect of the Owners’ purchase and/or lease of the Vessel to the Charterers under the terms of the Leasing Documents.
“Owners’ Surveyor” shall have the meaning as defined under Clause 41.9.
“Party” means a party to this Charter, namely the Owners or the Charterers.
59
“Payment Date” shall have the meaning as defined under Clause 36.5.
“Permitted Security Interest” means:
(a) |
any Security Interest created by a Security Document or a Financial Instrument; |
(b) |
any lien for unpaid master’s and crew’s wages in accordance with the ordinary course of operation of the Vessel or in accordance with usual reputable maritime practice; |
(c) |
any lien for salvage; |
(d) |
any lien for master’s disbursements incurred in the ordinary course of trading; |
(e) |
any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of the Vessel provided such liens do not secure amounts more than thirty (30) days overdue; |
(f) |
any Security Interest created in favour of a plaintiff or defendant in any action of the court or tribunal before whom such action is brought as security for costs and expenses where the Owners are prosecuting or defending such action in good faith by appropriate steps; and |
(g) |
Security Interests arising by operation of law in respect of taxes which are not overdue or for payment of taxes which are overdue for payment but which are being contested by the Owners or the Charterers in good faith by appropriate steps and in respect of which adequate reserves have been made, |
provided that the foregoing have not arisen due to the default or omission of any Obligor.
“Poseidon Principles” means the financial industry framework for assessing and disclosing the climate alignment of ship finance portfolios published in June 2019 as the same may be amended or replaced to reflect changes in applicable law or regulation or the introduction of or changes to mandatory requirements of the International Maritime Organisation from time to time.
“Potential Termination Event” means, an event or circumstance specified in Clause 47 (Termination Event) which would with the giving of any notice, the lapse of time, and/or a determination of the Owners, constitute a Termination Event.
“Prepositioning Date” shall have the same meaning as defined under the MOA.
“Prohibited Countries” means countries or territories whose government is the target of Sanctions or that is subject to comprehensive country-wide or territory-wide Sanctions (currently and, in any case, as long as the Sanctions remain in place, as regards United States Sanctions, Cuba, Syria, Iran, North Korea, Crimea and Venezuela), including but not limited to or pursuant to the US’s Office of Foreign Assets Control of the U.S.
“Prohibited Person” means any person who is the subject of Sanctions (whether designated by name or by reason of being included in a class of persons to whom the applicable Sanctions apply in accordance with their terms).
“Purchase Option” means the purchase option referred to in Clause 55.1.
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“Purchase Option Date” shall have the meaning ascribed thereto in Clause 55.2.
“Purchase Option Notice” shall have the meaning ascribed thereto in Clause 55.2.
“Purchase Option Price” means, in respect of any Purchase Option Date:
(a) |
if the Purchase Option Date falls on or after the first (1st) anniversary of the Commencement Date but prior to the seventh (7th) anniversary of the Commencement Date, the aggregate of: |
(i) |
the Owners’ Costs prevailing as at the relevant Purchase Option Date; |
(ii) |
the Relevant Fee (if appliable); |
(iii) |
any Charterhire accrued but unpaid as at the date of payment of the Purchase Option Price; |
(iv) |
any Breakfunding Costs including any Swap Costs; |
(v) |
any documented legal or other costs incurred by the Owners in connection with the exercise of the Purchase Option under Clause 55 (Purchase Option); and |
(vi) |
aside from the amounts described under paragraphs (i) to (v) above, any other moneys due and owing under the Leasing Documents at the relevant Purchase Option Date; |
(b) |
if the Purchase Option Date falls on or after the seventh (7th) anniversary of the Commencement Date, the aggregate of: |
(i) |
the Expiry Owners’ Costs; |
(ii) |
any Charterhire accrued but unpaid as at the date of payment of the Purchase Option Price; |
(iii) |
any documented legal or other costs incurred by the Owners in connection with the exercise of the Purchase Option under Clause 55 (Purchase Option); and |
(iv) |
aside from the amounts described under paragraphs (i) to (iii) above, any other moneys due and owing under the Leasing Documents at the relevant Purchase Option Date. |
“Purchase Price” has the meaning given to it in the MOA.
“QEL” means any agreement (entered or, as the context may require, to be entered into) between the Owners, the Owners’ Financiers (if applicable), the Charterers and (if applicable) any sub-charterer.
“Quotation Day” means, in relation to any Hire Period, two (2) Business Days before the first day of that Hire Period unless market practice differs in the Relevant Interbank Market in which
61
case the Quotation Day will be determined by the Owners in accordance with market practice in the Relevant Interbank Market.
“Relevant Interbank Market” means the London interbank market or in the case of any Replacement Benchmark, any applicable replacement interbank market.
“Relevant Jurisdiction” means, in relation to an Obligor:
(a) |
its Original Jurisdiction; |
(b) |
any jurisdiction where any property owned by it and charged under a Leasing Document is situated; |
(c) |
any jurisdiction where it conducts its business; or |
(d) |
any jurisdiction whose laws govern the perfection of any of the Security Documents entered into by it creating a Security Interest. |
“Relevant Nominating Body” means any applicable central bank, regulator or other supervisory authority or a group of them, or any working group or committee sponsored or chaired by, or constituted at the request of, any of them or the Financial Stability Board.
“Replacement Benchmark” means a benchmark rate which is:
(a) |
formally designated, nominated or recommended as the replacement for a Screen Rate by: |
(i) |
the administrator of that Screen Rate; or |
(ii) |
any Relevant Nominating Body, |
and if replacements have, at the relevant time, been formally designated, nominated or recommended under both paragraphs, the “Replacement Benchmark” will be the replacement under paragraph (ii) above;
(b) |
subject to Clause 37.5, in the opinion of the Owners, generally accepted in the international or any relevant domestic syndicated loan markets as the appropriate successor to that Screen Rate; or |
(c) |
subject to Clause 37.5, in the opinion of the Owners, an appropriate successor to a Screen Rate. |
“Relevant Fee” means, in relation to the Vessel, the amount set out corresponding to the relevant Purchase Option Date below:
Relevant Anniversary Date |
Relevant Fee (US$) |
1st Anniversary |
1.5% of the Owners’ Costs |
2nd Anniversary |
1.25% of the Owners’ Costs |
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3rd Anniversary |
1% of the Owners’ Costs |
4th Anniversary |
0.75% of the Owners’ Costs |
5th Anniversary |
0.5% of the Owners’ Costs |
6th Anniversary |
0% of the Owners’ Costs |
“Requisition Compensation” includes all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (a) of the definition of “Total Loss”.
“Sanctions” means any sanctions (including US “secondary sanctions”), embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment, exporting, financing or making assets available (or other activities similar to or connected with any of the foregoing):
(a) |
imposed by law or regulation of the United Kingdom, the Council of the European Union, the United Nations or its Security Council, the People’s Republic of China, the Special Administrative Region of Hong Kong or the United States of America; or |
(b) |
otherwise imposed by any law or regulation which are applicable to and/or binding on any Obligor. |
“Sanctions Advisory” means the Sanctions Advisory for the Maritime Industry, Energy and Metals Sectors, and Related Communities issued May 14, 2020 by the US Department of the Treasury, Department of State and Coast Guard, as may be amended or supplemented, and any similar future advisory.
“Sanctioned Ship” means a ship which is the subject of Sanctions.
“Screen Rate” means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for dollars for the relevant period displayed on page LIBOR01 or LIBOR02 of the Thomson Reuters screen (or any replacement Thomson Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Thomson Reuters. If such page or service ceases to be available, the Owners may specify another page or service displaying the relevant rate.
“Screen Rate Contingency Period” means twenty (20) days.
“Screen Rate Replacement Event” means, in relation to a Screen Rate:
(a) |
the methodology, formula or other means of determining that Screen Rate has, in the opinion of the Owners, materially changed; |
(b)
(i)
63
(A) |
the administrator of that Screen Rate or its supervisor publicly announces that such administrator is insolvent; or |
(B) |
information is published in any order, decree, notice, petition or filing, however described, of or filed with a court, tribunal, exchange, regulatory authority or similar administrative, regulatory or judicial body which reasonably confirms that the administrator of that Screen Rate is insolvent, |
provided that, in each case, at that time, there is no successor administrator to continue to provide that Screen Rate;
(ii) |
the administrator of that Screen Rate publicly announces that it has ceased or will cease, to provide that Screen Rate permanently or indefinitely and, at that time, there is no successor administrator to continue to provide that Screen Rate; |
(iii) |
the supervisor of the administrator of that Screen Rate publicly announces that such Screen Rate has been or will be permanently or indefinitely discontinued; or |
(iv) |
the administrator of that Screen Rate or its supervisor announces that that Screen Rate may no longer be used; or |
(c) |
the administrator of that Screen Rate determines that that Screen Rate should be calculated in accordance with its reduced submissions or other contingency or fallback policies or arrangements and either: |
(i) |
the circumstance(s) or event(s) leading to such determination are not (in the opinion of the Owners) temporary; or |
(ii) |
that Screen Rate is calculated in accordance with any such policy or arrangement for a period no less than the Screen Rate Contingency Period; or |
(d) |
in the opinion of the Owners, that Screen Rate is otherwise no longer appropriate for the purposes of calculating interest under this Charter. |
“Security Documents” means:
(a) |
the Account Charge; |
(b) |
the General Assignment; |
(c) |
the Shares Security; |
(d) |
the Builder’s Warranties Assignment; |
(e) |
each Manager’s Undertaking; and |
(f) |
any other security document conferring any Security Interest in respect of the obligations of the Charterers under or in connection with this Charter. |
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“Security Interest” means:
(a) |
a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or any other security interest of any kind; |
(b) |
the security rights of a plaintiff under an action in rem; or |
(c) |
any other right which confers on a creditor or potential creditor a right or privilege to receive the amount actually or contingently due to it ahead of the general unsecured creditors of the debtor concerned; however this paragraph (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution. |
“Shareholder” means the Guarantor.
“Shares Security” means a first priority charge/pledge over the shares of the Charterers executed or to be executed by the Shareholder in favour of the Owners.
“Shipbuilding Contract” means the shipbuilding contract dated 28 September 2020 entered into between the Head Sellers (as defined in the MOA) and the Builder (in its capacity as seller) for the construction and purchase of the Vessel as may from time to time be amended, supplemented.
“Shipbuilding Contract Price” means the contract price to be paid by the Head Sellers (as defined in the MOA) to the Builder under the Shipbuilding Contract.
“SOFR” means the secured overnight financing rate (SOFR) administered by the Federal Reserve Bank of New York (or any other person which takes over the administration of that rate) published (before any correction, recalculation or republication by the administrator) by the Federal Reserve Bank of New York (or any other person which takes over the publication of that rate).
“Specified Time” means 11.00am London time on the Quotation Day.
“Statement of Compliance” means a Statement of Compliance related to fuel oil consumption pursuant to regulations 6.6 and 6.7 of Annex VI.
“Subsidiary” means a subsidiary within the meaning of section 1159 of the UK Companies Act 2006.
“Swap Costs” means any amount payable by the Owners or documented costs incurred by the Owners (after netting out any gains) as a result of the termination or close-out of any Treasury Transaction entered into in connection with the Leasing Documents.
“Termination Date” has the meaning given to it under Clause 47.2.
“Termination Event” means any event described in Clause 47 (Termination Events).
“Termination Fee” means one point five per cent. (1.50%) of the Owners’ Costs as at the relevant date.
“Termination Notice” has the meaning given to it under Clause 47.2.
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“Termination Sum” means, in respect of any date (such date being referred to as the “Relevant Date” for the purposes of this definition only), the aggregate of (without double counting amounts that may be included in more than one sub-paragraph below):
(a) |
the Owners’ Costs prevailing as at the Relevant Date; |
(b) |
any Variable Charterhire accrued and unpaid as at the date of payment of the Termination Sum; |
(c) |
the Termination Fee; |
(d) |
any Breakfunding Costs including any Swap Costs; |
(e) |
any and all evidenced and documented direct costs, losses and liabilities incurred by the Owners as a result of the early termination of the leasing under this Charter (including any losses based on estimated market charter rates provided by an Approved Valuer of re-chartering the Vessel to another party other than the Charterers for the period up until the natural expiry of the Charter Period) including but not limited to any legal costs, any agency or broker fees incurred in attempting to re-charter or otherwise dispose of the Vessel; |
(f) |
any and all documented costs, losses and liabilities incurred by the Owners in locating, repossessing, recovering, repositioning, berthing, insuring and maintaining the Vessel and/or in collecting any payments due under this Charter and/or in obtaining the due performance of the obligations of the Charterers under this Charter or the other Leasing Documents; and |
(g) |
aside from the amounts described under paragraphs (a) to (f) above, any other moneys due and owing under the Leasing Documents at the Relevant Date including any default interest on amounts under (a) to (f) above. |
“Total Loss” means:
(a) |
any expropriation, confiscation, requisition (other than a requisition for hire) or acquisition of the Vessel, whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority; |
(b) |
any requisition for hire, arrest, condemnation, capture, seizure or detention of the Vessel (including any hijacking or theft but excluding any event specified in paragraph (a) of this definition) unless it is redelivered within thirty (30) days to the full control of the Owners or the Charterers; or |
(c) |
actual, constructive, compromised, agreed or arranged total loss of the Vessel. |
“Total Loss Date” means, in relation to the Total Loss of the Vessel:
(a) |
in the case of a Total Loss occurring under paragraph (a) of the definition of Total Loss, on the date on which the expropriation, confiscation, requisition or, as the case may be, the acquisition of the Vessel is completed by delivery of the Vessel to the relevant |
66
government or official authority or the person or persons claiming to be or to represent the relevant government or official authority;
(b) |
in the case of a Total Loss occurring under paragraph (b) of the definition of Total Loss, the date falling on the expiration of such thirty (30) day period; |
(c) |
in the case of an actual loss of the Vessel, the date on which it occurred; and |
(d) |
in the case of a constructive, compromised, agreed or arranged total loss of the Vessel, the earliest of: |
(i) |
the date when the Vessel was last heard of; |
(ii) |
the date on which a notice of abandonment is given to the insurers; and |
(iii) |
the date of any compromise, arrangement or agreement made by or on behalf of the Charterers with the insurers in which the insurers agree to treat the Vessel as a Total Loss. |
“Total Loss Payment Date” means, following the occurrence of a Total Loss, the earlier of:
(a) |
the date falling ninety (90) days after the Total Loss Date or such later date as the Owners may agree; and |
(b) |
the date on which the Owners receive the Total Loss Proceeds. |
“Total Loss Proceeds” means the proceeds of any policy or contract of insurance or any Requisition Compensation in each case arising in respect of a Total Loss.
“Total Loss Termination Sum” means, in respect of any date (such date being referred to as the “Relevant Date” for the purposes of this definition only), the aggregate of (without double counting amounts that may be included in more than one sub-paragraph below):
(a) |
the Owners’ Costs prevailing as at the Relevant Date; |
(b) |
any Variable Charterhire accrued and unpaid as at the date of payment of the Termination Sum; |
(c) |
any Breakfunding Costs including any Swap Costs; |
(d) |
any and all evidenced and documented direct costs, losses and liabilities incurred by the Owners as a result of the early termination of the leasing under this Charter (including any losses based on estimated market charter rates provided by an Approved Valuer of re-chartering the Vessel to another party other than the Charterers for the period up until the natural expiry of the Charter Period) including but not limited to any legal costs, any agency or broker fees incurred in attempting to re-charter or otherwise dispose of the Vessel; |
(e) |
any and all documented costs, losses and liabilities incurred by the Owners in collecting any payments due under this Charter and/or in obtaining the due performance of the obligations of the Charterers under this Charter or the other Leasing Documents; and |
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(f) |
aside from the amounts described under paragraphs (a) to (f) above, any other moneys due and owing under the Leasing Documents at the Relevant Date including any default interest on amounts under (a) to (f) above. |
“Treasury Transaction” means any derivative transaction entered into in connection with protection against or benefit from any fluctuation in price or rate.
“US” means the United States of America.
“US Tax Obligor” means:
(a) |
a person which is resident for tax purposes in the US; or |
(b) |
a person some or all of whose payments under the Leasing Documents are from sources within the US for US federal income tax purposes. |
“Variable Charterhire” shall have the meaning as defined under Clause 36.4(b).
“Vessel” means the VLCC with hull number 3211 and registered or to be registered under the name of the Owners under the Flag State upon Delivery.
66.2 |
In this Charter: |
“agreed form” means, in relation to a document, such document in a form agreed in writing between the Owners and the Charterers;
“asset” includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;
“company” includes any partnership, joint venture and unincorporated association;
“consent” includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation;
“contingent liability” means a liability which is not certain to arise and/or the amount of which remains unascertained;
“control” over a particular company means the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:
(a) |
cast, or control the casting of, fifty one per cent. (51%) or more of the maximum number of votes that might be cast at a general meeting of such company; or |
(b) |
appoint or remove all, or the majority, of the directors or other equivalent officers of such company; or |
(c) |
give directions with respect to the operating and financial policies of such company with which the directors or other equivalent officers of such company are obliged to comply; |
“document” includes a deed; also a letter or fax or email;
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“expense” means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;
“law” includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;
“legal or administrative action” means any legal proceeding or arbitration and any administrative or regulatory action or investigation;
“liability” includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;
“months” shall be construed in accordance with Clause 66.3;
“person” includes any company; any state, political sub-division of a state and local or municipal authority; and any international organisation;
“policy”, in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;
“protection and indemnity risks” means the usual risks covered by a protection and indemnity association which is a member of the International Group of Protection and Indemnity Clubs including pollution risks, extended passenger cover and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 6 of the International Hull Clauses (1/11/02 or 1/11/03), clause 8 of the Institute Time Clauses (Hulls) (1/10/83) or clause 8 of the Institute Time Clauses (Hulls) (1/11/1995) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;
“regulation” includes any regulation, rule, official directive, request or guideline whether or not having the force of law of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation; and
“tax” includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine.
66.3 |
Meaning of “month” |
A period of one or more “months” ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (“the numerically corresponding day”), but:
(a) |
on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or |
(b) |
on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day; |
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and “month” and “monthly” shall be construed accordingly.
66.4 |
In this Charter: |
(a) |
references to a Leasing Document or any other document being in the form of a particular appendix or to any document referred to in the recitals include references to that form with any modifications to that form which the Owners approve; |
(b) |
references to, or to a provision of, a Leasing Document or any other document are references to it as amended or supplemented, whether before the date of this Charter or otherwise; |
(c) |
references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Charter or otherwise; and |
(d) |
words denoting the singular number shall include the plural and vice versa. |
66.5 |
Headings |
In interpreting a Leasing Document or any provision of a Leasing Document, all clauses, sub-clauses and other headings in that and any other Leasing Document shall be entirely disregarded.
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EXECUTION PAGE
OWNERS |
|
|
|
SIGNED BY Wong Wai Sum |
) |
for and on behalf of |
) |
SEA 289 LEASING CO. LIMITED |
) /s/ Wong Wai Sum |
as attorney-in-fact |
) |
in the presence of |
) Attorney-in-Fact |
|
|
Witness’ signature: |
) /s/ Sandrea Mar |
Witness’ name: |
) Sandrea Mar |
Witness’ address: |
) Suites 4610-4619 Jardine House |
|
) 1 Connaught Place, Hong Kong |
|
|
CHARTERERS |
|
|
|
SIGNED BY Thaleia Kalafati |
) /s/ Thaleia Kalafati |
for and on behalf of |
) |
ARK MARINE S.A. |
|
as attorney-in-fact |
) /s/ Eirini Chaidemenou |
in the presence of |
) Eirini Chaidemenou |
|
) Attorney at Law |
Witness’ signature: |
) Athens Bar Association |
Witness’ name: |
) Eirini Chaidemenou |
Witness’ address: |
) Athens – Greece, +306976172522 |
71
SCHEDULE 1
ACCEPTANCE CERTIFICATE
72
SCHEDULE 2
CONDITIONS PRECEDENT
73
Dated: 21 March 2022
ARK MARINE S.A. , a corporation incorporated with Entity Number 109613 and existing under the laws of the Republic of the Marshall Islands with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960, hereinafter called the “Sellers”, have agreed to sell, and
SEA 289 LEASING CO. LIMITED, company incorporated under the laws of Hong Kong with limited liability with its registered office at 27/F, Three Exchange Square, 8 Connaught Place Central, Hong Kong, hereinafter called the “Buyers”, have agreed to buy:
Name of vessel: Hull No. 3211
IMO Number: 9920758
Classification Society: DNV
Class Notation: As per Class Certificate
Year of Build: 2022 Builder/Yard: Hyundai Heavy Industries Co., Ltd., South Korea
Flag: Marshall Islands or otherwise agreedPlace of Registration: N/A GT/NT: 154,500 / 106,657
hereinafter called the “Vessel”, on the following terms and conditions:
Definitions
“Agreement” means this memorandum of agreement which shall for the avoidance of doubt, include the rider provisions from Clauses 19 to 31.
“Flag State” means the Republic of the Marshall Islands (state flag state).
“Class” means the class notation referred to above.
“Classification Society” means the Society referred to above.
“Dollars” or “$” mean United States dollars, being the lawful currency of the United States of America.
“In writing” or “written” means a letter handed over from the Sellers to the Buyers or vice versa, a registered letter, e-mail or telefax.
“Parties” means the Sellers and the Buyers.
Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
1PURCHASE PRICE - (SEE CLAUSE 19)
2DEPOSIT - INTENTIONALLY OMITTED
3PAYMENT (SEE CLAUSE 19)
4INSPECTION - INTENTIONALLY OMITTED
5TIME AND PLACE OF DELIVERY AND NOTICES - (SEE CLAUSE 24)
6DIVERS INSPECTION / DRYDOCKING - INTENTIONALLY OMITTED
7SPARES, BUNKERS AND OTHER ITEMS
The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board and on shore. All spare parts and spare equipment including spare tail-end shaft(s) and/or spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of delivery used or unused, whether on board or not shall become the Buyers’ property.
The Sellers are not required to replace spare parts including spare tail-end shaft(s) and spare propeller(s)/propeller blade(s) which are taken out of spare and used as replacement prior to delivery, but the replaced items shall be the property of the Buyers. Stores and provisions and any bunkers, lubricating oils and greases on board the Vessel at the time of Delivery shall be taken over by the Buyers at no cost to the Buyers.
8DOCUMENTATION
At the time of delivery, the Buyers shall provide the Sellers with the following documents:
(i)a copy of Certificate of Registration of the Buyers;
(ii)a copy of resolutions or minutes of the meetings of the board of directors of the Buyers according to which they agree to purchase the Vessel and approving the execution of all documents and the doing of all things necessary to give effect to that; and
(iii)a copy of power of attorney of the Buyers appointing one or more representatives to act on behalf of the Buyers in the performance of this Agreement.
9ENCUMBRANCES
The Sellers warrant that the Vessel, at the time of Delivery, is free from all charters (other than the Bareboat Charter), encumbrances, mortgages and maritime liens or any other debts whatsoever, and is not subject to Port State or other administrative detentions. The Sellers hereby undertake to indemnify the Buyers against all consequences of claims made against the Vessel which have been incurred prior to the time of Delivery.
10TAXES, FEES AND EXPENSES
Any taxes, fees and expenses in connection with the purchase of the Vessel and registration in the Flag State and in connection with the closing of the Sellers’ register shall be for the Sellers’ account.
Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
11CONDITION ON DELIVERY
The Vessel with everything belonging to her shall be at the Sellers’ risk and expense until she is delivered to the Buyers but subject to the terms and conditions of this Agreement she shall be delivered and taken over as she was. However, the Vessel shall be delivered free of cargo and free of stowaways with her Class maintained without condition/recommendation*, free of average damage affecting the Vessel’s class, and with her classification certificates and national certificates, as well as all other certificates, valid and unextended without condition/recommendation* by the Classification Society or the relevant authorities at the time of Delivery.
12NAME/MARKINGS - INTENTIONALLY OMITTED
13BUYERS’ DEFAULT- INTENTIONALLY OMITTED
14SELLERS’ DEFAULT
Should the Sellers fail to give notice of the Scheduled Delivery Date by serving a Payment Notice under Clause 24 or fail to be ready to validly complete a legal transfer by the Cancelling Date the Buyers shall have the option of cancelling this Agreement. If after a Payment Notice has been given but before the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not made physically ready again by the Cancelling Date and new Payment Notice given, the Buyers shall retain their option to cancel. Should the Sellers fail to give a Payment Notice by the Cancelling Date or fail to be ready to validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers for their loss and for all expenses together with interest, and this Agreement shall immediately terminate and be cancelled without the need for either Buyers or Sellers to take any action whatsoever.
15BUYERS’ REPRESENTATIVES - INTENTIONALLY OMITTED
16LAW AND ARBITRATION (SEE CLAUSE 30)
17NOTICES - (SEE CLAUSE 25)
18ENTIRE AGREEMENT
The written terms of this Agreement, its Rider Clauses and the Bareboat Charter comprise the entire agreement between the Buyers and the Sellers in relation to the sale and purchase of the Vessel and supersede all previous agreements whether oral or written between the Parties in relation thereto. Each of the Parties acknowledges that in entering into this Agreement it has not relied on and shall have no right or remedy in respect of any statement, representation, assurance or warranty (whether or not made negligently) other than as is expressly set out in this Agreement. Any terms implied into this Agreement by any applicable statute or law are hereby excluded to the extent that such exclusion can legally be made. Nothing in this Clause shall limit or exclude any liability for fraud.
For and on behalf of the Sellers |
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For and on behalf of the Buyers |
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Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
2
EXECUTION VERSION
RIDER CLAUSES TO MEMORANDUM OF AGREEMENT
DATED 21 MARCH 2022
CLAUSE 19- PAYMENT OF PURCHASE PRICE BY BUYERS
(a) |
Subject to the provisions of this Agreement, in consideration of the Buyers agreeing to pay the Purchase Price of the Vessel to the Sellers, the Sellers hereby agree to sell and transfer all rights, title and interest in the Vessel absolutely, with full title guarantee, on the Delivery Date. |
(b) |
Subject to the provision of a duly completed Payment Notice to be received by the Buyers not later than five (5) Business Days prior to the Prepositioning Date (as hereinafter defined) and fulfilment of the Remittance Conditions Precedent at least one (1) Business Days prior to the Prepositioning Date, the Purchase Price shall be paid in full by the Buyers to the Sellers as follows: |
(i) |
on the Delivery Date, an amount corresponding to the amount of the Advance Charterhire payable by the Sellers as bareboat charterers of the Vessel to the Buyers as owners under the Bareboat Charter shall be set off against a corresponding amount of the Purchase Price payable under this Agreement; and |
(ii) |
the balance of the Purchase Price in an amount equal to the Opening Capital Balance shall be paid as follows: |
(A) |
the Buyers shall, no later than three (3) Business Days prior to the Vessel’s Scheduled Delivery Date (the “Prepositioning Date”) deposit with the Builder’s Bank the Delivery Payment (Builder) on an unallocated basis in a suspense account with SWIFT MT 103 and a SWIFT MT 199 irrevocable conditional release instruction in a form to be reasonably agreed (each such release instruction, the “SWIFT Payment Instructions”). The amount so deposited under the Delivery Payment (Builder) shall be released upon the signing, timing and release of the SBC Protocol of Delivery and Acceptance (to be countersigned by the Sellers and the Buyers) and the fulfilment of the Delivery Conditions Precedent and otherwise in accordance with the terms set out in the SWIFT Payment Instructions; and |
(B) |
the Buyers shall, by way of a SWIFT MT 103 pay the Delivery Payment (Sellers) to the Sellers’ Bank promptly after and in any case within one (1) Business Day of the release of the Delivery Payment(Builder). |
(c) |
In case of the prepositioning of amounts in (b)(ii)(A) above, interest calculated on the Delivery Payment (Builder) at the rate of the Overnight USD LIBOR plus 245 basis points (the “Remittance Interest”) shall: |
(i) |
in the event that the Vessel is delivered to the Buyers on the Delivery Date, accrue as of the Prepositioning Date (inclusive) until the Delivery Date (exclusive); and |
(ii) |
in the event that the Vessel is not delivered to the Buyers on the Delivery Date, accrue as of the Prepositioning Date until the Delivery Payment (Builder) is returned by the Builder’s Bank to the Buyers in accordance with the SWIFT Payment Instructions (both dates inclusive), |
and the Sellers shall pay to the Buyers the applicable amount of Remittance Interest as notified by the Buyers to the Sellers within three (3) Business Days of the Buyers’ demand.
CLAUSE 20– FURTHER CONDITIONS
The Buyers’ obligation to purchase the Vessel and the Sellers’ obligation to sell the Vessel are further conditional upon:
(a) |
the Vessel being delivered to the Head Sellers pursuant to the Shipbuilding Contract; |
(b) |
the Vessel being delivered to the Sellers pursuant to the Head MOA; |
(c) |
the Delivery taking place on a Business Day on or before the Cancelling Date; |
(d) |
the simultaneous delivery to and acceptance by the Sellers as bareboat charterer of the Vessel in accordance with the terms of the Bareboat Charter; and |
(e) |
no Potential Termination Event or Termination Event having occurred on the Prepositioning Date or the Delivery Date or which would occur on either such date as a result of the performance by the Sellers or Buyers of their respective obligations under this Agreement. |
CLAUSE 21- REPRESENTATIONS AND WARRANTIES OF SELLERS
(a) |
The Sellers represent and warrant to the Buyers on the date hereof, the Prepositioning Date and on the Delivery Date that: |
(i) |
they or the Head Sellers have paid all instalments payable under the Shipbuilding Contract to the Builder (other than the Delivery Instalment (Builder)) and no other amount is due from the Sellers or the Head Sellers to the Builder under the terms of the Shipbuilding Contract; |
(ii) |
they have entered into the Head MOA with the Head Sellers to obtain good and marketable title to the Vessel at the Delivery Date (hence having good and marketable title to the Vessel at the Delivery Date) as part of an agreed procedure free and clear of Security Interests and they have all requisite power and authority to enter and perform its obligations under such Head MOA; |
(iii) |
none of the Sellers or any member of the Group: |
(A) |
is a Prohibited Person; |
(B) |
is owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person; |
(C) |
owns or controls a Prohibited Person; nor |
(D) |
has a Prohibited Person serving as a director, officer or, to the best of the Sellers’ knowledge, employee; |
(iv) |
no part of the Purchase Price nor the Vessel shall be made available, directly or indirectly, to or for the benefit of a Prohibited Person nor shall they be otherwise |
2
directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions, or to fund any activity in a Prohibited Country ;
(v) |
they are not in breach of any Anti-Money Laundering Laws and they have instituted and maintained systems, controls, policies and procedures designed to: |
(AA) |
prevent and detect incidences of bribery and corruption, money laundering and terrorism financing; and |
(BB) |
promote and achieve compliance with Anti-Money Laundering Laws including, but not limited to, ensuring thorough and accurate books and records, and utilisation of commercially reasonable efforts to ensure that Affiliates acting on behalf of the Sellers shall act in compliance with Anti-Money Laundering Laws. |
CLAUSE 22– PHYSICAL PRESENCE
If there is any change in the flag state from the Flag State at the date of this Agreement and such new Flag State require the Buyers to have a physical presence or office in the jurisdiction of such Flag State, all documented fees, costs and expense arising out of or in connection with the establishment and maintenance of such physical presence or office by the Buyers shall be borne by the Sellers.
CLAUSE 23- INDEMNITIES
(a) |
The Sellers shall indemnify and pay such amounts to the Buyers in respect of all documented costs, claims, expenses, liabilities, losses, taxes, damages and fees (including but not limited to any legal fees, vessel registration and tonnage fees) suffered or incurred by or imposed on the Buyers arising from this Agreement or in connection with the Delivery, registration (including any fees pertaining to the registration of the owners as foreign maritime entities pursuant to the requirements of the Flag State), purchase and inspection of the Vessel by the Buyers or the funding of all or any portion of the Purchase Price (including but not limited to the event that the Delivery Instalments have been deposited in accordance with Clause 19(b)(ii) but not released or returned in accordance with the SWIFT Payment Instructions) for any reason whatsoever), and whether or not the Vessel is in the possession of or the control of the Sellers or otherwise. |
(b) |
Notwithstanding anything to the contrary herein, the indemnities provided by the Sellers under paragraph (a) above shall continue in full force and effect notwithstanding any breach of the terms of this Agreement or termination of this Agreement pursuant to the terms hereof. |
CLAUSE 24– NOTICE, TIME AND PLACE OF DELIVERY
(a) |
The Sellers shall keep the Buyers well informed of the proposed Delivery Date of the Vessel (including providing the Buyers with copies of all notices of the delivery schedule received from the Builder) and shall in any event specify the Scheduled Delivery Date and proposed place of delivery in the Payment Notice. |
(b) |
The Vessel shall be delivered and taken over at the yard of the Builder contemporaneously with the delivery by the Builder to the Sellers in accordance with the Shipbuilding Contract and the Head MOA on the Delivery Date. |
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CLAUSE 25– NOTICES
(a) |
Any notice, certificate, demand or other communication to be served, given, made or sent under or in relation to this Agreement shall be in English and in writing and (without prejudice to any other valid method or giving, making or sending the same) shall be deemed sufficiently given or made or sent if sent by registered post or by email to the following respective address: |
(A) |
to the Buyers: |
c/o CMB Financial Leasing Co., Ltd. |
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21F, China Merchants Bank Building |
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No. 1088 Lujiazui Ring Road |
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Shanghai 200120 |
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The People’s Republic of China |
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Attention: |
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Email: |
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Tel : |
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(B) |
to the Sellers: |
c/o OET CHARTERING INC. |
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Ethnarchou Makariou & D. Falireos Str. 2 |
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185 47, Neo Faliro, Piraeus, Greece |
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Attention: |
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Email: |
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Tel : |
or, if a party hereto changes its address or email address, to such other address (or email address) as that party may notify to the other.
(b) |
Any such communication shall be deemed to have reached the party to whom it was addressed (a) when delivered (in case of a registered letter), or (b) when actually received in readable form (in case of an email). A notice or other such communication received on a non-working day or after 5.00 p.m. in the place of receipt shall be deemed to be served on the next following working day in such place. |
CLAUSE 26– NO WAIVER OF RIGHTS
(a) |
No neglect, delay, omission or indulgence on the part of the Buyers in enforcing the terms and conditions of this Agreement shall prejudice the strict rights of the Buyers or be construed as a waiver thereof nor shall any single or partial exercise of any right of either party preclude any other or further exercise thereof. |
(b) |
No right or remedy conferred upon the Buyers by this Agreement shall be exclusive of any other right or remedy provided for herein or by law and all such rights and remedies shall be cumulative. |
CLAUSE 27– NO SET-OFF OR TAX DEDUCTION
(a) |
Any payment made by the Sellers to the Buyers under this Agreement shall be paid: |
4
(i) |
without any form of set-off, cross-claim or condition; and |
(ii) |
free and clear of any tax deduction (other than a FATCA Deduction) or withholding unless required by law. |
(b) |
Without prejudice to paragraph (a) of this Clause, if the Sellers are required by law to make a tax deduction from any payment: |
(i) |
the Sellers shall notify the Buyers as soon as they become aware of the requirement; and |
(ii) |
the amount due in respect of the payment shall be increased by the amount necessary to ensure that the Buyers receive and retain (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which they would otherwise have received. |
(c) |
In this Clause, “tax deduction” means any deduction or withholding for or on account of any present or future tax. |
CLAUSE 28– ASSIGNMENT AND TRANSFER
(a) |
The Sellers shall not assign or transfer (whether by novation or otherwise) their rights and/or obligations under this Agreement except with the Buyers’ prior written consent. |
(b) |
The Buyers may assign or transfer (whether by novation or otherwise) any of their rights under this Agreement in the same way as it may assign or transfer any of their rights under the Bareboat Charter, following which the Sellers shall execute such documents and do all such things as reasonably required by the Buyers to facilitate or effect such assignment or transfer. |
(c) |
Each of the Sellers and Buyers shall bear their own costs arising from any assignment or transfer as permitted under this Clause. |
CLAUSE 29- MISCELLANEOUS
(a) |
Unless otherwise expressly stated to the contrary in this Agreement, any payment which is due to be made on a day which is not a Business Day shall be made on the preceding Business Day instead. |
(b) |
If, at any time, any provision of this Agreement is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions under the law of that jurisdiction nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired. |
(c) |
The Sellers waive any rights of sovereign immunity which they or any of their properties may enjoy in any jurisdiction and subjects itself to civil and commercial law with respect to their obligations under this Agreement. |
(d) |
No term of this Agreement is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Agreement. |
5
(e) |
This Agreement may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Agreement or that Leasing Document, as the case may be. |
CLAUSE 30– GOVERNING LAW AND JURISDICTION
(a) |
This Agreement, and any non-contractual obligations arising out of or in connection with it, are governed by English law. |
(b) |
Any dispute arising out of or in connection with this Agreement (including a dispute regarding the existence, validity or termination of this Agreement or any non-contractual obligation arising out of or in connection with this Agreement) (a “Dispute”) shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause. |
(c) |
The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. The reference shall be to three (3) arbitrators. A Party wishing to refer a Dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other Party requiring the other Party to appoint its own arbitrator within fourteen (14) calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other Party appoints its own arbitrator and give notice that it has done so within the fourteen (14) days specified. If the other Party does not appoint its own arbitrator and give notice that it has done so within the fourteen (14) days specified, the Party referring a Dispute to arbitration may, without the requirement of any further prior notice to the other Party, appoint its arbitrator as sole arbitrator and shall advise the other Party accordingly. The award of a sole arbitrator shall be binding on both Parties as if he had been appointed by agreement. Nothing herein shall prevent the Parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. |
(d) |
In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 (or such other sum as the Parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. |
CLAUSE 31– DEFINITIONS
Unless otherwise specified hereunder, capitalised terms in this Agreement shall have the same meaning as in the Bareboat Charter:
“Approved Valuer” means Clarksons Platou, Simpson Spence Young, Braemar ACM, Arrow, Fearnleys, Maersk Brokers or such other independent and reputable shipbroker nominated by the Sellers and approved by the Buyers.
“Bareboat Charter” means the bareboat charterparty in respect of the Vessel dated on or about the date hereof and entered into between the Buyers as owner and the Sellers as bareboat charterer.
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“Builder” means Hyundai Heavy Industries Co., Ltd., a company incorporated in South Korea with limited liability and registered address at 1000, Bangeojinsunhwan-doro, Dong-gu, Ulsan, 44032, the Republic of Korea.
“Builder’s Account” means the account as designated and notified by the Builder with the Builder’s Bank in accordance with the Shipbuilding Contract for the purposes of receiving amounts thereunder.
“Builder’s Bank” means such bank or financial institution with which the Builder’s Account is maintained, details of which are notified to the Buyers not less than five (5) Business Days prior to the Prepositioning Date and the identity of which is acceptable to the Buyers.
“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for business in the principal business centres of Shanghai, Singapore, Amsterdam, Seoul and Piraeus and, in respect of a day on which a payment is required to be made or other dealing is due to take place under this Agreement in Dollars, also a day on which commercial banks are open in New York City.
“Cancelling Date” means 28 May 2022 or such later date as may be agreed by the Buyers in their discretion.
“Delivery” means the passing of the legal and beneficial interest in the Vessel from the Sellers to the Buyers pursuant to the terms of this Agreement.
“Delivery Conditions Precedent” means the conditions precedent detailed in Clause 34.2(g)(ii) of the Bareboat Charter.
“Delivery Date” means the date on which Delivery occurs.
“Delivery Payment (Builder)” means the portion of the Opening Capital Balance which is to be paid to the Builder as the final delivery instalment plus Extra Construction Costs (as defined in the Head MOA) as set out in the Payment Notice.
“Delivery Payment (Sellers)” means the portion of the Opening Capital Balance less the Delivery Payment (Builder) as set out in the Payment Notice.
“Delivery Payments” means the Delivery Payment (Builder) and the Delivery Payment (Sellers) and each, as the case may be, the “Delivery Payment”.
“Dispute” shall have the meaning ascribed thereto under Clause 30(b).
“Dollars” and “US$” mean the lawful currency, for the time being, of the United States of America.
“Head MOA” means the memorandum of agreement dated 29 June 2021 and made between the Charterers (in their capacity as buyers) and the Head Sellers (in their capacity as sellers), pursuant to which the Head Sellers agreed to sell and the Charterers agreed to purchase the Vessel upon the terms and conditions set out therein.
“Head Sellers” means Felton Enterprises S.A., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with registration number 106138 and with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro MH 96960.
“Initial Market Value” means, in relation to the Vessel:
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(a) |
subject to paragraph (b) below, the arithmetic mean of the valuations shown by two (2) valuation reports each addressed to the Buyers and prepared at the Sellers’ cost: |
(i) |
on a date no earlier than thirty (30) days prior to the Delivery Date; |
(ii) |
by Approved Valuers one nominated by the Buyers and the other nominated by the Sellers (but with the report addressed to Buyers); |
(iii) |
without physical inspection of the Vessel; and |
(iv) |
on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, without taking into account any charter; and |
(b) |
if there is a discrepancy of five per cent (5%) or more between the market valuations shown on the two (2) valuation reports obtained pursuant to paragraph (a) above (using the lower valuation figure as the denominator), then a third valuation shall be obtained and prepared on the same terms and conditions as set out under paragraph (a) above (except that the third valuation report additionally required under this sub-paragraph (b) shall be prepared by an Approved Valuer nominated by the Buyers), with the arithmetic mean taken from the valuations shown by such three (3) valuation reports. |
“MOA Protocol of Delivery and Acceptance” means the protocol of delivery and acceptance recording the time and date of the Delivery of the Vessel under this Agreement to be signed by the Buyers and the Sellers in substantially the form attached as Schedule 2 (Form of Protocol of Delivery and Acceptance).
“Opening Capital Balance” means an amount which is equal to seventy five per cent. (75%) of the Purchase Price.
“Payment Notice” means the payment notice to be submitted by the Sellers to the Buyers to request for the Buyers’ payment of the Purchase Price, which shall be in the form set out in Schedule 1 (Form of Payment Notice) and which shall be signed by at least one officer or authorised attorney of the Sellers.
“Prepositioning Date” shall have the meaning ascribed thereto under Clause 19(b)(ii).
“Purchase Price” means an amount equal to the lowest of:
(a) |
the Initial Market Value; and |
(b) |
$97,000,000. |
“Remittance Conditions Precedent” means the conditions precedent detailed in Clause 34.2(g)(i) of the Bareboat Charter.
“Remittance Interest” shall have the meaning ascribed thereto under Clause 19(c).
“SBC Protocol of Delivery and Acceptance” means the protocol of delivery and acceptance recording the time and date of the Delivery of the Vessel under the Shipbuilding Contract to be signed by the Builder and the Head Seller in the form required under the Shipbuilding Contract.
“Scheduled Delivery Date” means the date of delivery of the Vessel set out in the Payment Notice.
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“Sellers’ Account” means an account of the Sellers at the Sellers’ Bank.
“Sellers’ Bank” means a bank designated by the Sellers, details of which are notified to the Buyers not less than five (5) Business Days prior to the Prepositioning Date and the identity of which is acceptable to the Buyers.
“Shipbuilding Contract” means the shipbuilding contract dated 28 September 2020 entered into between the Head Sellers (in their capacity as buyers) and the Builder (in its capacity as seller) for the construction and purchase of the Vessel as may from time to time be amended, supplemented.
“SWIFT Payment Instructions” shall have the meaning ascribed thereto under Clause 19(b)(ii).
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SCHEDULE 1
FORM OF PAYMENT NOTICE
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SCHEDULE 2
FORM OF PROTOCOL OF DELIVERY AND ACCEPTANCE
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EXECUTION PAGE
BUYERS |
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SIGNED BY Wong Wai Sum |
) |
for and on behalf of |
) |
SEA 289 LEASING CO. LIMITED |
) /s/ Wong Wai Sum |
as attorney-in-fact |
) |
in the presence of |
) Attorney-in-Fact |
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Witness’ signature: |
) /s/ Sandrea Mar |
Witness’ name: |
) Sandrea Mar |
Witness’ address: |
) Suites 4610-4619 Jardine House |
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) 1 Connaught Place, Hong Kong |
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SELLERS |
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SIGNED BY Thaleia Kalafati |
) /s/ Thaleia Kalafati |
for and on behalf of |
) |
ARK MARINE S.A. |
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as attorney-in-fact |
) /s/ Eirini Chaidemenou |
in the presence of |
) Eirini Chaidemenou |
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) Attorney at Law |
Witness’ signature: |
) Athens Bar Association |
Witness’ name: |
) Eirini Chaidemenou |
Witness’ address: |
) Athens – Greece, +306976172522 |
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EXECUTION VERSION
Dated 26 January 2024
SEA 289 LEASING CO. LIMITED
as Owner
and
ARK MARINE S.A.
as Charterer
and
OKEANIS ECO TANKERS CORP.
as Guarantor and Shareholder
AMENDMENT AND RESTATEMENT DEED
relating to a bareboat charter dated 21 March 2022
as amended, supplemented and restated from time to time including by an amendment and
restatement deed dated 29 June 2023 in respect of
one (1) very large crude carrier named m.v. “Nissos Kea”
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Index |
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Clause |
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Page |
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1. |
Definitions and Interpretation |
1 |
2 |
Conditions Precedent |
2 |
3 |
Representations |
2 |
4 |
Amendment and Restatement |
3 |
5 |
Further Assurance |
4 |
6 |
Costs and Expenses |
4 |
7 |
Notices |
4 |
8 |
Counterparts |
5 |
9 |
Governing Law |
5 |
10 |
Jurisdiction |
5 |
Schedules
Schedule 1 Conditions Precdent |
6 |
Schedule 2 Form of Effective Date Notice |
7 |
Execution
Execution Pages |
9 |
EXECUTION VERSION
THIS DEED is made on 26 January 2024
PARTIES
(1)SEA 289 LEASING CO. LIMITED, a company incorporated under the laws of Hong Kong with limited liability whose registered office is at 27/F, Three Exchange Square, 8 Connaught Place, Hong Kong as owner (the “Owner”);
(2)ARK MARINE S.A., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with entity number 109613 and with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 as charterer (the “Charterer”); and
(3)OKEANIS ECO TANKERS CORP., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with registration number 96382 and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the “Guarantor” and the “Shareholder”).
BACKGROUND
(A)By the Charter, the Owner agreed to bareboat charter one (1) very large crude carrier named m.v. Nissos Kea (the “Vessel”) to the Charterer pursuant to the terms and conditions contained therein.
(B)Without prejudice and in addition to the Owner’s rights under the Charter and other Transaction Documents, the Parties have agreed to amend and restate the Charter as set out in this Deed as a result of further commercial negotiations between the Owner and the Charterer, with effect as of and from the Effective Date.
OPERATIVE PROVISIONS
1. |
DEFINITIONS AND INTERPRETATION |
1.1 |
Definitions |
In this Deed:
“Amended and Restated Charter” means the Charter as amended and restated by this Deed pursuant to which the additional clauses of the Charter shall be amended and restated in the form set out in Schedule 3 (Form of Amended and Restated Charter).
“Charter” means the bareboat charter dated 21 March 2022 (as amended and/or supplemented from time to time, including by an amendment and restatement deed dated 29 June 2023) and made between (i) the Owner as owners and (ii) the Charterer as charterers.
“Effective Date” means as of 31 December 2023 provided that the Owner is satisfied that the conditions precedent specified in Clause 2.1 (Conditions Precedent) are fulfilled and issues the Effective Date Notice.
“Effective Date Notice” means the notice by which the Owner notify the Charterer of the occurrence of the Effective Date, in substantially the form set out in Schedule 2 (Form of Effective Date Notice).
“Obligor” means collectively, the Charterer, the Guarantor and the Shareholder, and “Obligors” means each or any of them, as the context may require.
“Party” means a party to this Deed.
1.2 |
Defined expressions |
Defined expressions in the Charter and the other Leasing Documents shall have the same meanings when used in this Deed unless the context otherwise requires or unless otherwise defined in this Deed.
1.3 |
Application of construction and interpretation provisions of Charter |
Clauses 66.1 to 66.5 (definitions) inclusive of the Charter applies to this Deed as if it were expressly incorporated in it with any necessary modifications.
1.4 |
Designation as a Leasing Document |
The Owner and the Charterer designate this Deed as a Leasing Document.
1.5 |
Third party rights |
(a) |
Unless provided to the contrary in this Deed, a person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Deed. |
(b) |
Notwithstanding any term of any Leasing Document, the consent of any person who is not a party is not required to rescind or vary this Deed at any time. |
2 |
CONDITIONS PRECEDENT |
2.1 |
The occurrence of the Effective Date is subject to: |
(a) |
no Termination Event or Potential Termination Event having occurred on the date of this Deed and as of the Effective Date; |
(b) |
the representations and warranties in clause 48 (representations and warranties) of the Charter to be made by the Charterer being true on the date of this Deed and as of the Effective Date; and |
(c) |
the Owner having received (or waived receipt of) all of the documents and other evidence listed in Schedule 1 (Conditions Precedent) in form and substance satisfactory to the Owner. |
2.2 |
The Owner shall notify the Charterer promptly upon being satisfied as to the satisfaction of the conditions precedent referred to in paragraph 2.1 above by issuing the Effective Date Notice. |
3. |
REPRESENTATIONS |
3.1 |
Charter representations |
The Charterer makes the representations and warranties set out in clause 48 (representations and warranties) of the Charter, as amended and restated by this Deed and updated with appropriate modifications to refer to this Deed, by reference to the circumstances then existing on the date of this Deed and as of the Effective Date.
2
3.2 |
Leasing Document representations |
Each Obligor makes the representations and warranties set out in the Leasing Documents to which it is a party, as amended and restated by this Deed and updated with appropriate modifications to refer to this Deed, by reference to the circumstances then existing on the date of this Deed and as of the Effective Date.
4 |
AMENDMENT AND RESTATEMENT |
4.1 |
Specific amendments to the Charter |
With effect as of and from the Effective Date, the additional clauses of the Charter shall be amended and restated in the form of the Amended and Restated Charter and, as so amended and restated, the Charter shall continue to be binding on each of the parties to it in accordance with its terms as so amended and restated.
4.2 |
Amendments to Leasing Documents |
With effect as of and from the Effective Date, each of the Leasing Documents shall be, and shall be deemed by this Deed to be, amended by the definition of, and references throughout each of the Leasing Documents to, the Charter being construed as if the same referred to the Amended and Restated Charter.
4.3 |
Obligor Confirmation |
As of the Effective Date, each Obligor:
(a) |
confirms its acceptance of the Amended and Restated Charter; |
(b) |
agrees that it is bound as an Obligor (as defined in the Amended and Restated Charter); |
(c) |
confirms that the definition of, and references throughout each of the Leasing Documents to, the Charter and any of the other Leasing Documents shall be construed as if the same referred to the Charter and those Leasing Documents as amended and restated by this Deed; |
(d) |
(if it is a Guarantor) confirms that its guarantee and indemnity: |
(i) |
continues to have full force and effect on the terms of the Amended and Restated Charter; and |
(ii) |
extends to the obligations of the relevant Obligors under the Leasing Document as amended and restated by this Deed. |
4.4 |
Security confirmation |
As of the Effective Date, each Obligor confirms that:
(a) |
any Security Interest created by it under the Leasing Documents extends to the obligations of the relevant Obligors under the Leasing Documents as amended and restated by this Deed; |
(b) |
the obligations of the relevant Obligors under the Amended and Restated Charter are included in the Secured Liabilities (as defined in the Shares Security); |
3
(c) |
the Security Interests created under the Leasing Documents continues in full force and effect on the terms of the respective Leasing Documents; and |
(d) |
to the extent that this confirmation creates a new Security Interest, such Security Interest shall be on the terms of the Leasing Documents in respect of which this confirmation is given. |
4.5 |
Leasing Documents to remain in full force and effect |
The Leasing Documents shall remain in full force and effect and, from the Effective Date:
(a) |
in the case of the Charter as amended and restated pursuant to Clause 4.1 (Specific amendments to the Charter); |
(b) |
in the case of the Leasing Documents as amended and pursuant to Clause 4.2 (Amendments to Leasing Documents); |
(c) |
the Charter and the applicable provisions of this Deed will be read and construed as one document; |
(d) |
each of the Leasing Documents and the applicable provisions of this Deed will be read and construed as one document; and |
(e) |
except to the extent expressly waived by the amendments effected by this Deed, no waiver is given by this Deed and the Owner expressly reserve all their rights and remedies in respect of any Termination Event under the Leasing Documents |
5 |
FURTHER ASSURANCE |
5.1 |
Each Obligor shall promptly, and in any event within the time period specified by the Owner do all such acts (including procuring or arranging any registration, notarisation or authentication or the giving of any notice) or execute or procure execution of all such documents (including assignments, transfers, mortgages, charges, notices, instructions, acknowledgements, proxies and powers of attorney), as the Owner may specify (and in such form and substance as the Owner may require in favour of the Owner or its nominee(s)) to implement the terms and provisions of this Deed. |
5.2 |
The Owner shall take all such action as is available to them (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any encumbrance conferred or intended to be conferred on the Owner by or pursuant to the Security Documents and the Charter as amended and supplemented by this Deed. |
6 |
COSTS AND EXPENSES |
6.1 |
All costs and expenses (including legal costs and disbursements) incurred by the Owners in the preparation, negotiation, documentation and execution of all documentation in relation to the matters contemplated by this Deed shall be for the account of the Charterer. |
7 |
NOTICES |
7.1 |
Clause 46 (notices) of the Charter, as amended and restated by this Deed apply to this Deed as if it were expressly incorporated in it with any necessary modifications. |
7.2 |
The details of the Guarantor for the purposes of this Deed shall be: |
4
OKEANIS ECO TANKERS CORP.
c/o OET CHARTERING INC.
Ethnarchou Makariou & D. Falireos Str. 2
185 47, Neo Faliro, Piraeus, Greece
Attention:
Email:
Tel:
8 |
COUNTERPARTS |
This Deed may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Deed.
9 |
GOVERNING LAW |
This Deed and any non-contractual obligations arising out of or in connection with it are governed by English law.
10 |
JURISDICTION |
Clause 65 (Governing Law and Enforcement) of the Charter applies to this Deed as if it were expressly incorporated in it with any necessary modifications.
IN WITNESS WHEREOF this Deed has been entered into and delivered as a deed, on the date stated at the beginning of this Deed.
5
SCHEDULE 1
Conditions Precedent
6
SCHEDULE 2
FORM OF EFFECTIVE DATE NOTICE
7
SCHEDULE 3
AMENDED AND RESTATED CHARTER (ADDITIONAL CLAUSES MARKED TO INDICATE AMENDMENTS)
8
1. Shipbroker N/A |
2.Place and date |
|
3.Owners/Place of business (Cl. 1) SEA 289 LEASING CO. LIMITED, a company incorporated under the laws of Hong Kong with limited liability whose registered office is at27/F, Three Exchange Square, 8 Connaught Place, Hong Kong |
4.Bareboat Charterers/Place of business (Cl. 1) ARK MARINE S.A., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with Entity Number 109613 and with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 |
|
5.Vessel’s name, call sign and flag (Cl. 1 and 3) Vessel name: Hull No. 3211 Call Sign: 9920758 Flag: Marshall Islands or otherwise agreed between Parties | ||
6. Type of Vessel VLCC |
7.GT/NT 154,500/106,657 |
|
8.When/Where built 2022 Hyundai Heavy Industries, South Korea |
9.Total DWT (abt.) in metric tons on summer freeboard 300,000 |
|
10. Classification Society (Cl. 3) DNV |
11. Date of last special survey by the Vessel’s classification society N/A |
|
12 Further particulars of Vessel (also indicate minimum number of months’ validity of class certificates agreed acc. to Cl. 3) N/A | ||
13. Port or Place of delivery (Cl. 3) Back to back with MOA delivery |
14. Time for delivery (Cl. 4) See Clause 34, back to back with MOA delivery |
15. Cancelling date (Cl. 5) See definition of “Cancelling Date” and Clause 33 |
16. Port or Place of redelivery (Cl. 15) See Clauses 41and 42 |
17. No. of months’ validity of trading and class certificates upon redelivery (Cl. 15) Six (6) months |
|
18. Running days’ notice if other than stated in Cl. 4 |
19. Frequency of dry-docking (Cl. 10(g)) In accordance with Approved Classification Society or requirements of Flag State |
|
20. Trading limits (Cl. 6) Worldwide via safe ports/berth/anchorage within International Navigating Limits and always subject to Clause 39 (Insurance) and Clause 53 (Vessel Undertaking) | ||
21. Charter period (Cl. 2) See Clause 32 |
22. Charter hire (Cl. 11) See Clause 36 |
|
23. New class and other safety requirements (state percentage of Vessel’s insurance value acc. to Box 29)(Cl. 10(a)(ii)) N/A | ||
24. Rate of interest payable acc. to Cl. 11 (f) and, if applicable, acc. to PART IV See Clause 37 |
25. Currency and method of payment (Cl. 11) Dollars/Bank transfer |
|
26. Place of payment; also state beneficiary and bank account (Cl. 11) See Clause 36 |
27. Bank guarantee/bond (sum and place) (Cl. 24) (optional) N/A |
|
28. Mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) applies state date of Financial Instrument and name of Mortgagee(s)/Place of business) (Cl. 12) N/A |
29. Insurance (hull and machinery and war risks) (state value acc. to Cl. 13(f) or, if applicable, acc. to Cl. 14(k)) (also state if Cl. 14 applies) See Clause 39 |
|
30. Additional insurance cover, if any, for Owners’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) See Clause 39 |
31. Additional insurance cover, if any, for Charterers’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) See Clause 39 |
|
32. Latent defects (only to be filled in if period other than stated in Cl. 3) |
33. Brokerage commission and to whom payable (Cl. 27) N/A |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PREAMBLE - It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter if expressly agreed and stated in Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further. It is further agreed that the Additional Clauses as indicated in Box 46 above, appended to and integrated in this Charter supplement Part I and II of this Charter. In the event of a conflict, the Additional Clauses shall prevail.
Signature (Owners) |
Signature (Charterers) |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
|
|
|
|
|
1 |
1. Definitions |
|
61 |
(not applicable when Part III applies, as indicated in Box 37) |
2 |
In this Charter, the following terms shall have the |
|
62 |
(a) Should the Vessel not be delivered latest by the |
3 |
meanings hereby assigned to them: |
|
63 |
cancelling date indicated in Box 15, the Charterers shall |
4 |
“The Owners” shall mean the party identified in Box 3; |
|
64 |
have the option of cancelling this Charter by giving the |
5 |
“The Charterers” shall mean the party identified in Box 4; |
|
65 |
Owners notice of cancellation within thirty-six (36) |
6 |
“The Vessel” shall mean the vessel named in Box 5 and |
|
66 |
running hours after the cancelling date stated in Box |
7 |
with particulars as stated in Boxes 6 to 12. |
|
67 |
15, failing which this Charter shall remain in full force |
8 |
“Financial Instrument” has the meaning ascribed to it in Clause 66.1. means the mortgage, deed of |
|
68 |
and effect. |
9 |
covenant or other such financial security instrument as |
|
69 |
(b) If it appears that the Vessel will be delayed beyond |
10 |
annexed to this Charter and stated in Box 28. |
|
70 |
the cancelling date, the Owners may, as soon as they |
|
|
|
71 |
are in a position to state with reasonable certainty the |
11 |
2 Charter Period |
|
72 |
day on which the Vessel should be ready, give notice |
12 |
In consideration of the hire detailed in Box 22, |
|
73 |
thereof to the Charterers asking whether they will |
13 |
the Owners have agreed to let and the Charterers have |
|
74 |
exercise their option of cancelling, and the option must |
14 |
agreed to hire the Vessel for the period stated in Box 21 |
|
75 |
then be declared within one hundred and sixty-eight |
15 |
(“The Charter Period”). See also Clause 32. |
|
76 |
(168) running hours of the receipt by the Charterers of |
|
|
|
77 |
such notice or within thirty-six (36) running hours after |
16 |
3. Delivery |
|
78 |
the cancelling date, whichever is the earlier. If the |
17 |
(not applicable when Part III applies, as indicated in Box 37) |
|
79 |
Charterers do not then exercise their option of cancelling, |
18 |
(a) The Owners shall before and at the time of delivery |
|
80 |
the seventh day after the readiness date stated in the |
19 |
exercise due diligence to make the Vessel seaworthy |
|
81 |
Owners’ notice shall be substituted for the cancelling |
20 |
And in every respect ready in hull, machinery and |
|
82 |
date indicated in Box 15 for the purpose of this Clause 5. |
21 |
equipment for service under this Charter. |
|
83 |
(c) Cancellation under this Clause 5 shall be without |
22 |
The Vessel shall be delivered by the Owners and taken |
|
84 |
prejudice to any claim the Charterers may otherwise |
23 |
over by the Charterers at the port or place indicated in |
|
85 |
have on the Owners under this Charter. |
24 |
Box 13. in such ready safe berth as the Charterers may |
|
|
|
25 |
direct. |
|
86 |
6. Trading Restrictions (See also Clauses 39.9(d) and 53.1(c)) |
26 |
(b) The Vessel shall be properly documented on |
|
87 |
The Vessel shall be employed in lawful trades for the |
27 |
delivery in accordance with the laws of the flag State |
|
88 |
carriage of suitable lawful merchandise within the trading |
28 |
indicated in Box 5 and the requirements of the |
|
89 |
limits indicated in Box 20. |
29 |
classification society stated in Box 10. The Vessel upon |
|
90 |
The Charterers undertake not to employ the Vessel or |
30 |
delivery shall have her survey cycles up to date and |
|
91 |
suffer the Vessel to be employed otherwise than in |
31 |
trading and class certificates valid for at least the number |
|
92 |
conformity with the terms of the contracts of insurance |
32 |
of months agreed in Box 12. |
|
93 |
(including any warranties expressed or implied therein) |
33 |
(c) The delivery of the Vessel by the Owners and the |
|
94 |
without first obtaining the consent of the insurers to such |
34 |
taking over of the Vessel by the Charterers shall |
|
95 |
employment and complying with such requirements as |
35 |
constitute a full performance by the Owners of all the |
|
96 |
to extra premium or otherwise as the insurers may |
36 |
Owners’ obligations under this Clause 3, and thereafter |
|
97 |
prescribe. |
37 |
the Charterers shall not be entitled to make or assert |
|
98 |
The Charterers also undertake not to employ the Vessel |
38 |
any claim against the Owners on account of any |
|
99 |
or suffer her employment in any trade or business which |
39 |
conditions, representations or warranties expressed or |
|
100 |
is forbidden by the law of any country to which the Vessel |
40 |
implied with respect to the Vessel. but the Owners shall |
|
101 |
may sail or is otherwise illicit or in carrying illicit or |
41 |
be liable for the cost of but not the time for repairs or |
|
102 |
prohibited goods or in any manner whatsoever which |
42 |
renewals occasioned by latent defects in the Vessel, |
|
103 |
may render her liable to condemnation, destruction, |
43 |
her machinery or appurtenances, existing at the time of |
|
104 |
seizure or confiscation. |
44 |
delivery under this Charter, provided such defects have |
|
105 |
Notwithstanding any other provisions contained in this |
45 |
manifested themselves within twelve (12) months after |
|
106 |
Charter it is agreed that nuclear fuels or radioactive |
46 |
delivery unless otherwise provided in Box 32. |
|
107 |
products or waste are specifically excluded from the |
|
|
|
108 |
cargo permitted to be loaded or carried under this |
47 |
4. Time for Delivery (See Clause 34) |
|
109 |
Charter. This exclusion does not apply to radio-isotopes |
48 |
(not applicable when Part III applies, as indicated in Box 37) |
|
110 |
used or intended to be used for any industrial, |
49 |
The Vessel shall not be delivered before the date |
|
111 |
commercial, agricultural, medical or scientific purposes |
50 |
indicated in Box 14 without the Charterers’ consent and |
|
112 |
provided the Owners’ prior approval has been obtained |
51 |
the Owners shall exercise due diligence to deliver the |
|
113 |
to loading thereof. |
52 |
Vessel not later than the date indicated in Box 15. |
|
|
|
53 |
Unless otherwise agreed in Box 18, the Owners shall |
|
114 |
7. Surveys on Delivery and Redelivery (See Clauses 41.8 and 41.9) |
54 |
give the Charterers not less than thirty (30) running days’ |
|
115 |
(not applicable when Part III applies, as indicated in Box 37) |
55 |
preliminary and not less than fourteen (14) running days’ |
|
116 |
The Owners and Charterers shall each appoint |
56 |
definite notice of the date on which the Vessel is |
|
117 |
surveyors for the purpose of determining and agreeing |
57 |
expected to be ready for delivery. |
|
118 |
in writing the condition of the Vessel at the time of |
58 |
The Owners shall keep the Charterers closely advised |
|
119 |
delivery and redelivery hereunder (if applicable). The Owners shall |
59 |
of possible changes in the Vessel’s position. |
|
|
|
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|
60 |
5. Cancelling (See Clause33) |
|
|
|
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
|
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|
|
|
120 |
bear all expenses of the On-hire Survey including loss |
|
181 |
Society indicated in Box 10 and maintain all other |
121 |
of time, if any, and the Charterers shall bear all expenses |
|
182 |
necessary certificates in force at all times. |
122 |
of the Off-hire Survey including loss of time, if any, at |
|
183 |
(ii) New Class and Other Safety Requirements - In the |
123 |
the daily equivalent to the rate of hire or pro rata thereof. |
|
184 |
event of any improvement, structural changes or |
|
|
|
185 |
new equipment becoming necessary for the |
124 |
8. Inspection (See Clause 54) |
|
186 |
continued operation of the Vessel by reason of new |
125 |
The Owners shall have the right at any time after giving |
|
187 |
class requirements or by compulsory legislation, the costs of compliance shall be for the Charterers’ account. |
126 |
reasonable notice to the Charterers to inspect or survey |
|
188 |
costing (excluding the Charterers’ loss of time) |
127 |
the Vessel or instruct a duly authorised surveyor to carry |
|
189 |
more than the percentage stated in Box 23, or if |
128 |
out such survey on their behalf:- |
|
190 |
Box 23 is left blank, 5 per cent. of the Vessel’s |
129 |
(a) to ascertain the condition of the Vessel and satisfy |
|
191 |
insurance value as stated in Box 29, then the |
130 |
themselves that the Vessel is being properly repaired |
|
192 |
extent, if any, to which the rate of hire shall be varied |
131 |
and maintained. The costs and fees for such inspection |
|
193 |
and the ratio in which the cost of compliance shall |
132 |
or survey shall be paid by the Owners unless the Vessel |
|
194 |
be shared between the parties concerned in order |
133 |
is found to require repairs or maintenance in order to |
|
195 |
to achieve a reasonable distribution thereof as |
134 |
achieve the condition so provided; |
|
196 |
between the Owners and the Charterers having |
135 |
(b) in dry-dock if the Charterers have not dry-docked |
|
197 |
regard, inter alia, to the length of the period |
136 |
Her in accordance with Clause 10(g). The costs and fees |
|
198 |
remaining under this Charter shall, in the absence |
137 |
for such inspection or survey shall be paid by the |
|
199 |
of agreement, be referred to the dispute resolution |
138 |
Charterers; and |
|
200 |
method agreed in Clause 30. |
139 |
(c) for any other commercial reason they consider |
|
201 |
(iii) Financial Security - The Charterers shall maintain |
140 |
necessary (provided it does not unduly interfere with |
|
202 |
financial security or responsibility in respect of third |
141 |
the commercial operation of the Vessel). The costs and |
|
203 |
party liabilities as required by any government, |
142 |
fees for such inspection and survey shall be paid by the |
|
204 |
including federal, state or municipal or other division |
143 |
Owners. |
|
205 |
or authority thereof, to enable the Vessel, without |
144 |
All time used in respect of inspection, survey or repairs |
|
206 |
penalty or charge, lawfully to enter, remain at, or |
145 |
shall be for the Charterers’ account and form part of the |
|
207 |
leave any port, place, territorial or contiguous |
146 |
Charter Period. |
|
208 |
waters of any country, state or municipality in |
147 |
The Charterers shall also permit the Owners to inspect |
|
209 |
performance of this Charter without any delay. This |
148 |
the Vessel’s log books whenever requested and shall |
|
210 |
obligation shall apply whether or not such |
149 |
whenever required by the Owners furnish them with full |
|
211 |
requirements have been lawfully imposed by such |
150 |
information regarding any casualties or other accidents |
|
212 |
government or division or authority thereof. |
151 |
or damage to the Vessel. |
|
213 |
The Charterers shall make and maintain all arrange- |
|
|
|
214 |
ments by bond or otherwise as may be necessary to |
152 |
9. Inventories, Oil and Stores |
|
215 |
satisfy such requirements at the Charterers’ sole |
153 |
A complete inventory of the Vessel’s entire equipment, |
|
216 |
expense and the Charterers shall indemnify the Owners |
154 |
outfit including spare parts, appliances and of all |
|
217 |
against all consequences whatsoever (including loss of |
155 |
consumable stores on board the Vessel shall be made |
|
218 |
time) for any failure or inability to do so. |
156 |
by the Charterers in conjunction with the Owners on |
|
219 |
(b) Operation of the Vessel - The Charterers shall at |
157 |
delivery and again on redelivery of the Vessel. The |
|
220 |
their own expense and by their own procurement man, |
158 |
Charterers and the Owners, respectively, shall at the |
|
221 |
victual, navigate, operate, supply, fuel and, whenever |
159 |
time of delivery and redelivery take over and pay for all |
|
222 |
required, repair the Vessel during the Charter Period |
160 |
bunkers, lubricating oil, unbroached provisions, paints, |
|
223 |
and they shall pay all charges and expenses of every |
161 |
ropes and other consumable stores (excluding spare |
|
224 |
kind and nature whatsoever incidental to their use and |
162 |
parts) in the said Vessel at the then current market prices |
|
225 |
operation of the Vessel under this Charter, including |
163 |
at the ports of delivery and redelivery, respectively. The |
|
226 |
annual flag State fees of the Flag State and any foreign general |
164 |
Charterers shall ensure that all spare parts listed in the |
|
227 |
municipality and/or state taxes. The Master, officers |
165 |
inventory and used during the Charter Period are |
|
228 |
and crew of the Vessel shall be the servants of the Charterers |
166 |
replaced at their expense prior to redelivery of the |
|
229 |
for all purposes whatsoever, even if for any reason |
167 |
Vessel. |
|
230 |
appointed by the Owners. |
|
|
|
231 |
Charterers shall comply with the regulations regarding |
168 |
10. Maintenance and Operation |
|
232 |
officers and crew in force in the country of the Vessel’s |
169 |
(a)(i)Maintenance and Repairs - During the Charter |
|
233 |
flag or any other applicable law. |
170 |
Period the Vessel shall be in the full possession |
|
|
|
171 |
and at the absolute disposal for all purposes of the |
|
234 |
(c) The Charterers shall keep the Owners and the |
172 |
Charterers and under their complete control in |
|
235 |
mortgagee(s) advised of the intended employment, |
173 |
every respect. The Charterers shall maintain the |
|
236 |
planned dry-docking and major repairs of the Vessel, |
174 |
Vessel, her machinery, boilers, appurtenances and |
|
237 |
as reasonably required. |
175 |
spare parts in a good state of repair, in efficient |
|
|
|
176 |
operating condition and in accordance with good |
|
238 |
(d) Flag and Name of Vessel – During the Charter |
177 |
commercial maintenance practice and, except as |
|
239 |
Period, the Charterers shall have the liberty to paint the |
178 |
provided for in Clause 14(l), if applicable, at their |
|
240 |
Vessel in their own colours, install and display their |
179 |
own expense they shall at all times keep the |
|
241 |
funnel insignia and fly their own house flag. The |
180 |
Vessel’s Classification Class fully up to date with the Classification |
|
|
|
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
242 |
Charterers shall also have the liberty, with the Owners’ |
|
292 |
punctually in accordance with the terms of this Charter |
243 |
consent, which shall not be unreasonably withheld or delayed, to |
|
293 |
in respect of which time shall be of the essence. |
244 |
change the flag and/or the name of the Vessel during |
|
294 |
(b) The Charterers shall pay to the Owners for the hire |
245 |
the Charter Period (with all fees, costs and expenses arising in relation thereto for the Charterers’ account). Painting and re-painting, instalment |
|
295 |
of the Vessel a lump sum in the amount indicated in |
246 |
and re-instalment, registration and re-registration, if |
|
296 |
Box 22 which shall be payable not later than every thirty |
247 |
required by the Owners, shall be at the Charterers’ |
|
297 |
(30) running days in advance, the first lump sum being |
248 |
expense and time. |
|
298 |
payable on the date and hour of the Vessel’s delivery to |
|
|
|
299 |
the Charterers. Hire shall be paid continuously |
249 |
(e) Changes to the Vessel – See Clause 53.1(k). Subject to Clause 10(a)(ii), |
|
300 |
throughout the Charter Period. |
250 |
the Charterers shall make no structural changes in the |
|
301 |
(c) Payment of hire shall be made in cash without |
251 |
Vessel or changes in the machinery, boilers, appurten- |
|
302 |
discount in the currency and in the manner indicated in |
252 |
ances or spare parts thereof without in each instance |
|
303 |
Box 25 and at the place mentioned in Box 26. |
253 |
first securing the Owners’ approval thereof. If the Owners |
|
304 |
(d) Final payment of hire, if for a period of less than |
254 |
so agree, the Charterers shall, if the Owners so require, |
|
305 |
thirty (30) running days, shall be calculated proportionally |
255 |
restore the Vessel to its former condition before the |
|
306 |
according to the number of days and hours remaining |
256 |
termination of this Charter. |
|
307 |
before redelivery and advance payment to be effected |
|
|
|
308 |
accordingly. |
257 |
(f) Use of the Vessel’s Outfit, Equipment and |
|
309 |
(e) Should the Vessel be lost or missing, hire shall |
258 |
Appliances - The Charterers shall have the use of all |
|
310 |
cease from the date and time when she was lost or last |
259 |
outfit, equipment, and appliances on board the Vessel |
|
311 |
heard of. The date upon which the Vessel is to be treated |
260 |
at the time of delivery, provided the same or their |
|
312 |
as lost or missing shall be ten (10) days after the Vessel |
261 |
substantial equivalent shall be returned to the Owners |
|
313 |
was last reported or when the Vessel is posted as |
262 |
on redelivery in the same good order and condition as |
|
314 |
missing by Lloyd’s, whichever occurs first. Any hire paid |
263 |
when received, ordinary wear and tear excepted. The |
|
315 |
in advance to be adjusted accordingly. |
264 |
Charterers shall from time to time during the Charter |
|
316 |
(f) Any delay in payment of hire shall entitle the |
265 |
Period replace, renew or substitute such items of equipment as shall be so |
|
317 |
Owners to interest at the rate per annum as agreed |
266 |
damaged or worn as to be unfit for use. The Charterers |
|
318 |
in Box 24. If Box 24 has not been filled in, the three months |
267 |
are to procure that all repairs to or replacement of any |
|
319 |
Interbank offered rate in London (LIBOR or its successor) |
268 |
damaged, worn or lost parts or equipment be effected |
|
320 |
for the currency stated in Box 25, as quoted by the British |
269 |
in such manner (both as regards workmanship and |
|
321 |
Bankers’ Association (BBA) on the date when the hire |
270 |
quality of materials) as not to diminish the value of the |
|
322 |
fell due, increased by 2 per cent., shall apply. |
271 |
Vessel provided that the Vessel’s value not to be |
|
323 |
(g) Payment of interest due under sub-clause 11(f) |
|
diminished if the repairs or replacement are effected |
|
324 |
shall be made within seven (7) running days of the date |
|
in accordance with the Classification Society and/or |
|
325 |
of the Owners’ invoice specifying the amount payable |
|
the respective makers’ recommendations. Title of any |
|
326 |
or, in the absence of an invoice, at the time of the next |
|
equipment so replaced, renewed or substituted shall |
|
327 |
hire payment date. |
|
vest in and remain with the Owners. The Charterers |
|
|
|
|
have the right to fit additional |
|
328 |
12. Mortgage (See Clause 62) |
272 |
equipment at their expense and risk but the Charterers |
|
329 |
(only to apply if Box 28 has been appropriately filled in) |
273 |
shall remove such equipment at the end of the period if |
|
330 |
*) (a) The Owners warrant that they have not effected |
274 |
requested by the Owners. See also Clause 53.1(k). Any |
|
331 |
any mortgage(s) of the Vessel and that they shall not |
|
equipment including radio |
|
332 |
effect any mortgage(s) without the prior consent of the |
275 |
equipment on hire on the Vessel at time of delivery shall |
|
333 |
Charterers, which shall not be unreasonably withheld. |
276 |
be kept and maintained by the Charterers and the |
|
334 |
*) (b) The Vessel chartered under this Charter is financed |
277 |
Charterers shall assume the obligations and liabilities |
|
335 |
by a mortgage according to the Financial Instrument. |
|
|
|
336 |
The Charterers undertake to comply, and provide such |
278 |
of the Owners under any lease contracts in connection |
|
337 |
information and documents to enable the Owners to |
279 |
therewith and shall reimburse the Owners for all |
|
338 |
comply, with all such instructions or directions in regard |
280 |
expenses incurred in connection therewith, also for any |
|
339 |
to the employment, insurances, operation, repairs and |
281 |
new equipment required in order to comply with radio |
|
340 |
maintenance of the Vessel as laid down in the Financial |
282 |
regulations. |
|
341 |
Instrument or as may be directed from time to time during |
283 |
(g) Periodical Dry-Docking - The Charterers shall dry- |
|
342 |
the currency of the Charter by the mortgagee(s) in |
284 |
dock the Vessel and clean and paint her underwater |
|
343 |
conformity with the Financial Instrument. The Charterers |
285 |
parts whenever the same may be necessary, but not |
|
344 |
confirm that, for this purpose, they have acquainted |
286 |
less than once during the period stated in Box 19 or, if |
|
345 |
themselves with all relevant terms, conditions and |
287 |
Box 19 has been left blank, every sixty (60) calendar |
|
346 |
provisions of the Financial Instrument and agree to |
288 |
months after delivery or such other period as may be |
|
347 |
acknowledge this in writing in any form that may be |
289 |
required by the Classification Society or flag State. |
|
348 |
required by the mortgagee(s). The Owners warrant that |
|
|
|
349 |
they have not effected any mortgage(s) other than stated |
|
|
|
350 |
in Box 28 and that they shall not agree to any |
290 |
11. Hire (See Clause 36) |
|
351 |
amendment of the mortgage(s) referred to in Box 28 or |
291 |
(a) The Charterers shall pay hire due to the Owners |
|
352 |
effect any other mortgage(s) without the prior consent |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
|
|
|
|
|
353 |
of the Charterers, which shall not be unreasonably |
|
406 |
(d) Subject to the provisions of the Financial Instru- |
354 |
withheld. |
|
407 |
ments and Clause 43, if any, should the Vessel become a Total Loss, an actual, |
355 |
*) (Optional, Clauses 12(a) and 12(b) are alternatives; |
|
408 |
constructive, compromised or agreed total loss under |
356 |
indicate alternative agreed in Box 28). |
|
409 |
the insurances required under sub-clause 13(a), all |
|
|
|
410 |
insurance payments for such loss shall be paid to the |
357 |
13. Insurance and Repairs (See also Clause 39) |
|
411 |
Owners (or, if applicable, the Owners’ Financiers) in accordance with the agreed loss payable clauses. who shall distribute the moneys between the |
358 |
(a) During the Charter Period the Vessel shall be kept |
|
412 |
Owners and the Charterers according to their respective |
359 |
insured in accordance with Clause39 andby the Charterers at their expense against hull |
|
413 |
interests. The Charterers undertake to notify the Ownersand the Owners’ Financiers, |
360 |
and machinery, war and Protection and Indemnity risks |
|
414 |
and the mortgagee(s), if any, of any occurrences in |
361 |
(and any risks against which it is compulsory to insure |
|
415 |
consequence of which the Vessel is likely to become a |
362 |
for the operation of the Vessel, including but not limited to maintaining |
|
416 |
tTotal lLoss. as defined in this Clause. |
363 |
financial security in accordance with sub-clause |
|
417 |
(e) The Owners shall upon the request of the |
364 |
10(a)(iii)) in such form as the Owners shall in writing |
|
418 |
Charterers, promptly execute such documents as may |
365 |
approve, which approval shall not be un-reasonably |
|
419 |
be required to enable the Charterers to abandon the |
366 |
withheld. Such insurances shall be arranged by the |
|
420 |
Vessel to insurers and claim a constructive total loss. |
367 |
Charterers to protect the interests of both the Owners |
|
421 |
(f) For the purpose of insurance coverage against hull |
368 |
and the Charterers and the Owners’ Financiers mortgagee(s) (if any), and |
|
422 |
and machinery and war risks under the provisions of |
369 |
The Charterers shall be at liberty to protect under such |
|
423 |
sub-clause 13(a), the value of the Vessel is the sum |
370 |
insurances the interests of any managers they may |
|
424 |
indicated in Clause 39. Box 29. |
371 |
appoint provided such manager has entered into a |
|
|
|
|
manager’s undertaking in form and substance |
|
425 |
14. Insurance, Repairs and Classification |
|
acceptable to the Owners and the Owners’ Financiers |
|
426 |
(Optional, only to apply if expressly agreed and stated |
|
(if any). Insurance policies shall cover the Owners, the |
|
427 |
in Box 29, in which event Clause 13 shall be considered |
|
mortgagee(s) (if any), and |
|
428 |
deleted). |
372 |
the Charterers according to their respective interests. |
|
429 |
(a) During the Charter Period the Vessel shall be kept |
373 |
Subject to the provisions of the agreed loss payable clauses, Financial Instrument, if |
|
430 |
insured by the Owners at their expense against hull and |
374 |
any, and the approval of the Owners and the insurers, |
|
431 |
machinery and war risks under the form of policy or |
375 |
the Charterers shall effect all insured repairs and shall |
|
432 |
policies attached hereto. The Owners and/or insurers |
376 |
undertake settlement and reimbursement from the |
|
433 |
shall not have any right of recovery or subrogation |
377 |
insurers of all costs in connection with such repairs as |
|
434 |
against the Charterers on account of loss of or any |
378 |
well as insured charges, expenses and liabilities to the |
|
435 |
damage to the Vessel or her machinery or appurt- |
379 |
extent of coverage under the insurances herein provided |
|
436 |
enances covered by such insurance, or on account of |
380 |
for. |
|
437 |
payments made to discharge claims against or liabilities |
381 |
The Charterers also to remain responsible for and to |
|
438 |
of the Vessel or the Owners covered by such insurance. |
382 |
effect repairs and settlement of costs and expenses |
|
439 |
Insurance policies shall cover the Owners and the |
383 |
incurred thereby in respect of all other repairs not |
|
440 |
Charterers according to their respective interests. |
384 |
covered by the insurances and/or not exceeding any |
|
441 |
(b) During the Charter Period the Vessel shall be kept |
385 |
possible franchise(s) or deductibles provided for in the |
|
442 |
insured by the Charterers at their expense against |
386 |
insurances. |
|
443 |
Protection and Indemnity risks (and any risks against |
387 |
All time used for repairs under the provisions of sub- |
|
444 |
which it is compulsory to insure for the operation of the |
388 |
clause 13(a) and for repairs of latent defects according |
|
445 |
Vessel, including maintaining financial security in |
389 |
to Clause 3(c) above, including any deviation, shall be |
|
446 |
accordance with sub-clause 10(a)(iii)) in such form as |
390 |
for the Charterers’ account. |
|
447 |
the Owners shall in writing approve which approval shall |
|
|
|
448 |
not be unreasonably withheld. |
391 |
(b) If the conditions of the above insurances permit |
|
449 |
(c) In the event that any act or negligence of the |
392 |
additional insurance to be placed by the parties, such |
|
450 |
Charterers shall vitiate any of the insurance herein |
393 |
cover shall be limited to the amount for each party set |
|
451 |
provided, the Charterers shall pay to the Owners all |
394 |
out in Box 30 and Box 31, respectively. The Owners or |
|
452 |
losses and indemnify the Owners against all claims and |
395 |
the Charterers as the case may be shall immediately |
|
453 |
demands which would otherwise have been covered by |
396 |
furnish the other partyOwners with particulars of any additional |
|
454 |
such insurance. |
397 |
insurance effected, including copies of any cover notes |
|
455 |
(d) The Charterers shall, subject to the approval of the |
398 |
or policies and the written consent of the insurers of |
|
456 |
Owners or Owners’ Underwriters, effect all insured |
399 |
any such required insurance in any case where the |
|
457 |
repairs, and the Charterers shall undertake settlement |
400 |
consent of such insurers is necessary. |
|
458 |
of all miscellaneous expenses in connection with such |
401 |
(c) The Charterers shall upon the request of the |
|
459 |
repairs as well as all insured charges, expenses and |
402 |
Owners, provide information and promptly execute such |
|
460 |
liabilities, to the extent of coverage under the insurances |
403 |
documents as may be required to enable the Owners to |
|
461 |
provided for under the provisions of sub-clause 14(a). |
404 |
comply with the insurance provisions of the Financial |
|
462 |
The Charterers to be secured reimbursement through |
405 |
Instrument (if any). |
|
463 |
the Owners’ Underwriters for such expenditures upon |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
464 |
presentation of accounts. |
|
525 |
notified immediately to the Owners. |
465 |
(e) The Charterers to remain responsible for and to |
|
526 |
The Charterers warrant that they will not permit the |
466 |
effect repairs and settlement of costs and expenses |
|
527 |
Vessel to commence a voyage (including any preceding |
467 |
incurred thereby in respect of all other repairs not |
|
528 |
ballast voyage) which cannot reasonably be expected |
468 |
covered by the insurances and/or not exceeding any |
|
529 |
to be completed in time to allow redelivery of the Vessel |
469 |
possible franchise(s) or deductibles provided for in the |
|
530 |
within the Charter Period. Notwithstanding the above, |
470 |
insurances. |
|
531 |
should the Charterers fail to redeliver the Vessel within |
471 |
(f) All time used for repairs under the provisions of |
|
532 |
The Charter Period, the Charterers shall pay the daily |
472 |
sub-clauses 14(d) and 14(e) and for repairs of latent |
|
533 |
equivalent to the rate of hire stated in Box 22 plus 10 |
473 |
defects according to Clause 3 above, including any |
|
534 |
per cent. or to the market rate, whichever is the higher, |
474 |
deviation, shall be for the Charterers’ account and shall |
|
535 |
for the number of days by which the Charter Period is |
475 |
form part of the Charter Period. |
|
536 |
exceeded. All other terms, conditions and provisions of |
476 |
The Owners shall not be responsible for any expenses |
|
537 |
this Charter shall continue to apply. |
477 |
as are incident to the use and operation of the Vessel |
|
538 |
Subject to the provisions of Clause 10, the Vessel shall |
478 |
for such time as may be required to make such repairs. |
|
539 |
be redelivered to the Owners in the same or as good |
479 |
(g) If the conditions of the above insurances permit |
|
540 |
structure, state, condition and class as that in which she |
480 |
additional insurance to be placed by the parties such |
|
541 |
was delivered, fair wear and tear not affecting class |
481 |
cover shall be limited to the amount for each party set |
|
542 |
excepted. |
482 |
out in Box 30 and Box 31, respectively. The Owners or |
|
543 |
The Vessel upon redelivery shall have her survey cycles |
483 |
the Charterers as the case may be shall immediately |
|
544 |
up to date and trading and class certificates valid for at |
484 |
furnish the other party with particulars of any additional |
|
545 |
least the number of months agreed in Box 17. |
485 |
insurance effected, including copies of any cover notes |
|
|
|
486 |
or policies and the written consent of the insurers of |
|
546 |
16. Non-Lien |
487 |
any such required insurance in any case where the |
|
547 |
The Charterers will not suffer, nor permit to be continued, |
488 |
consent of such insurers is necessary. |
|
548 |
any lien or encumbrance incurred by them or their |
489 |
(h) Should the Vessel become an actual, constructive, |
|
549 |
agents, which might have priority over the title and |
490 |
compromised or agreed total loss under the insurances |
|
550 |
interest of the Owners in the Vessel. The Charterers |
491 |
required under sub-clause 14(a), all insurance payments |
|
551 |
further agree to fasten to the Vessel in a conspicuous |
492 |
for such loss shall be paid to the Owners, who shall |
|
552 |
place and to keep so fastened during the Charter Period |
493 |
distribute the moneys between themselves and the |
|
553 |
a notice reading as follows: |
494 |
Charterers according to their respective interests. |
|
554 |
“This Vessel is the property of (name of Owners). It is |
495 |
(i) If the Vessel becomes an actual, constructive, |
|
555 |
under charter to (name of Charterers) and by the terms |
496 |
compromised or agreed total loss under the insurances |
|
556 |
of the Charter Party neither the Charterers nor the |
497 |
arranged by the Owners in accordance with sub-clause |
|
557 |
Master have any right, power or authority to create, incur |
498 |
14(a), this Charter shall terminate as of the date of such |
|
558 |
or permit to be imposed on the Vessel any lien |
499 |
loss. |
|
559 |
whatsoever.” |
500 |
(j) The Charterers shall upon the request of the |
|
|
|
501 |
Owners, promptly execute such documents as may be |
|
560 |
17. Indemnity (See indemnity clauses in Additional Clauses) |
502 |
required to enable the Owners to abandon the Vessel |
|
561 |
(a) The Charterers shall indemnify the Owners against |
503 |
to the insurers and claim a constructive total loss. |
|
562 |
any loss, damage or expense incurred by the Owners |
504 |
(k) For the purpose of insurance coverage against hull |
|
563 |
arising out of or in relation to the operation of the Vessel |
505 |
and machinery and war risks under the provisions of |
|
564 |
by the Charterers, and against any lien of whatsoever |
506 |
sub-clause 14(a), the value of the Vessel is the sum |
|
565 |
nature arising out of an event occurring during the |
507 |
indicated in Box 29. |
|
566 |
Charter Period. If the Vessel be arrested or otherwise |
508 |
(l) Notwithstanding anything contained in sub-clause |
|
567 |
detained by reason of claims or liens arising out of her |
509 |
10(a), it is agreed that under the provisions of Clause |
|
568 |
operation hereunder by the Charterers, the Charterers |
510 |
14, if applicable, the Owners shall keep the Vessel’s |
|
569 |
shall at their own expense take all reasonable steps to |
511 |
Class fully up to date with the Classification Society |
|
570 |
secure that within a reasonable time the Vessel is |
512 |
indicated in Box 10 and maintain all other necessary |
|
571 |
released, including the provision of bail. |
513 |
certificates in force at all times. |
|
572 |
Without prejudice to the generality of the foregoing, the |
|
|
|
573 |
Charterers agree to indemnify the Owners against all |
514 |
15. Redelivery (See Clauses 41 and 42) |
|
574 |
consequences or liabilities arising from the Master, |
515 |
At the expiration of the Charter Period the Vessel shall |
|
575 |
officers or agents signing Bills of Lading or other |
516 |
be redelivered by the Charterers to the Owners at a |
|
576 |
documents. |
517 |
safe and ice-free port or place as indicated in Box 16, in |
|
577 |
(b) If the Vessel be arrested or otherwise detained by |
518 |
such ready safe berth as the Owners may direct. The |
|
578 |
reason of a claim or claims against the Owners, the |
519 |
Charterers shall give the Owners not less than thirty |
|
579 |
Owners shall at their own expense take all reasonable |
520 |
(30) running days’ preliminary notice of expected date, |
|
580 |
steps to secure that within a reasonable time the Vessel |
521 |
range of ports of redelivery or port or place of redelivery |
|
581 |
is released, including the provision of bail. |
522 |
and not less than fourteen (14) running days’ definite |
|
582 |
In such circumstances the Owners shall indemnify the |
523 |
notice of expected date and port or place of redelivery. |
|
583 |
Charterers against any loss, damage or expense |
524 |
Any changes thereafter in the Vessel’s position shall be |
|
584 |
incurred by the Charterers (including hire paid under |
|
|
|
585 |
this Charter) as a direct consequence of such arrest or |
|
|
|
586 |
detention. |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
587 |
18. Lien |
|
648 |
(a) In the event of the Requisition for Hire of the Vessel |
588 |
The Owners to shall have a lien upon all cargoes, sub-hires |
|
649 |
by any governmental or other competent authority |
589 |
and sub-freights belonging or due to the Charterers or |
|
650 |
(hereinafter referred to as “Requisition for Hire”) |
590 |
any sub-charterers and any Bill of Lading freight for all |
|
651 |
irrespective of the date during the Charter Period when |
591 |
claims under this Charter., and the Charterers to have a |
|
652 |
“Requisition for Hire” may occur and irrespective of the |
592 |
lien on the Vessel for all moneys paid in advance and |
|
653 |
length thereof and whether or not it be for an indefinite |
593 |
not earned. |
|
654 |
or a limited period of time, and irrespective of whether it |
|
|
|
655 |
may or will remain in force for the remainder of the |
594 |
19. Salvage |
|
656 |
Charter Period, this Charter shall not be deemed thereby |
595 |
All salvage and towage performed by the Vessel shall |
|
657 |
or thereupon to be frustrated or otherwise terminated |
596 |
be for the Charterers’ benefit and the cost of repairing |
|
658 |
and the Charterers shall continue to pay the stipulated |
597 |
damage occasioned thereby shall be borne by the |
|
659 |
hire in the manner provided by this Charter until the time |
598 |
Charterers. |
|
660 |
when the Charter would have terminated pursuant to |
|
|
|
661 |
any of the provisions hereof. always provided however |
599 |
20. Wreck Removal |
|
662 |
that in the event of “Requisition for Hire” any Requisition |
600 |
In the event of the Vessel becoming a wreck or |
|
663 |
Hire or compensation received or receivable by the |
601 |
obstruction to navigation the Charterers shall indemnify |
|
664 |
Owners shall be payable to the Charterers during the |
602 |
the Owners against any sums whatsoever which the |
|
665 |
remainder of the Charter Period or the period of the |
603 |
Owners shall become liable to pay and shall pay in |
|
666 |
“Requisition for Hire” whichever be the shorter. |
604 |
consequence of the Vessel becoming a wreck or |
|
667 |
(b) In the event of the Owners being deprived of their |
605 |
obstruction to navigation. |
|
668 |
ownership in the Vessel by any Compulsory Acquisition |
|
|
|
669 |
of the Vessel or requisition for title by any governmental |
606 |
21. General Average |
|
670 |
or other competent authority (hereinafter referred to as |
607 |
The Owners shall not contribute to General Average. |
|
671 |
“Compulsory Acquisition”), then, irrespective of the date |
|
|
|
672 |
during the Charter Period when “Compulsory Acqui- |
608 |
22. Assignment, Sub-Charter and Sale (See Clause 62) |
|
673 |
sition” may occur, this Charter shall be deemed |
609 |
(a) The Charterers shall not assign this Charter nor |
|
674 |
terminated as of the date of such “Compulsory |
610 |
sub-charter the Vessel on a bareboat basis except with |
|
675 |
Acquisition”. In such event Charter Hire to be considered |
611 |
the prior consent in writing of the Owners, which shall |
|
676 |
as earned and to be paid up to the date and time of |
612 |
not be unreasonably withheld, and subject to such terms |
|
677 |
such “Compulsory Acquisition”. |
613 |
and conditions as the Owners shall approve. |
|
|
|
614 |
(b) The Owners shall not sell the Vessel during the |
|
678 |
26. War |
615 |
currency of this Charter except with the prior written |
|
679 |
(a) Subject to the provisions of the Financial |
616 |
consent of the Charterers, which shall not be unreason- |
|
|
Instruments (if any) FfFor the purpose of this Clause, the |
617 |
ably withheld, and subject to the buyer accepting an |
|
|
words “War |
618 |
assignment of this Charter. |
|
680 |
Risks” shall include any war (whether actual or |
|
|
|
681 |
threatened), act of war, civil war, hostilities, revolution, |
619 |
23. Contracts of Carriage |
|
682 |
rebellion, civil commotion, warlike operations, the laying |
620 |
*) (a) The Charterers are to procure that all documents |
|
683 |
of mines (whether actual or reported), acts of piracy, |
621 |
issued during the Charter Period evidencing the terms |
|
684 |
acts of terrorists, acts of hostility or malicious damage, |
622 |
and conditions agreed in respect of carriage of goods |
|
685 |
blockades (whether imposed against all vessels or |
623 |
shall contain a paramount clause incorporating any |
|
686 |
imposed selectively against vessels of certain flags or |
624 |
legislation relating to carrier’s liability for cargo |
|
687 |
ownership, or against certain cargoes or crews or |
625 |
compulsorily applicable in the trade; if no such legislation |
|
688 |
otherwise howsoever), by any person, body, terrorist or |
626 |
exists, the documents shall incorporate the Hague-Visby |
|
689 |
political group, or the Government of any state |
627 |
Rules. The documents shall also contain the New Jason |
|
690 |
whatsoever, which may be dangerous or are likely to be |
628 |
Clause and the Both-to-Blame Collision Clause. |
|
691 |
or to become dangerous to the Vessel, her cargo, crew |
629 |
*) (b) The Charterers are to procure that all passenger |
|
692 |
or other persons on board the Vessel. |
630 |
tickets issued during the Charter Period for the carriage |
|
|
|
631 |
of passengers and their luggage under this Charter shall |
|
693 |
(b) The Vessel, unless the written consent of the |
632 |
contain a paramount clause incorporating any legislation |
|
694 |
Owners be first obtained and adequate insurances are |
633 |
relating to carrier’s liability for passengers and their |
|
|
in place (and the Charterers may be required to effect |
634 |
luggage compulsorily applicable in the trade; if no such |
|
|
special, modified or additional insurance in order to |
635 |
legislation exists, the passenger tickets shall incorporate |
|
|
ensure such adequacy at the Charterers’ costs) , shall |
636 |
the Athens Convention Relating to the Carriage of |
|
|
not continue to or go |
637 |
Passengers and their Luggage by Sea, 1974, and any |
|
695 |
through any port, place, area or zone (whether of land |
638 |
protocol thereto. |
|
696 |
or sea), or any waterway or canal, where it reasonably |
639 |
*) Delete as applicable. |
|
697 |
appears that the Vessel, her cargo, crew or other |
|
|
|
698 |
persons on board the Vessel, in the reasonable |
640 |
24. Bank Guarantee |
|
699 |
judgement of the Owners, may be, or are likely to be, |
641 |
(Optional, only to apply if Box 27 filled in) |
|
700 |
exposed to War Risks. The Charterers shall provide the |
642 |
The Charterers undertake to furnish, before delivery of |
|
|
owners with evidence satisfactory in respect of the |
643 |
the Vessel, a first class bank guarantee or bond in the |
|
|
adequacy of such insurances immediately thereafter. |
644 |
sum and at the place as indicated in Box 27 as guarantee |
|
|
Should the Vessel be within any |
645 |
for full performance of their obligations under this |
|
701 |
such place as aforesaid, which only becomes danger- |
646 |
Charter. |
|
|
|
|
|
|
|
|
647 |
25. Requisition/Acquisition |
|
|
|
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
702 |
ous, or is likely to be or to become dangerous, after her |
|
764 |
27. Commission |
703 |
entry into it, the Owners shall have the right to require |
|
765 |
The Owners to pay a commission at the rate indicated |
704 |
the Vessel to leave such area. |
|
766 |
in Box 33 to the Brokers named in Box 33 on any hire |
705 |
(c) The Vessel shall not load contraband cargo, or to |
|
767 |
paid under the Charter. If no rate is indicated in Box 33, |
706 |
pass through any blockade, whether such blockade be |
|
768 |
the commission to be paid by the Owners shall cover |
707 |
imposed on all vessels, or is imposed selectively in any |
|
769 |
the actual expenses of the Brokers and a reasonable |
708 |
way whatsoever against vessels of certain flags or |
|
770 |
fee for their work. |
709 |
ownership, or against certain cargoes or crews or |
|
771 |
If the full hire is not paid owing to breach of the Charter |
710 |
otherwise howsoever, or to proceed to an area where |
|
772 |
by either of the parties the party liable therefor shall |
711 |
she shall be subject, or is likely to be subject to |
|
773 |
indemnify the Brokers against their loss of commission. |
712 |
a belligerent’s right of search and/or confiscation. |
|
774 |
Should the parties agree to cancel the Charter, the |
713 |
(d) If the insurers of the war risks insurance, when |
|
775 |
Owners shall indemnify the Brokers against any loss of |
714 |
Clause 14 is applicable, should require payment of |
|
776 |
commission but in such case the commission shall not |
715 |
premiums and/or calls because, pursuant to the |
|
777 |
exceed the brokerage on one year’s hire. |
716 |
Charterers’ orders, the Vessel is within, or is due to enter |
|
|
|
717 |
and remain within, any area or areas which are specified |
|
778 |
28. Termination (See Clauses 41, 42 and 47) |
718 |
by such insurers as being subject to additional premiums |
|
779 |
(a) Charterers’ Default |
719 |
because of War Risks, then such premiums and/or calls |
|
780 |
The Owners shall be entitled to withdraw the Vessel from |
720 |
shall be reimbursed by the Charterers to the Owners at |
|
781 |
the service of the Charterers and terminate the Charter |
721 |
the same time as the next payment of hire is due. |
|
782 |
with immediate effect by written notice to the Charterers if: |
722 |
(e) The Charterers shall have the liberty: |
|
783 |
(i) the Charterers fail to pay hire in accordance with |
723 |
(i) to comply with all orders, directions, recommend- |
|
784 |
Clause 11. However, where there is a failure to |
724 |
ations or advice as to departure, arrival, routes, |
|
785 |
make punctual payment of hire due to oversight, |
725 |
sailing in convoy, ports of call, stoppages, |
|
786 |
negligence, errors or omissions on the part of the |
726 |
destinations, discharge of cargo, delivery, or in any |
|
787 |
Charterers or their bankers, the Owners shall give |
727 |
other way whatsoever, which are given by the |
|
788 |
the Charterers written notice of the number of clear |
728 |
Government of the Nation under whose flag the |
|
789 |
banking days stated in Box 34 (as recognised at |
729 |
Vessel sails, or any other Government, body or |
|
790 |
the agreed place of payment) in which to rectify |
730 |
group whatsoever acting with the power to compel |
|
791 |
the failure, and when so rectified within such |
731 |
compliance with their orders or directions; |
|
792 |
number of days following the Owners’ notice, the |
732 |
(ii) to comply with the orders, directions or recom- |
|
793 |
payment shall stand as regular and punctual. |
733 |
mendations of any war risks underwriters who have |
|
794 |
Failure by the Charterers to pay hire within the |
734 |
the authority to give the same under the terms of |
|
795 |
number of days stated in Box 34 of their receiving |
735 |
the war risks insurance; |
|
796 |
the Owners’ notice as provided herein, shall entitle |
736 |
(iii) to comply with the terms of any resolution of the |
|
797 |
the Owners to withdraw the Vessel from the service |
737 |
Security Council of the United Nations, any |
|
798 |
of the Charterers and terminate the Charter without |
738 |
directives of the European Community, the effective |
|
799 |
further notice; |
739 |
orders of any other Supranational body which has |
|
800 |
(ii) the Charterers fail to comply with the requirements of: |
740 |
the right to issue and give the same, and with |
|
801 |
(1) Clause 6 (Trading Restrictions) |
741 |
national laws aimed at enforcing the same to which |
|
802 |
(2) Clause 13(a) (Insurance and Repairs) |
742 |
the Owners are subject, and to obey the orders |
|
803 |
provided that the Owners shall have the option, by |
743 |
and directions of those who are charged with their |
|
804 |
written notice to the Charterers, to give the |
744 |
enforcement. |
|
805 |
Charterers a specified number of days grace within |
745 |
(f) In the event of outbreak of war (whether there be a |
|
806 |
which to rectify the failure without prejudice to the |
746 |
declaration of war or not) (i) between any two or more |
|
807 |
Owners’ right to withdraw and terminate under this |
747 |
of the following countries: the United States of America; |
|
808 |
Clause if the Charterers fail to comply with such |
748 |
Russia; the United Kingdom; France; and the People’s |
|
809 |
notice; |
749 |
Republic of China, (ii) between any two or more of the |
|
810 |
(iii) the Charterers fail to rectify any failure to comply |
750 |
countries stated in Box 36, both the Owners and the |
|
811 |
with the requirements of sub-clause 10(a)(i) |
751 |
Charterers shall have the right to cancel this Charter, |
|
812 |
(Maintenance and Repairs) as soon as practically |
752 |
whereupon the Charterers shall redeliver the Vessel to |
|
813 |
possible after the Owners have requested them in |
753 |
the Owners in accordance with Clause 15, if the Vessel |
|
814 |
writing so to do and in any event so that the Vessel’s |
754 |
has cargo on board after discharge thereof at |
|
815 |
insurance cover is not prejudiced. |
755 |
destination, or if debarred under this Clause from |
|
816 |
(b) Owners’ Default |
756 |
reaching or entering it at a near, open and safe port as |
|
817 |
If the Owners shall by any act or omission be in breach |
757 |
directed by the Owners, or if the Vessel has no cargo |
|
818 |
of their obligations under this Charter to the extent that |
758 |
on board, at the port at which the Vessel then is or if at |
|
819 |
the Charterers are deprived of the use of the Vessel |
759 |
sea at a near, open and safe port as directed by the |
|
820 |
and such breach continues for a period of fourteen (14) |
760 |
Owners. In all cases hire shall continue to be paid in |
|
821 |
running days after written notice thereof has been given |
761 |
accordance with Clause 11 and except as aforesaid all |
|
822 |
by the Charterers to the Owners, the Charterers shall |
762 |
other provisions of this Charter shall apply until |
|
823 |
be entitled to terminate this Charter with immediate effect |
763 |
redelivery the end of the Charter Period. |
|
824 |
by written notice to the Owners. |
|
|
|
825 |
(c) Loss of Vessel |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
826 |
This Charter shall be deemed to be terminated if the |
|
883 |
wishing to refer a dispute to arbitration shall appoint its |
827 |
Vessel becomes a total loss or is declared as a |
|
884 |
arbitrator and send notice of such appointment in writing |
828 |
constructive or compromised or arranged total loss. For |
|
885 |
to the other party requiring the other party to appoint its |
829 |
the purpose of this sub-clause, the Vessel shall not be |
|
886 |
own arbitrator within 14 calendar days of that notice and |
830 |
deemed to be lost unless she has either become an |
|
887 |
stating that it will appoint its arbitrator as sole arbitrator |
831 |
actual total loss or agreement has been reached with |
|
888 |
unless the other party appoints its own arbitrator and |
832 |
her underwriters in respect of her constructive, |
|
889 |
gives notice that it has done so within the 14 days |
833 |
compromised or arranged total loss or if such agreement |
|
890 |
specified. If the other party does not appoint its own |
834 |
with her underwriters is not reached it is adjudged by a |
|
891 |
arbitrator and give notice that it has done so within the |
835 |
competent tribunal that a constructive loss of the Vessel |
|
892 |
14 days specified, the party referring a dispute to |
836 |
has occurred. |
|
893 |
arbitration may, without the requirement of any further |
837 |
(d) Either party shall be entitled to terminate this |
|
894 |
prior notice to the other party, appoint its arbitrator as |
838 |
Charter with immediate effect by written notice to the |
|
895 |
sole arbitrator and shall advise the other party |
839 |
other party in the event of an order being made or |
|
896 |
accordingly. The award of a sole arbitrator shall be |
840 |
resolution passed for the winding up, dissolution, |
|
897 |
binding on both parties as if he had been appointed by |
841 |
liquidation or bankruptcy of the other party (otherwise |
|
898 |
agreement. |
842 |
than for the purpose of reconstruction or amalgamation) |
|
899 |
Nothing herein shall prevent the parties agreeing in |
843 |
or if a receiver is appointed, or if it suspends payment, |
|
900 |
writing to vary these provisions to provide for the |
844 |
ceases to carry on business or makes any special |
|
901 |
appointment of a sole arbitrator. |
845 |
arrangement or composition with its creditors. |
|
902 |
In cases where neither the claim nor any counterclaim |
846 |
(e) The termination of this Charter shall be without |
|
903 |
exceeds the sum of US$50,000 (or such other sum as |
847 |
prejudice to all rights accrued due between the parties |
|
904 |
the parties may agree) the arbitration shall be conducted |
848 |
prior to the date of termination and to any claim that |
|
905 |
in accordance with the LMAA Small Claims Procedure |
849 |
either party might have. |
|
906 |
current at the time when the arbitration proceedings are |
|
|
|
907 |
commenced. |
850 |
29. Repossession (See also Clauses 41, 42 and 47) |
|
908 |
*) (b) This Contract shall be governed by and construed |
|
In the event the Vessel is due for redelivery pursuant |
|
909 |
in accordance with Title 9 of the United States Code |
|
to Clause 41 or Owners have made a request for |
|
910 |
and the Maritime Law of the United States and any |
|
redelivery of the Vessel in accordance with the |
|
911 |
dispute arising out of or in connection with this Contract |
|
applicable provisions of Clause 42.1, |
|
912 |
shall be referred to three persons at New York, one to |
851 |
In the event of the termination of this Charter in |
|
913 |
be appointed by each of the parties hereto, and the third |
852 |
accordance with the applicable provisions of Clause 28, |
|
914 |
by the two so chosen; their decision or that of any two |
853 |
the Owners shall have the right to repossess the Vessel |
|
915 |
of them shall be final, and for the purposes of enforcing |
854 |
from the Charterers at her current or next port of call, or |
|
916 |
any award, judgement may be entered on an award by |
855 |
at a port or place convenient to them without hindrance |
|
917 |
any court of competent jurisdiction. The proceedings |
856 |
or interference by the Charterers, courts or local |
|
918 |
shall be conducted in accordance with the rules of the |
857 |
authorities. Pending physical repossession of the Vessel |
|
919 |
Society of Maritime Arbitrators, Inc. |
858 |
in accordance with this Clause 29, the Charterers shall |
|
920 |
In cases where neither the claim nor any counterclaim |
859 |
hold the Vessel as gratuitous bailee only to the Owners and |
|
921 |
exceeds the sum of US$50,000 (or such other sum as |
|
the Charterers shall procure that the master and crew |
|
922 |
the parties may agree) the arbitration shall be conducted |
|
follow the directions of the Owners . |
|
923 |
in accordance with the Shortened Arbitration Procedure |
860 |
The Owners shall arrange for an authorised represent - |
|
924 |
of the Society of Maritime Arbitrators, Inc. current at |
861 |
ative to board the Vessel as soon as reasonably |
|
925 |
the time when the arbitration proceedings are commenced. |
862 |
practicable following the termination of the Charter. The |
|
926 |
*) (c) This Contract shall be governed by and construed |
863 |
Vessel shall be deemed to be repossessed by the |
|
927 |
in accordance with the laws of the place mutually agreed |
864 |
Owners from the Charterers upon the boarding of the |
|
928 |
by the parties and any dispute arising out of or in |
865 |
Vessel by the Owners’ representative. All arrangements |
|
929 |
connection with this Contract shall be referred to |
866 |
and expenses relating to the settling of wages, |
|
930 |
arbitration at a mutually agreed place, subject to the |
867 |
disembarkation and repatriation of the Charterers’ |
|
931 |
procedures applicable there. |
868 |
Master, officers and crew shall be the sole responsibility |
|
932 |
(d) Notwithstanding (a), (b) or (c) above, the parties |
869 |
of the Charterers. |
|
933 |
may agree at any time to refer to mediation any |
|
|
|
934 |
difference and/or dispute arising out of or in connection |
870 |
30. Dispute Resolution (See Clause 65) |
|
935 |
with this Contract. |
871 |
*) (a) This Contract shall be governed by and construed |
|
936 |
In the case of a dispute in respect of which arbitration |
872 |
in accordance with English law and any dispute arising |
|
937 |
has been commenced under (a), (b) or (c) above, the |
873 |
out of or in connection with this Contract shall be referred |
|
938 |
following shall apply:- |
874 |
to arbitration in London in accordance with the Arbitration |
|
939 |
(i) Either party may at any time and from time to time |
875 |
Act 1996 or any statutory modification or re-enactment |
|
940 |
elect to refer the dispute or part of the dispute to |
876 |
thereof save to the extent necessary to give effect to |
|
941 |
mediation by service on the other party of a written |
877 |
the provisions of this Clause. |
|
942 |
notice (the “Mediation Notice”) calling on the other |
878 |
The arbitration shall be conducted in accordance with |
|
943 |
party to agree to mediation. |
879 |
the London Maritime Arbitrators Association (LMAA) |
|
944 |
(ii) The other party shall thereupon within 14 calendar |
880 |
Terms current at the time when the arbitration proceed - |
|
945 |
days of receipt of the Mediation Notice confirm that |
881 |
ings are commenced. |
|
|
|
882 |
The reference shall be to three arbitrators. A party |
|
|
|
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
946 |
they agree to mediation, in which case the parties |
|
971 |
(vi) Unless otherwise agreed or specified in the |
947 |
shall thereafter agree a mediator within a further |
|
972 |
mediation terms, each party shall bear its own costs |
948 |
14 calendar days, failing which on the application |
|
973 |
incurred in the mediation and the parties shall share |
949 |
of either party a mediator will be appointed promptly |
|
974 |
equally the mediator’s costs and expenses. |
950 |
by the Arbitration Tribunal (“the Tribunal”) or such |
|
975 |
(vii) The mediation process shall be without prejudice |
951 |
person as the Tribunal may designate for that |
|
976 |
and confidential and no information or documents |
952 |
purpose. The mediation shall be conducted in such |
|
977 |
disclosed during it shall be revealed to the Tribunal |
953 |
place and in accordance with such procedure and |
|
978 |
except to the extent that they are disclosable under |
954 |
on such terms as the parties may agree or, in the |
|
979 |
the law and procedure governing the arbitration. |
955 |
event of disagreement, as may be set by the |
|
980 |
(Note: The parties should be aware that the mediation |
956 |
mediator. |
|
981 |
process may not necessarily interrupt time limits.) |
957 |
(iii) If the other party does not agree to mediate, that |
|
982 |
(e) If Box 35 in Part I is not appropriately filled in, sub-clause |
958 |
fact may be brought to the attention of the Tribunal |
|
983 |
30(a) of this Clause shall apply. Sub-clause 30(d) shall |
959 |
and may be taken into account by the Tribunal when |
|
984 |
apply in all cases. |
960 |
allocating the costs of the arbitration as between |
|
985 |
*) Sub-clauses 30(a), 30(b) and 30(c) are alternatives; |
961 |
the parties. |
|
986 |
indicate alternative agreed in Box 35. |
962 |
(iv) The mediation shall not affect the right of either |
|
|
|
963 |
party to seek such relief or take such steps as it |
|
987 |
31. Notices (See Clause 46) |
964 |
considers necessary to protect its interest. |
|
988 |
(a) Any notice to be given by either party to the other |
965 |
(v) Either party may advise the Tribunal that they have |
|
989 |
party shall be in writing and may be sent by fax, telex, |
966 |
agreed to mediation. The arbitration procedure shall |
|
990 |
registered or recorded mail or by personal service. |
967 |
continue during the conduct of the mediation but |
|
991 |
(b) The address of the Parties for service of such |
968 |
the Tribunal may take the mediation timetable into |
|
992 |
communication shall be as stated in Boxes 3 and 4 |
969 |
account when setting the timetable for steps in the |
|
993 |
respectively. |
970 |
arbitration. |
|
|
|
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART III
PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY
(Optional, only to apply if expressly agreed and stated in Box 37)
1. |
Specifications and Building Contract |
|
62 |
Builders have estimated that the Vessel will be ready for |
2 |
(a) The Vessel shall be constructed in accordance with |
|
63 |
delivery to the Owners as therein provided but the delivery |
3 |
the Building Contract (hereafter called “the Building |
|
64 |
date for the purpose of this Charter shall be the date when |
4 |
Contract”) as annexed to this Charter, made between the |
|
65 |
the Vessel is in fact ready for delivery by the Builders after |
5 |
Builders and the Owners and in accordance with the |
|
66 |
completion of trials whether that be before or after as |
6 |
specifications and plans annexed thereto, such Building |
|
67 |
indicated in the Building Contract. The Charterers shall not |
7 |
Contract, specifications and plans having been counter - |
|
68 |
be entitled to refuse acceptance of delivery of the Vessel |
8 |
signed as approved by the Charterers. |
|
69 |
and upon and after such acceptance, subject to Clause |
9 |
(b) No change shall be made in the Building Contract or |
|
70 |
1(d), the Charterers shall not be entitled to make any claim |
10 |
in the specifications or plans of the Vessel as approved by |
|
71 |
against the Owners in respect of any conditions, |
11 |
the Charterers as aforesaid, without the Charterers’ |
|
72 |
representations or warranties, whether express or implied, |
12 |
consent. |
|
73 |
as to the seaworthiness of the Vessel or in respect of delay |
13 |
(c) The Charterers shall have the right to send their |
|
74 |
in delivery. |
14 |
representative to the Builders’ Yard to inspect the Vessel |
|
75 |
(b) If for any reason other than a default by the Owners |
15 |
during the course of her construction to satisfy themselves |
|
76 |
under the Building Contract, the Builders become entitled |
16 |
that construction is in accordance with such approved |
|
77 |
under that Contract not to deliver the Vessel to the Owners, |
17 |
specifications and plans as referred to under sub-clause |
|
78 |
the Owners shall upon giving to the Charterers written |
18 |
(a) of this Clause. |
|
79 |
notice of Builders becoming so entitled, be excused from |
19 |
(d) The Vessel shall be built in accordance with the |
|
80 |
giving delivery of the Vessel to the Charterers and upon |
20 |
Building Contract and shall be of the description set out |
|
81 |
receipt of such notice by the Charterers this Charter shall |
21 |
therein. Subject to the provisions of sub-clause 2(c)(ii) |
|
82 |
cease to have effect. |
22 |
hereunder, the Charterers shall be bound to accept the |
|
83 |
(c) If for any reason the Owners become entitled under |
23 |
Vessel from the Owners, completed and constructed in |
|
84 |
the Building Contract to reject the Vessel the Owners shall, |
24 |
accordance with the Building Contract, on the date of |
|
85 |
before exercising such right of rejection, consult the |
25 |
delivery by the Builders. The Charterers undertake that |
|
86 |
Charterers and thereupon |
26 |
having accepted the Vessel they will not thereafter raise |
|
87 |
(i) if the Charterers do not wish to take delivery of the Vessel |
27 |
any claims against the Owners in respect of the Vessel’s |
|
88 |
they shall inform the Owners within seven (7) running days |
28 |
performance or specification or defects, if any. |
|
89 |
by notice in writing and upon receipt by the Owners of such |
29 |
Nevertheless, in respect of any repairs, replacements or |
|
90 |
notice this Charter shall cease to have effect; or |
30 |
defects which appear within the first 12 months from |
|
91 |
(ii) if the Charterers wish to take delivery of the Vessel |
31 |
delivery by the Builders, the Owners shall endeavour to |
|
92 |
they may by notice in writing within seven (7) running days |
32 |
compel the Builders to repair, replace or remedy any defects |
|
93 |
require the Owners to negotiate with the Builders as to the |
33 |
or to recover from the Builders any expenditure incurred in |
|
94 |
terms on which delivery should be taken and/or refrain from |
34 |
carrying out such repairs, replacements or remedies. |
|
95 |
exercising their right to rejection and upon receipt of such |
35 |
However, the Owners’ liability to the Charterers shall be |
|
96 |
notice the Owners shall commence such negotiations and/ |
36 |
limited to the extent the Owners have a valid claim against |
|
97 |
or take delivery of the Vessel from the Builders and deliver |
37 |
the Builders under the guarantee clause of the Building |
|
98 |
her to the Charterers; |
38 |
Contract (a copy whereof has been supplied to the |
|
99 |
(iii) in no circumstances shall the Charterers be entitled to |
39 |
Charterers). The Charterers shall be bound to accept such |
|
100 |
reject the Vessel unless the Owners are able to reject the |
40 |
sums as the Owners are reasonably able to recover under |
|
101 |
Vessel from the Builders; |
41 |
this Clause and shall make no further claim on the Owners |
|
102 |
(iv) if this Charter terminates under sub-clause (b) or (c) of |
42 |
for the difference between the amount(s) so recovered and |
|
103 |
this Clause, the Owners shall thereafter not be liable to the |
43 |
the actual expenditure on repairs, replacement or |
|
104 |
Charterers for any claim under or arising out of this Charter |
44 |
remedying defects or for any loss of time incurred. |
|
105 |
or its termination. |
45 |
Any liquidated damages for physical defects or deficiencies |
|
106 |
(d) Any liquidated damages for delay in delivery under the |
46 |
shall accrue to the account of the party stated in Box 41(a) |
|
107 |
Building Contract and any costs incurred in pursuing a claim |
47 |
or if not filled in shall be shared equally between the parties. |
|
108 |
therefor shall accrue to the account of the party stated in |
48 |
The costs of pursuing a claim or claims against the Builders |
|
109 |
Box 41(c) or if not filled in shall be shared equally between |
49 |
under this Clause (including any liability to the Builders) |
|
110 |
the parties. |
50 |
shall be borne by the party stated in Box 41(b) or if not |
|
|
|
51 |
filled in shall be shared equally between the parties. |
|
111 |
3. Guarantee Works |
|
|
|
112 |
If not otherwise agreed, the Owners authorise the |
52 |
2.Time and Place of Delivery |
|
113 |
Charterers to arrange for the guarantee works to be |
53 |
(a) Subject to the Vessel having completed her |
|
114 |
performed in accordance with the building contract terms, |
54 |
acceptance trials including trials of cargo equipment in |
|
115 |
and hire to continue during the period of guarantee works. |
55 |
accordance with the Building Contract and specifications |
|
116 |
The Charterers have to advise the Owners about the |
56 |
to the satisfaction of the Charterers, the Owners shall give |
|
117 |
performance to the extent the Owners may request. |
57 |
and the Charterers shall take delivery of the Vessel afloat |
|
118 |
4. Name of Vessel |
58 |
when ready for delivery and properly documented at the |
|
119 |
The name of the Vessel shall be mutually agreed between |
59 |
Builders’ Yard or some other safe and readily accessible |
|
120 |
the Owners and the Charterers and the Vessel shall be |
60 |
dock, wharf or place as may be agreed between the parties |
|
|
|
61 |
hereto and the Builders. Under the Building Contract the |
|
|
|
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART III
PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY
(Optional, only to apply if expressly agreed and stated in Box 37)
121 |
painted in the colours, display the funnel insignia and fly |
|
128 |
shall bear all survey expenses and all other costs, if any, |
122 |
the house flag as required by the Charterers. |
|
129 |
including the cost of docking and undocking, if required, |
|
|
|
130 |
as well as all repair costs incurred. The Charterers shall |
123 |
5. Survey on Redelivery |
|
131 |
also bear all loss of time spent in connection with any |
124 |
The Owners and the Charterers shall appoint surveyors |
|
132 |
docking and undocking as well as repairs, which shall be |
125 |
for the purpose of determining and agreeing in writing the |
|
133 |
paid at the rate of hire per day or pro rata. |
126 |
condition of the Vessel at the time of re-delivery. |
|
|
|
127 |
Without prejudice to Clause 15 (Part II), the Charterers |
|
|
|
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART IV
HIRE/PURCHASE AGREEMENT
(Optional, only to apply if expressly agreed and stated in Box 42)
1 |
On expiration of this Charter and provided the |
|
27 |
shall be for Sellers’ account. |
|
Charterers |
|
28 |
In exchange for payment of the last month’s hire |
2 |
have fulfilled their obligations according to Part I and II |
|
29 |
instalment the Sellers shall furnish the Buyers with a |
3 |
as well as Part III, if applicable, it is agreed, that on |
|
30 |
Bill of Sale duly attested and legalized, together with a |
4 |
payment of the final payment of hire as per Clause 11 |
|
31 |
certificate setting out the registered encumbrances, if |
5 |
the Charterers have purchased the Vessel with |
|
32 |
any. On delivery of the Vessel the Sellers shall provide |
6 |
everything belonging to her and the Vessel is fully paid |
|
33 |
for deletion of the Vessel from the Ship’s Register and |
7 |
for. |
|
34 |
deliver a certificate of deletion to the Buyers. |
8 |
In the following paragraphs the Owners are referred to |
|
35 |
The Sellers shall, at the time of delivery, hand to the |
9 |
as the Sellers and the Charterers as the Buyers. |
|
36 |
Buyers all classification certificates (for hull, engines, |
10 |
The Vessel shall be delivered by the Sellers and taken |
|
37 |
anchors, chains, etc.), as well as all plans which may |
11 |
over by the Buyers on expiration of the Charter. |
|
38 |
be in Sellers’ possession. |
12 |
The Sellers guarantee that the Vessel, at the time of |
|
39 |
The Wireless Installation and Nautical Instruments, |
13 |
delivery, is free from all encumbrances and maritime |
|
40 |
unless on hire, shall be included in the sale without any |
14 |
liens or any debts whatsoever other than those arising |
|
41 |
extra payment. |
15 |
from anything done or not done by the Buyers or any |
|
42 |
The Vessel with everything belonging to her shall be at |
16 |
existing mortgage agreed not to be paid off by the time |
|
43 |
Sellers’ risk and expense until she is delivered to the |
17 |
of delivery. Should any claims, which have been incurred |
|
44 |
Buyers, subject to the conditions of this Contract and |
18 |
prior to the time of delivery be made against the Vessel, |
|
45 |
the Vessel with everything belonging to her shall be |
19 |
the Sellers hereby undertake to indemnify the Buyers |
|
46 |
delivered and taken over as she is at the time of delivery, |
20 |
against all consequences of such claims to the extent it |
|
47 |
after which the Sellers shall have no responsibility for |
21 |
can be proved that the Sellers are responsible for such |
|
48 |
possible faults or deficiencies of any description. |
22 |
claims. Any taxes, notarial, consular and other charges |
|
49 |
The Buyers undertake to pay for the repatriation of the |
23 |
and expenses connected with the purchase and |
|
50 |
Master, officers and other personnel if appointed by the |
24 |
registration under Buyers’ flag, shall be for Buyers’ |
|
51 |
Sellers to the port where the Vessel entered the Bareboat |
25 |
account. Any taxes, consular and other charges and |
|
52 |
Charter as per Clause 3 (Part II) or to pay the equivalent |
26 |
expenses connected with closing of the Sellers’ register, |
|
53 |
cost for their journey to any other place. |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART V
PROVISIONS TO APPLY FOR VESSELS REGISTERED IN A BAREBOAT CHARTER REGISTRY
(Optional, only to apply if expressly agreed and stated in Box 43)
1 |
1. Definitions |
|
17 |
3. Termination of Charter by Default |
2 |
For the purpose of this PART V, the following terms shall |
|
18 |
If the Vessel chartered under this Charter is registered |
3 |
have the meanings hereby assigned to them: |
|
19 |
in a Bareboat Charter Registry as stated in Box 44, and |
4 |
“The Bareboat Charter Registry” shall mean the registry |
|
20 |
if the Owners shall default in the payment of any amounts |
5 |
of the State whose flag the Vessel will fly and in which |
|
21 |
due under the mortgage(s) specified in Box 28, the |
6 |
the Charterers are registered as the bareboat charterers |
|
22 |
Charterers shall, if so required by the mortgagee, direct |
7 |
during the period of the Bareboat Charter. |
|
23 |
the Owners to re-register the Vessel in the Underlying |
8 |
“The Underlying Registry” shall mean the registry of the |
|
24 |
Registry as shown in Box 45. |
9 |
state in which the Owners of the Vessel are registered |
|
25 |
In the event of the Vessel being deleted from the |
10 |
as Owners and to which jurisdiction and control of the |
|
26 |
Bareboat Charter Registry as stated in Box 44, due to a |
11 |
Vessel will revert upon termination of the Bareboat |
|
27 |
default by the Owners in the payment of any amounts |
12 |
Charter Registration. |
|
28 |
due under the mortgage(s), the Charterers shall have |
|
|
|
29 |
the right to terminate this Charter forthwith and without |
13 |
2.Mortgage |
|
30 |
prejudice to any other claim they may have against the |
14 |
The Vessel chartered under this Charter is financed by |
|
31 |
Owners under this Charter. |
15 |
a mortgage and the provisions of Clause 12(b) (Part II) |
|
|
|
16 |
shall apply. |
|
|
|
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
EXECUTION VERSION
ADDITIONAL CLAUSES TO BARECON 2001 ORIGINALLY DATED 21 MARCH 2022 AND FURTHER
AMENDED BY AN AMENDMENT AND RESTATEMENT DEED DATED 29 JUNE 2023
CLAUSE 32 – CHARTER PERIOD
32.1 |
The period of this Charter (the “Charter Period”) shall, subject to the terms of this Charter, continue for a period of seven (7) years starting start from the Commencement Date and end on the date falling eighty-four (84) months from 31 December 2023 (31 December 2023 being the “Reference Date”). |
32.2 |
Notwithstanding the fact that the Charter Period shall commence on the Commencement Date, this Charter shall be: |
(a) |
in full force and effect; and |
(b) |
valid, binding and enforceable against the parties hereto, |
with effect from the date hereof until the end of the Charter Period (subject to the terms of this Charter).
CLAUSE 33 – CANCELLATION
33.1 |
If: |
(a) |
the Vessel is not delivered by the Charterers as sellers to the Owners as buyers under the MOA by the Cancelling Date (or such later date as the parties to the MOA may agree); |
(b) |
it becomes unlawful for the Charterers as sellers and the Owners as buyers to perform or comply with any or all of their obligations under the MOA; or |
(c) |
the MOA expires, is cancelled, terminated, rescinded or suspended or otherwise ceases to remain in full force and effect for any reason (in whole or in part), |
then this Charter shall immediately terminate and be cancelled (without prejudice to Clause 57 (Indemnities) and without the need for either the Owners or the Charterers to take any action whatsoever), provided that the Owners shall be entitled to retain all fees and expenses paid by the Charterers pursuant to Clause 44 (Fees and Expenses) (and without prejudice to Clause 44 (Fees and Expenses) and any clause of the MOA, if such fees have not been paid, the Charterers shall forthwith pay such fees and expenses to the Owners in accordance with Clause 44 (Fees and Expenses)) and such payment shall be irrevocable and unconditional and is acknowledged by the Charterers to be proportionate as to amount, having regard to the legitimate interest of the Owners, in protecting against the Owners’ risk of the Charterers failing to perform its obligations under this Charter. For the avoidance of doubt, the termination of the Charter shall not prejudice the operation of any provision of any Leasing Document which is expressed to survive the termination or cancellation of this Charter.
CLAUSE 34 – DELIVERY AND CHARTER OF VESSEL
34.1 |
This Charter is part of a transaction involving the sale, purchase and charter back of the Vessel and constitutes one of the Leasing Documents. |
34.2 |
The obligation of the Owners to charter the Vessel to the Charterers hereunder is subject to and conditional upon: |
(a) |
no Termination Event or Potential Termination Event having occurred on the date of this Charter and on the Commencement Date; |
(b) |
the representations and warranties contained in Clause 48 (Representations and Warranties) |
being true and correct on the date hereof and on the Commencement Date;
(c) |
the Vessel being delivered to the Head Sellers pursuant to the Shipbuilding Contract; |
(d) |
the Vessel being delivered to the Charterers under the Head MOA; |
(e) |
the Vessel being delivered to the Owners pursuant to the MOA; |
(f) |
the Delivery occurring on or before the Cancelling Date; and |
(g) |
the Owners having received from the Charterers: |
(i) |
on or before the date falling one (1) Business Day prior to the Prepositioning Date (or such other period as the Owners may otherwise agree), the documents or evidence set out in Part A of Schedule 2 (Conditions Precedent) in form and substance satisfactory to them; and |
(ii) |
on the Commencement Date and prior to or simultaneously with the Owners executing a dated and timed copy of the protocol of delivery and acceptance evidencing delivery of the Vessel under the MOA and a dated and timed copy of the Acceptance Certificate, the documents or evidence set out in Part B of Schedule 2 (Conditions Precedent) in form and substance satisfactory to them, |
and if any of the documents listed in sub-paragraph (g) above are not in the English language then they shall be accompanied by an English translation where required by the Owners.
34.3 |
On delivery to and acceptance by the Owners (in their capacity as buyers) of the Vessel from the Charterers (in their capacity as sellers) under the MOA, the Vessel shall be deemed to have been delivered to, and accepted without reservation by, the Charterers under this Charter and the Charterers shall become and be entitled to the possession and use of the Vessel on and subject to the terms and conditions of this Charter on the same day as the delivery date of the Vessel under the MOA. |
34.4 |
On Delivery, as evidence of the commencement of the Charter Period, the Charterers shall sign and deliver to the Owners, the Acceptance Certificate. The Charterers shall be deemed to have accepted the Vessel under this Charter, and the commencement of the Charter Period having started, on Delivery even if, for whatever reason, the Acceptance Certificate is not signed. |
34.5 |
The Charterers shall not be entitled for any reason whatsoever to refuse to accept delivery of the Vessel under this Charter once the Vessel has been delivered to and accepted by the Owners (in their capacity as buyers) from the Charterers (in their capacity as sellers) under the MOA, and the Owners shall not be liable for any losses, costs or expenses whatsoever or howsoever arising including without limitation, any loss of profit or any loss or otherwise: |
2
(a) |
resulting directly or indirectly from any defect or alleged defect in the Vessel or any failure of the Vessel; or |
(b) |
arising from any delay in the commencement of the Charter Period or any failure of the Charter Period to commence. |
34.6 |
The Owners shall not be obliged to deliver the Vessel to the Charterers with any bunkers and unused lubricating oils and hydraulic oils and greases in storage tanks and unopened drums of the Vessel except for such items which are already on the Vessel on Delivery. The Owners shall not be responsible for the fitness, quality or quantity of any such bunkers and unused lubricating oils and hydraulic oils and greases and the Charterers shall make no claim against Owners in respect of the same. |
34.7 |
The Charterers shall procure receipt by the Owners of the conditions subsequent set out in Part C of Schedule 2 in a form and substance satisfactory to the Owners within the time periods permitted therein. |
CLAUSE 35 – QUIET ENJOYMENT
35.1 |
Subject to the terms of any QEL and provided that: |
(a) |
the Charterers do not breach any term of this Charter or any other Leasing Document to which they are a party; and |
(b) |
no Termination Event or Total Loss has occurred, |
the Owners hereby agree not to disturb or interfere with the Charterers’ lawful use, possession and quiet enjoyment of the Vessel during the Charter Period.
CLAUSE 36 – CHARTERHIRE AND ADVANCE CHARTERHIRE
36.1 |
In consideration of the Owners agreeing to charter the Vessel to the Charterers under this Charter at the request of the Charterers, the Charterers hereby irrevocably and unconditionally agree to pay to the Owners the Charterhire, the Advance Charterhire and all other amounts payable under this Charter in accordance with the terms of this Charter. |
36.2 |
The Charterers shall pay to the Owners on the Commencement Date, an amount which is equal to the difference between the Purchase Price and the Owners’ Costs as of the Commencement Date (the “Advance Charterhire”). The Charterers shall be deemed to have paid the Advance Charterhire to the Owners on the Commencement Date by the Owners (as buyers under the MOA) setting off an amount equal to the Advance Charterhire against a corresponding amount of the Purchase Price payable by the Owners to the Charterers (as sellers) under the MOA. |
36.3 |
The Advance Charterhire shall not bear interest and shall be non-refundable. |
36.4 |
Following Delivery and commencing from the Commencement Date but ending on and including the Reference Date, the Charterers shall pay Charterhire in arrears in quarterly instalments on each Payment Date. Each instalment shall consist of: |
3
(a) |
a capital element of Charterhire (the “Initial Fixed Charterhire”) which shall be in an amount equivalent to 1/28 of the difference between the Opening Capital Balance and the Expiry Owners’ Costs; and |
(b) |
a variable element of Charterhire (the “Initial Variable Charterhire”) which shall be calculated by applying the aggregate of: |
(i) |
the applicable Interest Rate for the relevant Hire Period; and |
(ii) |
the Margin; and |
(iii) |
the Credit Adjustment Spread, |
to the Owners’ Costs on the immediately preceding Payment Date (or, in the case of the First Payment Date only, on the Commencement Date) for the Hire Period ending on the relevant Payment Date by reference to the actual number of days elapsed.
36.5 |
Following the Reference Date (but excluding such date) for the rest of the Charter Period, the Charterers shall pay Charterhire in arrears in quarterly instalments on each Payment Date. Each instalment shall consist of: |
(a) |
a capital element of Charterhire (the “Fixed Charterhire”) which shall be in an amount equivalent to 1/28 of the difference between the Amended Owners’ Costs and the Amended Expiry Owners’ Costs; and |
(b) |
a variable element of Charterhire (the “Variable Charterhire”) which shall be calculated by applying the aggregate of: |
(i) |
the applicable Interest Rate for the relevant Hire Period; and |
(ii) |
the Amended Margin, |
to the Owners’ Costs on the immediately preceding Payment Date (in case of the first payment following the Reference Date, to the Amended Owners’ Costs) for the Hire Period ending on the relevant Payment Date by reference to the actual number of days elapsed.
36.6 |
36.5Charterhire shall be payable in arrears on the following dates (each a “Payment Date”): |
(a) |
the first instalment of Charterhire shall be payable on the date falling three (3) months after the Commencement Date (the “First Payment Date”); and |
(b) |
each subsequent instalment of Charterhire (other than the last instalment of Charterhire) shall be payable quarterly thereafter, with the final instalment of Charterhire payable on the last day of the Charter Period, |
such that there are a total of twenty eight (28thirty five (35) Payment Dates during the Charter Period.
36.7 |
36.6Payment of Charterhire on any Payment Date shall be made in same day available funds and received by the Owners by not later than 5.00 pm (Shanghai time). Any payment of |
4
Charterhire which is due to be made on a Payment Date which is not also a Business Day shall be made on the previous Business Day instead.
36.8 |
36.7Time of payment of the Charterhire and any other payments by the Charterers under this Charter shall be of the essence. |
36.9 |
36.8All payments of the Charterhire and any other moneys payable hereunder shall be made in Dollars. |
36.10 |
36.9All payments of the Charterhire and any other moneys payable hereunder shall be payable by the Charterers to the Owners’ designated bank account as the Owners may notify the Charterers in writing from time to time. |
36.11 |
36.10Payment of the Charterhire and any other amounts under this Charter shall be at the Charterers’ risk until receipt by the Owners. |
36.12 |
36.11The Vessel shall not at any time be deemed off-hire and the Charterers’ obligation to pay the Charterhire and any other amounts payable under this Charter (including but not limited to the Termination Sum or the Total Loss Termination Sum) in Dollars shall be absolute and unconditional under any and all circumstances and shall not be affected by any circumstances of any nature whatsoever including but not limited to: |
(a) |
(except in the case of the Advance Charterhire) any set off, counterclaim, recoupment, defence, claim or other right which the Charterers may at any time have against the Owners or any other person for any reason whatsoever including, without limitation, any act, omission or breach on the part of the Owners under this Charter or any other agreement at any time existing between the Owners and the Charterers; |
(b) |
any change, extension, indulgence or other act or omission in respect of any indebtedness or obligation of the Charterers, or any sale, exchange, release or surrender of, or other dealing in, any security for any such indebtedness or obligation; |
(c) |
any title defect or encumbrance or any dispossession of the Vessel by title paramount or otherwise; |
(d) |
any defect in the seaworthiness, condition, value, design, merchantability, operation or fitness for use of the Vessel or the ineligibility of the Vessel for any particular trade or for registration or documentation under the laws of any relevant jurisdiction; |
(e) |
the Total Loss or any damage to or forfeiture or court marshall’s or other sale of the Vessel if the Termination Sum, Total Loss Termination Sum or any part thereof remains due; |
(f) |
any libel, attachment, levy, detention, sequestration or taking into custody of the Vessel or any restriction or prevention of or interference with or interruption or cessation in, the use or possession thereof by the Charterers; |
(g) |
any insolvency, bankruptcy, reorganization, arrangement, readjustment, dissolution, liquidation or similar proceedings by or against the Charterers and any other Obligors; |
5
(h) |
any invalidity, unenforceability, lack of due authorization or other defects, or any failure or delay in performing or complying with any of the terms and provisions of this Charter or any of the Leasing Documents by any party to this Charter or any other person; |
(i) |
any enforcement or attempted enforcement by the Owners of their rights under this Charter or any of the Leasing Documents executed or to be executed pursuant to this Charter; |
(j) |
any loss of use of the Vessel due to deficiency or default or strike of officers or crew, fire, breakdown, damage, accident, defective cargo or any other cause which would or might but for this provision have the effect of terminating or in any way affecting any obligation of the Charterers under this Charter; or |
(k) |
any prevention, delay, deviation or disruption in the use of the Vessel resulting from the wide outbreak of any viruses (including the 2019 novel coronavirus), including but not limited to those caused by: |
(i) |
closure of ports; |
(ii) |
prohibitions or restrictions against the Vessel calling at or passing through certain ports; |
(iii) |
restriction in the movement of personnel and/or shortage of labour affecting the operation of the Vessel or the operation of the ports (including stevedoring operations); |
(iv) |
quarantine regulations affecting the Vessel, its cargo, the crew members or relevant port personnel; |
(v) |
fumigation or cleaning of the Vessel; or |
(vi) |
any claims raised by any sub-charterer or manager of the Vessel that a force majeure event or termination event (or any other analogous event howsoever called) has occurred under the relevant charter agreement or management agreement (as the case may be) of the Vessel as a result of the outbreak of such viruses. |
36.13 |
36.12All stamp duty, value added tax (for the avoidance of doubt, including without limitation, goods and services tax), withholding or other taxes and import and export duties and all other similar types of charges (for the avoidance of doubt any Owner’s income tax liabilities) which may be levied or assessed on or in connection with: |
(a) |
the operation of this Charter in respect of the hire and all other payments to be made pursuant to this Charter and the remittance thereof to the Owners; and |
(b) |
the import, export, purchase, delivery and re-delivery of the Vessel, |
shall be borne by the Charterers. The Charterers shall pay, if applicable, value added tax and other similar tax levied on any Charterhire and other payments payable under this Charter by addition to, and at the time of payment of, such amounts.
CLAUSE 37 – CHANGES TO INTEREST RATE, DEFAULT INTEREST
37.1
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(a) |
Interpolated Term SOFR: If, in relation to any determination of the Interest Rate prior to a Published Rate Replacement Event, the Owners determine (which determination shall be conclusive and binding) that Term SOFR is not available for a Hire Period, the applicable Interest Rate shall be the Interpolated Term SOFR. |
(b) |
Historic Term SOFR: If paragraph (a) above applies but it is not possible to calculate the Interpolated Term SOFR for the relevant Hire Period, the applicable Interest Rate shall be the Historic Term SOFR. |
(c) |
Interpolated Historic Term SOFR: if paragraph (b) above applies but no Historic Term SOFR is available for the relevant Hire Period, the applicable Interest Rate shall be the Interpolated Historic Term SOFR. |
(d) |
Cost of Funds: if paragraph (c) above applies but it is not possible to calculate the Interpolated Historic Term SOFR, Clause 37.2 below shall apply. |
37.2 |
(i) If this Clause 37.2 applies to any Hire Period pursuant to Clause 37.1(d) above; or (ii) after the occurrence of a Published Rate Replacement Event but prior to the making of any necessary amendment or waiver in accordance with Clause 37.3 below; or (iii) if the Charterers receive notification from the Owners that the costs of funding of the Owners would be in excess of the Market Disruption Rate, the Interest Rate shall be the rate per annum which is the cost certified by the Owners (expressed as an annual rate of interest) of funding the Owners’ Costs during the relevant Hire Period (as reasonably determined by the Owners). |
37.3 |
If a Published Rate Replacement Event has occurred in relation to the Published Rate, the Owners are entitled to make any amendment or waiver to the terms of the Leasing Documents with the consent of the Charterers (at the Charterers’ cost) which relates to: |
(a) |
providing for the use of a Replacement Reference Rate in place of (or in addition to) that Published Rate; and |
(b)
(i) |
aligning any provision of any Leasing Document to the use of that Replacement Reference Rate; |
(ii) |
enabling that Replacement Reference Rate to be used for the calculation of the Interest Rate under this Charter (including, without limitation, any consequential changes required to enable that Replacement Reference Rate to be used for the purposes of this Charter); |
(iii) |
implementing market conventions applicable to that Replacement Reference Rate; |
(iv) |
providing for appropriate fallback (and market disruption) provisions for that Replacement Reference Rate; |
(v) |
adjusting the pricing to reduce or eliminate, to the extent reasonably practicable, any transfer of economic value from one Party to another as a result of the application of that Replacement Reference Rate (and if any adjustment or method for calculating any adjustment has been formally designated, nominated or recommended by the |
7
Relevant Nominating Body, the adjustment shall be determined on the basis of that designation, nomination or recommendation),
and pending any such amendment or waiver and the Replacement Reference Rate being utilised under the Leasing Documents to calculate the Interest Rate, Clause 37.2 shall apply to the calculation of the Interest Rate.
37.4 |
If the Charterers fail to make any payment due under this Charter on the due date, they shall pay additional interest on such late payment at a rate which is equal to two per cent. (2%) per annum above the applicable Interest Rate for the relevant Hire Period and the Margin and the Credit Adjustment Spread : |
(a) |
prior to and including the Reference Date, the applicable Interest Rate for the relevant Hire Period and the Margin and the Credit Adjustment Spread; and |
37.4(b) |
following and excluding the Reference Rate, the applicable Interest Rate for the relevant Hire Period and the Amended Margin, which shall apply prior to, during or following Delivery and shall accrue on a daily basis from the date on which such payment became due up to and excluding the date of payment thereof, and the Charterers and the Owners agree that such default rate is proportionate as to amount, having regard to the legitimate interest of the Owners, in protecting against the Owners’ risk of the Charterers failing to perform its obligations under this Charter. |
37.5 |
All interest (including default interest) and any other payments under this Charter which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a three hundred and sixty (360) days’ year. |
CLAUSE 38 – POSSESSION OF VESSEL
38.1 |
The Charterers shall not, without the prior written consent of the Owners, assign, mortgage or pledge the Vessel or any interest therein and shall not permit the creation or existence of any Security Interest thereon (including for any monies paid in advance and not earned, and for any claims for damages arising from any breach by the Owners of this Charter and other amounts due to the Charterers under this Charter) except for the Permitted Security Interests. |
38.2 |
The Charterers shall promptly notify any party (including without limitation, any sub-charterer) (as the Owners may request) in writing that the Vessel is the property of the Owners and the Charterers shall provide the Owners with a copy of such written notification and evidence that such party has received such written notification. |
38.3 |
If the Vessel is arrested, seized, impounded, forfeited, detained or taken out of their possession or control (whether or not pursuant to any distress, execution or other legal process), the Charterers shall procure the immediate release of the Vessel (whether by providing bail or procuring the provision of security or otherwise do such lawful things as the circumstances may require) and shall immediately notify the Owners of such event and shall indemnify the Owners against all losses, costs or charges incurred by the Owners by reason thereof in re-taking possession or otherwise in re-acquiring the Vessel. |
38.4 |
The Charterers shall pay and discharge or cause any sub-charterer of the Vessel to pay and discharge all obligations and liabilities whatsoever which have given or may give rise to liens |
8
on or claims enforceable against the Vessel. The Charterers shall take all reasonable steps to prevent (and shall procure that a sub-charterer shall take all reasonable steps to prevent) an arrest of the Vessel.
CLAUSE 39 – INSURANCE
39.1 |
The Charterers shall procure that insurances for the Vessel are effected: |
(a) |
in Dollars; |
(b) |
in the case of fire and usual hull and machinery, marine risks and war risks (including blocking and trapping), on an agreed value basis of at least the higher of (i) one hundred per cent (100%) of then applicable Fair Market Value of the Vessel and (ii) one hundred and twenty per cent (120%) of the then prevailing Owners’ Costs ; |
(c) |
in the case of oil pollution liability risks, for an aggregate amount equal to the higher of (i) US$1,000,000,000 or (ii) the highest level of cover from time to time available under basic protection and indemnity club entry and in the international marine insurance market; |
(d) |
in the case of protection and indemnity risks, in respect of the full tonnage of the Vessel and with a protection and indemnity club which is a member of the International Group of Protection and Indemnity Clubs; |
(e) |
through brokers approved by the Owners and with first class international insurers and/or underwriters acceptable to the Owners and having a Standard & Poor’s rating of BBB+ or above, a Moody’s rating of A or above or an AM Best rating of A- or above or otherwise acceptable to the Owners; and |
(f) |
otherwise on terms and in form acceptable to the Owners. |
39.2 |
In addition to the terms set out in Clause 13(a) (Insurance and Repairs), the Charterers shall procure that the Obligatory Insurances shall: |
(a) |
subject always to paragraph (b), name the Owners, the Charterers and the Approved Technical Manager as the only named assureds unless the interest of every other named assured or co- assured is limited: |
(i) |
in respect of any Obligatory Insurances for hull and machinery and war risks; |
(A) |
to any provable out-of-pocket expenses that they have incurred and which form part of any recoverable claim on underwriters; and |
(B) |
to any third party liability claims where cover for such claims is provided by the policy (and then only in respect of discharge of any claims made against them); and |
(ii) |
in respect of any Obligatory Insurances for protection and indemnity risks, to any recoveries they are entitled to make by way of reimbursement following discharge of any third party liability claims made specifically against them, |
9
and every other named assured or co-assured has undertaken in writing to the Owners or the Owners’ Financiers (if any) (in such form as they may require) that any deductible shall be apportioned between the Charterers and every other named assured or co-assured (save for the Owners or the Owners’ Financiers (if any)) in proportion to the gross claims made by or paid to each of them and that they shall do all things necessary and provide all documents, evidence and information to enable the Owners and the Owners’ Financiers (if any) in accordance with the terms of the loss payable clause, to collect or recover any moneys which at any time become payable in respect of the Obligatory Insurances;
(b) |
whenever the Owners require in respect of any Owners’ Financiers: |
(i) |
in respect of fire and other usual marine risks and war risks, name (or be amended to name) the same as additional named assured for their rights and interests, warranted no operational interest and with full waiver of rights of subrogation against such Owners’ Financier, but without such financiers thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance; |
(ii) |
in relation to protection and indemnity risks, name (or be amended to name) the same as additional insured or co-assured for their rights and interests to the extent permissible under the relevant protection and indemnity club rules; and |
(iii) |
name the Owners’ Financiers (if any) and the Owners as respectively the first ranking loss payee and the second ranking loss payee (and in the absence of any Owners’ Financiers, the Owners as first ranking loss payee) in accordance with the terms of the relevant loss payable clauses approved by the Owners’ Financiers and the Owners with such directions for payment in accordance with the terms of such relevant loss payable clause, as the Owners and the Owners’ Financiers (if any) may specify; |
(c) |
provide that all payments by or on behalf of the insurers under the Obligatory Insurances to the Owners and/or the Owners’ Financiers (as applicable) shall be made without set-off, counterclaim, deduction or condition whatsoever; |
(d) |
provide that such Obligatory Insurances shall be primary without right of contribution from other insurances which may be carried by the Owners or the Owners’ Financiers (if any); |
(e) |
provide that the Owners and/or the Owners’ Financiers (if any) may make proof of loss if the Charterers fail to do so; and |
(f) |
provide that if any Obligatory Insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of the Owners and/or the Owners’ Financiers (if any), or if any Obligatory Insurance is allowed to lapse for non-payment of premium, such cancellation, change or lapse shall not be effective with respect to the Owners and/or the Owners’ Financiers (if any) for thirty (30) days after receipt by the Owners and/or the Owners’ Financiers (if any) of prior written notice from the insurers of such cancellation, change or lapse. |
39.3 |
The Charterers shall: |
(a) |
at least fourteen (14) days prior to Delivery (or such shorter period agreed by the parties), notify in writing the Owners of the terms and conditions of all Insurances; |
10
(b) |
at least fourteen (14) days before the expiry of any Obligatory Insurance or otherwise before the change of appointment of any brokers (or other insurers) and any protection and indemnity or war risks association through which Obligatory Insurances are taken from time to time pursuant to this Clause 39 (Insurance), notify the Owners of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom the Charterers propose to renew or obtain that Obligatory Insurance and of the proposed terms of such renewed or new insurance cover and obtain the Owners’ approval to such matters; |
(c) |
at least seven (7) days before the expiry of any Obligatory Insurance, procure that such Obligatory Insurance is renewed or to be renewed on its expiry date in accordance with the provisions of this Charter; |
(d) |
procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal or the effective date of the new insurance and protection and indemnity cover notify the Owners in writing of the terms and conditions of the renewal; and |
(e) |
as soon as practicable after the expiry of any Obligatory Insurance and within thirty (30) days after such expiry, deliver to the Owners a letter of undertaking as required by this Charter in respect of such Insurances for the Vessel as renewed pursuant to Clause 39.3 together with copies of the relevant policies or cover notes or entry certificates duly endorsed with the interest of the Owners and/or the Owners’ Financiers (if any). |
39.4 |
The Charterers shall ensure that all insurance companies and/or underwriters, and/or insurance brokers (if any) provide the Owners with copies (or upon the Owners’ request, originals) of policies, cover notes and certificates of entry relating to the Obligatory Insurances which they are to effect or renew and letter or letters of undertaking in a form required by the Owners or the Owners’ Financiers (if any) and including undertakings by the insurance companies and/or underwriters that: |
(a) |
they will have endorsed on each policy, immediately upon issuance, a loss payable clause and a notice of assignment complying with the provisions of this Charter and the Financial Instruments; |
(b) |
they will hold the benefit of such policies and such insurances, to the order of the Owners and/or the Owners’ Financiers (if any) and/or such other party in accordance with the said loss payable clause; |
(c) |
they will advise the Owners and the Owners’ Financiers (if any) promptly of any material change to the terms of the Obligatory Insurances of which they are aware; |
(d) |
they will notify the Owners and the Owners’ Financiers (if any) not less than fourteen (14) days before the expiry of the Obligatory Insurances, in the event of their not having received notice of renewal instructions from the Charterers and, in the event of their receiving instructions to renew, they will promptly notify the Owners and the Owners’ Financiers (if any) of the terms of the instructions; and |
(e) |
if any of the Obligatory Insurances form part of any fleet cover, the Charterers shall procure that the insurance broker(s), or leading insurer, as the case may be, undertakes to the Owners and the Owners’ Financiers (if any) that such insurance broker or insurer will not set off against |
11
any sum recoverable in respect of a claim relating to the Vessel under such Obligatory Insurances any premiums due in respect of any other vessel under any fleet cover of which the Vessel forms a part or any premium due for other insurances, they waive any lien on the policies, or any sums received under them, which they might have in respect of such premiums, and they will not cancel such Obligatory Insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of the Vessel forthwith upon being so requested by the Owners or the Owners’ Financiers (if any) and where practicable.
39.5 |
The Charterers shall ensure that any protection and indemnity and/or war risks associations in which the Vessel is entered provides the Owners and the Owners’ Financiers (if any) with: |
(a) |
a copy of the certificate of entry for the Vessel as soon as such certificate of entry is issued; |
(b) |
a letter or letters of undertaking in such form as may be required by the Owners or the Owners’ Financiers (if any) or in such association’s standard form; and |
(c) |
a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to the Vessel. |
39.6 |
The Charterers shall ensure that all policies relating to the Obligatory Insurances are deposited with the approved brokers (if any) through which the insurances are effected or renewed. |
39.7 |
The Charterers shall procure that all premiums or other sums payable in respect of the Obligatory Insurances are punctually paid and produce all relevant receipts when so required by the Owners. |
39.8 |
The Charterers shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect. |
39.9 |
The Charterers shall neither do nor omit to do (nor permit to be done or not to be done) any act or thing which would or might render any Obligatory Insurance invalid, void, voidable or unenforceable or render any sum payable under an Obligatory Insurance repayable in whole or in part and, in particular: |
(a) |
the Charterers shall procure that all necessary action is taken and all requirements are complied with which may from time to time be applicable to the Obligatory Insurances, and (without limiting the obligations contained in this Clause) ensure that the Obligatory Insurances are not made subject to any exclusions or qualifications to which the Owners have not given their prior approval (unless such exclusions or qualifications are made in accordance with the rules of a protection and indemnity association which is a member of the International Group of Protection and Indemnity Clubs); |
(b) |
the Charterers shall not make or permit any changes relating to the classification or the classification society of the Vessel or, subject to procuring the provision of a replacement manager’s undertaking in substantially the same form as the Manager’s Undertaking, any changes to the manager or operator of the Vessel unless such changes have, if required, first been approved by the underwriters of the Obligatory Insurances and the Owners or the Owners’ Financiers (if any); |
12
(c) |
the Charterers shall procure that all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Vessel is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation) are made and the Charterers shall promptly provide the Owners with copies of such declarations and a copy of its valid certificate of financial responsibility; and |
(d) |
the Charterers shall not employ the Vessel, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the Obligatory Insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify. |
39.10 |
The Charterers shall not make or agree to any material alteration to the terms of any Obligatory Insurance nor waive any right relating to any Obligatory Insurance without the prior written consent of the Owners. |
39.11 |
The Charterers shall not settle, compromise or abandon any claim under any Obligatory Insurance for Total Loss or for a Major Casualty, and shall do all things necessary and provide all documents, evidence and information to enable the Owners to collect or recover any moneys which at any time become payable in respect of the Obligatory Insurances. |
39.12 |
The Charterers shall provide the Owners upon written request, copies of all material communications between the Charterers and: |
(a) |
the approved brokers; |
(b) |
the approved protection and indemnity and/or war risks associations; and |
(c) |
the approved insurers and/or underwriters, |
which relate directly or indirectly to:
(i) |
the Charterers’ obligations relating to the Obligatory Insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and |
(ii) |
any credit arrangements made between the Charterers and any of the persons referred to in paragraphs (a) or (b) above relating wholly or partly to the effecting or maintenance of the Obligatory Insurances; and |
(iii) |
any communication with any party involved in case of a claim under any of the Vessel’s insurances. |
39.13 |
The Charterers shall promptly provide the Owners (or any persons which they may designate) with any information which the Owners may request for the purpose of: |
(a) |
obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the Insurances (including but not limited to the report obtained under Clause 39.16); or |
13
(b) |
effecting, maintaining or renewing any such insurances as are referred to in Clause 13(a) (Insurance and Repairs) or this Clause 39 (Insurance) or dealing with or considering any matters relating to any such insurances; |
39.14 |
The Charterers shall upon demand fully indemnify the Owners (including if requested by the Owners, make direct payment to the relevant insurer or broker for the same) in respect of all premiums and other expenses which are incurred by: |
(a) |
the Owners in connection with or with a view to effecting, maintaining or renewing an innocent owners interest insurance and an innocent owners additional perils insurance or any similar protective shipowner insurance that is taken out in respect of the Vessel; and/or |
(b) |
the Owners’ Financiers (if any) in connection with or with a view to effecting, maintaining or renewing a mortgagee’s interest insurance, a mortgagee’s additional perils insurance, all protection and indemnity insurance that is taken out in respect of the Vessel, |
in each case as referred to in paragraphs (a) and (b) above, in an amount not exceeding one hundred and twenty per cent (120%) of the Owners’ Costs from time to time and on such other terms, through such insurers and generally in such manner as the Owners or the Owners’ Financiers (as the case may be) may from time to time consider appropriate.
39.15 |
The Charterers shall be solely responsible for and indemnify the Owners in respect of all loss or damage to the Vessel (insofar as the Owners shall not be reimbursed by the proceeds of any insurance in respect thereof) however caused occurring at any time or times before physical possession thereof is retaken by the Owners, with only reasonable wear and tear to the Vessel excepted. |
39.16 |
The Charterers shall reimburse or indemnify the Owners for any expenses incurred or to be incurred by the Owners in obtaining a detailed report signed by an independent firm of marine insurance brokers approved by the Owners dealing with the Obligatory Insurances and stating the opinion of such firm as to the adequacy of the Obligatory Insurances: |
(a) |
when an agreed form of such detailed report satisfactory to the Owners is obtained as a condition precedent requirement under Part A of Schedule 2 (Conditions Precedent) of this Charter; |
(b) |
when the Owners procure the issuance of such detailed report no more than once every calendar year, unless a Termination Event has occurred in which case such reports may be procured at the Charterer’s cost at any such time; and |
(c) |
further from time to time upon the Owners’ demand where, in the Owners’ opinion, at any time during the Charter Period there has been a material change in the terms of the Insurances and/or a change in the circumstances which would materially adversely affect the adequacy of the Obligatory Insurances. |
39.17 |
The Charterers shall: |
(a) |
keep the Vessel insured at their expense against such other risks (not including loss of hire or earnings risks) which the Owners and the Owners’ Financiers (if any) consider reasonable for a prudent shipowner or operator to insure against for trading, management, operational and/or safety purposes at the relevant time (as notified by the Owners) and which risks are, at that |
14
time, generally insured against as market practice by owners or operators of vessels similar to the Vessel and having regard to the availability of such cover in the insurance market at that time; and
(b) |
upon demand fully indemnify the Owners in respect of all premiums and other expenses incurred by the Owners in respect of any other insurances which the Owners deem necessary and takes out in respect of the Vessel. |
CLAUSE 40 – WARRANTIES RELATING TO VESSEL
40.1 |
It is expressly agreed and acknowledged that the Owners are not the manufacturer or original supplier of the Vessel but that the Owners (in their capacity as buyers) have purchased the Vessel from the Charterers (in their capacity as sellers) pursuant to the MOA at the request of the Charterers, for the purpose of then chartering the Vessel to the Charterers hereunder and that no condition, term, warranty or representation of any kind is or has been given to the Charterers by or on behalf of the Owners in respect of the Vessel (or any part thereof). |
40.2 |
All conditions, terms or warranties express or implied by the law relating to the specifications, quality, description, merchantability or fitness for any purpose of the Vessel (or any part thereof) or otherwise are hereby expressly excluded. |
40.3 |
The Charterers agree and acknowledge that the Owners shall not be liable for any claim, loss, damage, expense or other liability of any kind or nature caused directly or indirectly by the Vessel or by any inadequacy thereof or the use or performance thereof or any repairs thereto or servicing thereof and the Charterers shall not by reason thereof be released from any liability to pay any Charterhire or other payment due under this Charter. |
40.4 |
The Charterers further agree and acknowledge that the Owners are not operating the Vessel and the liability to surrender any Emission Allowances in respect of the Vessel under any applicable Emission Scheme shall lie with the Charterers and/or any other organisation or person whom the Charterers have contractually agreed to take over all duties and responsibilities (including any sub-charterer of the Vessel or the Approved Manager) imposed by the ISM Code, and the Charterers hereby agree that they shall promptly upon the Owners’ request, provide and submit a signed mandate letter in the form acceptable to the Owners and the relevant authority and any other information and documents as required by the Owners and/or the relevant authority. |
40.5 |
Without prejudice to Clause 40.4, in relation to EU ETS: |
(a) |
the Charterers acknowledge that if the Vessel stops at ports in the European Union, they will incur liabilities under EU ETS and Fuel EU Maritime; |
(b) |
the Charterers acknowledge and agree that if they intend to sail the Vessel into ports in the European Union, the Charterers shall register the Vessel as part of a Shipping Company (as defined under the EU ETS) as required under the EU ETS and shall comply in all respects with the EU ETS and Fuel EU Maritime; |
(c) |
if required by the Owners, the Charterers shall provide a letter in a format to be agreed by the Owners confirming that they have assumed responsibility for the operation of the Vessel from the Owners (the “ETS and Fuel EU Maritime Letter”); and |
15
(d) |
the Charterers shall submit the ETS and Fuel EU Maritime Letter to the relevant administering authority upon registration of the Vessel pursuant to the EU ETS and shall provide the Owners with evidence of such registration within fourteen (14) days. |
CLAUSE 41 – TERMINATION AND REDELIVERY
41.1 |
Upon termination of the leasing of the Vessel under this Charter pursuant to Clause 47.2, the Charterers shall be obliged to pay the Owners the Termination Sum on the Termination Date and it is hereby agreed by the parties hereto that: |
(a) |
without prejudice to Clause 42.2, the obligation to pay the Termination Sum is a continuing obligation and shall survive the termination of the leasing of the Vessel under this Charter and shall continue in full force and effect until irrevocably and unconditionally paid in full; |
(b) |
payment of the Termination Sum is deemed to be proportionate as to amount, having regard to the legitimate interest of the Owners, in protecting against the Owners’ risk of the Charterers failing to perform its obligations under this Charter; and |
(c) |
the Termination Sum shall, depending on the nature of the Termination Event(s) on the basis of which the Owners serve a Termination Notice, be either an obligation to pay damages following acceptance by the Owners of a breach of condition by the Charterers or an obligation to pay an agreed sum in specified circumstances which do not involve a breach of contract by the Charterers. |
41.2 |
If the Charterers fail to make any payment of the Termination Sum on the Termination Date, Clause 37.6 37.4 shall apply and the Owners shall be entitled to exercise their rights under Clause 42 (Sale of Vessel by the Owners in the event of Non-Payment of Termination Sum). |
41.3 |
Concurrently with the unconditional and irrevocable payment of the Termination Sum in full pursuant to the terms of this Charter, this Charter shall terminate and the Owners shall (save in the event of Total Loss or in the event that the Vessel has been sold or contracted to be sold pursuant to Clause 42 (Sale of Vessel by the Owners in the event of Non-Payment of Termination Sum)), at the cost of the Charterers, transfer the legal and beneficial ownership of the Vessel on an “as is where is” basis to the Charterers or their nominees free from any registered mortgages, encumbrances, liens, debts or claims incurred or permitted by the Owners (save for those liens, encumbrances and debts incurred by the Charterers or arising out of or in connection with this Charter), and shall execute a bill of sale and a protocol of delivery and acceptance evidencing the same and such sale shall be completed otherwise in accordance with Clause 56.1(a) and 56.1(b). |
41.4 |
The Charterers hereby undertake to indemnify the Owners against any claims incurred in relation to the Vessel prior to such transfer of ownership. Any taxes, notarial, consular and other costs, charges and expenses connected with closing of the Owners’ register shall be for the Charterers’ account. |
41.5 |
On natural expiration of this Charter, unless the Purchase Option Price or the Mandatory Sale Price is paid by the Charterers in accordance with Clause 56 (Sale of the Vessel), the Charterers shall re-deliver the Vessel to the Owners in accordance with Clause 41.6 and shall ensure that |
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they have fulfilled their obligations under this Charter and made payment of all Charterhire and all other moneys pursuant to the terms of this Charter. In such case, the Charterers shall give the Owners not less than 30/20/10/5 running days’ preliminary notice of expected date and range of ports or places of redelivery not less than 5/3/2/1/ running days’ definite notice of expected date and port or place of redelivery. Any changes thereafter in the Vessel’s position shall be notified immediately to the Owners.
41.6 |
If the Charterers are required to redeliver the Vessel to the Owners pursuant to the terms of this Charter, the Vessel shall be redelivered and taken over safely afloat at a safe and accessible berth or anchorage in such location as the Owners may reasonably require (which, for the avoidance of doubt, shall exclude any war listed area declared by the Joint War Committee). The Charterers shall ensure that, at the time of redelivery to the Owners, the Vessel: |
(a) |
be in an equivalent class as she was as at the Commencement Date and without any recommendations or conditions and with valid certificates for not less than six (6) months and free of average damage affecting the Vessel’s classification and in the same or as good structure, state, condition and classification as that in which she was deemed on the Commencement Date, fair wear and tear not affecting the Vessel’s classification excepted; |
(b) |
has passed her 5-year special survey (if applicable), and subsequent second intermediate surveys and drydock at the Charterers’ time and expense without any overdue recommendations or conditions to the satisfaction of the Approved Classification Society; |
(c) |
‘has her survey cycles up-to-date and trading and class certificate valid for at least the number of months agreed in Box 17; |
(d) |
be re-delivered to the Owners together with all spare parts and spare equipment as were on board at the time of Delivery, and any such spare parts and spare equipment on board at the time of re-delivery shall be taken over by the Owners free of charge; |
(e) |
be free of any cargo and Security Interest (save for the Security Interests granted pursuant to the Financial Instruments, if any) subject to the terms of any sub-charter which the Owners have approved pursuant to the terms of this Charter; |
(f) |
be free of any crew and officers unless otherwise instructed by the Owners; |
(g) |
be free of any charter or other employment (unless the Owners wish to retain the continuance of any prevailing charter or as otherwise agreed by the Owners in their absolute discretion or unless such sub-charter has been approved by the Owners pursuant to the terms of this Charter); and |
(h) |
have such amount of bunkers on board the Vessel as would be sufficient to enable the Vessel to sail to the nearest bunker port in compliance with all bunkering fuel content regulations then applicable in such place of redelivery. |
41.7 |
The Charterers warrant that they will not permit (or request any sub-charterer not to) the Vessel to commence a voyage (including any preceding ballast voyage) which cannot reasonably be expected to be completed in time to allow redelivery of the Vessel within any time period required by this Clause 41 (Termination and Redelivery). Notwithstanding the above, should the Charterers fail to redeliver the Vessel within any time period required by |
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this Clause 41 (Termination and Redelivery), the Charterers shall pay the daily equivalent to the rate of Charterhire plus ten per cent. (10%) or to the market rate, whichever is the higher, for the number of days by which the Charter Period is exceeded.
41.8 |
If the Charterers are required to redeliver the Vessel to the Owners pursuant to the terms of this Charter other than pursuant to Clause 42.1(a), the Owners and Charterers shall mutually appoint a surveyor (the “Joint Surveyor”) for the purpose of determining and agreeing in writing the condition of the Vessel at the time of such redelivery. The Charterers shall provide the Joint Surveyor with all such facilities and access to the Vessel as may be required to enable the Joint Surveyor to conduct its survey of the Vessel and shall take all such actions as may be reasonably recommended by the Joint Surveyor to ensure that the Vessel shall be redelivered in accordance with Clause 41.6. |
41.9 |
If the Charterers are required to redeliver the Vessel to the Owners pursuant to Clause 42.1(a), the Owners shall appoint surveyors (the “Owners’ Surveyor”) for the purpose of determining and agreeing in writing the condition of the Vessel at the time of such redelivery. The Charterers shall provide the Owners’ Surveyor with all such facilities and access to the Vessel as may be required to enable the Owners’ Surveyor to conduct its survey of the Vessel and shall take all such actions as may be reasonably recommended by the Owners’ Surveyor to ensure that the Vessel shall be redelivered in accordance with Clause 41.6. |
41.10 |
The Owners shall not be obliged to accept redelivery of the Vessel until the Owners are reasonably satisfied that all conditions for the redelivery of the Vessel under this Charter (including without limitation, Clause 41.6) are met, and the Vessel shall (if the redelivery is at the end of the Charter Period) continue to be on-hire under the terms of this Charter until such redelivery. The Owners reserve all rights to recover from the Charterers any costs, expense and/or liabilities incurred or suffered by them (including without limitation, the costs of any repairs which may be required to restore the Vessel to the condition required by Clause 41.6 as a result of the Vessel not being redelivered in accordance with the terms of this Charter. |
41.11 |
The Owners shall, at the time of the redelivery of the Vessel, take over all bunkers, lubricating oil, unbroached provisions, paints, ropes, other consumable stores and spare parts in the Vessel at no cost to the Owners. |
CLAUSE 42 – SALE OF VESSEL BY THE OWNERS IN THE EVENT OF NON-PAYMENT OF TERMINATION SUM
42.1 |
The Charterers agree that should the Termination Sum not be paid on the Termination Date: |
(a) |
save as required to comply with this Clause 42.1, the Charterers’ right to possess and operate the Vessel shall immediately cease and (without in any way affecting the Charterers’ obligation to pay the Charterer the Termination Sum and comply with its other obligations under this Charter) the Charterers shall hold the Vessel as gratuitous bailee only to the Owners, the Charterers shall procure that the master and crew follow the orders and directions of the Owners and the Charterers shall, upon the Owners’ request (at Owners’ sole discretion), be obliged to immediately (and at the Charterers’ own cost) redeliver the Vessel to the Owners at such ready and nearest safe port or location as the Owners may require and for the avoidance of doubt, any such redelivery shall not extinguish the Owners’ right to recover the Termination Sum from the Charterers under this Charter; |
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(b) |
the Owners shall be entitled (at Owners’ sole discretion) to operate the Vessel as they may require and may create whatsoever interests thereon, including without limitation charterparties or any other form of employment contracts provided that the Earnings of the Vessel during such period less its operational expenses (the “Net Trading Proceeds”) shall be applied against the Termination Sum and any other amounts payable under the Leasing Documents pursuant to Clause 64 (General Application of Proceeds) provided, that if such use of the Vessel results in the Owners suffering a loss then such losses shall be included in the indemnities contained in Clause 57 (Indemnities) and be added to the Termination Sum; and |
(c) |
the Owners shall be entitled (at Owners’ sole discretion) to immediately thereafter sell the Vessel to any person on such terms as they deem fit, save that if required by the Charterers or the Guarantor and if agreed by the Owners, the Charterers or the Guarantor may within such reasonable time as specified by the Owners (the “Nomination Period”) first nominate or identify a purchaser for the Vessel (a “Nominated Purchaser”) and the Owners may sell the Vessel to such Nominated Purchaser subject to all the following conditions being satisfied: |
(i) |
the Nominated Purchaser is acceptable to the Owners; and |
(ii) |
the price to be paid by the Nominated Purchaser (after deducting any commissions, taxes and other costs of sale) is equal to or more than the applicable Termination Sum (unless otherwise agreed by the Owners in their absolute discretion) unless the shortfall is paid by any Obligor or member of the Group on or before such sale, |
and any net sale proceeds (after deducting all fees, taxes, disbursements and any other costs and expenses incurred by the Owners in connection with such sale) (the “Net Sales Proceeds”) derived from any such sale to a Nominated Purchaser or any other person shall be applied towards reduction of the Termination Sum in accordance with Clause 64 (General Application of Proceeds). If the Net Sales Proceeds are not sufficient to settle the Termination Sum in full, the Charterers shall remain liable to pay the shortfall and default interest shall continue to accrue on the unpaid portion of the Termination Sum in accordance with Clause 37.637.4. The above is without prejudice to all of the Owners’ rights under the Leasing Documents (including to sell the Vessel to any person they deem fit) should there be no agreement as to the Nominated Purchaser.
42.2 |
Notwithstanding Clause 42.1, the Owners may, by written notice to the Charterers at any time after the expiry of the Nomination Period (if applicable pursuant to Clause 42.1(c) above), elect to retain the Vessel instead of selling the Vessel under Clause 42.1(c) above (with such option to elect to retain the Vessel to take effect from such date as they may nominate after the expiry of the Nomination Period (if applicable pursuant to Clause 42.1(c) above) (regardless of date of the notice)), and in doing so, the Owners shall first obtain the Fair Market Value of the Vessel (after deducting any commissions, taxes and costs which would be likely to be incurred in connection with a sale of the Vessel) not later than ten (10) days after the date of such nomination and if the Fair Market Value (less such deductions) of the Vessel is less than the Termination Sum as of the date of the determination of the Fair Market Value, the Charterers shall immediately pay the difference to the Owners upon the Owners’ demand. If the Fair Market Value of the Vessel (subject to the aforesaid deductions) exceeds the Termination Sum as at such date, the Owners shall within thirty (30) days (of the date of the notice) pay the difference to the Charterers. |
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CLAUSE 43 – TOTAL LOSS
43.1 |
Throughout the Charter Period, the Charterer shall bear the full risk of any Total Loss of or any other damage to the Vessel howsoever arising. If the Vessel becomes a Total Loss after Delivery, the Charterer shall, subject to Clause 43.2, pay the Total Loss Termination Sum to the Owners on the Total Loss Payment Date. Upon such receipt by the Owners of the Total Loss Termination Sum, this Charter shall terminate (without prejudice to any provision of this Charter expressed to survive termination) but until such receipt, the Charterers shall remain liable to make all payments of Charterhire and all other amounts to the Owners under this Charter, notwithstanding that the Vessel has become a Total Loss. |
43.2 |
Any Total Loss Proceeds unconditionally received by the Owners (or the Owners’ Financiers in accordance with the terms of the relevant loss payable clause) shall be applied in accordance with Clause 64 (General Application of Proceeds) and shall satisfy the obligation of the Charterers to pay the Total Loss Termination Sum to the extent received by the Owners or the Owners’ Financiers in accordance with the terms of the relevant loss payable clause). The obligation of the Charterers to pay the Total Loss Termination Sum shall remain unaffected and exist regardless of whether any of the insurers have agreed or refused to meet or has disputed in good faith, the claim for Total Loss. |
43.3 |
If the Total Loss Proceeds unconditionally received by the Owners or the Owners’ Financiers in accordance with the terms of the relevant loss payable clause) are less than the Total Loss Termination Sum, the Charterers shall pay such shortfall to the Owner on the Total Loss Payment Date. |
43.4 |
The Owners shall have no obligation to supply to the Charterers with a replacement vessel following the occurrence of a Total Loss. |
CLAUSE 44 – FEES AND EXPENSES
44.1 |
The Charterers shall pay to the Owners a non-refundable arrangement fee (the “Arrangement Fee”) in the amount and at the times agreed in the Fee Letter. The Charterers shall pay to the Owners a further non-refundable arrangement fee (the “Further Arrangement Fee”) in the amount and at the times agreed in the Further Arrangement Fee Letter. |
44.2 |
All costs and expenses including, but not limited to documented legal costs, expenses and other disbursements reasonably incurred by the Owners and each of their legal counsels in relation to preparing, negotiating and executing this Charter and the Leasing Document, shall be for the account of the Charterers (regardless of whether the transaction contemplated by the Leasing Documents actually completes). |
44.3 |
If: |
(a) |
the Charterers request an amendment, waiver or consent; or |
(b) |
the Charterers make a request to re-register the Vessel in another Flag State; or |
the Charterers shall, on demand, reimburse the Owners for the amount of all costs and expenses (including legal fees) incurred by the Owners in responding to, evaluating, negotiating or complying with that request or requirement (including, for the avoidance of doubt, any amounts the Owners have to pay under the terms of the Financial Instruments).
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44.4 |
All documented costs and expenses incurred by the Owners in relation to the acquisition, registration of title of the Vessel in the Owners’ name in the Flag State together with any and all fees (including but not limited to any vessel registration and tonnage fees and the Owners’ initial and ongoing registration and maintenance costs if required to be registered as a foreign maritime entity or the appointment of resident agents under the laws of the Flag State) payable by the Owners to register, maintain and/or renew such registration, shall be for the account of the Charterers. Without prejudice to the foregoing, if the Flag State requires the Owners to establish a physical presence or office in the jurisdiction of such Flag State, all fees, costs and expenses payable by the Owners to establish and maintain such physical presence or office shall be for the account of the Charterers. The Charterers shall promptly provide the Owners with evidence of payment of the annual register/tonnage tax amounts payable to the Flag State or any other aforesaid costs, expenses and/or taxes when the same fall due. |
44.5 |
All documented costs and expenses (including legal fees) incurred by the Owners in relation to the transfer of title of the Vessel by the Owners to the Charterers and the re-delivery of the Vessel by the Charterers to the Owners pursuant to Clause 41 (Termination and Redelivery) shall be for the account of the Charterers. |
44.6 |
The Charterers shall, on demand, pay to the Owners the amount of all documented costs and expenses (including legal fees) incurred by the Owners in connection with the enforcement of, or the preservation of any rights under, any Leasing Document, including, without limitation, any action brought by the Owners to arrest or recover possession of the Vessel, and with any proceedings instituted by or against the Owners as a consequence of it entering into a Leasing Document or enforcing those rights. |
44.7 |
The Charterers shall on demand reimburse the Owners for the amount of all costs and expenses (including legal fees) reasonably incurred by the Owners in connection with any amendment, waiver or consent relating to any change arising as a result of an amendment required under Clause 37.437.3. |
CLAUSE 45 – NO WAIVER OF RIGHTS
45.1 |
No neglect, delay, act, omission or indulgence on the part of either Party in enforcing the terms and conditions of this Charter or any other Leasing Document (to which they are party to) shall prejudice the strict rights of that Party or be construed as a waiver thereof nor shall any single or partial exercise of any right of either party preclude any other or further exercise thereof. |
45.2 |
No right or remedy conferred upon either Party by this Charter or any other Leasing Document shall be exclusive of any other right or remedy provided for herein or by law and all such rights and remedies shall be cumulative. |
CLAUSE 46 – NOTICES
46.1 |
Any notice, certificate, demand or other communication to be served, given, made or sent under or in relation to this Charter shall be in English and in writing and (without prejudice to any other valid method or giving, making or sending the same) shall be deemed sufficiently given or made or sent if sent by registered post or by email to the following respective address: |
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(a)to the Owners: |
c/o CMB Financial Leasing Co., Ltd. |
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21F, China Merchants Bank Building |
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No. 1088 Lujiazui Ring Road |
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Shanghai 200120 |
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The People’s Republic of China |
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Attention: |
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Email: |
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Tel: |
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(b)to the Charterers: |
c/o OET CHARTERING INC. |
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Ethnarchou Makariou & D. Falireos Str. 2 |
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185 47, Neo Faliro, Piraeus, Greece |
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Attention: |
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Email: |
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Tel: |
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or, if a party hereto changes its address or email address, to such other address (or email address) as that party may notify to the other.
46.2Any such communication shall be deemed to have reached the party to whom it was addressed (a)when delivered (in case of a registered letter), or (b) when actually received in readable form (in case of an email). A notice or other such communication received on a non-working day or after 5.00 p.m. in the place of receipt shall be deemed to be served on the next following working day in such place.
CLAUSE 47 – TERMINATION EVENTS
47.1 |
The Owners and the Charterers hereby agree that any of the following events shall constitute a Termination Event: |
(a) |
any Obligor fails to pay or the Owners do not receive on the due date any amount payable pursuant to a Leasing Document, unless such failure to pay is caused by a technical error and payment is made within three (3) Business Days of its due date; |
(b) |
the Charterers breach or omit to observe or perform or procure the performance of any of the undertakings in Clauses 50.1(f), Clause 51 (Financial Covenants), Clause 52 (Valuations), 53.1(b), 53.1(c) and failed to remedy the breach in relation to the Delisting in Clause 50.1(i) above; |
(c) |
the Charterers fail to obtain and/or maintain the Insurances required under Clause 39(Insurance) in accordance with the provisions thereof (or any insurer in respect of such Insurances cancels the Insurances or disclaims liability with respect thereto); |
(d) |
any Obligor commits any other breach of, or omits to observe or perform, any of their other obligations or undertakings in any Leasing Document (other than a breach referred to in paragraphs (a) to (c) above) or any Approved Manager breaches any provision of, or omits to observe or perform, any of their obligations or undertakings in any Manager’s Undertaking |
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unless such breach or omission is in the reasonable opinion of the Owners, remediable and the relevant Obligor or Approved Manager remedies such breach or omission to the satisfaction of the Owners within fifteen (15) Business Days of the earlier of (i) the date of the notice thereof from the Owners or (ii) upon the relevant Obligor or Approved Manager becoming aware of the same;
(e) |
any representation or warranty made by or on behalf of an Obligor, in or pursuant to any Leasing Document to which it is a party, in the reasonable opinion of the Owners, proves to be materially untrue or misleading when it is made; |
(f) |
any of the following occurs in relation to any Financial Indebtedness of any Obligor: |
(i) |
any Financial Indebtedness is not paid when due or not paid within any originally applicable grace period; |
(ii) |
any Financial Indebtedness is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described) and following the expiry of any applicable grace period; |
(iii) |
any commitment for any Financial Indebtedness is cancelled or suspended by any of its creditors as a result of an event of default (however described) and following the expiry of any applicable grace period; |
(iv) |
any of its creditors becomes entitled to declare any Financial Indebtedness due and payable prior to its specified maturity as a result of an event of default (however described) and following the expiry of any applicable grace period; or |
(v) |
any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of such Obligors ceases to be available or becomes capable of being terminated or declared due and payable or cash cover is required or becomes capable of being required, as a result of any termination event or event of default (howsoever defined), |
provided that no Termination Event will occur under this paragraph (f) in respect of the Guarantor if the aggregate amount of Financial Indebtedness falling within sub-paragraphs (i) to (v) above (for the Guarantor) is less than US$10,000,000 (or its equivalent in any other currency or currencies);
(g) |
any of the following occurs in relation to any Obligor: |
(i) |
it becomes unable to pay its debts as they fall due; |
(ii) |
any administrative or other receiver is appointed over all or a substantial part of its assets unless as part of a solvent reorganisation which has been approved in writing by the Owners; |
(iii) |
it makes any formal declaration of bankruptcy or any formal statement to the effect that it is insolvent or likely to become insolvent or a winding up or administration order is made in relation to it, or its members or directors of pass a resolution to the effect that it should be wound up, placed in administration or cease to carry on business or |
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it makes any formal statement to the effect that it is reasonably likely to become insolvent;
(iv) |
a petition is presented in any Relevant Jurisdiction for its winding up or administration, or the appointment of a provisional liquidator over it, unless the petition is being contested in good faith and on substantial grounds and is dismissed or withdrawn within twenty one (21) days of the presentation of the petition; |
(v) |
it petitions a court, or presents any proposal for, any form of judicial or non-judicial suspension or deferral of payments, reorganisation of its debt (or certain of its debt) or arrangement with all or a substantial proportion (by number or value) of their creditors or of any class of them or any such suspension or deferral of payments, reorganisation or arrangement is effected by court order, contract or otherwise; |
(vi) |
any meeting of its members or directors is summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraphs (ii), (iii), (iv) or (v) above; |
(vii) |
in a country other than England and Wales, any event occurs or any procedure is commenced which is similar to any of the foregoing described in paragraphs (ii), (iii), |
(iv) or (v) above;
(viii) |
any expropriation, attachment, sequestration, distress or execution (or any analogous process in any jurisdiction) affects any of its asset or assets (other than a Total Loss of the Vessel); |
(ix) |
it fails to comply with or pay any sum due from it under any final judgment or any final order made or given by a court or tribunal of competent jurisdiction unless the aggregate sum is less than US$10,000,000 in aggregate in respect of the Guarantor; or |
(x) |
if it suspends or ceases to carry on (or threatens to suspend or cease carrying on) all or a material part of its business, |
provided that in the case of an Obligor other than the Charterers and the Guarantor, the occurrence of any of the above events falling within sub-paragraphs (i) to (x) above in respect of such Obligor shall be a Termination Event only if it has or is reasonably likely to have a Material Adverse Effect.
(h) |
any consent, approval, authorisation, license or permit necessary to enable the Charterers to operate or charter the Vessel or to enable any Obligor to (i) comply with any provision of a Leasing Document to which it is a party or (ii) ensure that the obligations of that Obligor or Approved Manager under such Leasing Document are legal, valid, binding or enforceable, is not granted, expires without being renewed, is revoked or becomes, at the relevant time, expressly liable to or otherwise subject to automatic revocation or any condition of such a consent, approval, authorisation, license or permit is not fulfilled or waived within any applicable grace period (resulting in such consent, approval, authorisation, licence or permit being, at the relevant time, subject to automatic revocation or expiration); |
(i) |
any event or circumstance occurs which has or is reasonably likely to have a Material Adverse Effect; |
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(j) |
an Obligor suspends or ceases carrying on its business; |
(k) |
the Security Interest constituted by any Security Document is in any way imperilled or in jeopardy or this Charter or any Leasing Document or any Security Interest created by a Security Document: |
(i) |
is cancelled, terminated, rescinded or suspended or otherwise ceases to remain in full force and effect for any reason or no longer constitutes valid, binding and enforceable obligations of any party to that document for any reason whatsoever; or |
(ii) |
is amended or varied without the prior written consent of the Owners, except for any amendment or variation which is expressly permitted by this Charter or any other relevant Leasing Document; |
(l) |
any Obligor or any Approved Manager rescinds, repudiates (or purports to rescind or repudiates or purports to repudiate) a Leasing Document; |
(m) |
it is or has become: |
(i) |
unlawful or prohibited, whether as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or |
(ii) |
contrary to, or inconsistent with, any regulation, |
for any Obligor or Approved Manager to maintain or give effect to any of its obligations under any Leasing Document;
(n) |
if it becomes unlawful in any applicable jurisdiction for the Owners to perform any of their obligations as contemplated by this Charter or any other Leasing Document to which they are a party; |
(o) |
any Termination Event (as defined in an applicable Other Charter) occurs and is continuing under any Other Charter or a Termination Event (as defined in the Additional Other Charter) occurs and is continuing under the Additional Other Charter; |
(p) |
if as a result of any Sanctions, the Owners or the Owners’ Financiers are prohibited from performing any of their obligations under the Leasing Documents, the Financial Instruments or the transactions contemplated under each of these respective documents; |
(q) |
any lease, hire purchase agreement, charter or any other financing arrangement in respect of any Fleet Vessel (other than the Vessel, the Additional Other Vessel and the Other Vessel) is terminated, cancelled or repudiated by the relevant lessor or owner or financier as a consequence of any termination event or event of default (howsoever defined therein). |
(r) |
if any Obligor: |
(i) |
is or becomes a Prohibited Person; |
(ii) |
is owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person; |
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(iii) |
owns or controls a Prohibited Person; |
(iv) |
has a Prohibited Person serving as a director, officer or employee; or |
(r)a Change of Control occurs without the prior written consent of the Owners.
47.2 |
Notwithstanding and without prejudice to Clause 33 (Cancellation), upon the occurrence of any Termination Event which is continuing, the Owners may issue a written notice to the Charterers terminating this leasing of the Vessel under this Charter and demanding payment of the Termination Sum (the “Termination Notice”), whereupon the Charterers shall be obliged to pay the Termination Sum to the Owners on the date specified by the Owners in their sole discretion in the Termination Notice (the “Termination Date”). |
47.3 |
For the avoidance of doubt, notwithstanding any action taken by the Owners following a Termination Event, the Charterers shall remain liable for the outstanding obligations on their part to be performed under this Charter including but not limited to all insurance, operational and maintenance covenants until such time as the Vessel is redelivered to the Owners in accordance with Clause 42 (Sale of Vessel by the Owners in the event of Non-Payment of Termination Sum), or the title is transferred to the Charterers in accordance with Clause 41.3 or the Vessel is sold in accordance with Clause 42 (Sale of Vessel by the Owners in the event of Non-Payment of Termination Sum). |
47.4 |
Without limiting the generality of the foregoing or any other rights of the Owners, if a Termination Event occurs and it is continuing, the Charterers agree and acknowledge that the Owners shall have the sole and exclusive right and power to (i) settle, compromise, compound, adjust or defend any action, suit or proceeding relating to or pertaining to the Vessel and this Charter, (ii) make proof of loss, appear in and prosecute any action arising from any policy or policies of insurance maintained pursuant to this Charter, and settle, adjust or compromise any claims for loss, damage or destruction under, or take any other action in respect of, any such policy or policies and/or change or appoint a new manager for the Vessel and the appointment of any originally appointed manager may be terminated immediately without any recourse to the Owners. |
47.5 |
Each Termination Event shall either be a breach of condition by the Charterers where it involves a breach of this Charter or any of the other Leasing Document by the Charterers or shall otherwise be an agreed terminating event, the occurrence of which gives rise to a right of the Owners to terminate the leasing of the Vessel under this Charter and to exercise its rights under this clause. |
CLAUSE 48 – REPRESENTATIONS AND WARRANTIES
48.1 |
The Charterers represent and warrant to the Owners, save as otherwise stated in this Clause, as of the date hereof, and on each day henceforth until the last day of the Charter Period, as follows: |
(a) |
each of the Obligors is duly incorporated and validly existing under the laws of its jurisdiction of incorporation; |
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(b) |
each Obligor and each Approved Manager has the corporate capacity and has taken all corporate actions to obtain and maintain all consents, approvals, authorisations, licenses or permits necessary or desirable for it: |
(i) |
to enable it lawfully to enter into, exercise its rights and comply with and perform its obligations under each of the Leasing Documents to which it is a party; and |
(ii) |
to make each of the Leasing Documents to which it is a party admissible in evidence in its Relevant Jurisdictions; |
(c) |
all consents, approvals, authorisations, licences or permits referred to in Clause 48(b) remain in full force and effect and nothing has occurred which makes any of them liable to revocation; |
(d) |
each Leasing Document to which an Obligor and Approved Manager is a party constitutes such Obligor’s and Approved Manager’s legal, valid and binding obligations enforceable against such party (and where expressed to be a deed, shall be enforceable as a deed) in accordance with its respective terms; |
(e) |
the entry into and performance by each Obligor and the transactions contemplated by, each Leasing Document to which such Obligors and Approved Manager is a party do not and will not conflict with: |
(i) |
any law or regulation applicable to it (including Anti-Money Laundering Laws, Anti- Bribery and Anti-Corruption Laws, Sanctions or laws relating to anti-trust or collusion and laws relating to human rights violation); |
(ii) |
its constitutional documents; and |
(iii) |
any agreement or instrument binding upon it or any of its assets or constitute a default or termination event (however described) under any such agreement or instrument; |
(f) |
the choice of governing law as stated in each Leasing Document and the agreement by the relevant parties thereto to refer disputes to the relevant courts or tribunals as stated in such Leasing Document are valid and binding against such parties; |
(g) |
under the laws of the Relevant Jurisdictions of each Obligor and Approved Manager it is not necessary for any of the Leasing Documents to which it is a party to be registered, filed, recorded, notarised or enrolled with any court or other authority in that jurisdiction or that any stamp, registration, notarial or similar taxes or fees be paid on or in relation to the Leasing Documents to which it is a party or the transactions contemplated by those Leasing Documents except payment of associated fees which registration, filings, taxes and fees will be made and paid promptly after the date of the relevant Leasing Documents to which it is a party; |
(h) |
each Security Document to which an Obligor or Approved Manager is a party does now or, as the case may be, will upon execution and delivery create, the Security Interests it purports to create over any assets to which such Security Interest, by its terms, relates, and such Security Interests will, when created or intended to be created, be valid and effective; |
(i) |
no party has any Security Interest (other than the Permitted Security Interests) or any other interest, right or claim over, in or in relation to the Vessel, this Charter, any moneys payable |
27
under any Leasing Document or over any assets which are, the subject of the Security Interests created or intended to be created by the Security Documents;
(j) |
the obligations of each Obligor, under each Leasing Document to which it is a party, are the direct, general and unconditional obligations of such Obligor and rank at least pari passu with all other present and future unsecured and unsubordinated creditors of each Obligor save for any obligation which is mandatorily preferred by law and not by virtue of any contract; |
(k) |
all payments which an Obligor is liable to make under any Leasing Document to which such Obligor is a party may be made by such party without deduction or withholding for or on account of any tax payable under the laws of their jurisdiction of incorporation; |
(l) |
no Obligor has failed to pay all taxes applicable to, or imposed on or in relation to it, its business or if applicable, the Vessel; |
(m) |
no Obligor has breached any law or regulation which breach has or is reasonably likely to have a Material Adverse Effect; |
(n) |
in relation to the Shipbuilding Contract: |
(i) |
all amounts due and payable to the Shipbuilding Contract on or prior to the date hereof have been fully and irrevocably paid to the Builder (receipt of which have been duly acknowledged by the Builder) and there are no outstanding amounts as at the date hereof which are due, owing or payable to the Builder thereunder; and |
(ii) |
on Delivery of the Vessel, there are no unresolved disputes and/or pending claims for payment between the Builder and the Charterers in respect of the Shipbuilding Contract or the Vessel (unless where notified to the Owners and where accepted by the Owners in writing prior to Delivery); |
(o) |
to the best of the Charterers’ knowledge, as at the date of this Charter, no Builder’s default nor buyer’s default under the Shipbuilding Contract has occurred which has not been waived unconditionally which will adversely affect the transfer of title of the Vessel under the MOA and/or chartering of the Vessel under this Charter; |
(p) |
no Obligor or other member of the Group, nor any of their subsidiaries, directors or officers, affiliates or any employee, has engaged in any activity or conduct which would violate any Anti- Bribery and Anti-Corruption Laws, laws pertaining to anti-terrorism or Anti-Money Laundering Laws in any applicable jurisdiction and each Obligor and Group member has instituted and maintained policies and procedures designed to prevent violation of such laws, regulations and rules; |
(q) |
no Obligor or other member of the Group, nor any of their subsidiaries, directors or officers, affiliates or employees, has taken or will take any action in furtherance of an offer, payment, promise to pay or authorisation or approval of the payment or giving of money, property, gifts or anything else of value, directly or indirectly, to any government official (which shall include without limitation, any officer or employee of a government or government owned or controlled entity or of a public international organisation or any person acting in an official capacity for and on behalf of the foregoing or any political party or party official or candidate for public office) to influence official action or secure an improper advantage; |
28
(r) |
no Environmental Claim has been made against any Obligor or any other member of the Group; |
(s) |
no Environmental Incident has occurred and no person has claimed that an Environmental Incident has occurred; |
(t) |
no Termination Event or Potential Termination Event has occurred and is continuing or might reasonably be expected to result from the entry into and performance of this Charter or any other Leasing Document and no other event or circumstance is outstanding which constitutes a default or a termination event (however described) under any other agreement or instrument which is binding on it or to which its assets are subject; |
(u) |
no litigation, arbitration or administrative proceedings or investigations (including proceedings or investigations relating to any alleged or actual breach of the ISM Code or of the ISPS Code) of or before any court, arbitral body or agency have been started against any Obligor which has or is reasonably likely to have a Material Adverse Effect; |
(v) |
the consolidated financial statements delivered pursuant to Clause 49.1(a) are prepared in accordance with IFRS consistently applied and give a true and fair view of (if audited) or fairly represent (if unaudited) the financial condition of each of the Charterers and the Guarantor as at the end of the period to which such financial statements relate; |
(w) |
since the date of the Original Financial Statements or as the case may be, the date of any more recent financial statements delivered pursuant to Clause 49.1(a), there has been no material adverse change in each of the Charterers and the Guarantor or the Group’s business, assets or financial condition; |
(x) |
in relation to any information provided by any Obligor (including any information in relation to the Shipbuilding Contract) for the purposes of this Charter: |
(i) |
such information was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated; |
(ii) |
any financial projections contained in such information have been prepared on the basis of recent historical information and on the basis of reasonable assumptions, and |
(iii) |
nothing has occurred or been omitted from any such information and no information has been given or withheld that results in any such information being untrue or misleading; |
(y) |
no corporate action, legal proceeding or other procedure or step described in Clause 47.1(g) or circumstances described in Clause 47.1(f) has been taken or exists or, to their knowledge, threatened in relation to an Obligor; |
(z) |
no Obligors, nor any of its assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement); |
(aa) |
for the purposes of the Regulation, the centre of main interest (as that term is used in Article 3(1) of the Regulation) of each Obligor is situated in its jurisdiction of incorporation Greece and it has no “establishment” (as that term is used in Article 2(10) of the Regulation) in any other jurisdiction; |
29
(bb) |
no Obligor is a US Tax Obligor and none of them have established a place of business in the United States of America; |
(cc) |
no Obligor has established a place of business in the United Kingdom; |
(dd) |
no Obligor, Approved Manager, sub-charterer and no member of the Group: |
(i) |
is a Prohibited Person; |
(ii) |
is owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person; |
(iii) |
owns or controls a Prohibited Person; or |
(iv) |
has a Prohibited Person serving as a director, officer or, to the best of its knowledge, employee; |
(ee) |
no Obligor nor its respective directors, member, officers and employee, member of the Group, nor any sub-charterer is in breach of applicable Sanctions, has been or is currently being investigated on compliance with Sanctions, have received notice or are aware of any claim, action, suit or proceeding against any of them with respect to Sanctions, or have taken any action to evade the application of Sanctions; and |
(ff) |
any factual information provided by the Charterers (or on their behalf) to the Owners was true and accurate (including all information in relation to the Shipbuilding Contract) as at the date it was provided or as the date at which such information was stated. |
CLAUSE 49 – GENERAL INFORMATION UNDERTAKINGS
49.1 |
The Charterers undertake that they shall comply or procure compliance with the following information undertakings commencing from the date hereof and up to the last day of the Charter Period: |
(a) |
they will send to the Owners: |
(i) |
as soon as possible, but in no event later than ninety (90) days after the end of the first half of each financial year of each of the Charterers and the Guarantor, the unaudited semi-annual combined financial accounts of the Guarantor and the unaudited management accounts of the Charterers; |
(ii) |
as soon as possible, but in no event later than one hundred and eighty (180) days after the end of each financial year of the Guarantor, the audited annual combined financial accounts of the Guarantor and the unaudited management accounts of the Charterers, |
(b) |
they will procure that each set of financial statements delivered pursuant to Clause 49.1(a) shall be in English and certified by a duly authorised officer of the relevant company as giving a true and fair view (if audited) or fairly representing (if unaudited) its financial condition and operations as at the date as at which those financial statements were drawn up; |
(c) |
they will promptly provide to the Owners, copies of all notices and minutes relating to any of their extraordinary shareholders’ meetings which are despatched to the shareholders or to |
30
their creditors or any class thereof and its constitutional documents where these have been amended or varied (to the extent not contrary to the other provisions of this Charter);
(d) |
they will provide the Owners as soon as reasonably practicable upon becoming aware of them, the details of: |
(i) |
any litigation, arbitration or administrative proceedings or investigations relating to any alleged or actual breach of any Sanctions, laws pertaining to anti-terrorism or Anti- Money Laundering Laws which are current or pending against any Obligor, Approved Manager, other member of the Group, or, to the best knowledge of the Charterers, any sub-charterer; |
(ii) |
any litigation, arbitration or administrative proceedings or investigations relating to any other matters not referred to in paragraph (i) above (including proceedings or investigations relating to any alleged or actual breach of the ISM Code or of the ISPS Code) in relation to an Obligor; and |
(iii) |
any Termination Event or Potential Termination Event that has occurred (and the steps, if any, being taken to remedy it); |
(e) |
they will, promptly upon a request by the Owners, supply to the Owners a certificate signed by an officer on its behalf certifying that no Termination Event or Potential Termination Event has occurred (or if a Termination Event or Potential Termination Event has occurred, specifying the nature of the Potential Termination Event or Termination Event (and the steps, if any, being taken to remedy it); |
(f) |
they will, as soon as practicable upon the request of the Owners, provide the Owners with any additional financial or other information relating to: |
(i) |
themselves, any Obligor and/or the Vessel (including, but not limited to the condition and location of the Vessel, its Earnings and its Insurances); |
(ii) |
the Security Interests relating to any Leasing Documents; |
(iii) |
compliance of each Obligor and any Approved Manager with the terms of the Leasing Documents; |
(iv) |
the financial condition, business and operations of the Obligors; or |
(v) |
to any other matter relevant to, or to any provision of any Leasing Document to which it is a party, |
which may reasonably be requested by the Owners at any time;
(g) |
they shall provide details of the Vessel’s management and employment status (including the entry into any pooling arrangements) at least every six (6) months to the Owners upon a request by the Owners; and |
(h) |
they shall as soon as reasonable practicable notify the Owners in writing if any payments which they or any other Obligor, is liable to make under any Leasing Document is subject to deduction or withholding or any other tax whatsoever; |
31
CLAUSE 50 – GENERAL UNDERTAKINGS
50.1 |
The Charterers undertake that they shall comply or procure compliance with the following general undertakings commencing from the date hereof and up to the last day of the Charter Period: |
(a) |
they will, and will procure that each other Obligor and each Approved Manager shall, obtain and promptly renew or procure the provision or renewal of and provide copies of, from time to time, any necessary consents, approvals, authorisations, licenses or permits of any regulatory body or authority for the transactions contemplated under each Leasing Document to which any Obligor and each Approved Manager is a party (including without limitation the sale, chartering and operation of the Vessel); |
(b) |
they will at their own cost, and will procure and each other Obligor and each Approved Manager, will: |
(i) |
ensure that any Leasing Document to which they are a party validly creates the obligations and the Security Interests which such Leasing Document purports to create; and |
(ii) |
without limiting the generality of paragraph (i), promptly register, file, record or enrol any Leasing Document to which they are a party with any court or authority in all Relevant Jurisdictions, pay any stamp duty, registration or similar tax in all Relevant Jurisdictions in respect of any Leasing Document to which they are a party, give any notice or take any other step which, is or has become necessary or desirable for any such Leasing Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which such Leasing Document creates; |
(c) |
they will not, and will procure each other Obligor and Approved Manager will not, create or permit to subsist any Security Interest over any of its assets which are, the subject of the Security Interests created or intended to be created by the Security Documents, unless with the prior written approval of the Owners and save for Permitted Security Interests; |
(d) |
they will not, and will procure each Obligor will not, change the location of its centre of main interest (as that term is used in Article 3(1) of the Regulation) from that stated in relation to it under 48.1(aa) and it will create no “establishment” (as that term is used in Article 2(10) of the Regulation) in any other jurisdiction; |
(e) |
except with the Owners’ prior written consent, they will not, and will procure each other Obligor will not, make a substantial change to the general nature of their respective businesses from that carried on at the date of this Charter; |
(f) |
except with the Owners’ prior written consent or where expressly permitted under the Leasing Documents, they will not enter into any merger, amalgamation, demerger, solvent reorganisation or corporate reconstruction; |
(g) |
they will not: |
(i) |
enter into any borrowing except for loans from affiliates which are unsecured and fully subordinated to the Owners; |
32
(ii) |
incur any liabilities or obligations to any party except for those reasonably incurred in the ordinary course of operating, chartering, repairing and maintaining the Vessel; |
(iii) |
be the creditor in respect of any loan or any form of credit to any person; |
(iv) |
give or allow any to be outstanding any guarantee or indemnity to or for the benefit of any person in respect of any obligation of any other person or enter into any document under which they assume any liability of any other person other than any guarantee or indemnity given under the Leasing Documents; |
(v) |
enter into any material agreement other than the Leasing Documents or any other agreement expressly allowed under any term of the Leasing Documents; |
(vi) |
enter into a single transaction or a series of transactions (whether related or not) to sell, lease, transfer or otherwise dispose of any asset (including without limitation the Vessel, its Earnings or its Insurances); and |
(vii) |
without prejudice to the above sub-paragraphs (i) to (vi), enter into any transaction (whether with another member of the Group or otherwise) which are, in any respect, less favourable than those which they could obtain an a bargain made at arms’ length; |
(h) |
they will not, and shall procure that the Guarantor shall not, following the occurrence of a Termination Event which is continuing or where any of the following would result in the occurrence of a Potential Termination Event or Termination Event: |
(i) |
declare, make or pay any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (whether in cash or in kind) on or in respect of its shares (or any class of its shares including any preferred shares); |
(ii) |
repay or distribute any dividend or share premium reserve; |
(iii) |
pay any management, advisory or other fee to or to the order of any of its shareholders; or |
(iv) |
redeem, repurchase, defease, retire or repay any of their shares or resolve to do so; and |
(i) |
they shall procure that a Delisting shall not occur provided that if a Delisting shall occur, then the Charterers shall, promptly and in any event no later than the date falling thirty (30) days from the date of such Delisting, make such prepayments or provide additional security to the satisfaction of the Owners. |
CLAUSE 51 – FINANCIAL COVENANTS
51.1 |
The Charterers undertake that they shall procure that the Guarantor shall comply with the following financial covenants during the Charter Period: |
(a) |
the Guarantor’s Leverage Ratio shall not exceed seventy five per cent (75%). |
33
(b) |
the Guarantor shall maintain Liquid Assets (free of any Security and inclusive of any balances in time deposits) in an amount of not less than the higher of (i) $10,000,000 on an aggregate basis and (ii) $750,000 per Fleet Vessel; |
(c) |
the Guarantors’ Consolidated Net Worth shall not be less than $100,000,000. |
51.2 |
In this Clause 51 (Financial Covenants): |
“Accounting Information” means the annual audited combined financial accounts and the unaudited semi-annual combined financial accounts to be provided to the Owner in accordance with this Charter.
“Adjusted Total Assets” means, at any date, the amount which would be shown as “Total Assets” under the heading “ASSETS” in the balance sheet of the most recent Accounting Information as adjusted for the aggregate difference (positive or negative) between the book value (being the fixed asset value as per the most recent Accounting Information) and the Fleet Market Value minus the Liquid Assets.
“Consolidated Net Worth” means the aggregate of the Consolidated Market Value Adjusted Total Assets less the Consolidated Total Liabilities.
“Consolidated Net Worth” means the aggregate of the Consolidated Market Value Adjusted Total Assets less the Consolidated Total Liabilities.
“Consolidated Current Assets” means the aggregate of the cash and marketable securities, trade and other receivables from persons other than a member of the Group realisable 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, in each case in relation to the Group, as stated in the then most recent and relevant Accounting Information.
“Consolidated Market Value Adjusted Tangible Fixed Assets” means the Fleet Market Value plus the book value (less depreciation computed in accordance with the IFRS consistently applied) on a consolidated basis of all other tangible fixed assets of the Group (excluding the Fleet Vessels), as stated in the then most recent and relevant Accounting Information.
“Consolidated Market Value Adjusted Total Assets” means, at any relevant time, the aggregate of Consolidated Current Assets and Consolidated Market Value Adjusted Tangible Fixed Assets.
“Consolidated Total Liabilities” means the aggregate (as of the date of calculation) of all obligations of the Guarantor then outstanding for the payment or repayment of money as stated under “Total Liabilities” in the financial statements or, as the case may be, management accounts, then most recently required to be delivered pursuant to this Charter including, without limitation:
(a) |
any amounts payable by the Guarantor under leases or similar arrangements over their respective periods; |
(b) |
any credit to the Guarantor from a supplier of goods or under any instalment purchase or other similar arrangement; |
34
(c) |
the aggregate amount then outstanding of liabilities and obligations of third parties to the extent that they are guaranteed by the Guarantor; |
(d) |
any contingent liabilities (including any taxes or other payments under dispute or arbitration) which have been or should be recorded in the notes to the Guarantor’s financial statements or, as the case may be, management accounts; and |
(e) |
any deferred tax liabilities. |
“Fleet Market Value” means the aggregate Fair Market Value of the Fleet Vessels, and for the purpose of ascertaining the Fair Market Value of the Fleet Vessel, the definition of Fair Market Value in Clause 66 (Definitions) shall apply.
“Leverage Ratio” means, at any date, the ratio (expressed as a percentage) of:
(i)the Total Liabilities minus Liquid Assets; and
(ii)the Adjusted Total Assets.
“Liquid Assets” means, at any date, the amount of cash and cash equivalents which would be shown as “Cash and Cash Equivalents” under the heading “ASSETS” in the balance sheet of the most recent Accounting Information.
“Total Liabilities” means, at any date, the amount which would be shown as “Total current liabilities” plus the amount which would be shown as “Total non-current liabilities”, both under the heading “LIABILITIES AND SHAREHOLDERS’EQUITY” in the balance sheet of the most recent Accounting Information (which, for the avoidance of doubt, shall include potential leasing liabilities and shall only exclude shareholder loans when subordinated, non-interest bearing and not callable at will (minimum one year notice)).
51.3 |
The Charterers shall promptly notify the Owners if the Guarantor agrees to provide any new financial covenants to a creditor (or to amend existing ones such that they materially differ from the financial covenants under Clause 51.1 above placing such creditor in a position which is comparatively more favourable in terms of the financial covenants than the position of the Owners) under the agreements entered into or to be entered into in connection with any Financial Indebtedness owed by the Guarantor or a Group member to such creditor and agrees that it will and shall procure the Guarantor will promptly enter into such necessary documentation as may be required to amend and supplement (as applicable) this Charter and any applicable Leasing Document so as to reflect and incorporate such more favourable financial covenants into this Charter and any applicable Leasing Document (as the case may be). |
CLAUSE 52 – VALUATIONS
52.1 |
The Charterers undertake that they shall comply or procure compliance with the following undertakings commencing from the date hereof and up to the last day of the Charter Period: |
(a) |
they shall at their cost: |
(i) |
provide to the Owners valuations of the Vessel (to be addressed to the Owners) to enable the Owners to determine the Initial Market Value of the Vessel; |
35
(ii) |
at least once per calendar year as requested by the Owners, provide to the Owners valuations of the Vessel (to be addressed to the Owners) to enable the Owners to determine the Fair Market Value of the Vessel; and |
(iii) |
at any time as requested by the Owners following the occurrence of a Termination Event or a Potential Termination Event, provide to the Owners valuations of the Vessel (to be addressed to the Owners) to enable the Owners to determine the Fair Market Value of the Vessel; and |
(b) |
if at any time, the Vessel’s Fair Market Value falls below an amount equivalent to one hundred and eighteen per cent (118%) of the Owners’ Costs (the “LTV Breach”, and the said difference between the Fair Market Value and the Owners’ Costs shall be referred to as the “shortfall” for the purposes of this paragraph) then the Charterers shall, promptly and in any event no later than the date falling thirty (30) days from the date which the valuations relating to the Vessel’s Fair Market Value are received by the Owners, make payment in an amount such as to eliminate the shortfall which payment shall be applied in the Owners’ sole discretion. |
CLAUSE 53 – VESSEL UNDERTAKINGS
53.1 |
The Charterers undertake that they shall comply or procure compliance with the following Vessel and Sanctions related undertakings commencing from the date hereof and up to the last day of the Charter Period: |
(a) |
they will notify the Owners promptly upon becoming aware: |
(i) |
that any Environmental Claim has been made against the Charterers or in connection with the Vessel, or that any Environmental Incident has occurred; |
(ii) |
of any arrest or detention of the Vessel or any exercise or purported exercise of any lien on that Vessel or its Earnings or any requisition of the Vessel for hire; |
(iii) |
any modification or alteration of the Vessel of a value in excess of $1,000,000; |
(iv) |
any casualty or occurrence as a result of which the Vessel has become or is, by the passing of time or otherwise, likely to become, a Major Casualty; and |
(v) |
that a Total Loss has occurred, |
and will keep the Owners fully up-to-date with all developments;
(b) |
they will comply, and will procure that each other Obligor, each other member of the Group, and any sub-charterer will comply, with all Sanctions and all laws and regulations relating to them, the Vessel and its construction, ownership, employment, operation, management and registration, including the ISM Code, the ISPS Code (including the maintenance of an ISSC), all Environmental Laws, all Anti-Money Laundering Laws, laws pertaining to anti-terrorism, Anti- Bribery and Anti-Corruption Laws and the laws of the Vessel’s registry, and in particular, they shall effect and maintain a sanctions compliance policy which, inter alia, implements the recommendations of the Sanctions Advisory, to ensure compliance with all such laws and regulations implemented from time to time, including, without limitation they will, and will procure that each other Obligors, each other member of the Group and each sub-charterer will: |
36
(i) |
conduct their activities in a manner consistent with US and UN sanctions, as applicable; |
(ii) |
have sufficient resources in place to ensure execution of and compliance with their own sanctions policies by their personnel, e.g., direct hires, contractors, and staff; |
(iii) |
ensure subsidiaries and affiliates comply with the relevant policies, as applicable; |
(iv) |
have relevant controls in place to monitor automatic identification system (AIS) transponders; |
(v) |
have controls in place to screen and assess onboarding or offloading cargo in areas they determine to present a high risk; |
(vi) |
have controls to assess authenticity of bills of lading, as necessary; and |
(vii) |
have controls in place consistent with the Sanctions Advisory, |
(c) |
without limiting Clause 53.1(b), they will procure that: |
(i) |
the Vessel shall not be constructed, operated, employed, managed, used by or for the benefit of a Prohibited Person or in trading to or from a Prohibited Country, including calling at any port of a Prohibited Country; |
(ii) |
the Vessel shall not be used in any manner contrary to Sanctions, or in a manner that creates a risk that an Obligor will become a Prohibited Person; |
(iii) |
notwithstanding any other provision of this paragraph (c), the Vessel shall not be used in trading in any manner that creates a risk that the Vessel will become a Sanctioned Ship; |
(iv) |
the Vessel shall not be traded in any manner which would trigger the operation of any sanctions limitation or exclusion clause (or similar) in the Insurances or in any manner which would result or would reasonably be expected to result in any Obligor or the Owners becoming a Prohibited Person; and |
(v) |
that each charterparty in respect of the Vessel shall contain, for the benefit of the Owners, language which gives effect to the provisions of Clause 53.1(c) as regards Sanctions and of this Clause and which permits refusal of employment or voyage orders if compliance would result in a breach of Sanctions and which prohibits trading to any Prohibited Country; |
(vi) |
it and any sub-charterer of the Vessel or the Approved Manager will cooperate and exchange all relevant data and information in a timely manner to facilitate compliance with any applicable Emissions Scheme and enable each party to calculate the amount of Emissions Allowances in respect of the Vessel that must be surrendered to the authorities of the applicable Emissions Scheme for the Charter Period and that each relevant party will supply the relevant authority of such Emission Scheme with relevant mandating documents to surrender such allowances to ensure that the Owners and the Charterers will be in compliance with all Environmental Laws; |
37
(d) |
they will, promptly notify the Owners and provide all information which may be relevant for the purposes of ascertaining whether the Obligors, the Approved Manager and any sub- charterer are in compliance with all laws and regulations and Sanctions applicable to and/or binding on them, and in particular, they shall notify the Owners in writing immediately upon being aware that any of the Charterers’ shareholders, directors, officers or employees is a Prohibited Person or has otherwise become a target of any Sanctions; |
(e) |
save with the Owners’ prior consent in writing (such consent not to be unreasonably withheld) they shall not agree or enter into, and shall procure that the Builder does not agree or enter into, any transaction, agreement, document or do or omit to do anything which will have the effect of varying, amending, supplanting or waiving any term of the Shipbuilding Contract relating to the Builder’s Warranties in a material manner; |
(f) |
save with the Owners’ prior consent in writing, they shall not agree or enter into, and shall procure that each Approved Manager does not agree or enter into, any transaction, arrangement, document or do or omit to do anything which will have the effect of varying, amending, supplementing or waiving any term of the relevant management agreement which would result in an annual increase of the management fee to more than twenty per cent. (20%) of the management fee payable under the relevant management agreement as at the date of this Charter; |
(g) |
they shall not: |
(i) |
change an Approved Manager unless such change in appointment is approved in writing by the Owners (such approval not to be unreasonably withheld or delayed) and provided that such substitute Approved Manager has (prior to accepting its appointment) entered into an undertaking in a form substantially similar to the Manager’s Undertaking or in such other form as may be acceptable to the Owners; or |
(ii) |
terminate or otherwise assign or transfer the relevant management agreement unless with the prior approval in writing by the Owners (such approval not to be unreasonably withheld or delayed); |
(h) |
with effect from and following Delivery, ensure that the Vessel will be registered in the Flag State under the name of the Owners; |
(i) |
the Vessel shall be classed with an Approved Classification Society upon Delivery at the highest classification available for vessels of its type and be free of all overdue recommendations or conditions, and maintain such class during the Charter Period; |
(j) |
unless with the Owners’ prior written consent (such consent not to be unreasonably withheld or delayed save that such qualification shall not apply following the occurrence of a Termination Event), they shall not deactivate or lay up the Vessel; |
(k) |
they shall not make any structural change to the Vessel without the prior written consent of the Owners other than a structural change that: |
(i) |
is mandatorily required by any applicable law and regulation; or |
(ii) |
relates to the installation of exhaust gas cleaning systems (scrubbers) and/or ballast water treatment systems (and in the case of the ballast water treatment system, the |
38
Charterers shall ensure that the same is installed and a USCG certificate of compliance regarding the same issued on a date prior to 1 July 2022); or
(iii) |
would not, in the Owners’ reasonable opinion: |
(A) |
have a material adverse effect on the Vessel’s fitness for purpose; |
(B) |
materially alter the structure, type or performance characteristics of the Vessel; and/or |
(C) |
materially diminish the value of the Vessel or have a material adverse effect on the safety, performance or marketability of the Vessel, |
and the Charterers shall provide the Owners with at least fifteen (15) days prior written notice of the commencement of any such alterations (as well as notification of such alterations being completed promptly after such completion) and shall provide the Owners with all information (including without limitation, any plans for the proposed modifications, repairs, replacement, installation or alteration, valuation reports and confirmation of class from the Approved Classification Society) as the Owners may require for the purposes of determining the matters set out in paragraphs (i) to (iii) above together with evidence that the Obligatory Insurances have been appropriately updated, and shall indemnify the Owners against all costs and expenses incurred by the Owners in connection with all such proposed modifications, repairs, replacement, installation or alteration of the Vessel and if such modification, repair or replacement or installation is approved or satisfies the requirements of this Clause, once effected, shall form part of the Vessel;
(l) |
they will procure that each Approved Manager shall, upon the request of the Owners at the expense of the Charterers, furnish the Owners with an inspection report setting out such matters relating to the condition of the Vessel as the Owners may require on an annual basis and if a Termination Event occurs, at such other frequency as the Owners may otherwise require; |
(m) |
subject to the other terms of this Charter, the Charterers may freely sub-charter the Vessel save that the Owners’ prior written consent shall be required: |
(i) |
to any sub-bareboat or demise charter of the Vessel; |
(ii) |
to any other employment of the Vessel which would constitute an Assignable Sub- Charter (and upon the Owners’ consent the Charterers shall assign their rights and interests in such Assignable Sub-Charter to the Owners); and |
(iii) |
to any employment of the Vessel which does not permit a transfer of the registered ownership of the Vessel without the consent of the applicable sub-charterer; |
(n) |
they shall procure that all Earnings in connection with the Vessel are paid into the Operating Account and that the Charterers facilitate access by the Owners to information relating to the Operating Account; |
(o) |
they shall ensure that a minimum amount of $500,000 is maintained in the Operating Account at all times during the Charter Period; and |
39
(p) |
they shall, upon the request of the Owners and at the cost of the Charterers, on or before 31st July in each calendar year, supply or procure the supply to the Owners all information necessary in order for the Owners to comply with its or any Owners’ Financiers’ obligations under the Poseidon Principles in respect of the preceding year, including, without limitation, all ship fuel oil consumption data required to be collected and reported in accordance with Regulation 22A of Annex VI and any Statement of Compliance relating to the Vessel for the preceding calendar year and, for the avoidance of doubt, such information shall be “Confidential Information” for the purposes of Clause 63 (Confidentiality) but the Charterers acknowledge that, in accordance with the Poseidon Principles, such information will form part of the information published regarding the Owners’ and/or Owners’ Financiers’ portfolio climate alignment. |
(q) |
they shall procure that the Vessel is free of encumbrances and liens (save for those created by the Owners or otherwise permitted in writing under the terms of this Charter). |
CLAUSE 54 – INSPECTION OF VESSEL
54.1 |
Without prejudice to Clause 54.2 below, the Owners shall be entitled to inspect or survey the Vessel or instruct a duly authorized surveyor to carry out such survey on their behalf: |
(a) |
to ascertain the condition of the Vessel and satisfy themselves that the Vessel is being properly repaired and maintained; |
(b) |
in dry-dock if the Charterers have not dry-docked the Vessel in accordance with Clause 10(g) (Periodical Dry-docking); |
(c) |
as may be required for classification purposes; and |
(d) |
for any other commercial reason they consider necessary, |
and in doing so, the Charterers shall afford the Owners or their authorised surveyor with all proper facilities in relation to such inspection or survey.
54.2 |
The Owners shall be entitled to exercise its rights of inspection or survey as described under Clause 54.1 (Inspection of Vessel) once a year (subject to provision of reasonable prior notice) without interference to the operation of the Vessel save that upon the occurrence of a Termination Event or Potential Termination Event, the Owners shall have the right to inspect or survey the Vessel at any time (and for the avoidance of doubt, more than once a year). |
54.3 |
The documented costs and fees for any inspection and survey permitted under this Clause shall be paid by the Charterers. |
54.4 |
All time used in respect of inspection, survey or repairs pursuant to this Clause shall be for the Charterers’ account and form part of the Charter Period. |
54.5 |
The Charterers shall also permit the Owners to inspect the Vessel’s log books or survey reports whenever requested and shall whenever required by the Owners furnish them with full information regarding any casualties or other accidents or damage to the Vessel. |
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CLAUSE 55 – PURCHASE OPTION
55.1 |
The Charterers shall have the option (the “Purchase Option”) to purchase the Vessel on each anniversary date on and Payment Date as from the first (1st) anniversary of the Commencement Reference Date as specified in the Purchase Option Notice (as hereinafter defined) at the applicable Purchase Option Price, subject to the other terms of this Clause 55 (Purchase Option). |
55.2 |
The Purchase Option shall be exercisable only: |
(a) |
upon the Charterers providing not less than sixty (60) days’ written notice (the “Purchase Option Notice”) to purchase the Vessel on a date specified therein (the “Purchase Option Date”) which shall fall on an anniversary of the Commencement Date on or after the first (1st) anniversary of the Commencement Date a Payment Date described in Clause 55.1 or on the last day of the Charter Period (as the case may be) subject to Clause 60.1 (unless otherwise agreed by the Owners); and |
(b) |
in the absence of the occurrence of a Potential Termination Event or a Termination Event on or prior to either the date of the Purchase Option Notice or the Purchase Option Date. |
55.3 |
The Purchase Option Notice shall be signed by a duly authorised officer or attorney of the Charterers and, once delivered to the Owners, will in each case be irrevocable and the Charterers shall be bound to pay to the Owners the Purchase Option Price on the Purchase Option Date. |
55.4 |
The sale of the Vessel pursuant to the Charterers’ exercise of the Purchase Option shall be conducted in accordance with Clause 56 (Sale of the Vessel). |
55.5 |
If the Charterers do not exercise the Purchase Option on or before the expiration of the Charter Period: |
(a) |
the Charterers shall pay the Option Premium to Owners on the last day of the Charter Period; |
(b) |
the Charterers shall on the last day of the Charter Period re-deliver the Vessel to the Owners in accordance with Clause 41.6 and shall ensure that they have fulfilled their obligations under this Charter and made payment of the Option Premium, all Charterhire and all other moneys pursuant to the terms of this Charter; and |
(c) |
the Owners shall be entitled (at Owners’ sole discretion) to sell or operate the Vessel as they may require. For the avoidance of doubt, the Charterers agree that should the Option Premium not be paid or not be paid in full on its due date for payment under the terms of this Charter, any net proceeds deriving from the sale or operation of the Vessel by the Owners shall not be applied towards reduction of the unpaid Option Premium, Charterhire or any other moneys due pursuant to the terms of this Charter. |
CLAUSE 55A – MANDATORY SALE DELIBERATELY LEFT BLANK
If the Mandatory Sale Price becomes payable in accordance with Clause 37.5 (Changes to Interest Rate, Default Interest), the same shall be payable in consideration of the purchase and transfer of the legal and beneficial title of the Vessel pursuant to Clause 56 (Sale of the Vessel). The day on which the
41
Mandatory Sale Price is paid pursuant to Clause 37.5 (Changes to Interest Rate, Default Interest) is a “Mandatory Sale Date” and such transfer of the Vessel provided therein is a “Mandatory Sale”.
CLAUSE 56 – SALE OF THE VESSEL
56.1 The sale of the legal and beneficial interest and title in the Vessel pursuant to the Charterers’ exercise of, as the case may be, the Charterers’ Purchase Option under Clause 55 (Purchase Option) or pursuant to Clause 41.3, or the completion of a Mandatory Sale under Clause 55A (Mandatory Sale) shall be on an “as is where is” and subject to the following terms and conditions:
(a) |
no condition, warranty or representation of any kind is or has been given by or on behalf of the Owners in respect of the Vessel or any part thereof, and accordingly the Charterers hereby confirm that they have not, in entering into this Charter, relied on any condition, warranty or representation by the Owners or any person on the Owners’ behalf, express or implied, whether arising by law or otherwise in relation to the Vessel or any part thereof, including, without limitation, warranties or representations as to the description, suitability, quality, merchantability, fitness for any purpose, value, state, condition, appearance, safety, durability, design or operation of any kind or nature of the Vessel or any part thereof, and the benefit of any such condition, warranty or representation by the Owners is hereby irrevocably and unconditionally waived by the Charterers to the extent permissible under applicable law, and the Charterers hereby also waive any rights which they may have in tort in respect of any of the matters referred to above and irrevocably agree that the Owners shall have no greater liability in tort in respect of any such matter than they would have in contract after taking account of all of the foregoing exclusions. No third party making any representation or warranty relating to the Vessel or any part thereof is the agent of the Owners nor has any such third party authority to bind the Owners thereby. Notwithstanding anything contained above, nothing contained herein is intended to obviate, remove or waive any rights or warranties or other claims relating thereto which the Charterers (or their nominee) or the Owners may have against the manufacturer or supplier of the Vessel or any third party; |
(b) |
the Vessel shall be free from any registered mortgages incurred by the Owners (save for those mortgages, liens, encumbrances and debts arising out of or in connection with this Charter or the Leasing Documents); |
(c) |
the Purchase Option Price, or Termination Sum or Mandatory Sale Price (as applicable) shall be paid by (or on behalf of) the Charterers to the Owners together with (without double counting) unpaid amounts of Charterhire, Breakfunding Costs (if applicable), default interest accruing under Clause 37.6 37.4 (if applicable), fees, expenses and any other moneys owing by or accrued or due from the Charterers under this Charter on or prior to the Purchase Option Date or the Termination Date or the Mandatory Sale Date (as the case may be) which remain unpaid; and |
(d) |
concurrently with the Owners receiving irrevocable payment of the Purchase Option Price or the Termination Sum or the Mandatory Sale Price (as applicable) and all other moneys payable under this Charter in full pursuant to the terms of this Charter, the Owners shall (save in the event of Total Loss) (at Charterers’ cost) transfer the legal and beneficial ownership of the Vessel on an “as is where is” basis to the Charterers or their nominees and shall (at Charterers’ cost) execute a bill of sale and a protocol of delivery and acceptance evidencing the same and any other document strictly necessary to transfer the title of the Vessel, as well as procure the |
42
relevant ship registry to issue a certificate of title or any other evidence provided in accordance with the practice of such registry showing that the Vessel shall be free from any registered mortgages in favour of the Owners, to the Charterers and the relevant ship registry of the Vessel under the Charterers’ flag of choice (and to the extent required for such purposes, the Vessel shall be deemed first to have been redelivered to the Owners), provided that the Owners shall not be obliged to do anything which would (in its reasonable opinion) constitute a breach of the applicable QEL (if any). Any fees (including legal fees), costs or disbursements incurred by the Owners in connection with the Charterers’ exercise of the Purchase Option or transfer of the Vessel following payment of the Termination Sum or Mandatory Sale Price (as the case may be) shall be indemnified or reimbursed by the Charterers to the Owners upon the Owners’ demand on or prior to the Purchase Option Date or date of payment of the Termination Sum or Mandatory Sale Date (as applicable).
CLAUSE 57 – INDEMNITIES
57.1 |
The Charterers shall pay such amounts to the Owners, on the Owners’ demand, in respect of all documented claims, expenses, liabilities, losses, taxes, fees (including but not limited to any vessel registration and tonnage fees) suffered or incurred by or imposed on the Owners arising from this Charter and any Leasing Document, whether prior to, during or after termination of the leasing of this Charter, including without limitation: |
(a) |
as a result of incorporating the Owners in the relevant jurisdiction selected by the Charterers or required for the purpose of flying the flag of the Vessel in a particular jurisdiction; |
(b) |
in connection with delivery, possession, performance, control, registration, repair, survey, insurance, maintenance, manufacture, purchase, ownership or operation of the Vessel (including but not limited to any social security contributions); |
(c) |
in connection with the prevention or release of liens or detention of or requisition, use, operation, redelivery, sale or disposal of the Vessel (or any part of it) and/or whether prior to, during or after termination; |
(d) |
in connection with delay in the scheduled delivery date of the Vessel under the Shipbuilding Contract; |
(e) |
in connection with or following the occurrence of a Termination Event or Potential Termination Event (including without limitation, by reason thereof in re-taking possession or otherwise in acquiring the Vessel pursuant to Clause 38.3). |
Without prejudice to its generality, this Clause covers any claims, expenses, liabilities and losses which arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code, the ISPS Code, the MARPOL Protocol, any Environmental Law or any Sanctions.
57.2 |
The Charterers hereby irrevocably agree to indemnify and hold harmless the Owners against all consequences or liabilities arising from the master, officers or agents signing bills of lading or other documents and any claim, expense, liability or loss incurred by the Owners in liquidating or employing deposits from the Owners’ Financiers or third parties to fund the acquisition of the Vessel pursuant to the MOA, the Head MOA and/or the Shipbuilding Contract. |
43
57.3 |
Notwithstanding anything to the contrary herein (but subject and without prejudice to Clause 33 (Cancellation)) and without prejudice to any right to damages or other claim which the Charterers may have at any time against the Owners under this Charter, the indemnities provided by the Charterers in favour of the Owners shall continue in full force and effect notwithstanding any breach of the terms of this Charter or termination of this Charter pursuant to the terms hereof or termination of this Charter by the Owners. |
57.4 |
All rights which the Charterers have at any time (whether in respect of this Charter or any other transaction) against any Obligors shall be fully subordinated to the rights of the Owners under the Leasing Documents and until the end of this Charter and unless the Owners otherwise direct, the Charterers shall not exercise any rights which it may have (whether in respect of this Charter or any other transaction) by reason of performance by it of its obligations under any Leasing Document or by reason of any amount becoming payable, or liability arising, under this Clause: |
(a) |
to be indemnified by any Obligor; |
(b) |
to claim any contribution from any third party providing security for, or any other guarantor of, any Obligor under any Leasing Document; |
(c) |
to take any benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of any Obligor under any Leasing Document or of any other guarantee or security taken pursuant to, or in connection with, any Leasing Document by any Obligors; |
(d) |
to bring legal or other proceedings for an order requiring any Obligor to make any payment, or perform any obligation, in respect of any Leasing Document; |
(e) |
to exercise any right of set-off against any Obligor; and/or |
(f) |
to claim or prove as a creditor of any Obligor, |
and if the Charterers receive any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to the extent necessary to enable all amounts which may be or become payable to the Owners by any Obligor or in connection with any Leasing Document to be repaid in full on trust for the Owners and shall promptly pay or transfer the same to the Owners.
CLAUSE 58 – NO SET-OFF OR TAX DEDUCTION
58.1 |
All Charterhire and any payment made from the Charterers to enable the Owners to pay all amounts under a Leasing Document shall be paid punctually and: |
(a) |
without any form of set-off, cross claim, condition or counterclaim; |
(b) |
free and clear of any tax deduction or withholding unless required by law; and |
(c) |
net of any bank charges or bank fees. |
58.2 |
Without prejudice to Clause 58.1, if the Owners are required by law to make a tax deduction from any payment: |
44
(a) |
the Owners shall notify the Charterers as soon as they become aware of the requirement; and |
(b) |
the amount due in respect of the payment shall be increased by the amount necessary to ensure that the Owners receive and retain (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which they would otherwise have received. |
58.3 |
The Charterers shall (within three (3) Business Days of demand by Owners) pay to the Owners an amount equal to the loss, liability or cost which the Owners determine will be or has been (directly or indirectly) suffered for or on account of tax by the Owners in respect of a Leasing Document. |
58.4 |
Clause 58.3 shall not apply: |
(a) |
with respect to any tax assessed on the Owners under the law of the jurisdiction in which the Owners are incorporated or, if different, the jurisdiction (or jurisdictions) in which the Owners are treated as resident for tax purposes if that tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by the Owners; or |
(b) |
to the extent a loss, liability or cost is compensated for by an increased payment under Clause 58.2. |
58.5 |
Notwithstanding any other provision to this Charter, if any deduction or withholding or other tax is or will be required to be made by the Charterers or the Owners in respect of a payment to the Owners as a result of the Owners being incorporated in a particular jurisdiction, the Owners shall have the right to transfer their interest in the Vessel (and this Charter) to any person nominated by the Owners and all costs in relation to such transfer shall be for the account of the Charterers. |
58.6 |
If the Charterers compensate the Owners by an increased payment pursuant to Clauses 58.2 or 58.3 and the Owners determine that they have obtained and utilized a tax credit attributable to this increased payment, the Owners shall reimburse the Charterers that increased payment (or part thereof if the tax credit is attributable to only part of such increased payment). |
CLAUSE 59 – INCREASED COSTS
59.1 |
This Clause 59 (Increased Costs) applies if the Owners notify the Charterers that they consider that as a result of: |
(a) |
the introduction or alteration after the date of this Charter of a law or an alteration after the date of this Charter in the manner in which a law is interpreted or applied (disregarding any effect which relates to the application to payments under this Charter of a tax on the Owners’ overall net income); or |
(b) |
complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which the Owners allocates capital resources to their obligations under this Charter) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Charter, |
the Owners (or a parent company of them) has incurred or will incur an “increased cost”.
45
59.2 |
In this Clause 59 (Increased Costs), “increased cost” means, in relation to the Owners: |
(a) |
an additional or increased cost incurred as a result of, or in connection with, the Owners or the Owners’ parent company having entered into, or being a party to, this Charter, or funding the acquisition of the Vessel pursuant to the MOA or performing their obligations under this Charter (including as a result of, or in connection with, incorporating itself in a particular jurisdiction as requested by the Charterers or in order to fly a particular flag in respect of the Vessel); |
(b) |
an additional or increased cost of funding or financing the acquisition of the Vessel pursuant to the MOA; or |
(c) |
a liability to make a payment or a return forgone, which is calculated by reference to any amounts received or receivable by the Owners under this Charter, |
and for the purposes of this Clause, the Owners may in good faith allocate or spread costs an/or losses among their assets and liabilities (or any class of their assets and liabilities) on such basis as they consider appropriate.
59.3 |
Subject to the terms of Clause 59.1, the Charterers shall pay to the Owners, upon receipt of the Owners’ demand and any evidence thereto (where available to the Owners), the amounts which the Owners from time to time notify the Charterers to be necessary to compensate the Owners for the increased cost. |
CLAUSE 60 – MISCELLANEOUS
60.1 |
Unless otherwise expressly stated to the contrary in this Charter, any payment which is due to be made on a day which is not a Business Day shall be made on the preceding Business Day instead. |
60.2 |
If, at any time, any provision of any Leasing Document is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions under the law of that jurisdiction nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired. |
60.3 |
The Charterers waive any rights of sovereign immunity which they or any of their properties may enjoy in any jurisdiction and subjects itself to civil and commercial law with respect to their obligations under this Charter. |
60.4 |
No term of this Charter is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Charter. |
60.5 |
This Charter and each other Leasing Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Charter or that Leasing Document, as the case may be. |
CLAUSE 61 – FATCA
61.1Defined terms
46
For the purposes of this Clause 61 (FATCA), the following terms shall have the following meanings:
“Code” means the United States Internal Revenue Code of 1986, as amended.
“FATCA” means:
(a) |
sections 1471 to 1474 of the Code or any associated regulations; |
(b) |
any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or |
(c) |
any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the IRS, the US government or any governmental or taxation authority in any other jurisdiction. |
“FATCA Deduction” means a deduction or withholding from a payment under this Charter or the Leasing Documents required by or under FATCA.
“FATCA Exempt Party” means a Relevant Party that is entitled under FATCA to receive payments free from any FATCA Deduction.
“FATCA Non-Exempt Party” means any Relevant Party who is not a FATCA Exempt Party.
“IRS” means the United States Internal Revenue Service or any successor taxing authority or agency of the United States government.
“Relevant Party” means any of the parties to this Charter and the Leasing Documents.
61.2 |
FATCA Information |
(a) |
Subject to paragraph (c) below, each Relevant Party shall, on the date of this Charter, and thereafter within ten (10) Business Days of a reasonable request by another Relevant Party: |
(i) |
confirm to that other party whether it is a FATCA Exempt Party or is not a FATCA Exempt Party; and |
(ii) |
supply to the requesting party (with a copy to all other Relevant Parties) such other form or forms (including IRS Form W-8 or Form W-9 or any successor or substitute form, as applicable) and any other documentation and other information relating to its status under FATCA (including its applicable “pass thru percentage” or other information required under FATCA or other official guidance including intergovernmental agreements) as the requesting party reasonably requests for the purpose of the requesting party’s compliance with FATCA. |
(b) |
If a Relevant Party confirms to any other Relevant Party that it is a FATCA Exempt Party or provides an IRS Form W-8 or W-9 to showing that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, or that |
47
the said form provided has ceased to be correct or valid, that party shall so notify all other Relevant Parties or provide the relevant revised form, as applicable, reasonably promptly.
(c) |
Nothing in this Clause shall oblige any Relevant Party to do anything which would or, in its reasonable opinion, might constitute a breach of any law or regulation, any policy of that party, any fiduciary duty or any duty of confidentiality, or to disclose any confidential information (including, without limitation, its tax returns and calculations); provided, however, that nothing in this paragraph shall excuse any Relevant Party from providing a true, complete and correct IRS Form W-8 or W-9 (or any successor or substitute form where applicable). Any information provided on such IRS Form W-8 or W-9 (or any successor or substitute forms) shall not be treated as confidential information of such party for purposes of this paragraph. |
(d) |
If a Relevant Party fails to confirm its status or to supply forms, documentation or other information requested in accordance with the provisions of this Charter or the provided information is insufficient under FATCA, then: |
(i) |
if that party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such party shall be treated for the purposes of this Charter and the Leasing Documents as if it is a FATCA Non-Exempt Party; and |
(ii) |
if that party failed to confirm its applicable passthru percentage then such party shall be treated for the purposes of this Charter and the Leasing Documents (and payments made thereunder) as if its applicable passthru percentage is 100%, |
until (in each case) such time as the party in question provides sufficient confirmation, forms, documentation or other information to establish the relevant facts.
61.3 |
FATCA Deduction and gross-up by Relevant Party. |
(a) |
If the representation made by the Charterers under 48.1(bb) proves to be untrue or misleading such that the Charterers are required to make a FATCA Deduction, the Charterers shall make the FATCA Deduction and any payment required in connection with that FATCA Deduction within the time allowed and in the minimum amount required by FATCA. |
(b) |
If the Charterers are required to make a FATCA Deduction then the Charterers shall increase the payment due from them to the Owners to an amount which (after making any FATCA Deduction) leaves an amount equal to the payment which would have been due if no FATCA Deduction had been required. |
(c) |
The Charterers shall promptly upon becoming aware that they must make a FATCA Deduction (or that there is any change in the rate or basis of a FATCA Deduction) notify the Owners accordingly. Within thirty (30) days of the Charterers making either a FATCA Deduction or any payment required in connection with that FATCA Deduction, the Charterers shall deliver to the Owners evidence reasonably satisfactory to the Owners that the FATCA Deduction has been made or (as applicable) any appropriate payment paid to the relevant governmental or taxation authority. |
61.4 |
FATCA Deduction by Owners. |
The Owners may make any FATCA Deduction they are required by FATCA to make, and any payment required in connection with that FATCA Deduction, and the Owners shall not be required to increase any payment in respect of which they make such a FATCA Deduction or otherwise compensate the recipient for that FATCA Deduction.
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61.5 |
FATCA Mitigation. |
Notwithstanding any other provision to this Charter, if a FATCA Deduction is or will be required to be made by any party under Clause 61.4 in respect of a payment to the Owners as a result of the Owners not being a FATCA Exempt Party, the Owners shall have the right to transfer their interest in the Vessel (and this Charter) to any person nominated by the Owners and all costs in relation to such transfer shall be for the account of the Charterers.
CLAUSE 62 – ASSIGNMENT, TRANSFER AND REFINANCING
62.1 |
The Charterers shall not assign or transfer (whether by novation or otherwise) their rights and/or obligations under this Charter or any other Leasing Document. |
62.2 |
The Charterers acknowledge that, at any time during the Charter Period: |
(a) |
the Owners are entitled to enter into certain funding arrangements in relation to the Vessel with the Owners’ Financiers in order to refinance the then outstanding Owners’ Costs (or part thereof), which funding arrangements may be secured, inter alia, by the relevant Financial Instruments; |
(b) |
the Owners may do any of the following as security for the funding arrangements referred to in paragraph (a) above, in each case without consent of the Charterers but with notice to the Charterers: |
(i) |
execute a ship mortgage over the Vessel or any other Financial Instrument in favour of the Owners’ Financiers; |
(ii) |
assign their rights and interests to, in or in connection with this Charter and/or any other Leasing Document in favour of the Owners’ Financiers; |
(iii) |
assign their rights and interests to, in or in connection with the Insurances, the Earnings and the Requisition Compensation of the Vessel in favour of the Owners’ Financiers; and |
(iv) |
enter into any other document or arrangement which is necessary to give effect to such financing arrangements. |
62.3 |
The Charterers undertake to comply, and provide such information and documents reasonably required to enable the Owners to comply, with all such instructions or directions in regard to the employment, insurances, operation, repairs and maintenance of the Vessel as laid down in any Financial Instrument or as may be reasonably directed from time to time during the currency of this Charter by the Owners’ Financiers in conformity with any Financial Instrument. The Charterers further agree and acknowledge for themselves all relevant terms, conditions and provisions of each Financial Instrument (if any) and agree to acknowledge this in writing in any form that may be reasonably required by the Owners’ Financiers subject to not imposing to the Charterers any more onerous obligations than those included in the Leasing Documents. The Charterers further agree to enter into any required acknowledgements of assignments and other customary documents as may be required in connection with the Financing Documents. |
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62.4 |
The Owners shall, if requested by the Charterers or any applicable sub-charterer, procure that on or around the time a mortgage over the Vessel is executed in favour of Owners’ Financiers, the Owners’ Financiers shall enter into a QEL with the Owners and the Charterers or any applicable sub-charterer (in a form to be agreed among the Owners’ Financiers, the Owners, the Charterers and any applicable sub-charterer). |
62.5 |
During the Charter Period, the Owners may procure a: |
(a) |
change in the registered ownership of the Vessel; and/or |
(b) |
assign or transfer by novation of any of its rights and obligations under any of the Leasing Documents, |
without the consent of the Charterers to any other financial institution, trust, fund, leasing company or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets provided always that such change of ownership or transfer shall not disturb or interfere with the Charterers’ lawful use, possession and quiet enjoyment of the Vessel during the Charter Period. The Charterers shall be liable to the aforesaid new owner of the Vessel for its performance of all obligations under this Charter (as novated) after any such change of the registered ownership from the Owners to such new owner and the Charterers shall procure that any party to a Leasing Document:
(i) |
becomes liable to the new of owner of the Vessel for its performance of all obligations pursuant to such Leasing Document; and |
(ii) |
enters into all necessary documents or takes any necessary actions required for such Leasing Document and any Security Interest created thereunder remaining in full force and effect (or to be novated and/or re-executed) as from the completion of the relevant sale. |
62.6 |
The Charterers agree and undertake to enter into any such usual documents and provide all necessary assistance as the Owners shall require to complete or perfect the transfer of the Vessel (with the benefit and burden of this Charter) or any novation or assignment made pursuant to this Clause 62 (Assignment, Transfer and Re-financing) at no cost for the Charterers. |
CLAUSE 63 – CONFIDENTIALITY
The Parties agree to keep the terms and conditions of this Charter and any other Leasing Document (the “Confidential Information”) strictly confidential, provided that a Party may disclose Confidential Information in the following cases:
(a) |
it is already known to the public or becomes available to the public other than through the act or omission of the disclosing Party; |
(b) |
it is required to be disclosed under the applicable laws of any Relevant Jurisdiction or by a governmental order, decree, regulation or rule; |
(c) |
in filings with a court or arbitral body in proceedings in which the Confidential Information is relevant and in discovery arising out of such proceedings; |
50
(d) |
to any other party to a Leasing Document; |
(e) |
to (or through) whom a Party assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Leasing Document (as permitted by the terms thereof) provided that such person shall undertake that it would not disclose Confidential information to any other party save for circumstances arising which are similar to those described under this Clause; |
(f) |
to any of the following persons (on a need to know basis): |
(i) |
a shareholder or an Affiliate of either Party or a party referred to in paragraph (d); |
(ii) |
its board of directors, employees or its shareholders; |
(iii) |
professional advisers retained by a disclosing party; |
(iv) |
any rating agencies; |
(v) |
the Approved Classification Society; |
(vi) |
the ship registry of the Flag State; and |
(vii) |
in the case of the disclosing party being the Owners, persons advising on, providing or considering the provision of financing to the Owners or an Affiliate of the Owners, |
provided that the disclosing party shall exercise due diligence to ensure that no such person shall disclose Confidential Information to any other party save for circumstances arising which are similar to those described under this Clause or such other circumstances as may be permitted by all Parties;
(g) |
to any person which is a classification society or other entity which the Owners or the Owners’ Financiers have engaged to make the calculations necessary to enable the Owners and/or the Owners’ Financiers to comply with their reporting obligations under the Poseidon Principles; or |
(h) |
with the prior written consent of all Parties and if required by any Party, subject to a corresponding confidentiality undertaking obtained from the party to whom the Confidential Information is disclosed to. |
CLAUSE 64 – GENERAL APPLICATION OF PROCEEDS
64.1 |
Any Net Trading Proceeds, Net Sales Proceeds, Total Loss Proceeds, any proceeds realised by the Owners in connection with the enforcement of the Security Documents (unless otherwise specified in the Security Documents) and any proceeds received by the Owners from any Other Owner (as trustee for the Owners) shall be applied in the following order of application against amounts payable under the Leasing Documents: |
(a) |
firstly, in or towards any amounts outstanding under the Leasing Documents other than the Termination Sum (including but not limited to any costs and expenses incurred in the enforcement of the Security Documents, to the extent these are not covered under the Termination Sum); |
51
(b) |
secondly, in or towards satisfaction of the Charterers’ obligation to pay the Termination Sum (or such portion of it that then remains unpaid) in any order of application in the amounts comprising the Termination Sum as the Owners may determine; and |
(c) |
thirdly, upon satisfaction in full of all amounts payable to the Owners under the Leasing Documents, in payment of any surplus to the Charterers, but subject always to the terms of the General Assignment. |
CLAUSE 65 – GOVERNING LAW AND ENFORCEMENT
65.1 |
This Charter, and any non-contractual obligations arising out of or in connection with it, shall be governed by English law. |
65.2 |
Any dispute arising out of or in connection with any Leasing Document (including a dispute regarding the existence, validity or termination of any Leasing Document or any non- contractual obligation arising out of or in connection with any Leasing Document) (a “Dispute”) shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause. |
65.3 |
The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. The reference shall be to three (3) arbitrators. A Party wishing to refer the Dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other Party requiring the other Party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other Party appoints its own arbitrator and give notice that it has done so within the fourteen (14) days specified. If the other Party does not appoint its own arbitrator and give notice that it has done so within the fourteen (14) days specified, the Party referring a Dispute to arbitration may, without the requirement of any further prior notice to the other Party, appoint its arbitrator as sole arbitrator and shall advise the other Party accordingly. The award of a sole arbitrator shall be binding on both Parties as if he had been appointed by agreement. Nothing herein shall prevent the Parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. |
65.4 |
In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 (or such other sum as the Parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. |
CLAUSE 66 – DEFINITIONS
66.1 |
In this Charter the following terms shall have the meanings ascribed to them below: |
“Acceptance Certificate” means a certificate substantially in the form set out in Schedule 1 (Acceptance Certificate) to be signed by the Charterers at Delivery.
“Account Bank” means ABN AMRO Bank N.V., Netherlands or such other bank approved by the Owners.
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“Account Charge” means the document creating charge(s) over the Operating Account executed or to be executed by the Charterers in favour of the Owners.
“Additional Other Charter” means, in relation to the Additional Other Vessel, the bareboat charterparty to be entered into between the Additional Other Owner and the Additional Other Charterer.
“Additional Other Charterer” means Moonsprite Shipping Corp., a corporation incorporated under the laws of the Republic of the Marshall Islands with registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960.
“Additional Other Owner” means Sea 112 Leasing Co. Limited, a company incorporated under the laws of Hong Kong with registered address at 46/F, Champion Tower 3, Garden Road, Central, Hong Kong.
“Additional Other Vessel” means m.v. Nissos Anafi with IMO number 9856086 currently flagged under the laws of the Republic of the Marshall Islands.
“Advance Charterhire” has the meaning as defined under Clause 36.2 of the Charter.
“Affiliate” means in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.
“Amended Expiry Owners’ Costs” means US$40,921,875.
“Amended Margin” means 2.00% per annum.
“Amended Owners’ Costs” meansUS$66,384,375 which is equal to the Owners’ Costs as at the Reference Date, for the avoidance of doubt, after having deducted the Initial Fixed Charterhire due and payable on the Reference Date.
“Annex VI” means Annex VI of the Protocol of 1997 to amend the International Convention for the Prevention of Pollution from Ships 1973 (Marpol), as modified by the Protocol of 1978 relating thereto.
“Anti-Bribery and Anti-Corruption Laws” means the US Foreign Corrupt Practices Act of 1977 as amended and the rules and regulations thereunder, the UK Bribery Act of 2010, and/or any similar laws, rules or regulations issued, administered or enforced by the United States, United Kingdom, the European Union or any of its member states, or any other country or governmental agency having jurisdiction over the Owners or any Obligors or their respective subsidiaries.
“Anti-Money Laundering Laws” means all applicable financial record-keeping and reporting requirements, anti-money laundering statutes (including all applicable rules and regulations thereunder) and all applicable related or similar laws, rules, regulations or guidelines, of all jurisdictions including and without limitation, the United States of America, the United Kingdom, Greece, the Republic of the Marshall Islands, Hong Kong and the People’s Republic of China and which in each case are:
(a) |
issued, administered or enforced by any governmental agency having jurisdiction over the Charterers or any other Obligors or their respective subsidiaries; |
53
(b) |
of any jurisdiction in which the Charterers or any other Obligor conducts business; or |
(c) |
to which the Charterers or any other Obligor is subjected or subject to. |
“Approved Classification Society” means the classification society stipulated in the Shipbuilding Contract or any other classification society which is a member of the International Association of Classification Societies and approved by the Owners in writing.
“Approved Commercial Manager” means OET Chartering Inc. or any other reputable ship management company as may be approved by the Owners in writing prior to its appointment as commercial manager of the Vessel in accordance with this Charter.
“Approved Manager” means the Approved Commercial Manager or the Approved Technical Manager.
“Assignable Sub-charter” means any period time charters relating to the Vessel, whether or not already in existence.
“Approved Technical Manager” means Kyklades Maritime Corporation or any other reputable ship management company as may be approved by the Owners in writing prior to its appointment as technical manager of the Vessel in accordance with this Charter.
“Approved Valuer” means Clarksons Platou, Simpson Spence Young, Braemar ACM, Arrow, Fearnleys, Maersk Brokers or such other independent and reputable shipbroker nominated by the Charterers and approved by the Owners.
“Arrangement Fee” has the meaning as defined under Clause 44.1.
“Breakfunding Costs” means all breakfunding costs and expenses incurred or payable by the Owners when a repayment or prepayment under the relevant funding arrangement entered into by the Owners for the purpose of financing the Purchase Price (or any part thereof) does not fall on a Payment Date, a Purchase Option Date or a date specified by the Owners in any Termination Notice.
“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for business in the principal business centres of Shanghai, Singapore, Amsterdam and Piraeus or:
(a) |
in respect of a day on which a payment is required to be made or other dealing is due to take place under this Agreement in Dollars, a day on which banks are open in New York City; and |
(b) |
in respect of the calculation of any Initial Variable Charterhire or Variable Charterhire, a US Government Securities Business Day. |
“Builder” has the meaning ascribed to such term in the MOA.
“Builder’s Warranties” means the guarantees and/or warranties provided by the Builder to the Head Sellers under Article IX of the Shipbuilding Contract and assigned by the Head Sellers to the Charterers which the Charterers will on-assign to the Owners pursuant to the Builder’s Warranties Assignment.
54
“Builder’s Warranties Assignment” means the tripartite assignment executed between (a) the Head Sellers (b) the Charterers and (c) the Owners in relation to the Builder’s Warranties in relation to the Vessel.
“Cancelling Date” has the meaning ascribed to such term in the MOA.
“Change of Control” means:
(a) |
the Guarantor ceasing to directly own one hundred percent (100%) of the shares in the Charterers; or |
(b) |
Mr. Ioannis Alafouzos and Mr. Themistoklis Alafouzos cease to hold less than 35% of the shares (directly or indirectly) of the Guarantor. |
“Charter Period” means the period described in Clause 32.1 unless it is terminated earlier in accordance with the provisions of this Charter.
“Charterhire” means each of, as the context may require, all of the instalments of hire payable hereunder on each applicable Payment Date comprising in each case either (before the Reference Date) both Initial Fixed Charterhire and Initial Variable Charterhire or (after the Reference Date) both Fixed Charterhire and Variable Charterhire, as further detailed in Clause 36.
“Commencement Date” means the date on which Delivery takes place. “Credit Adjustment Spread” means zero point one five per cent. (0.15%);
“Delisting” means the Guarantor ceasing to be listed on the Oslo Stock Exchange (Oslo Børs). both :
(a) |
the Oslo Stock Exchange (Oslo Børs); and |
(b) |
the New York Stock Exchange. |
“Delivery” means the physical and legal delivery of the Vessel from the Owners to the Charterers pursuant to the terms of this Charter.
“Dollars” and “US$” mean the lawful currency for the time being of the United States of America.
“Earnings” means all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Charterers and which arise out of the use or operation of the Vessel, including (but not limited to):
(a) |
all freight, hire and passage moneys; |
(b) |
any compensation payable in the event of requisition of the Vessel for hire; |
(c) |
any remuneration for salvage and towage services; |
(d) |
any demurrage and detention moneys; |
55
(e) |
damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of the Vessel; |
(f) |
all moneys which are at any time payable to the Charterers in relation to general average contribution; and |
(g) |
if and whenever the Vessel is employed on terms whereby any moneys falling within paragraphs (a) to (f) are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to the Vessel. |
“Emission Allowances” means an allowance, credit, quota, permit or equivalent, representing a right of a vessel to emit a specified quantity of greenhouse gas emissions recognised by the Emissions Scheme.
“Emission Scheme” means a greenhouse gas emissions trading scheme which for the purposes of this Charter shall include the EU ETS and any other similar systems imposed by applicable lawful authorities that regulate the issuance, allocation, trading or surrendering of Emission Allowances.
“Environmental Claim” means any claim by any governmental, judicial or regulatory authority or any other person which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law and, for this purpose, “claim” includes a claim for damages, compensation, contribution, injury, fines, losses and penalties or any other payment of any kind, including in relation to clean-up and removal, whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset.
“Environmental Incident” means:
(a) |
any release, emission, spill or discharge of Environmentally Sensitive Material whether within the Vessel or from the Vessel into any other vessel or into or upon the air, water, land or soils (including the seabed) or surface water; or |
(b) |
any incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, water, land or soils (including the seabed) or surface water from a vessel other than the Vessel and which involves a collision between the Vessel and such other vessel or some other incident of navigation or operation, in either case, in connection with which the Vessel is actually or potentially liable to be arrested, attached, detained or injuncted and/or the Vessel and/or any Obligors and/or any operator or manager of the Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or |
(c) |
any other incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, water, land or soils (including the seabed) or surface water otherwise than from the Vessel and in connection with which the Vessel is actually or potentially liable to be arrested and/or where any Obligors and/or any |
56
operator or manager of the Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action.
“Environmental Law” means any present or future law relating to pollution or protection of human health or the environment, to conditions in the workplace, to the carriage, generation, handling, storage, use, release or spillage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material including any law pertaining to any Emission Scheme.
“Environmentally Sensitive Material” means and includes all contaminants, oil, oil products, toxic substances and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous.
“EU ETS” means the European Union Emissions Trading System specifically applicable to shipping pursuant to the European Directive 2023/959 amending European Directive 2003/87/EC and Commission Implementing Regulation (EU) 2023/2599 of 22 November 2023 laying down rules for the application of Directive 2003/97/EC of the European Parliament and of the Council as regards the administration of shipping companies by administering authorities in respect of a shipping company.
“ETS and Fuel EU Maritime Letter” shall have the meaning as defined under Clause 40.5(c).
“Expiry Owners’ Costs” means an amount equal to sixty five per cent. (65%) of the Opening Capital Balance.
“Fair Market Value” means the value of the Vessel determined as follows:
(a) |
subject to sub-paragraph (b) below, the arithmetic mean of the valuations shown by two (2) valuation reports each addressed to the Buyers and prepared at the Sellers’ cost: |
(i) |
on a date no earlier than thirty (30) days prior to the relevant date of valuation; |
(ii) |
by Approved Valuers one nominated by the Owners and the other nominated by the Charterers (but with the report addressed to the Owners); |
(iii) |
without physical inspection of the Vessel; and |
(iv) |
on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, without taking into account any charter; and |
(b) |
if there is a discrepancy of five per cent. (5%) or more between the market valuations shown on the two (2) valuation reports obtained pursuant to paragraph (a) above (using the lower valuation figure as the denominator), then a third valuation shall be obtained and prepared on the same terms and conditions as set out under paragraph (a) above (except that the third valuation report additionally required under this sub- paragraph (b) shall be prepared by an Approved Valuer nominated by the Owners), |
57
with the arithmetic mean taken from the valuations shown by such three (3) valuation reports.
“Fee Letter” mean the fee letter referred to under Clause 44.1 for payment of the Arrangement Fee.
“Financial Indebtedness” means, in relation to a person (the “debtor”), a liability of the debtor:
(a) |
for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor; |
(b) |
under any loan stock, bond, note or other security issued by the debtor; |
(c) |
under any acceptance credit, guarantee or letter of credit facility made available to the debtor; |
(d) |
under a financial lease, a deferred purchase consideration arrangement (other than deferred payments for assets or services obtained on normal commercial terms in the ordinary course of business) or any other agreement having the commercial effect of a borrowing or raising of money by the debtor; |
(e) |
under any foreign exchange transaction, any interest or currency swap 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 paragraphs (a) to (e) if the references to the debtor referred to the other person. |
“Financial Instruments” means the applicable loan or facility agreement entered into between the Owners (or their affiliate) and the Owners’ Financiers and any mortgage, deed of covenants, assignment in respect of any of the Leasing Documents, assignment in respect of Earnings, Insurances and Requisition Compensation, manager’s undertaking and subordination (including assignment of manager’s interests in the Insurances) or any other financial security instruments granted by the Owners to the Owners’ Financiers as security for the financing or refinancing of the Owners’ acquisition of the Vessel.
“First Payment Date” shall have the meaning as defined under 36.5(a36.6(a).
“Fixed Charterhire” shall have the meaning as defined under Clause 36.4(a36.5(a).
“Flag State” means the flag state named in Box 5 of this Charter or any other state or jurisdiction approved in writing by the Owners (whose approval shall not be unreasonably withheld or delayed).
“Fleet Vessel” means any ship or vessel (including, but not limited to, the Vessel, the Additional Other Vessel and the Other Vessel) from time to time wholly leased, hired, chartered or financed under any lease, hire purchase agreement, charter or any other financing arrangement by affiliates of the Owners and/or the Other Owner to subsidiaries or affiliates of the Guarantor.
58
“Fuel EU Maritime” means Fuel EU Maritime Regulation 2023/1805 dated 13 September 2023 on the use of renewable and low-carbon fuels in maritime transport, and amending Directive 2009/16/EC.
“Further Arrangement Fee” has the meaning as defined under Clause 44.1.
“Further Arrangement Fee Letter” means the fee letter referred to under Clause 44.1 for payment of the Further Arrangement Fee.
“General Assignment” means the assignment agreement executed or to be executed between the Charterers and the Owners in respect of the Vessel, pursuant to which the Charterers shall, inter alia, assign its rights under:
(a) |
the Earnings, Insurances, Requisition Compensation in respect of the Vessel; and |
(b) |
any Assignable Sub-charter; in favour of the Owners. |
“Group” means the Guarantor and its Subsidiaries (whether directly or indirectly owned) from time to time.
“Guarantee” means the guarantee executed by the Guarantor in favour of the Owners on or about the date hereof.
“Guarantor” means Okeanis Eco Tankers Corp., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with registration number 96382 and its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Republic of the Marshall Islands MH 96960.
“Head MOA” means the memorandum of agreement dated 29 June 2021 and made between the Charterers (in their capacity as buyers) and the Head Sellers (in their capacity as sellers), pursuant to which the Head Sellers agreed to sell and the Charterers agreed to purchase the Vessel upon the terms and conditions set out therein.
“Head Sellers” means Felton Enterprises S.A., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with registration number 106138 and registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro MH 96960.
“Hire Period” means (i) in the case of the first Hire Period, the period commencing on the Commencement Date and ending on the First Payment Date; and (ii) in the case of each subsequent Payment Date, the period of commencing on the last day of the preceding Hire Period and ending on the next occurring Payment Date.
“Historic Term SOFR” means, in relation to any Hire Period, the most recent applicable Term SOFR for a period equal in length to that Hire Period and which is as of a day which is no more than three US Government Securities Business Days before the Quotation Day.
“Holding Company” means, in relation to a person, any other person in relation to which (i) it is a Subsidiary or (ii) it is a Subsidiary of a Subsidiary.
59
“IAPPC” means a valid international air pollution prevention certificate for the Vessel issued pursuant to the MARPOL Protocol.
“IFRS” means International Financing Reporting Standards.
“Initial Fixed Charterhire” has the meaning defined in Clause 36.4(a).
“Initial Market Value” has the meaning ascribed to such term in the MOA.
“Initial Variable Charterhire” has the meaning defined in Clause 36.4(b).
“Insurances” means:
(a) |
all policies and contracts of insurance, including entries of the Vessel in any protection and indemnity or war risks association, which are effected in respect of the Vessel or otherwise in relation to it whether before, on or after the date of this Charter; and |
(b) |
all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium and any rights in respect of any claim whether or not the relevant policy, contract of insurance or entry has expired on or before the date of this Charter. |
“Interpolated Historic Term SOFR” means, in relation to any Hire Period, the rate (rounded to the same number of decimal places as Term SOFR) which results from interpolating on a linear basis between:
(A) |
either: |
(1) |
the most recent applicable Term SOFR (as of a day which is not more than three US Government Securities Business Days before the Quotation Day) for the longest period (for which Term SOFR is available) which is less than the Hire Period; or |
(2) |
if no such Term SOFR is available for a period which is less than the Hire Period, SOFR for a day which is no more than five US Government Securities Business Days (and no less than two US Government Securities Business Days) before the Quotation Day; and |
(B) |
the most recent applicable Term SOFR (as of a day which is not more than three US Government Securities Business Days before the Quotation Day) for the shortest period (for which Term SOFR is available) which exceeds the Hire Period. |
“Interpolated Term SOFR” means, in relation to any Hire Period, the rate (rounded to the same number of decimal places as Term SOFR) which results from interpolating on a linear basis between:
(A) |
either: |
(1) |
the applicable Term SOFR (as of the Quotation Day in respect of that Hire Period) for the longest period (for which Term SOFR is available) which is less than that Hire Period; or |
60
(2) |
if no such Term SOFR is available for a period which is less than that Hire Period, SOFR for the day which is two US Government Securities Business Days before the Quotation Day; and |
(B) |
the applicable Term SOFR (as of the Quotation Day in respect of that Hire Period) for the shortest period (for which Term SOFR is available) which exceeds that Hire Period. |
“Interest Rate” means, for any Hire Period, the applicable Reference Rate.
“ISM Code” means the International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organisation Assembly as Resolutions A.741 (18) and A.788 (19), as the same may be amended or supplemented from time to time (and the terms “safety management system”, “Safety Management Certificate” and “Document of Compliance” have the same meanings as are given to them in the ISM Code).
“ISPS Code” means the International Ship and Port Security Code as adopted by the Conference of Contracting Governments to the Safety of Life at Sea Convention 1974 on 13 December 2002 and incorporated as Chapter XI-2 of the Safety of Life at Sea Convention 1974, as the same may be supplemented or amended from time to time.
“ISSC” means a valid international ship security certificate for the Vessel issued pursuant to the ISPS Code.
“Joint Surveyor” shall have the meaning as defined under Clause 41.8.
“Leasing Documents” means this Charter, the Guarantee, the MOA, the Fee Letter, the Further Fee Letter, any QEL , the Security Documents, any other document designated as a “Leasing Document” as agreed between the Charterers and the Owners and each, as the context may require, the “Leasing Document”.
“Major Casualty” means any casualty to the Vessel in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds US$2,000,000 or the equivalent in any other currency.
“Manager’s Undertaking” means, in relation to an Approved Manager, a letter of undertaking to be executed by that Approved Manager in favour of the Owners subordinating the rights of that Approved Manager against the Vessel and the Charterers to the rights of the Owners.
“Mandatory Sale” has the meaning given to that term in Clause 55A.
“Mandatory Sale Date” has the meaning given to that term in Clause 55A.
“Mandatory Sale Price” means, in respect of the Mandatory Sale Date, the aggregate of:
(a) |
the Owners’ Costs prevailing as at the Mandatory Sale Date; |
(b) |
any Charterhire accrued but unpaid as at the date of payment of the Mandatory Sale Price; |
61
(c) |
any Breakfunding Costs including any Swap Costs; |
(d) |
any documented legal or other costs incurred by the Owners in connection with the exercise of the Mandatory Sale; and |
(e) |
aside from the amounts described under paragraphs (a) to (d) above, any other moneys due and owing under the Leasing Documents at the Mandatory Sale Date. |
“Margin” means two point four five per cent. (2.45%) per annum.
“Market Disruption Rate” means :
(a) |
prior to the Reference Date, the percentage rate per annum which is the aggregate of the Reference Rate and the Credit Adjustment Spread.; and |
(b) |
following the Reference Date, the Reference Rate. |
“MARPOL Protocol” means Annex VI (Regulations for the Prevention of Air Pollution from Ships) to the International Convention for the Prevention of Pollution from Ships 1973 (as amended in 1978 and 1997).
“Material Adverse Effect” means, in the reasonable opinion of the Owners, a material adverse effect on:
(a) |
the business, operations, property, condition (financial or otherwise) of any Obligor or the Group (taken as a whole); or |
(b) |
the ability of any Obligor to perform its obligations under any Leasing Document to which it is a party; or |
(c) |
the validity or enforceability of, or the effectiveness or ranking of any Security Interests granted pursuant to, any of the Leasing Documents or the rights or remedies of the Owners under any of the Leasing Documents. |
“MOA” means the memorandum of agreement dated on or about the date of this Charter and made between the Owners (in their capacity as buyers) and the Charterers (in their capacity as sellers), pursuant to which the Charterers agree to sell and the Owners agree to purchase the Vessel upon the terms and conditions set out therein.
“Net Sales Proceeds” has the meaning given to it under Clause 42.1(c). “Net Trading Proceeds” has the meaning given to it under Clause 42.1(b). “Nominated Purchaser” has the meaning given to it under Clause 42.1(c).
“Obligatory Insurances” means any insurances of the Vessel required to be effected by or on behalf of the Charterers pursuant to Clause 39.
“Obligors” means:
(a) |
the Charterers; |
62
(b) |
the Guarantor; |
(c) |
the Approved Managers as at the date of this Charter which is an entity within the Group; |
(d) |
any sub-charterer of the Vessel which is an entity within the Group; and |
(e) |
any other party providing security for the Charterers’ obligations under this Charter pursuant to a Security Document or otherwise (except any Approved Manager or sub- charterer which are not entities within the Group). |
“Opening Capital Balance” shall have the same meaning as defined under the MOA.
“Operating Account” means an interest bearing account opened or to be opened in the name of the Charterers with the Account Bank.
“Option Premium” means an amount of US$1,500,000US$6,000,000.
“Original Financial Statements” means in relation to the Guarantor, its audited consolidated financial statements for the fiscal year ended 31 December 2020 and its unaudited consolidated financial statements for the fiscal year ended 31 December 2021.
“Original Jurisdiction” means, in relation to an Obligor, the jurisdiction under whose laws they are incorporated as at the date of this Charter.
“Other Charters” means, in relation to each Other Vessel, each bareboat charterparty dated on or around the date of this Charter which is entered into between each applicable Other Owner and each applicable Other Charterer.
“Other Charterer” means, in relation to an Other Vessel, Theta Navigation Ltd.
“Other Leasing Documents” means the Leasing Documents as defined in the Other Charter. “Other Owner” means, in relation to an Other Vessel, Sea 290 Leasing Co. Limited.
“Other Vessel” means each, or as the context may require, Hull Number 3212.
“Owners’ Costs” means, on any relevant date, (i) the Opening Capital Balance minus (ii) the aggregate of Initial Fixed Charterhire and Fixed Charterhire which has been paid by the Charterers and received by the Owners as at such date.
“Owners’ Financier” means any financier providing financing or refinancing facilities to the Owners or any affiliate of the Owners in respect of the Owners’ purchase and/or lease of the Vessel to the Charterers under the terms of the Leasing Documents.
“Owners’ Surveyor” shall have the meaning as defined under Clause 41.9. “Party” means a party to this Charter, namely the Owners or the Charterers. “Payment Date” shall have the meaning as defined under Clause 36.536.6.
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“Permitted Security Interest” means:
(a) |
any Security Interest created by a Security Document or a Financial Instrument; |
(b) |
any lien for unpaid master’s and crew’s wages in accordance with the ordinary course of operation of the Vessel or in accordance with usual reputable maritime practice; |
(c) |
any lien for salvage; |
(d) |
any lien for master’s disbursements incurred in the ordinary course of trading; |
(e) |
any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of the Vessel provided such liens do not secure amounts more than thirty (30) days overdue; |
(f) |
any Security Interest created in favour of a plaintiff or defendant in any action of the court or tribunal before whom such action is brought as security for costs and expenses where the Owners are prosecuting or defending such action in good faith by appropriate steps; and |
(g) |
Security Interests arising by operation of law in respect of taxes which are not overdue or for payment of taxes which are overdue for payment but which are being contested by the Owners or the Charterers in good faith by appropriate steps and in respect of which adequate reserves have been made, |
provided that the foregoing have not arisen due to the default or omission of any Obligor.
“Poseidon Principles” means the financial industry framework for assessing and disclosing the climate alignment of ship finance portfolios published in June 2019 as the same may be amended or replaced to reflect changes in applicable law or regulation or the introduction of or changes to mandatory requirements of the International Maritime Organisation from time to time.
“Potential Termination Event” means, an event or circumstance specified in Clause 47 (Termination Event) which would with the giving of any notice, the lapse of time, and/or a determination of the Owners, constitute a Termination Event.
“Prepositioning Date” shall have the same meaning as defined under the MOA.
“Prohibited Countries” means countries or territories whose government is the target of Sanctions or that is subject to comprehensive country-wide or territory-wide Sanctions (currently and, in any case, as long as the Sanctions remain in place, as regards United States Sanctions, Cuba, Syria, Iran, North Korea, Crimea and Venezuela), including , in particular but not limited to or pursuant to the US’s Office of Foreign Assets Asset Control of the U.SUS Department of Treasury (“OFAC”).
“Prohibited Person” means any person who is the subject of Sanctions (whether designated by name or by reason of being included in a class of persons to whom the applicable Sanctions apply in accordance with their terms).
“Published Rate” means Term SOFR for three (3) months.
64
“Published Rate Replacement Event” means, in relation to a Published Rate:
(a) |
the methodology, formula or other means of determining that Published Rate has, in the opinion of the Owners and the Charterers, materially changed; |
(b) |
(i) |
(I) |
the administrator of that Published Rate or its supervisor publicly announces that such administrator is insolvent; or |
(II) |
information is published in an order, decree, notice, petition or filing, howsoever described, of or filed with a court, tribunal, exchange, regulatory authority or similar administrative, regulatory or judicial body which reasonably confirms that the administrator of that Published Rate is insolvent, |
provided that, in each case, at that time, there is no successor administrator to continue to provide that Published Rate;
(ii) |
the administrator of that Published Rate publicly announces that it has ceased or will cease, to provide that Published Rate permanently or indefinitely and, at that time, there is no successor administrator to continue to provide that Published Rate; |
(iii) |
the supervisor of the administrator of that Published Rate publicly announces that such Published Rate has been or will be permanently or indefinitely continued; or |
(iv) |
the administrator of that Published Rate or its supervisor publicly announces that that Published Rate may no longer be used; or |
(c) |
the administrator of that Published Rate (or the administrator of an interest rate which is a constituent element of that Published Rate) determines that that Published Rate should be calculated in accordance with its reduced submissions or other contingency or fallback policies or arrangements and either: |
(i) |
the circumstance(s) or event(s) leading to such determination are not (in the opinion of the Owners and the Charterers) temporary; or |
(ii) |
that Published Rate is calculated in accordance with any such policy or arrangement for a period no less than a time period approved by the Owners and the Charterers; or |
(d) |
in the opinion of the Owners and the Charterers, that Published Rate is otherwise no longer appropriate for the purposes of calculating interest under this Charter. |
“Purchase Option” means the purchase option referred to in Clause 55.1.
“Purchase Option Date” shall have the meaning ascribed thereto in Clause 55.2.
“Purchase Option Notice” shall have the meaning ascribed thereto in Clause 55.2.
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“Purchase Option Price” means, in respect of any Purchase Option Date:
(a) |
if If the Purchase Option Date falls on or after the first (1st) anniversary of the Commencement Reference Date but prior to the seventh (7th) anniversary of the Commencement Reference Date, the aggregate of: |
(i) |
the Owners’ Costs prevailing as at the relevant Purchase Option Date; |
(ii) |
the Relevant Fee (if appliable); |
(ii) |
(iii)any Charterhire accrued but unpaid as at the date of payment of the Purchase Option Price; |
(iii) |
(iv)any Breakfunding Costs including any Swap Costs; |
(iv) |
(v)any documented legal or other costs incurred by the Owners in connection with the exercise of the Purchase Option under Clause 55 (Purchase Option); and |
(v) |
(vi)aside from the amounts described under paragraphs paragraph (i) to (viv) above, any other moneys due and owing under the Leasing Documents at the relevant Purchase Option Date; |
(b) |
if the Purchase Option Date falls on or after the seventh (7th) anniversary of the Commencement Reference Date, the aggregate of: |
(i) |
the Amended Expiry Owners’ Costs; |
(ii) |
any Charterhire accrued but unpaid as at the date of payment of the Purchase Option Price; |
(iii) |
any documented legal or other costs incurred by the Owners in connection with the exercise of the Purchase Option under Clause 55 (Purchase Option); and |
(iv) |
aside from the amounts described under paragraphs (i) to (iii) above, any other moneys due and owing under the Leasing Documents at the relevant Purchase Option Date. |
“Purchase Price” has the meaning given to it in the MOA.
“QEL” means any agreement (entered or, as the context may require, to be entered into) between the Owners, the Owners’ Financiers (if applicable), the Charterers and (if applicable) any sub-charterer.
“Quotation Day” means, in relation to any Hire Period, two (2) US Government Securities Business Days before the first day of that Hire Period unless market practice differs in the relevant syndicated loan market in which case the Quotation Day will be determined by the Owners in accordance with that market practice (and if quotations would normally be given on more than one day, the Quotation Day will be the last of those days).
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“Reference Rate” means, in relation to a Hire Period:
(a) |
the applicable Term SOFR for three (3) months as of 5:00pm New York time on the Quotation Day for dollars; or |
(b) |
as otherwise determined pursuant to Clause 37 (Changes to Interest Rate, Default Interest), |
and if, in either case, (i) prior to (and including) the Reference Date, the aggregate of that rate and the Credit Adjustment Spread is less than zero, the Reference Rate shall be deemed to be such a rate that the aggregate of the Reference Rate and the Credit Adjustment Spread is zero and (ii) following (and excluding) the Reference Date, if that rate is less than zero, the Reference Rate shall be deemed to be zero.
“Relevant Jurisdiction” means, in relation to an Obligor:
(a) |
its Original Jurisdiction; |
(b) |
any jurisdiction where any property owned by it and charged under a Leasing Document is situated; |
(c) |
any jurisdiction where it conducts its business; or |
(d) |
any jurisdiction whose laws govern the perfection of any of the Security Documents entered into by it creating a Security Interest. |
“Relevant Nominating Body” means any applicable central bank, regulator or other supervisory authority or a group of them, or any working group or committee sponsored or chaired by, or constituted at the request of, any of them or the Financial Stability Board.
“Relevant Fee” means, in relation to the Vessel, the amount set out corresponding to the relevant Purchase Option Date below:
“Replacement Reference Rate” means a reference rate which is:
67
(a) |
formally designated, nominated or recommended as the replacement for a Published Rate by: |
(i) |
the administrator of that Published Rate (provided that the market or economic reality that such benchmark rate measures is the same as that measured by that Published Rate); or |
(ii) |
any Relevant Nominating Body, |
and if replacements have, at the relevant time, been formally designated, nominated or recommended under both paragraphs, the “Replacement Reference Rate” will be the replacement under sub-paragraph (ii) above;
(b) |
in the opinion of the Owners and the Charterers, generally accepted in the international or any relevant domestic syndicated loan markets as the appropriate successor or alternative to that Published Rate; or |
(c) |
in the opinion of the Owners and the Charterers, an appropriate successor or alternative to a Published Rate. |
“Requisition Compensation” includes all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (a) of the definition of “Total Loss”.
“Sanctions” means any sanctions (including US “secondary sanctions”), embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment, exporting, financing or making assets available (or other activities similar to or connected with any of the foregoing):
(a) |
imposed by law or regulation of the United Kingdom, the Council of the European Union, the United Nations or its Security Council, the People’s Republic of China, the Special Administrative Region of Hong Kong or the United States of America; or |
(b) |
otherwise imposed by any law or regulation which are applicable to and/or binding on any Obligor. |
“Sanctions Advisory” means the Sanctions Advisory for the Maritime Industry, Energy and Metals Sectors, and Related Communities issued May 14, 2020 by the US Department of the Treasury, Department of State and Coast Guard, as may be amended or supplemented, and any similar future advisory.
“Sanctioned Ship” means a ship which is the subject of Sanctions.
“Security Documents” means:
(a) |
the Account Charge; |
(b) |
the General Assignment; |
(c) |
the Shares Security; |
(d) |
the Builder’s Warranties Assignment; |
68
(e) |
each Manager’s Undertaking; and |
(f) |
any other security document conferring any Security Interest in respect of the obligations of the Charterers under or in connection with this Charter. |
“Security Interest” means:
(a) |
a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or any other security interest of any kind; |
(b) |
the security rights of a plaintiff under an action in rem; or |
(c) |
any other right which confers on a creditor or potential creditor a right or privilege to receive the amount actually or contingently due to it ahead of the general unsecured creditors of the debtor concerned; however this paragraph (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution. |
“Shareholder” means the Guarantor.
“Shares Security” means a first priority charge/pledge over the shares of the Charterers executed or to be executed by the Shareholder in favour of the Owners.
“Shipbuilding Contract” means the shipbuilding contract dated 28 September 2020 entered into between the Head Sellers (as defined in the MOA) and the Builder (in its capacity as seller) for the construction and purchase of the Vessel as may from time to time be amended, supplemented.
“Shipbuilding Contract Price” means the contract price to be paid by the Head Sellers (as defined in the MOA) to the Builder under the Shipbuilding Contract.
“SOFR” means the secured overnight financing rate (SOFR) administered by the Federal Reserve Bank of New York (or any other person which takes over the administration of that rate) published (before any correction, recalculation or republication by the administrator) by the Federal Reserve Bank of New York (or any other person which takes over the publication of that rate).
“Statement of Compliance” means a Statement of Compliance related to fuel oil consumption pursuant to regulations 6.6 and 6.7 of Annex VI.
“Subsidiary” means a subsidiary within the meaning of section 1159 of the UK Companies Act 2006.
“Swap Costs” means any amount payable by the Owners or documented costs incurred by the Owners (after netting out any gains) as a result of the termination or close-out of any Treasury Transaction entered into in connection with the Leasing Documents.
“Termination Date” has the meaning given to it under Clause 47.2.
“Termination Event” means any event described in Clause 47 (Termination Events).
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“Termination Fee” means one point five per cent. (1.50%) of the Owners’ Costs as at the relevant date.
“Termination Notice” has the meaning given to it under Clause 47.2.
“Term SOFR” means the term SOFR reference rate administered by CME Group Benchmark Administration Limited (or any other person which takes over the administration of that rate) for the relevant period published (before any correction, recalculation or republication by that administrator) by CME Group Benchmark Administration Limited (or any other person which takes over the administration of that rate).
“Termination Sum” means, in respect of any date (such date being referred to as the “Relevant Date” for the purposes of this definition only), the aggregate of (without double counting amounts that may be included in more than one sub-paragraph below):
(a) |
the Owners’ Costs prevailing as at the Relevant Date; |
(b) |
any Variable Charterhire accrued and unpaid as at the date of payment of the Termination Sum; |
(c) |
the Termination Fee; |
(d) |
any Breakfunding Costs including any Swap Costs; |
(e) |
any and all evidenced and documented direct costs, losses and liabilities incurred by the Owners as a result of the early termination of the leasing under this Charter (including any losses based on estimated market charter rates provided by an Approved Valuer of re-chartering the Vessel to another party other than the Charterers for the period up until the natural expiry of the Charter Period) including but not limited to any legal costs, any agency or broker fees incurred in attempting to re-charter or otherwise dispose of the Vessel; |
(f) |
any and all documented costs, losses and liabilities incurred by the Owners in locating, repossessing, recovering, repositioning, berthing, insuring and maintaining the Vessel and/or in collecting any payments due under this Charter and/or in obtaining the due performance of the obligations of the Charterers under this Charter or the other Leasing Documents; and |
(g) |
aside from the amounts described under paragraphs (a) to (f) above, any other moneys due and owing under the Leasing Documents at the Relevant Date including any default interest on amounts under (a) to (f) above. |
“Total Loss” means:
(a) |
any expropriation, confiscation, requisition (other than a requisition for hire) or acquisition of the Vessel, whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority; |
70
(b) |
any requisition for hire, arrest, condemnation, capture, seizure or detention of the Vessel (including any hijacking or theft but excluding any event specified in paragraph (a) of this definition) unless it is redelivered within thirty (30) days to the full control of the Owners or the Charterers; or |
(c) |
actual, constructive, compromised, agreed or arranged total loss of the Vessel. |
“Total Loss Date” means, in relation to the Total Loss of the Vessel:
(a) |
in the case of a Total Loss occurring under paragraph (a) of the definition of Total Loss, on the date on which the expropriation, confiscation, requisition or, as the case may be, the acquisition of the Vessel is completed by delivery of the Vessel to the relevant government or official authority or the person or persons claiming to be or to represent the relevant government or official authority; |
(b) |
in the case of a Total Loss occurring under paragraph (b) of the definition of Total Loss, the date falling on the expiration of such thirty (30) day period; |
(c) |
in the case of an actual loss of the Vessel, the date on which it occurred; and |
(d) |
in the case of a constructive, compromised, agreed or arranged total loss of the Vessel, the earliest of: |
(i) |
the date when the Vessel was last heard of; |
(ii) |
the date on which a notice of abandonment is given to the insurers; and |
(iii) |
the date of any compromise, arrangement or agreement made by or on behalf of the Charterers with the insurers in which the insurers agree to treat the Vessel as a Total Loss. |
“Total Loss Payment Date” means, following the occurrence of a Total Loss, the earlier of:
(a) |
the date falling ninety (90) days after the Total Loss Date or such later date as the Owners may agree; and |
(b) |
the date on which the Owners receive the Total Loss Proceeds. |
“Total Loss Proceeds” means the proceeds of any policy or contract of insurance or any Requisition Compensation in each case arising in respect of a Total Loss.
“Total Loss Termination Sum” means, in respect of any date (such date being referred to as the “Relevant Date” for the purposes of this definition only), the aggregate of (without double counting amounts that may be included in more than one sub-paragraph below):
(a)the Owners’ Costs prevailing Costsprevailing as at the Relevant Date;
(b)any Variable Charterhire accrued and unpaid as at the date of payment of the Termination Sum;
(c)any Breakfunding Costs including any Swap Costs;
71
(d) |
any and all evidenced and documented direct costs, losses and liabilities incurred by the Owners as a result of the early termination of the leasing under this Charter (including any losses based on estimated market charter rates provided by an Approved Valuer of re-chartering the Vessel to another party other than the Charterers for the period up until the natural expiry of the Charter Period) including but not limited to any legal costs, any agency or broker fees incurred in attempting to re-charter or otherwise dispose of the Vessel; |
(e) |
any and all documented costs, losses and liabilities incurred by the Owners in collecting any payments due under this Charter and/or in obtaining the due performance of the obligations of the Charterers under this Charter or the other Leasing Documents; and |
(f) |
aside from the amounts described under paragraphs (a) to (e) above, any other moneys due and owing under the Leasing Documents at the Relevant Date including any default interest on amounts under (a) to (e) above. |
“Treasury Transaction” means any derivative transaction entered into in connection with protection against or benefit from any fluctuation in price or rate.
“US” means the United States of America.
“US Government Securities Business Day” means any day other than:
(a) |
a Saturday or a Sunday; and |
(b) |
a day on which the Securities Industry and Financial Markets Association (or any successor organisation) recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in US Government securities. |
“US Tax Obligor” means:
(a) |
a person which is resident for tax purposes in the US; or |
(b) |
a person some or all of whose payments under the Leasing Documents are from sources within the US for US federal income tax purposes. |
“Variable Charterhire” shall have the meaning as defined under Clause 36.4(b36.5(b).
“Vessel” means the VLCC with hull number 3211 and registered or to be registered under the name of the Owners under the Flag State upon Delivery.
66.2 |
In this Charter: |
“agreed form” means, in relation to a document, such document in a form agreed in writing between the Owners and the Charterers;
“asset” includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;
72
“company” includes any partnership, joint venture and unincorporated association;
“consent” includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation;
“contingent liability” means a liability which is not certain to arise and/or the amount of which remains unascertained;
“control” over a particular company means the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:
(a) |
cast, or control the casting of, fifty one per cent. (51%) or more of the maximum number of votes that might be cast at a general meeting of such company; or |
(b) |
appoint or remove all, or the majority, of the directors or other equivalent officers of such company; or |
(c) |
give directions with respect to the operating and financial policies of such company with which the directors or other equivalent officers of such company are obliged to comply; |
“document” includes a deed; also a letter or fax or email;
“expense” means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;
“law” includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;
“legal or administrative action” means any legal proceeding or arbitration and any administrative or regulatory action or investigation;
“liability” includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;
“months” shall be construed in accordance with Clause 66.3;
“person” includes any company; any state, political sub-division of a state and local or municipal authority; and any international organisation;
“policy”, in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;
“protection and indemnity risks” means the usual risks covered by a protection and indemnity association which is a member of the International Group of Protection and Indemnity Clubs including pollution risks, extended passenger cover and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 6 of the International Hull Clauses (1/11/02 or 1/11/03), clause 8 of the Institute Time Clauses (Hulls)
73
(1/10/83) or clause 8 of the Institute Time Clauses (Hulls) (1/11/1995) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;
“regulation” includes any regulation, rule, official directive, request or guideline whether or not having the force of law of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation; and
“tax” includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine.
66.3 |
Meaning of “month” |
A period of one or more “months” ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (“the numerically corresponding day”), but:
(a) |
on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or |
(b) |
on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day; |
and “month” and “monthly” shall be construed accordingly.
66.4 |
In this Charter: |
(a) |
references to a Leasing Document or any other document being in the form of a particular appendix or to any document referred to in the recitals include references to that form with any modifications to that form which the Owners approve; |
(b) |
references to, or to a provision of, a Leasing Document or any other document are references to it as amended or supplemented, whether before the date of this Charter or otherwise; |
(c) |
references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Charter or otherwise; and |
(d) |
words denoting the singular number shall include the plural and vice versa. |
66.5 |
Headings |
In interpreting a Leasing Document or any provision of a Leasing Document, all clauses, sub- clauses and other headings in that and any other Leasing Document shall be entirely disregarded.
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EXECUTION PAGE
OWNERS
SIGNED BY)
for and on behalf of)
SEA 289 LEASING CO. LIMITED)
as attorney-in-fact)
in the presence of)
Witness’ signature:)
Witness’ name:)
Witness’ address:)
CHARTERERS
SIGNED BY)
for and on behalf of)
ARK MARINE S.A.
as attorney-in-fact)
in the presence of)
Witness’ signature:)
Witness’ name:)
Witness’ address:)
75
SCHEDULE 1
ACCEPTANCE CERTIFICATE
76
SCHEDULE 2
CONDITIONS PRECEDENT
77
EXECUTION PAGES
OWNER |
|
|
|
EXECUTED AND DELIVERED AS A DEED |
) |
by Wan Tsz Chun |
) /s/ Wan Tsz Chun |
|
) |
Its Attorney-in-Fact |
) |
for and on behalf of |
) |
SEA 289 LEASING CO. LIMITED |
) |
in the presence of: |
) |
|
|
Witness’ signature: |
) /s/ CHAN Wai Yan Regina |
Witness’ name: CHAN Wai Yan Regina |
) |
Witness’ address: Suites 4610-4619, |
) |
Jardine House, 1 Connaught Place, Hong Kong |
|
|
|
|
|
CHARTERER |
|
|
|
EXECUTED AND DELIVERED AS A DEED |
) |
by Thaleia Kalafati |
) /s/ Thaleia Kalafati |
attorney-in-fact |
) |
for and on behalf of |
) |
ARK MARINE S.A. |
) |
in the presence of: |
) |
|
|
Witness’ signature: |
) /s/ Eirini Chaidemenou |
Witness’ name: Eirini Chaidemenou |
) |
Witness’ address: Attorney at Law |
) |
Athens Bar Association |
|
Athens - Greece |
|
|
|
GUARANTOR AND SHAREHOLDER |
|
|
|
EXECUTED AND DELIVERED AS A DEED |
) |
|
|
by Thaleia Kalafati |
) /s/ Thaleia Kalafati |
attorney-in-fact |
) |
for and on behalf of |
) |
OKEANIS ECO TANKERS CORP. |
) |
in the presence of: |
) |
|
|
Witness’ signature: |
) /s/ Eirini Chaidemenou |
Witness’ name: Eirini Chaidemenou |
) |
Witness’ address: Attorney at Law |
) |
Athens Bar Association |
|
Athens - Greece |
|
9
EXECUTION VERSION
Dated 21 March 2022
OKEANIS ECO TANKERS CORP.
as Guarantor
– and –
SEA 289 LEASING CO. LIMITED
as Owner
GUARANTEE
relating to a Bareboat Charter of one (1) very large crude carrier
with Builder’s Hull No. 3211
INDEX
Clause |
Page |
|
1 |
INTERPRETATION |
1 |
2 |
GUARANTEE |
2 |
3 |
LIABILITY AS PRINCIPAL AND INDEPENDENT DEBTOR |
3 |
4 |
EXPENSES |
3 |
5 |
ADJUSTMENT OF TRANSACTIONS |
4 |
6 |
PAYMENTS |
4 |
7 |
INTEREST |
4 |
8 |
SUBORDINATION |
4 |
9 |
ENFORCEMENT |
5 |
10 |
REPRESENTATIONS AND WARRANTIES |
5 |
11 |
UNDERTAKINGS |
7 |
12 |
JUDGMENTS AND CURRENCY INDEMNITY |
11 |
13 |
SET-OFF |
11 |
14 |
SUPPLEMENTAL |
12 |
15 |
ASSIGNMENT |
13 |
16 |
NOTICES |
14 |
17 |
INVALIDITY OF LEASING DOCUMENTS |
14 |
18 |
INCORPORATION OF BAREBOAT CHARTER PROVISIONS |
15 |
19 |
GOVERNING LAW AND JURISDICTION |
15 |
SCHEDULE 1 |
16 |
|
FORM OF COMPLIANCE CERTIFICATE |
16 |
|
EXECUTION PAGE |
17 |
EXECUTION VERSION
THIS GUARANTEE is made on 21 March 2022
BETWEEN
(1) |
OKEANIS ECO TANKERS CORP., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with registration number 96382 and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the “Guarantor”); and |
(2) |
SEA 289 LEASING CO. LIMITED, a company incorporated under the laws of Hong Kong with registration number 3089456 whose registered office is at 27/F, Three Exchange Square, 8 Connaught Place Central, Hong Kong (the “Owner”, which expression includes its successors and assigns). |
BACKGROUND
(A) |
By a bareboat charter dated 21 March 2022 (the “Bareboat Charter”) and made between (i) the Owner as owner and (ii) Ark Marine S.A. as charterer (the “Bareboat Charterer”), the Owner has agreed to bareboat charter the Vessel to the Bareboat Charterer pursuant to the terms and conditions contained therein. |
(B) |
The Guarantor is a shareholder of the Bareboat Charterer and holds 100 per cent of all of the issued shares in the Bareboat Charterer. |
(C) |
The execution and delivery to the Owner of this Guarantee is one of the conditions to the purchase of the Vessel by the Owner from the Bareboat Charterer in accordance with the MOA and the chartering of the Vessel by the Owner to the Bareboat Charterer under the Bareboat Charter. |
(D) |
This Guarantee is the Guarantee referred to in the Bareboat Charter. |
IT IS AGREED as follows:
1 |
INTERPRETATION |
1.1 |
Defined expressions. Words and expressions defined in the Bareboat Charter shall have the same meanings when used in this Guarantee unless the context otherwise requires. |
1.2 |
Construction of certain terms. In this Guarantee: |
“bankruptcy” includes a liquidation, receivership or administration and any form of suspension of payments, arrangement with creditors or reorganisation under any corporate or insolvency law of any country.
“Code” means the United States Internal Revenue Code of 1986, as amended.
“Compliance Certificate” means a certificate in the form set out in Schedule 1 (Form of Compliance Certificate) or in any other form agreed between the Guarantor and the Owner.
“control” over a particular company means the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:
(a) |
cast, or control the casting of, more than 51 per cent, of the maximum number of votes that might be cast at a general meeting of such company; |
(b) |
appoint or remove all, or the majority, of the directors or other equivalent officers of such company; or |
(c) |
give directions with respect to the operating and financial policies of such company with which the directors or other equivalent officers of such company are obliged to comply; |
“FATCA” means:
(a) |
sections 1471 to 1474 of the Code or any associated regulations; |
(b) |
any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or |
(c) |
any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the IRS, the US government or any governmental or taxation authority in any other jurisdiction. |
“FATCA Deduction” means a deduction or withholding from a payment under the Bareboat Charter or the Leasing Documents required by or under FATCA.
“FATCA Exempt Party” means a Relevant Party that is entitled under FATCA to receive payments free from any FATCA Deduction.
“Okeanis Group” means the Guarantor and each of the Guarantor’s Subsidiaries (whether directly or indirectly owner) from time to time.
“Party” means a party to this Guarantee.
“Subsidiary” means a subsidiary within the meaning of section 1159 of the Companies Act 2006.
“US Tax Obligor” means:
(a) |
a Party which is resident for tax purposes in the United States of America; or |
(b) |
a Party some or all of whose payments under this Guarantee, the Bareboat Charter are from sources within the United States for US federal income tax purposes. |
1.3References to “Bareboat Charterer”.References to the Bareboat Charterer under this Guarantee shall, for the avoidance of doubt, include reference to the Bareboat Charterer in its various capacities under the Leasing Documents.
1.4 |
Application of construction and interpretation provisions of Bareboat Charter |
Clauses 66.2 to 66.5 of the Bareboat Charter apply, with any necessary modifications, to this Guarantee.
2 |
GUARANTEE |
2.1 |
Guarantee and indemnity. The Guarantor unconditionally and irrevocably: |
(a) |
guarantees the due payment of all amounts payable by the Bareboat Charterer under or in connection with the Leasing Documents; |
2
(b) |
guarantees the punctual performance by the Bareboat Charterer of all the Bareboat Charterer’s obligations under or in connection with the Leasing Documents; |
(c) |
undertakes to pay to the Owner, immediately on the Owner’s demand as if it was the principal obligor, any such amount which is not paid by the Bareboat Charterer when due and payable under or in connection with the Leasing Documents; and |
(d) |
undertakes to fully indemnify, as an independent and primary obligation, the Owner immediately on its demand in respect of all documented claims, expenses, liabilities, costs and losses which are made or brought against or incurred by the Owner as a result of or in connection with any obligation or liability of the Bareboat Charterer under the Leasing Documents and/or any obligation or liability guaranteed by the Guarantor being or becoming unenforceable, invalid, void or illegal; and the amount recoverable under this indemnity shall be equal to the amount which the Owner would otherwise have been entitled to recover under the applicable Leasing Documents. |
2.2 |
No limit on number of demands. The Owner may serve more than one (1) demand under Clause 2.1. |
2.3 |
Guarantee of whole amount. |
This Guarantee shall be construed and take effect as a guarantee of all amounts due to the Owner under the Leasing Documents (or any of them).
3 |
LIABILITY AS PRINCIPAL AND INDEPENDENT DEBTOR |
3.1 |
Principal and independent debtor. The Guarantor shall be liable under this Guarantee as a principal and independent debtor and accordingly it shall not have, as regards this Guarantee, any of the rights or defences of a surety. |
3.2 |
Waiver of rights and defences. Without limiting the generality of Clause 3.1, the Guarantor shall neither be discharged by, nor have any claim against the Owner in respect of: |
(a) |
any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor or any other person; |
(b) |
any amendment or supplement being made to any Leasing Document (however fundamental and whether or not more onerous); |
(c) |
any arrangement or concession (including a rescheduling or acceptance of partial payments) relating to, or affecting, any Leasing Document; |
(d) |
any release or loss (even though negligent) of any right or Security Interest created by any Leasing Document; |
(e) |
any failure (even though negligent) promptly or properly to exercise or enforce any such right or Security Interest, including a failure to realise for its full market value an asset covered by such a Security Interest; |
(f) |
any Leasing Document being or later becoming void, unenforceable, illegal or invalid or otherwise defective in whole or in part for any reason, including a neglect to register it or |
(g) |
any insolvency or similar proceedings. |
4 |
EXPENSES |
4.1 |
Costs of preservation of rights, enforcement etc. The Guarantor shall pay to the Owner on its demand the amount of all documented expenses (including, without limitation, out of |
3
pocket expenses and legal fees) incurred by the Owner in connection with the enforcement of, or the preservation of any rights under this Guarantee or any Leasing Document, including any advice, claim or proceedings relating to this Guarantee or any Leasing Document.
4.2 |
Fees and expenses payable under Leasing Documents. Clause 4.1 is without prejudice to the Guarantor’s liabilities in respect of the Bareboat Charterer’s obligations under any Leasing Document to which it is a party. |
5 |
ADJUSTMENT OF TRANSACTIONS |
5.1 |
Reinstatement of obligation to pay. The Guarantor shall pay to the Owner on its demand any amount which the Owner is required, or agrees, to pay pursuant to any claim by, or settlement with, a trustee in bankruptcy of the Bareboat Charterer on the ground that the Bareboat Charter (as the case may be), or a payment by the Bareboat Charterer or other Obligor, was invalid or on any similar ground. |
6 |
PAYMENTS |
6.1 |
Method of payments. Any amount due under this Guarantee shall be paid: |
(a) |
in immediately available funds; |
(b) |
to such account as the Owner may from time to time notify to the Guarantor; |
(c) |
without any form of set-off, cross-claim or condition; and |
(d) |
free and clear of any tax deduction or withholding for or on account of any tax payable except a tax deduction or withholding which the Guarantor is required by law to make. |
6.2 |
Grossing-up for taxes. If the Guarantor is required by law to make a tax deduction, the amount due to the Owner shall be increased by the amount necessary to ensure that the Owner receives and retains a net amount which, after the tax deduction, is equal to the full amount that it would otherwise have received. |
7 |
INTEREST |
7.1 |
Accrual of interest. Any amount due under this Guarantee shall carry interest after the date on which the Owner demands payment of it until it is actually paid, unless interest on that same amount also accrues under the relevant Leasing Document. |
7.2 |
Calculation of interest. Interest under this Guarantee shall be calculated and accrue in the same way as interest under clause 37 of the Bareboat Charter, as applicable. |
7.3 |
Guarantee extends to interest payable under Leasing Documents. For the avoidance of doubt, it is confirmed that this Guarantee covers all interest payable under the Leasing Documents. |
8 |
SUBORDINATION |
8.1 |
Subordination of rights of Guarantor. All rights which the Guarantor at any time has (whether in respect of this Guarantee or any other transaction) against the Bareboat Charterer or any other Obligor or their respective assets shall be fully subordinated to the rights of the Owner under the Leasing Documents and, in particular, the Guarantor shall not: |
(a) |
claim, or in a bankruptcy of the Bareboat Charterer or any Obligor prove for, any amount payable to the Guarantor by the Bareboat Charterer or any Obligor, whether in respect of this Guarantee or any other transaction; |
4
(b) |
take or enforce any Security Interest for any such amount; |
(c) |
claim to set-off any such amount against any amount payable by the Guarantor to the Bareboat Charterer or any Obligor; or |
(d) |
claim any subrogation or other right in respect of any Leasing Document or any sum received or recovered by the Owner under the Leasing Documents. |
9 |
ENFORCEMENT |
9.1 |
No requirement to commence proceedings against Bareboat Charterer. The Owner will not need to commence any proceedings under, or enforce any Security Interest created by any Leasing Document before claiming or commencing proceedings under this Guarantee. |
9.2 |
Conclusive evidence of certain matters. However, as against the Guarantor: |
(a) |
any judgment or order of a court in any Relevant Jurisdiction in connection with any Leasing Document; and |
(b) |
any statement or admission of the Bareboat Charterer in connection with any Leasing Document, |
shall be binding and conclusive as to all matters of fact and law to which it relates.
10 |
REPRESENTATIONS AND WARRANTIES |
10.1 |
General. The Guarantor represents and warrants to the Owner, as at the date of this Guarantee and throughout the Charter Period, as follows. |
10.2 |
Status. |
(a) |
The Guarantor is duly incorporated and validly existing and in good standing under the laws of the Republic of the Marshall Islands. |
(b) |
The Guarantor is not a US Tax Obligor. |
10.3 |
Corporate power. |
(a) |
The Guarantor has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it: |
(i) |
to execute this Guarantee or any other Security Document to which it is a party; and |
(ii) |
to make all the payments contemplated by, and to comply with, this Guarantee or any other Security Document to which it is a party. |
(b) |
For the avoidance of doubt, the Guarantor executes this Guarantee in furtherance of its corporate purposes pursuant to s.16 of the Marshall Islands’ Business Corporations Act, as amended, and no authorisation by vote of its shareholders is (or shall be) required for it to execute this Guarantee. |
10.4 |
Consents in force. All the consents referred to in Clause 10.3 remain in force and nothing has occurred which makes any of them liable to revocation. |
10.5 |
Legal validity. This Guarantee and the Security Documents to which it is a party constitute the Guarantor’s legal, valid and binding obligations enforceable against the Guarantor in accordance with their terms subject to any relevant insolvency laws affecting creditors’ rights generally. |
5
10.6 |
No third party Security Interests. Without limiting the generality of Clause 10.5, at the time of the execution and delivery of this Guarantee and any other Security Document to which the Guarantor is a party: |
(a) |
the Guarantor will have the right to create all the Security Interests which that Security Document purports to create; and |
(b) |
no third party will have any Security Interest (except for Permitted Security Interests) or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates. |
10.7 |
No conflicts. The execution by the Guarantor of this Guarantee and any other Security Document to which it is a party and its compliance with this Guarantee and such Security Documents will not involve or lead to a contravention of: |
(a) |
any law or regulation; or |
(b) |
the constitutional documents of the Guarantor; or |
(c) |
any contractual or other obligation or restriction which is binding on the Guarantor or any of its assets. |
10.8 |
No withholding taxes. All payments which the Guarantor is liable to make under this Guarantee and the Security Documents to which it is a party may be made without deduction or withholding for or on account of any tax payable under any law of any Relevant Jurisdiction. |
10.9 |
No default. No Termination Event or Potential Termination Event has occurred and is continuing. |
10.10 |
Information. All information which has been provided in writing by or on behalf of the Guarantor to the Owner in connection with any Security Document satisfies the requirements of Clause 11.2; all audited and unaudited accounts which have been so provided satisfies the requirements of Clause 11.4; and there has been no Material Adverse Effect in the financial position or state of affairs of the Guarantor from that disclosed in the latest of those accounts. |
10.11 |
No litigation. No legal or administrative action involving the Guarantor has been commenced or taken which has or is reasonably likely to have a Material Adverse Effect. |
10.12 |
Restricted Persons. Neither the Guarantor, nor any of its directors, officers or employees or any person acting on its behalf is a Restricted Person or otherwise a target of applicable Sanctions. |
10.13 |
Sanctions. None of the Guarantor nor its directors, officers or employees are in breach of applicable Sanctions laws, have been or are currently being investigated on compliance with Sanctions, have received notice of or are aware of any claim, action, suit, proceeding or investigation against them with respect of Sanctions and none of them have taken any action to evade the application of Sanctions. |
10.14 |
Anti-Money Laundering Laws. The Guarantor is not in breach of any Anti-Money Laundering Laws and has instituted and maintained systems, controls, policies and procedures designed to: |
(i) |
prevent and detect incidences of bribery and corruption, money laundering and terrorism financing; and |
(ii) |
promote and achieve compliance with Anti-Money Laundering Laws including, but not limited to, ensuring thorough and accurate books and records, and utilization of best |
6
efforts to ensure that Affiliates acting on behalf of the Guarantor shall act in compliance with Anti-Money Laundering Laws.
10.15 |
Taxes paid. The Guarantor has paid all taxes applicable to, or imposed on or in relation to the Guarantor or its business. |
10.16 |
Provisions of Leasing Documents. The Guarantor is fully familiar with and agrees with all provisions of the Leasing Documents to which the Bareboat Charterer is a party. |
10.17 |
No waiver. No oral or written statement has been made to the Guarantor by or on behalf of the Owner or any other person which could be construed as a waiver of any provisions of this Guarantee or a statement of intention not to enforce this Guarantee in accordance with its terms. |
11 |
UNDERTAKINGS |
11.1 |
General. The Guarantor undertakes with the Owner to comply with the following provisions of this Clause 11 at all times during the Charter Period, except as the Owner may otherwise permit. |
11.2 |
Information provided to be accurate. All financial and other information which is provided in writing by or on behalf of the Guarantor under or in connection with this Guarantee will be true and not misleading and will not omit any material fact or consideration. |
11.3 |
Provision of financial statements. The Guarantor will send to the Owner: |
(a) |
as soon as possible, but in no event later than one hundred and eighty (180) days after the end of each financial year of the Guarantor, the audited annual combined financial reports of the Guarantor for that financial year; |
(b) |
as soon as possible, but in no event later than ninety (90) days after the end of each half-year, the consolidated semi-annual management accounts of the Guarantor certified as to their correctness by at least one officer of the Guarantor; and |
(c) |
such financial and other information as the Owner or its financiers may reasonably request. |
11.4 |
Form of financial statements. All accounts (audited and unaudited) delivered under Clause 11.3 will: |
(a) |
be prepared in accordance with all applicable laws and generally accepted accounting principles consistently applied; |
(b) |
give a true and fair view of the state of affairs of the Guarantor and the Okeanis Group at the date of those accounts and of their profit for the period to which those accounts relate; |
(c) |
fully disclose or provide for all significant liabilities of the Guarantor and the Okeanis Group; and |
(d) |
if not in the English language, be accompanied by an English translation duly certified as to its correctness. |
11.5 |
Shareholder and creditor notices. The Guarantor will send the Owner, at the same time as they are despatched, copies of all material communications in relation to any Leasing Document. |
11.6 |
Consents. The Guarantor will maintain in force and promptly obtain or renew, and will, upon the request of the Owner, promptly send certified copies to the Owner of, all consents required: |
7
(a) |
for the Guarantor to perform its obligations under this Guarantee and any other Security Document to which it is a party; and |
(b) |
for the validity or enforceability of this Guarantee and any other Security Document to which it is a party, |
and the Guarantor will comply with the terms of all such consents.
11.7 |
Maintenance of Security Interests. The Guarantor will: |
(a) |
at its own cost, do all that it reasonably can to ensure that any Security Document to which it is a party validly creates the obligations and the Security Interests which it purports to create; and |
(b) |
without limiting the generality of paragraph (a) above, at its own cost, promptly register, file, record or enrol any Security Document to which it is a party with any court or authority in all Relevant Jurisdictions, pay any stamp, registration or similar tax in all Relevant Jurisdictions in respect of any Security Document to which it is a party, give any notice or take any other step which may be or become necessary or desirable for any Security Document to which it is a party to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates. |
11.8 |
Notification of litigation. The Guarantor will provide the Owner with details of any legal, arbitral or administrative action which are current, threatened or pending against the Guarantor as soon as such action is instituted. |
11.9 |
Notification of default. The Guarantor will notify the Owner as soon as the Guarantor becomes aware of: |
(a) |
the occurrence of a Termination Event or a Potential Termination Event; or |
(b) |
any matter which indicates that a Termination Event or a Potential Termination Event may have occurred, |
and will thereafter keep the Owner fully up-to-date with all developments.
11.10 |
Maintenance of status. The Guarantor will maintain its separate corporate existence as a corporation and remain in good standing under the laws of the Republic of the Marshall Islands. |
11.11 |
Negative Pledge. The Guarantor shall procure that the Bareboat Charterer will not create or permit to arise any Security Interest over any asset present or future except for the Permitted Security Interests. |
11.12 |
No disposal of assets, change of business. The Guarantor shall not, and shall procure that the Bareboat Charterer will not: |
(a) |
transfer, lease or otherwise dispose of all or a substantial part of its assets, whether by one transaction or a number of transactions, whether related or not except in the usual course of its trading operations; or |
(b) |
make any substantial change to the nature of its business or its corporate structure from that existing at the date of this Guarantee, provided that no breach of this clause will occur if (a) and (b) occurs in relation to the Guarantor but such event does not cause a Material Adverse Effect. |
11.13 |
No payment of dividend. The Guarantor shall not make or pay any dividend or other distribution of its share capital (including in relation to any preferred shares) following the |
8
occurrence of a Termination Event which is continuing or where the payment of such dividend or distribution of such share capital will result in the occurrence of a Potential Termination Event or Termination Event.
11.14 |
No merger etc. The Guarantor shall procure that the Bareboat Charterer will not, enter into any form of merger, sub-division, amalgamation, demerger, reorganisation or corporate reconstruction. |
11.15 |
Maintenance of ownership of Bareboat Charterer. The Guarantor shall remain the direct owner of one hundred percent (100%) of the shares in the Charterers. |
11.16 |
Sanctions. The Guarantor shall comply with all applicable laws and regulations in respect of Sanctions, and in particular, the Guarantor shall effect and maintain a sanctions compliance policy to ensure compliance with all such laws and regulations implemented from time to time. |
11.17Anti-Money Laundering Laws.The Guarantor shall conduct its business in compliance with Anti-Money Laundering Laws and maintain systems, controls, policies and procedures designed to promote and achieve ongoing compliance with Anti-Money Laundering Laws.
11.18 |
FATCA. The Guarantor shall not, and shall procure that the Bareboat Charterer will not become a US Tax Obligor. |
11.19 |
Financial covenants. The Guarantor shall ensure that, at all times: |
(a) |
the Guarantor’s Leverage Ratio shall not exceed seventy five per cent (75%). |
(b) |
it shall maintain Liquid Assets (free of any Security and inclusive of any balances in time deposits) in an amount of not less than the higher of (i) $10,000,000 on an aggregate basis and (ii) $750,000 per Fleet Vessel; |
(c) |
its Consolidated Net Worth shall not be less than $100,000,000. |
For the purposes of this Clause 11.19;
“Accounting Information” means the annual audited combined financial accounts and the unaudited semi-annual combined financial accounts to be provided to the Owner in accordance with the Bareboat Charter.
“Adjusted Total Assets” means, at any date, the amount which would be shown as “Total Assets” under the heading “ASSETS” in the balance sheet of the most recent Accounting Information as adjusted for the aggregate difference (positive or negative) between the book value (being the fixed asset value as per the most recent Accounting Information) and the Fleet Market Value minus the Liquid Assets.
“Consolidated Net Worth” means the aggregate of the Consolidated Market Value Adjusted Total Assets less the Consolidated Total Liabilities.
“Consolidated Net Worth” means the aggregate of the Consolidated Market Value Adjusted Total Assets less the Consolidated Total Liabilities.
“Consolidated Current Assets” means the aggregate of the cash and marketable securities, trade and other receivables from persons other than a member of the Group realisable 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, in each case in relation to the Group, as stated in the then most recent and relevant Accounting Information.
9
“Consolidated Market Value Adjusted Tangible Fixed Assets” means the Fleet Market Value plus the book value (less depreciation computed in accordance with the IFRS consistently applied) on a consolidated basis of all other tangible fixed assets of the Group (excluding the Fleet Vessels), as stated in the then most recent and relevant Accounting Information.
“Consolidated Market Value Adjusted Total Assets” means, at any relevant time, the aggregate of Consolidated Current Assets and Consolidated Market Value Adjusted Tangible Fixed Assets.
“Consolidated Total Liabilities” means the aggregate (as of the date of calculation) of all obligations of the Guarantor then outstanding for the payment or repayment of money as stated under “Total Liabilities” in the financial statements or, as the case may be, management accounts, then most recently required to be delivered pursuant to this Charter including, without limitation:
(a) |
any amounts payable by the Guarantor under leases or similar arrangements over their respective periods; |
(b) |
any credit to the Guarantor from a supplier of goods or under any instalment purchase or other similar arrangement; |
(c) |
the aggregate amount then outstanding of liabilities and obligations of third parties to the extent that they are guaranteed by the Guarantor; |
(d) |
any contingent liabilities (including any taxes or other payments under dispute or arbitration) which have been or should be recorded in the notes to the Guarantor’s financial statements or, as the case may be, management accounts; and |
(e)any deferred tax liabilities.
“Fleet Market Value” means the aggregate Fair Market Value of the Fleet Vessels.
“Leverage Ratio” means, at any date, the ratio (expressed as a percentage) of:
(a) |
the Total Liabilities minus Liquid Assets; and |
(b) |
the Adjusted Total Assets. |
“Liquid Assets” means, at any date, the amount of cash and cash equivalents which would be shown as “Cash and Cash Equivalents” under the heading “ASSETS” in the balance sheet of the most recent Accounting Information.
“Total Liabilities” means, at any date, the amount which would be shown as “Total current liabilities” plus the amount which would be shown as “Total non-current liabilities”, both under the heading “LIABILITIES AND SHAREHOLDERS’EQUITY” in the balance sheet of the most recent Accounting Information (which, for the avoidance of doubt, shall include potential leasing liabilities and shall only exclude shareholder loans when subordinated, non-interest bearing and not callable at will (minimum one year notice)).
11.20 |
Compliance Certificate. |
(a) |
The Guarantor shall supply to the Owner, a Compliance Certificate setting out (in reasonable detail) computations as to compliance with Clause 11.19 (financial covenants) together with: |
10
(i) |
the annual consolidated financial reports of the Guarantor to be provided to the Owner in accordance with Clause 11.3(a); and |
(ii) |
semi-annual consolidated accounts of the Guarantor to be provided to the Owner in accordance with Clause 11.3(b); and |
(b) |
Each Compliance Certificate shall be signed by an officer of the Guarantor as appropriate. |
11.21 |
Listing. |
The Guarantor shall remain listed on the Oslo Stock Exchange (Oslo Børs) and shall procure that the Charterers will make the necessary prepayments or provide additional security under Clause 50.1(i) of the Bareboat Charter should it cease to be listed on the Oslo Stock Exchange (Oslo Børs).
12 |
JUDGMENTS AND CURRENCY INDEMNITY |
12.1 |
Judgments relating to Leasing Documents. This Guarantee shall cover any amount payable by the Bareboat Charterer under or in connection with any judgment relating to any Leasing Document. |
12.2 |
Currency indemnity. If any sum due from the Guarantor to the Owner under this Guarantee or under any order or judgment relating to this Guarantee has to be converted from the currency in which this Guarantee provided for the sum to be paid (the “Contractual Currency”) into another currency (the “Payment Currency”) for the purpose of: |
(a) |
making or lodging any claim or proof against the Guarantor, whether in its liquidation, any arrangement involving it or otherwise; or |
(b) |
obtaining an order or judgment from any court or other tribunal; or |
(c) |
enforcing any such order or judgment; |
the Guarantor shall indemnify the Owner against the loss arising when the amount of the payment actually received by the Owner is converted at the available rate of exchange into the Contractual Currency.
In this Clause 12.2, the “available rate of exchange” means the rate at which the Owner is able, at the opening of business (Beijing time) on the Business Day after it receives the sum concerned, to purchase the Contractual Currency with the Payment Currency.
13 |
SET-OFF |
13.1 |
Application of credit balances. The Owner or any affiliate of the Owner may without prior notice: |
(a) |
apply any balance (whether or not then due) which at any time stands to the credit of any account in the name of the Guarantor at any office in any country of the Owner or its affiliate in or towards satisfaction of any sum then due from the Guarantor to the Owner or its affiliate under this Guarantee and any other Security Document; and |
(b) |
for that purpose: |
(i) |
break, or alter the maturity of, all or any part of a deposit of the Guarantor; |
(ii) |
convert or translate all or any part of a deposit or other credit balance into Dollars; and |
11
(iii) |
enter into any other transaction or make any entry with regard to the credit balance which the Owner or its affiliate considers appropriate. |
13.2 |
Existing rights unaffected. The Owner or its affiliate shall not be obliged to exercise any of its rights under Clause 13.1; and those rights shall be without prejudice and in addition to any right of set-off, combination of accounts, charge, lien or other right or remedy to which the Owner or its affiliate is entitled (whether under the general law or any document). |
14 |
SUPPLEMENTAL |
14.1 |
Continuing guarantee. This Guarantee shall remain in force as a continuing security at all times from the date of this Guarantee up to the last day of the Charter Period. |
14.2 |
Rights cumulative, non-exclusive. The Owner’s rights under and in connection with this Guarantee are cumulative, may be exercised as often as appears expedient and shall not be taken to exclude or limit any right or remedy conferred by law. |
14.3 |
No impairment of rights under Guarantee. If the Owner omits to exercise, delays in exercising or invalidly exercises any of its rights under this Guarantee, that shall not impair that or any other right of the Owner under this Guarantee. |
14.4 |
Severability of provisions. If any provision of this Guarantee is or subsequently becomes void, illegal, unenforceable or otherwise invalid, that shall not affect the validity, legality or enforceability of its other provisions. |
14.5 |
Guarantee not affected by other security. This Guarantee shall not impair, nor be impaired by, any other guarantee, any Security Interest or any right of set-off or netting or to combine accounts which the Owner may now or later hold in connection with the Leasing Documents. |
14.6 |
Guarantor bound by Leasing Documents. The Guarantor agrees with the Owner to be bound by all provisions of each Leasing Document in the same way as if those provisions had been set out (with any necessary modifications) in this Guarantee. |
14.7 |
Applicability of provisions of Guarantee to other Security Interests. Any Security Interest which the Guarantor creates (whether at the time at which it signs this Guarantee or at any later time) to secure any liability under this Guarantee shall be a principal and independent security, and Clauses 3 and 17 shall, with any necessary modifications, apply to it, notwithstanding that the document creating the Security Interest neither describes it as a principal or independent security nor includes provisions similar to Clauses 3 and 17. |
14.8 |
Applicability of provisions of Guarantee to other rights. Clauses 3 and 17 shall also apply to any right of set-off or netting or to combine accounts which the Guarantor creates by an agreement entered into at the time of this Guarantee or at any later time (notwithstanding that the agreement does not include provisions similar to Clauses 3 and 17), being an agreement referring to this Guarantee. |
14.9 |
Third party rights. A person who is not a party to this Guarantee has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Guarantee. |
14.10 |
Counterparts. This Guarantee may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Guarantee. |
14.11 |
FATCA Information. |
(a) |
Subject to paragraph (c) below, each Party shall, on the date of this Guarantee, and thereafter within ten (10) Business Days of a reasonable request by the other Party: |
12
(i) |
confirm to the other Party whether it is: |
(A) |
a FATCA Exempt Party; or |
(B) |
not a FATCA Exempt Party; and |
(ii) |
supply to the requesting party (with a copy to all other Relevant Parties) such other form or forms (including IRS Form W-8 or Form W-9 or any successor or substitute form, as applicable) and any other documentation and other information relating to its status under FATCA (including its applicable “pass thru percentage” or other information required under FATCA or other official guidance including intergovernmental agreements) as the requesting party reasonably requests for the purposes of the requesting party’s compliance with FATCA. |
(b) |
If a Relevant Party confirms to any other Relevant Party that it is a FATCA Exempt Party or provides an IRD Form W-8 or W-9 to showing that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, or that the said form provided has ceased to be correct or valid, that Party shall notify the other Party reasonably promptly. |
(c) |
Nothing in this Clause shall oblige any Relevant Party to do anything which would or, in its reasonable opinion, might constitute a breach of any law or regulation, any policy of that party, any fiduciary duty or any duty of confidentiality, or to disclose any confidential information (including, without limitation, its tax returns and calculations); provided, however, that nothing in this paragraph shall excuse any Relevant Party from providing a true, complete and correct IRS Form W-8 or W-9 (or any successor or substitute form where applicable). Any information provided on such IRS Form W-8 or W-9 (or any successor or substitute forms) shall not be treated as confidential information of such party for purposes of this paragraph. |
(d) |
If a Relevant Party fails to confirm its status or to supply forms, documentation or other information requested in accordance with the provisions of this Guarantee or the provided information is insufficient under FATCA, then: |
(i) |
if that Party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such Party shall be treated for the purposes of this Guarantee and the Leasing Documents as if it is not a FATCA Exempt Party; and |
(ii) |
if that Party failed to confirm its applicable passthru percentage then such Party shall be treated for the purposes of the Leasing Documents (and payments made thereunder) as if its applicable passthru percentage is 100%, |
until (in each case) such time as the Party in question provides sufficient confirmation, forms, documentation or other information to establish the relevant facts.
15 |
ASSIGNMENT |
15.1 |
Assignment by Charterer. The Charterer shall not assign or transfer (whether by novation or otherwise) its rights and/or obligations under this Guarantee. |
15.2 |
Assignment by Owner. The Owner may assign any of its rights and transfer any of its obligations under this Guarantee to the same extent as it may transfer the same under the other Leasing Documents to which it is a party subject always to the provisions of the Bareboat Charter. |
13
16 |
NOTICES |
16.1 |
Notices. Any notice, certificate, demand or other communication to be served, given made or sent under or in relation to this Guarantee shall be in English and in writing and (without prejudice to any other valid method or giving making or sending the same) shall be deemed sufficiently given or made or sent if sent by registered post or by email to the following respective addresses: |
(A) |
to the Owner: |
c/o CMB Financial Leasing Co., Ltd Attention: |
(B) |
to the Guarantor: |
c/o OET CHARTERING INC. Attention: |
or, if a party hereto changes its address, to such other address as that party may notify to the other.
16.2 |
Validity of demands. A demand under this Guarantee shall be valid notwithstanding that it is served: |
(a) |
on the date on which the amount to which it relates is payable by the Bareboat Charterer under a Leasing Document; and |
(b) |
at the same time as the service of the Termination Notice referred to under clause 47.2 of the Bareboat Charter; |
and a demand under this Guarantee should specifically refer to each amount payable under or in connection with a Leasing Document.
17 |
INVALIDITY OF LEASING DOCUMENTS |
17.1 |
Invalidity of Leasing Documents. In the event of: |
(a) |
any Leasing Document now being or later becoming, with immediate or retrospective effect, void, illegal, unenforceable or otherwise invalid for any other reason whatsoever, whether of a similar kind or not; or |
(b) |
without limiting the scope of paragraph (a), a bankruptcy or insolvency of any Obligor, the introduction of any law or any other matter resulting in any Obligor being discharged from liability under any Leasing Document, or the Bareboat Charter ceasing to operate (for example, by interest ceasing to accrue), |
this Guarantee shall cover any amount which would have been or become payable under or in connection with a Leasing Document if such Leasing Document had been and remained entirely valid, legal and enforceable, or the Bareboat Charterer had not suffered bankruptcy or insolvency, or any combination of such events or circumstances, as the case may be, and
14
the Bareboat Charterer had remained fully liable under it for obligations whether invalidly incurred or validly incurred but subsequently retrospectively invalidated; and references in this Guarantee to amounts payable by the Bareboat Charterer under or in connection with a Leasing Document shall include references to any amount which would have so been or become payable as aforesaid.
18 |
INCORPORATION OF BAREBOAT CHARTER PROVISIONS |
18.1 |
The following provisions of the Bareboat Charter apply to this Guarantee as if they were expressly incorporated therein with any necessary modifications: |
Clause 45 (No waiver of rights);
Clause 58 (No set-off or tax deduction);
Clause 61 (FATCA); and
Clause 63 (Confidentiality).
18.2 |
Clause 18.1 is without prejudice to the application to this Guarantee of any provision of the Bareboat Charter which, by its terms, applies or relates to this Guarantee. |
19 |
GOVERNING LAW AND JURISDICTION |
19.1 |
This Guarantee and any non-contractual obligations arising out of or in connection with it are governed by English law. |
19.2 |
Any dispute arising out of or in connection with this Guarantee shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause 19. The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. |
19.3 |
The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the 14 days specified, the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if he had been appointed by agreement. Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. |
19.4 |
In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. Where the reference is to three arbitrators the procedure for making appointments shall be in accordance with the procedure for full arbitration stated above. |
THIS GUARANTEE has been executed and delivered as a deed on the date stated at the beginning of this Guarantee.
15
SCHEDULE 1
FORM OF COMPLIANCE CERTIFICATE
16
EXECUTION PAGE
GUARANTOR |
|
|
|
EXECUTED AND DELIVERED AS A DEED |
) |
by |
)Thaleia Kalafati |
as an attorney-in-fact |
)/s/ Thaleia Kalafati |
for and on behalf of |
) |
OKEANIS ECO TANKERS CORP. |
) |
In the presence of: |
)/s/ Eirini Chaidemenou |
|
)Attorney at Law |
Witness’ signature: |
)Athens Bar Association |
Witness’ name: |
)Eirini Chaidemenou |
Witness’ address: |
)Athens - Greece, +306976172522 |
|
|
OWNER |
|
|
|
SIGNED, SEALED AND DELIVERED AS A DEED |
) |
by |
)Wong Wai Sum |
as an attorney-in-fact |
)/s/ Wong Wai Sum |
for and on behalf of |
) |
SEA 289 LEASING CO. LIMITED |
) |
In the presence of: |
) |
|
) |
Witness’ signature: |
)/s/ Sandrea Mar |
Witness’ name: |
)Sandrea Mar |
Witness’ address: |
)Suites 4610-4619 Jardine House |
|
1 Connaught Place, Hong Kong |
17
Exhibit 4.10
1 |
Shipbroker N/A |
2 |
Place and date 21 March 2022 |
||
3 |
Owners/Place of business (Cl. 1) SEA 290 LEASING CO. LIMITED, a company incorporated under the laws of Hong Kong with limited liability whose registered office is at27/F, Three Exchange Square, 8 Connaught Place, Hong Kong |
4 |
Bareboat Charterers/Place of business (Cl. 1) THETA NAVIGATION LTD, a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with Entity Number 109610 and with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 |
||
5 |
Vessel’s name, call sign and flag (Cl. 1 and 3) Vessel name: Hull No. 3212 Call Sign: 9920760 Flag: Marshall Islands or otherwise agreed between Parties |
||||
6 |
Type of Vessel VLCC |
7 |
GT/NT 154,500/106,657 |
||
8 |
When/Where built 2022 Hyundai Heavy Industries, South Korea |
9 |
Total DWT (abt.) in metric tons on summer freeboard 300,000 |
||
10 |
Classification Society (Cl. 3) DNV |
11 |
Date of last special survey by the Vessel’s classification society N/A |
||
12 |
Further particulars of Vessel (also indicate minimum number of months’ validity of class certificates agreed acc. to Cl. 3) N/A |
||||
13 |
Port or Place of delivery (Cl. 3) Back to back with MOA delivery |
14 |
Time for delivery (Cl. 4) See Clause 34, back to back with MOA delivery |
15 |
Cancelling date (Cl. 5) See definition of “Cancelling Date” and Clause 33 |
16 |
Port or Place of redelivery (Cl. 15) See Clauses 41 and 42 |
17 |
. No. of months’ validity of trading and class certificates upon redelivery (Cl. 15) Six (6) months |
||
18 |
Running days’ notice if other than stated in Cl. 4 |
19 |
Frequency of dry-docking (Cl. 10(g)) In accordance with Approved Classification Society or requirements of Flag State |
||
20 |
Trading limits (Cl. 6) Worldwide within International Navigating Limits and excluding any war listed area declared by the Joint War Committee |
||||
21 |
Charter period (Cl. 2) See Clause 32 |
22 |
Charter hire (Cl. 11) See Clause 36 |
||
23 |
New class and other safety requirements (state percentage of Vessel’s insurance value acc. to Box 29)(Cl. 10(a)(ii)) N/A |
||||
24 |
Rate of interest payable acc. to Cl. 11 (f) and, if applicable, acc. to PART IV See Clause 37 |
25 |
Currency and method of payment (Cl. 11) Dollars/Bank transfer |
||
26 |
Place of payment; also state beneficiary and bank account (Cl. 11) See Clause 36 |
27 |
Bank guarantee/bond (sum and place) (Cl. 24) (optional) N/A |
||
28 |
Mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) applies state date of Financial Instrument and name of Mortgagee(s)/Place of business) (Cl. 12) N/A |
29 |
Insurance (hull and machinery and war risks) (state value acc. to Cl. 13(f) or, if applicable, acc. to Cl. 14(k)) (also state if Cl. 14 applies) See Clause 39 |
||
30 |
Additional insurance cover, if any, for Owners’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) See Clause 39 |
31 |
Additional insurance cover, if any, for Charterers’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) See Clause 39 |
||
32 |
Latent defects (only to be filled in if period other than stated in Cl. 3) N/A |
33 |
Brokerage commission and to whom payable (Cl. 27) N/A |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will contribute an infringement of BIMCO's copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
34 |
Grace period (state number of clear banking days) (Cl. 28) N/A |
35 |
Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed Place of Arbitration must be stated (Cl. 30) (c) Clause 30 not applicable. See Clause 65 |
36 |
War cancellation (indicate countries agreed) (Cl. 26(f)) N/A |
||
37 |
Newbuilding Vessel (indicate with “yes” or “no” whether PART III applies) (optional) Yes, Part III does not apply |
39 |
Name and place of Builders (only to be filled in if PART III applies) N/A |
39 |
Vessel’s Yard Building No. (only to be filled in if PART III applies) N/A |
40 |
Date of Building Contract (only to be filled in if PART III applies) N/A |
41 |
Liquidated damages and costs shall accrue to (state party acc. to Cl. 1) a)N/A b)N/A c)N/A |
||
42 |
Hire/Purchase agreement (indicate with “yes” or “no” whether PART IV applies) (optional) No, Part IV does not apply |
43 |
Bareboat Charter Registry (indicate with “yes” or “no” whether PART V applies) (optional) No |
44 |
Flag and Country of the Bareboat Charter Registry (only to be filled in if PART V applies) N/A |
45 |
Country of the Underlying Registry (only to be filled in if PART V applies) N/A |
46 |
Number of additional clauses covering special provisions, if agreed Clause 32 to Clause 66 |
PREAMBLE - It Is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter if expressly agreed and stated in Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it Is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further. It is further agreed that the Additional Clauses as indicated in Box 46 above, appended to and integrated in this Charter supplement Part I and II of this Charter. In the event of a conflict, the Additional Clauses shall prevail.
|
Signature (Owners) |
Wong Wai Sum |
|
Signature (Charterers) |
Thaleia Kalafati |
|
|
|
|
|
|
|
/s/ Wong Wai Sum |
Attorney in-Fact |
|
/s/ Thaleia Kalafati |
Attorney in-Fact |
|
|
|
|
|
|
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will contribute an infringement of BIMCO's copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
11. Definitions
2In this Charter, the following terms shall have the
3meanings hereby assigned to them:
4“The Owners” shall mean the party identified in Box 3;
5“The Charterers” shall mean the party identified in Box 4;
6“The Vessel” shall mean the vessel named in Box 5 and
7with particulars as stated in Boxes 6 to 12.
8 |
“Financial Instrument” has the meaning ascribed to it means the mortgage, deed of |
9 |
in Clause 66.1.covenant or other such financial security instrument as |
10annexed to this Charter and stated in Box 28.
112 Charter Period
12In consideration of the hire detailed in Box 22,
13the Owners have agreed to let and the Charterers have
14agreed to hire the Vessel for the period stated in Box 21
15(“The Charter Period”). See also Clause 32.
163. Delivery
17(not applicable when Part III applies, as indicated in Box 37)
18(a) The Owners shall before and at the time of delivery
19exercise due diligence to make the Vessel seaworthy
20And in every respect ready in hull, machinery and
21equipment for service under this Charter.
22The Vessel shall be delivered by the Owners and taken
23over by the Charterers at the port or place indicated in
24Box 13. in such ready safe berth as the Charterers may
25direct.
26(b) The Vessel shall be properly documented on
27delivery in accordance with the laws of the flag State
28indicated in Box 5 and the requirements of the
29classification society stated in Box 10. The Vessel upon
30delivery shall have her survey cycles up to date and
31trading and class certificates valid for at least the number
32of months agreed in Box 12.
33(c) The delivery of the Vessel by the Owners and the
34taking over of the Vessel by the Charterers shall
35constitute a full performance by the Owners of all the
36Owners’ obligations under this Clause 3, and thereafter
37the Charterers shall not be entitled to make or assert
38any claim against the Owners on account of any
39conditions, representations or warranties expressed or
40implied with respect to the Vessel. but the Owners shall
41be liable for the cost of but not the time for repairs or
42renewals occasioned by latent defects in the Vessel,
43her machinery or appurtenances, existing at the time of
44delivery under this Charter, provided such defects have
45manifested themselves within twelve (12) months after
46delivery unless otherwise provided in Box 32.
474. Time for Delivery (See Clause 34)
48(not applicable when Part III applies, as indicated in Box 37)
49The Vessel shall not be delivered before the date
50indicated in Box 14 without the Charterers’ consent and
51the Owners shall exercise due diligence to deliver the
52Vessel not later than the date indicated in Box 15.
53Unless otherwise agreed in Box 18, the Owners shall
54give the Charterers not less than thirty (30) running days’
55preliminary and not less than fourteen (14) running days’
56definite notice of the date on which the Vessel is
57expected to be ready for delivery.
58 |
The Owners shall keep the Charterers closely advised |
59of possible changes in the Vessel’s position.
605. Cancelling (See Clause 33)
61(not applicable when Part III applies, as indicated in Box 37)
62(a) Should the Vessel not be delivered latest by the
63cancelling date indicated in Box 15, the Charterers shall
64have the option of cancelling this Charter by giving the
65Owners notice of cancellation within thirty-six (36)
66running hours after the cancelling date stated in Box
6715, failing which this Charter shall remain in full force
68and effect.
69(b) If it appears that the Vessel will be delayed beyond
70the cancelling date, the Owners may, as soon as they
71are in a position to state with reasonable certainty the
72day on which the Vessel should be ready, give notice
73thereof to the Charterers asking whether they will
74exercise their option of cancelling, and the option must
75then be declared within one hundred and sixty-eight
76(168) running hours of the receipt by the Charterers of
77such notice or within thirty-six (36) running hours after
78the cancelling date, whichever is the earlier. If the
79Charterers do not then exercise their option of cancelling,
80the seventh day after the readiness date stated in the
81Owners’ notice shall be substituted for the cancelling
82date indicated in Box 15 for the purpose of this Clause 5.
83(c) Cancellation under this Clause 5 shall be without
84prejudice to any claim the Charterers may otherwise
85have on the Owners under this Charter.
866. Trading Restrictions (See also Clauses 39.9(d) and 53.1(c))
87The Vessel shall be employed in lawful trades for the
88carriage of suitable lawful merchandise within the trading
89limits indicated in Box 20.
90The Charterers undertake not to employ the Vessel or
91suffer the Vessel to be employed otherwise than in
92conformity with the terms of the contracts of insurance
93(including any warranties expressed or implied therein)
94without first obtaining the consent of the insurers to such
95employment and complying with such requirements as
96to extra premium or otherwise as the insurers may
97prescribe.
98The Charterers also undertake not to employ the Vessel
99or suffer her employment in any trade or business which
100is forbidden by the law of any country to which the Vessel
101may sail or is otherwise illicit or in carrying illicit or
102prohibited goods or in any manner whatsoever which
103may render her liable to condemnation, destruction,
104seizure or confiscation.
105Notwithstanding any other provisions contained in this
106Charter it is agreed that nuclear fuels or radioactive
107products or waste are specifically excluded from the
108cargo permitted to be loaded or carried under this
109Charter. This exclusion does not apply to radio-isotopes
110used or intended to be used for any industrial,
111commercial, agricultural, medical or scientific purposes
112provided the Owners’ prior approval has been obtained
113to loading thereof.
114 |
7. Surveys on Delivery and Redelivery (See Clauses 41.8 and 41.9) |
115(not applicable when Part III applies, as indicated in Box 37)
116The Owners and Charterers shall each appoint
117surveyors for the purpose of determining and agreeing 118in writing the condition of the Vessel at the time of
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will contribute an infringement of BIMCO's copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
119delivery and redelivery hereunder (if applicable). The Owners shall
120bear all expenses of the On-hire Survey including loss
121of time, if any, and the Charterers shall bear all expenses
122of the Off-hire Survey including loss of time, if any, at
123the daily equivalent to the rate of hire or pro rata thereof.
1248. Inspection (See Clause 54)
125The Owners shall have the right at any time after giving
126reasonable notice to the Charterers to inspect or survey
127the Vessel or instruct a duly authorised surveyor to carry
128out such survey on their behalf:-
129(a) to ascertain the condition of the Vessel and satisfy
130themselves that the Vessel is being properly repaired
131and maintained. The costs and fees for such inspection
132or survey shall be paid by the Owners unless the Vessel
133is found to require repairs or maintenance in order to
134achieve the condition so provided;
135(b) in dry-dock if the Charterers have not dry-docked
136Her in accordance with Clause 10(g). The costs and fees
137for such inspection or survey shall be paid by the
138Charterers; and
139(c) for any other commercial reason they consider
140necessary (provided it does not unduly interfere with
141the commercial operation of the Vessel). The costs and
142fees for such inspection and survey shall be paid by the
143Owners.
144All time used in respect of inspection, survey or repairs
145shall be for the Charterers’ account and form part of the
146Charter Period.
147The Charterers shall also permit the Owners to inspect
148the Vessel’s log books whenever requested and shall
149whenever required by the Owners furnish them with full
150information regarding any casualties or other accidents
151or damage to the Vessel.
1529. Inventories, Oil and Stores
153A complete inventory of the Vessel’s entire equipment,
154outfit including spare parts, appliances and of all
155consumable stores on board the Vessel shall be made
156by the Charterers in conjunction with the Owners on
157delivery and again on redelivery of the Vessel. The
158Charterers and the Owners, respectively, shall at the
159time of delivery and redelivery take over and pay for all
160bunkers, lubricating oil, unbroached provisions, paints,
161ropes and other consumable stores (excluding spare
162parts) in the said Vessel at the then current market prices
163at the ports of delivery and redelivery, respectively. The
164Charterers shall ensure that all spare parts listed in the
165inventory and used during the Charter Period are
166replaced at their expense prior to redelivery of the
167Vessel.
16810. Maintenance and Operation
169(a)(i)Maintenance and Repairs - During the Charter
170Period the Vessel shall be in the full possession
171and at the absolute disposal for all purposes of the
172Charterers and under their complete control in
173every respect. The Charterers shall maintain the
174Vessel, her machinery, boilers, appurtenances and
175spare parts in a good state of repair, in efficient
176operating condition and in accordance with good
177commercial maintenance practice and, except as
178provided for in Clause 14(l), if applicable, at their
179own expense they shall at all times keep the
180 |
Vessel’s Classification Class fully up to date with the Classification |
181Society indicated in Box 10 and maintain all other
182necessary certificates in force at all times.
183(ii) New Class and Other Safety Requirements - In the
184event of any improvement, structural changes or
185new equipment becoming necessary for the
186continued operation of the Vessel by reason of new
187 |
class requirements or by compulsory legislation, the costs of compliance shall be for the Charterers’ account. |
188costing (excluding the Charterers’ loss of time)
189more than the percentage stated in Box 23, or if
190Box 23 is left blank, 5 per cent. of the Vessel’s
191insurance value as stated in Box 29, then the
192extent, if any, to which the rate of hire shall be varied
193and the ratio in which the cost of compliance shall
194be shared between the parties concerned in order
195to achieve a reasonable distribution thereof as
196between the Owners and the Charterers having
197regard, inter alia, to the length of the period
198remaining under this Charter shall, in the absence
199of agreement, be referred to the dispute
200resolution 200 method agreed in Clause 30.
201(iii) Financial Security - The Charterers shall maintain
202financial security or responsibility in respect of third
203party liabilities as required by any government,
204including federal, state or municipal or other division
205or authority thereof, to enable the Vessel, without
206penalty or charge, lawfully to enter, remain at, or
207leave any port, place, territorial or contiguous
208waters of any country, state or municipality in
209performance of this Charter without any delay. This
210obligation shall apply whether or not such
211requirements have been lawfully imposed by such
212government or division or authority thereof.
213The Charterers shall make and maintain all arrange-
214ments by bond or otherwise as may be necessary to
215satisfy such requirements at the Charterers’ sole
216expense and the Charterers shall indemnify the Owners
217against all consequences whatsoever (including loss of
218time) for any failure or inability to do so.
219(b) Operation of the Vessel - The Charterers shall at
220their own expense and by their own procurement man,
221victual, navigate, operate, supply, fuel and, whenever
222required, repair the Vessel during the Charter Period
223and they shall pay all charges and expenses of every
224kind and nature whatsoever incidental to their use and
225operation of the Vessel under this Charter, including
226annual flag State fees of the Flag State and any foreign general
227municipality and/or state taxes. The Master, officers
228and crew of the Vessel shall be the servants of the Charterers
229for all purposes whatsoever, even if for any reason
230appointed by the Owners.
231Charterers shall comply with the regulations regarding
232officers and crew in force in the country of the Vessel’s
233flag or any other applicable law.
234(c) The Charterers shall keep the Owners and the
235mortgagee(s) advised of the intended employment,
236planned dry-docking and major repairs of the Vessel,
237as reasonably required.
238(d) Flag and Name of Vessel – During the Charter 239Period, the Charterers shall have the liberty to paint the
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will contribute an infringement of BIMCO's copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
240Vessel in their own colours, install and display their
241funnel insignia and fly their own house flag. The
242Charterers shall also have the liberty, with the Owners’
243consent, which shall not be unreasonably withheld or delayed, to
244change the flag and/or the name of the Vessel during
245 |
the Charter Period (with all fees, costs and expenses arising in relation thereto for the Charterers’ account). Painting and re-painting, instalment |
246and re-instalment, registration and re-registration, if
247required by the Owners, shall be at the Charterers’
248expense and time.
249 |
(e) Changes to the Vessel – See Clause 53.1(k). Subject to Clause 10(a)(ii), |
250the Charterers shall make no structural changes in the
251Vessel or changes in the machinery, boilers, appurten-
252ances or spare parts thereof without in each instance
253first securing the Owners’ approval thereof. If the Owners
254so agree, the Charterers shall, if the Owners so require,
255restore the Vessel to its former condition before the
256termination of this Charter.
257(f) Use of the Vessel’s Outfit, Equipment and
258Appliances - The Charterers shall have the use of all
259outfit, equipment, and appliances on board the Vessel
260at the time of delivery, provided the same or their
261substantial equivalent shall be returned to the Owners
262on redelivery in the same good order and condition as
263when received, ordinary wear and tear excepted. The
264Charterers shall from time to time during the Charter
265 |
Period replace, renew or substitute such items of equipment as shall be so |
266damaged or worn as to be unfit for use. The Charterers
267are to procure that all repairs to or replacement of any
268damaged, worn or lost parts or equipment be effected
269in such manner (both as regards workmanship and
270quality of materials) as not to diminish the value of the
271 |
Vessel provided that the Vessel’s value not to be diminished if the repairs or replacement are effected in accordance with the Classification Society and/or the respective makers’ recommendations. Title of any equipment so replaced, renewed or substituted shall vest in and remain with the Owners. The Charterers have the right to fit additional |
272equipment at their expense and risk but the Charterers
273shall remove such equipment at the end of the period if
274 |
requested by the Owners. See also Clause 53.1(k). Any equipment including radio |
275equipment on hire on the Vessel at time of delivery shall
276be kept and maintained by the Charterers and the
277Charterers shall assume the obligations and liabilities
278of the Owners under any lease contracts in connection
279therewith and shall reimburse the Owners for all
280expenses incurred in connection therewith, also for any
281new equipment required in order to comply with radio
282regulations.
283(g) Periodical Dry-Docking - The Charterers shall dry-
284dock the Vessel and clean and paint her underwater
285parts whenever the same may be necessary, but not
286less than once during the period stated in Box 19 or, if
287Box 19 has been left blank, every sixty (60) calendar
288months after delivery or such other period as may be
289required by the Classification Society or flag State.
29011. Hire (See Clause 36)
291(a) The Charterers shall pay hire due to the Owners
292punctually in accordance with the terms of this Charter
293in respect of which time shall be of the essence.
294(b) The Charterers shall pay to the Owners for the hire
295of the Vessel a lump sum in the amount indicated in
296Box 22 which shall be payable not later than every thirty
297(30) running days in advance, the first lump sum being
298payable on the date and hour of the Vessel’s delivery to
299the Charterers. Hire shall be paid continuously
300throughout the Charter Period.
301(c) Payment of hire shall be made in cash without
302discount in the currency and in the manner indicated in
303Box 25 and at the place mentioned in Box 26.
304(d) Final payment of hire, if for a period of less than
305thirty (30) running days, shall be calculated proportionally
306according to the number of days and hours remaining
307before redelivery and advance payment to be effected
308accordingly.
309(e) Should the Vessel be lost or missing, hire shall
310cease from the date and time when she was lost or last
311heard of. The date upon which the Vessel is to be treated
312as lost or missing shall be ten (10) days after the Vessel
313was last reported or when the Vessel is posted as
314missing by Lloyd’s, whichever occurs first. Any hire paid
315in advance to be adjusted accordingly.
316(f) Any delay in payment of hire shall entitle the
317Owners to interest at the rate per annum as agreed
318in Box 24. If Box 24 has not been filled in, the three months
319Interbank offered rate in London (LIBOR or its successor)
320for the currency stated in Box 25, as quoted by the British
321Bankers’ Association (BBA) on the date when the hire
322fell due, increased by 2 per cent., shall apply.
323(g) Payment of interest due under sub-clause 11(f)
324shall be made within seven (7) running days of the date
325of the Owners’ invoice specifying the amount payable
326or, in the absence of an invoice, at the time of the next
327hire payment date.
32812. Mortgage (See Clause 62)
329(only to apply if Box 28 has been appropriately filled in)
330*)(a) The Owners warrant that they have not effected
331any mortgage(s) of the Vessel and that they shall not
332effect any mortgage(s) without the prior consent of the
333Charterers, which shall not be unreasonably withheld.
334*)(b) The Vessel chartered under this Charter is financed
335by a mortgage according to the Financial Instrument.
336The Charterers undertake to comply, and provide such
337information and documents to enable the Owners to
338comply, with all such instructions or directions in regard
339to the employment, insurances, operation, repairs and
340maintenance of the Vessel as laid down in the Financial
341Instrument or as may be directed from time to time during
342the currency of the Charter by the mortgagee(s) in
343conformity with the Financial Instrument. The Charterers
344confirm that, for this purpose, they have acquainted
345themselves with all relevant terms, conditions and
346provisions of the Financial Instrument and agree to
347acknowledge this in writing in any form that may be
348required by the mortgagee(s). The Owners warrant that
349they have not effected any mortgage(s) other than stated
350in Box 28 and that they shall not agree to any 351amendment of the mortgage(s) referred to in Box 28 or
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will contribute an infringement of BIMCO's copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
352effect any other mortgage(s) without the prior consent
353of the Charterers, which shall not be unreasonably
354withheld.
355*) (Optional, Clauses 12(a) and 12(b) are alternatives;
356indicate alternative agreed in Box 28).
35713. Insurance and Repairs (See also Clause 39)
358(a) During the Charter Period the Vessel shall be kept
359 |
insured in accordance with Clause 39 andby the Charterers at their expense against hull |
360and machinery, war and Protection and Indemnity risks
361(and any risks against which it is compulsory to insure
362for the operation of the Vessel, including but not limited
to maintaining
363financial security in accordance with sub-clause
36410(a)(iii)) in such form as the Owners shall in writing
365approve, which approval shall not be un-reasonably
366withheld. Such insurances shall be arranged by the
367Charterers to protect the interests of both the Owners
368and the Charterers and the Owners’ Financiers
mortgagee(s) (if any), and
369The Charterers shall be at liberty to protect under such
370insurances the interests of any managers they may
371 |
appoint provided such manager has entered into a manager’s undertaking in form and substance acceptable to the Owners and the Owners’ Financiers (if any). Insurance policies shall cover the Owners, the mortgagee(s) (if any), and |
372the Charterers according to their respective interests.
373 |
Subject to the provisions of the agreed loss payable clauses, Financial Instrument, if |
374any, and the approval of the Owners and the insurers,
375the Charterers shall effect all insured repairs and shall
376undertake settlement and reimbursement from the
377insurers of all costs in connection with such repairs as
378well as insured charges, expenses and liabilities to the
379extent of coverage under the insurances herein provided
380for.
381The Charterers also to remain responsible for and to
382effect repairs and settlement of costs and expenses
383incurred thereby in respect of all other repairs not
384covered by the insurances and/or not exceeding any
385possible franchise(s) or deductibles provided for in the
386insurances.
387All time used for repairs under the provisions of sub-
388clause 13(a) and for repairs of latent defects according
389to Clause 3(c) above, including any deviation, shall be
390for the Charterers’ account.
391(b) If the conditions of the above insurances permit
392additional insurance to be placed by the parties, such
393cover shall be limited to the amount for each party set
394out in Box 30 and Box 31, respectively. The Owners or
395the Charterers as the case may be shall immediately
396furnish the other partyOwners with particulars of any additional
397insurance effected, including copies of any cover notes
398or policies and the written consent of the insurers of
399any such required insurance in any case where the
400consent of such insurers is necessary.
401(c) The Charterers shall upon the request of the
402Owners, provide information and promptly execute such
403documents as may be required to enable the Owners to
404comply with the insurance provisions of the Financial
405Instrument (if any).
406(d) Subject to the provisions of the Financial Instru-
407 |
ments and Clause 43, if any, should the Vessel become a Total Loss, an actual, |
408constructive, compromised or agreed total loss under
409the insurances required under sub-clause 13(a), all
410insurance payments for such loss shall be paid to the
411 |
Owners (or, if applicable, the Owners’ Financiers) in accordance with the agreed loss payable clauses. who shall distribute the moneys between the |
412 |
Owners and the Charterers according to their respective |
413 |
interests. The Charterers undertake to notify the Owners and the Owners’ Financiers, |
414and the mortgagee(s), if any, of any occurrences in
415consequence of which the Vessel is likely to become a
416tTotal lLoss. as defined in this Clause.
417(e) The Owners shall upon the request of the
418Charterers, promptly execute such documents as may
419be required to enable the Charterers to abandon the
420Vessel to insurers and claim a constructive total loss.
421(f) For the purpose of insurance coverage against hull
422and machinery and war risks under the provisions of
423sub-clause 13(a), the value of the Vessel is the sum
424indicated in Clause 39.Box 29.
42514. Insurance, Repairs and Classification
426(Optional, only to apply if expressly agreed and stated
427in Box 29, in which event Clause 13 shall be considered
428deleted).
429(a) During the Charter Period the Vessel shall be kept
430insured by the Owners at their expense against hull and
431machinery and war risks under the form of policy or
432policies attached hereto. The Owners and/or insurers
433shall not have any right of recovery or subrogation
434against the Charterers on account of loss of or any
435damage to the Vessel or her machinery or appurt-
436enances covered by such insurance, or on account of
437payments made to discharge claims against or liabilities
438of the Vessel or the Owners covered by such insurance.
439Insurance policies shall cover the Owners and the
440Charterers according to their respective interests.
441(b) During the Charter Period the Vessel shall be kept
442insured by the Charterers at their expense against
443Protection and Indemnity risks (and any risks against
444which it is compulsory to insure for the operation of the
445Vessel, including maintaining financial security in
446accordance with sub-clause 10(a)(iii)) in such form as
447the Owners shall in writing approve which approval shall
448not be unreasonably withheld.
449(c) In the event that any act or negligence of the
450Charterers shall vitiate any of the insurance herein
451provided, the Charterers shall pay to the Owners all
452losses and indemnify the Owners against all claims and
453demands which would otherwise have been covered by
454such insurance.
455(d) The Charterers shall, subject to the approval of the
456Owners or Owners’ Underwriters, effect all insured
457repairs, and the Charterers shall undertake settlement
458of all miscellaneous expenses in connection with such
459repairs as well as all insured charges, expenses and
460liabilities, to the extent of coverage under the insurances 461provided for under the provisions of sub-clause 14(a).
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will contribute an infringement of BIMCO's copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
462The Charterers to be secured reimbursement through
463the Owners’ Underwriters for such expenditures upon
464presentation of accounts.
465(e) The Charterers to remain responsible for and to
466effect repairs and settlement of costs and expenses
467incurred thereby in respect of all other repairs not
468covered by the insurances and/or not exceeding any
469possible franchise(s) or deductibles provided for in the
470insurances.
471(f) All time used for repairs under the provisions of
472sub-clauses 14(d) and 14(e) and for repairs of latent
473defects according to Clause 3 above, including any
474deviation, shall be for the Charterers’ account and shall
475form part of the Charter Period.
476The Owners shall not be responsible for any expenses
477as are incident to the use and operation of the Vessel
478for such time as may be required to make such repairs.
479(g) If the conditions of the above insurances permit
480additional insurance to be placed by the parties such
481cover shall be limited to the amount for each party set
482out in Box 30 and Box 31, respectively. The Owners or
483the Charterers as the case may be shall immediately
484furnish the other party with particulars of any additional
485insurance effected, including copies of any cover notes
486or policies and the written consent of the insurers of
487any such required insurance in any case where the
488consent of such insurers is necessary.
489(h) Should the Vessel become an actual, constructive,
490compromised or agreed total loss under the insurances
491required under sub-clause 14(a), all insurance payments
492for such loss shall be paid to the Owners, who shall
493distribute the moneys between themselves and the
494Charterers according to their respective interests.
495(i) If the Vessel becomes an actual, constructive,
496compromised or agreed total loss under the insurances
497arranged by the Owners in accordance with sub-clause
49814(a), this Charter shall terminate as of the date of such
499loss.
500(j) The Charterers shall upon the request of the
501Owners, promptly execute such documents as may be
502required to enable the Owners to abandon the Vessel
503to the insurers and claim a constructive total loss.
504(k) For the purpose of insurance coverage against hull
505and machinery and war risks under the provisions of
506sub-clause 14(a), the value of the Vessel is the sum
507indicated in Box 29.
508(l) Notwithstanding anything contained in sub-clause
50910(a), it is agreed that under the provisions of Clause
51014, if applicable, the Owners shall keep the Vessel’s
511Class fully up to date with the Classification Society
512indicated in Box 10 and maintain all other necessary
513certificates in force at all times.
51415. Redelivery (See Clauses 41 and 42)
515At the expiration of the Charter Period the Vessel shall
516be redelivered by the Charterers to the Owners at a
517safe and ice-free port or place as indicated in Box 16, in
518such ready safe berth as the Owners may direct. The
519Charterers shall give the Owners not less than thirty
520(30) running days’ preliminary notice of expected date,
522and not less than fourteen (14) running days’ definite
523notice of expected date and port or place of redelivery.
524Any changes thereafter in the Vessel’s position shall be
525notified immediately to the Owners.
526The Charterers warrant that they will not permit the
527Vessel to commence a voyage (including any preceding
528ballast voyage) which cannot reasonably be expected
529to be completed in time to allow redelivery of the Vessel
530within the Charter Period. Notwithstanding the above,
531should the Charterers fail to redeliver the Vessel within
532The Charter Period, the Charterers shall pay the daily
533equivalent to the rate of hire stated in Box 22 plus 10
534per cent. or to the market rate, whichever is the higher,
535for the number of days by which the Charter Period is
536exceeded. All other terms, conditions and provisions of
537this Charter shall continue to apply.
538Subject to the provisions of Clause 10, the Vessel shall
539be redelivered to the Owners in the same or as good
540structure, state, condition and class as that in which she
541was delivered, fair wear and tear not affecting class
542excepted.
543The Vessel upon redelivery shall have her survey cycles
544up to date and trading and class certificates valid for at
545least the number of months agreed in Box 17.
54616. Non-Lien
547The Charterers will not suffer, nor permit to be continued,
548any lien or encumbrance incurred by them or their
549agents, which might have priority over the title and
550interest of the Owners in the Vessel. The Charterers
551further agree to fasten to the Vessel in a conspicuous
552place and to keep so fastened during the Charter Period
553a notice reading as follows:
554“This Vessel is the property of (name of Owners). It is
555under charter to (name of Charterers) and by the terms
556of the Charter Party neither the Charterers nor the
557Master have any right, power or authority to create, incur
558or permit to be imposed on the Vessel any lien
559whatsoever.”
56017. Indemnity (See indemnity clauses in Additional Clauses)
561(a) The Charterers shall indemnify the Owners against
562any loss, damage or expense incurred by the Owners
563arising out of or in relation to the operation of the Vessel
564by the Charterers, and against any lien of whatsoever
565nature arising out of an event occurring during the
566Charter Period. If the Vessel be arrested or otherwise
567detained by reason of claims or liens arising out of her
568operation hereunder by the Charterers, the Charterers
569shall at their own expense take all reasonable steps to
570secure that within a reasonable time the Vessel is
571released, including the provision of bail.
572Without prejudice to the generality of the foregoing, the
573Charterers agree to indemnify the Owners against all
574consequences or liabilities arising from the Master,
575officers or agents signing Bills of Lading or other
576documents.
577(b) If the Vessel be arrested or otherwise detained by
578reason of a claim or claims against the Owners, the
579Owners shall at their own expense take all reasonable
580steps to secure that within a reasonable time the Vessel
581is released, including the provision of bail.
582In such circumstances the Owners shall indemnify the
583Charterers against any loss, damage or expense
584incurred by the Charterers (including hire paid under
521range of ports of redelivery or port or place of redelivery 585this Charter) as a direct consequence of such arrest or
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will contribute an infringement of BIMCO's copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
586detention.
58718. Lien
588The Owners to shall have a lien upon all cargoes, sub-hires
589and sub-freights belonging or due to the Charterers or
590any sub-charterers and any Bill of Lading freight for all
591claims under this Charter., and the Charterers to have a
592lien on the Vessel for all moneys paid in advance and
593not earned.
59419. Salvage
595All salvage and towage performed by the Vessel shall
596be for the Charterers’ benefit and the cost of repairing
597damage occasioned thereby shall be borne by the
598Charterers.
59920. Wreck Removal
600In the event of the Vessel becoming a wreck or
601obstruction to navigation the Charterers shall indemnify
602the Owners against any sums whatsoever which the
603Owners shall become liable to pay and shall pay in
604consequence of the Vessel becoming a wreck or
605obstruction to navigation.
60621. General Average
607The Owners shall not contribute to General Average.
60822. Assignment, Sub-Charter and Sale (See Clause 62)
609(a) The Charterers shall not assign this Charter nor
610sub-charter the Vessel on a bareboat basis except with
611the prior consent in writing of the Owners, which shall
612not be unreasonably withheld, and subject to such terms
613and conditions as the Owners shall approve.
614(b) The Owners shall not sell the Vessel during the
615currency of this Charter except with the prior written
616consent of the Charterers, which shall not be unreason-
617ably withheld, and subject to the buyer accepting an
618assignment of this Charter.
61923. Contracts of Carriage
620*) (a) The Charterers are to procure that all documents
621issued during the Charter Period evidencing the terms
622and conditions agreed in respect of carriage of goods
623shall contain a paramount clause incorporating any
624legislation relating to carrier’s liability for cargo
625compulsorily applicable in the trade; if no such legislation
626exists, the documents shall incorporate the Hague-Visby
627Rules. The documents shall also contain the New Jason
628Clause and the Both-to-Blame Collision Clause.
629*) (b) The Charterers are to procure that all passenger
630tickets issued during the Charter Period for the carriage
631of passengers and their luggage under this Charter shall
632contain a paramount clause incorporating any legislation
633relating to carrier’s liability for passengers and their
634luggage compulsorily applicable in the trade; if no such
635legislation exists, the passenger tickets shall incorporate
636the Athens Convention Relating to the Carriage of
637Passengers and their Luggage by Sea, 1974, and any
638protocol thereto.
639*) Delete as applicable.
64024. Bank Guarantee
641(Optional, only to apply if Box 27 filled in)
642The Charterers undertake to furnish, before delivery of
643the Vessel, a first class bank guarantee or bond in the
644sum and at the place as indicated in Box 27 as guarantee
645for full performance of their obligations under this
646Charter.
64725. Requisition/Acquisition
648(a) In the event of the Requisition for Hire of the Vessel
649by any governmental or other competent authority
650(hereinafter referred to as “Requisition for Hire”)
651irrespective of the date during the Charter Period when
652“Requisition for Hire” may occur and irrespective of the
653length thereof and whether or not it be for an indefinite
654or a limited period of time, and irrespective of whether it
655may or will remain in force for the remainder of the
656Charter Period, this Charter shall not be deemed thereby
657or thereupon to be frustrated or otherwise terminated
658and the Charterers shall continue to pay the stipulated
659hire in the manner provided by this Charter until the time
660when the Charter would have terminated pursuant to
661any of the provisions hereof. always provided however
662that in the event of “Requisition for Hire” any Requisition
663Hire or compensation received or receivable by the
664Owners shall be payable to the Charterers during the
665remainder of the Charter Period or the period of the
666“Requisition for Hire” whichever be the shorter.
667(b) In the event of the Owners being deprived of their
668ownership in the Vessel by any Compulsory Acquisition
669of the Vessel or requisition for title by any governmental
670or other competent authority (hereinafter referred to as
671“Compulsory Acquisition”), then, irrespective of the date
672during the Charter Period when “Compulsory Acqui-
673sition” may occur, this Charter shall be deemed
674terminated as of the date of such “Compulsory
675Acquisition”. In such event Charter Hire to be considered
676as earned and to be paid up to the date and time of
677such “Compulsory Acquisition”.
67826. War
679 |
(a) Subject to the provisions of the Financial Instruments (if any) FfFor the purpose of this Clause, the words “War |
680Risks” shall include any war (whether actual or
681threatened), act of war, civil war, hostilities, revolution,
682rebellion, civil commotion, warlike operations, the laying
683of mines (whether actual or reported), acts of piracy,
684acts of terrorists, acts of hostility or malicious damage,
685blockades (whether imposed against all vessels or
686imposed selectively against vessels of certain flags or
687ownership, or against certain cargoes or crews or
688otherwise howsoever), by any person, body, terrorist or
689political group, or the Government of any state
690whatsoever, which may be dangerous or are likely to be
691or to become dangerous to the Vessel, her cargo, crew
692or other persons on board the Vessel.
693(b) The Vessel, unless the written consent of the
694 |
Owners be first obtained and adequate insurances are in place (such adequacy to be determined by the Owners acting reasonably), shall not continue to or go |
695through any port, place, area or zone (whether of land
696or sea), or any waterway or canal, where it reasonably
697appears that the Vessel, her cargo, crew or other
698persons on board the Vessel, in the reasonable
699judgement of the Owners, may be, or are likely to be,
700exposed to War Risks. Should the Vessel be within any
701such place as aforesaid, which only becomes danger-
702ous, or is likely to be or to become dangerous, after her
703entry into it, the Owners shall have the right to require
704the Vessel to leave such area.
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will contribute an infringement of BIMCO's copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
705(c) The Vessel shall not load contraband cargo, or to
706pass through any blockade, whether such blockade be
707imposed on all vessels, or is imposed selectively in any
708way whatsoever against vessels of certain flags or
709ownership, or against certain cargoes or crews or
710otherwise howsoever, or to proceed to an area where
711she shall be subject, or is likely to be subject to
712a belligerent’s right of search and/or confiscation.
713(d) If the insurers of the war risks insurance, when
714Clause 14 is applicable, should require payment of
715premiums and/or calls because, pursuant to the
716Charterers’ orders, the Vessel is within, or is due to enter
717and remain within, any area or areas which are specified
718by such insurers as being subject to additional premiums
719because of War Risks, then such premiums and/or calls
720shall be reimbursed by the Charterers to the Owners at
721the same time as the next payment of hire is due.
722(e) The Charterers shall have the liberty:
723(i) to comply with all orders, directions, recommend-
724ations or advice as to departure, arrival, routes,
725sailing in convoy, ports of call, stoppages,
726destinations, discharge of cargo, delivery, or in any
727other way whatsoever, which are given by the
728Government of the Nation under whose flag the
729Vessel sails, or any other Government, body or
730group whatsoever acting with the power to compel
731compliance with their orders or directions;
732(ii) to comply with the orders, directions or recom-
733mendations of any war risks underwriters who have
734the authority to give the same under the terms of
735the war risks insurance;
736(iii) to comply with the terms of any resolution of the
737Security Council of the United Nations, any
738directives of the European Community, the effective
739orders of any other Supranational body which has
740the right to issue and give the same, and with
741national laws aimed at enforcing the same to which
742the Owners are subject, and to obey the orders
743and directions of those who are charged with their
744enforcement.
745(f) In the event of outbreak of war (whether there be a
746declaration of war or not) (i) between any two or more
747of the following countries: the United States of America;
748Russia; the United Kingdom; France; and the People’s
749Republic of China, (ii) between any two or more of the
750countries stated in Box 36, both the Owners and the
751Charterers shall have the right to cancel this Charter,
752whereupon the Charterers shall redeliver the Vessel to
753the Owners in accordance with Clause 15, if the Vessel
754has cargo on board after discharge thereof at
755destination, or if debarred under this Clause from
756reaching or entering it at a near, open and safe port as
757directed by the Owners, or if the Vessel has no cargo
758on board, at the port at which the Vessel then is or if at
759sea at a near, open and safe port as directed by the
760Owners. In all cases hire shall continue to be paid in
761accordance with Clause 11 and except as aforesaid all
762other provisions of this Charter shall apply until
763redelivery the end of the Charter Period.
76427. Commission
765The Owners to pay a commission at the rate indicated
766in Box 33 to the Brokers named in Box 33 on any hire
767paid under the Charter. If no rate is indicated in Box 33,
768the commission to be paid by the Owners shall cover
769the actual expenses of the Brokers and a reasonable
770fee for their work.
771If the full hire is not paid owing to breach of the Charter
772by either of the parties the party liable therefor shall
773indemnify the Brokers against their loss of commission.
774Should the parties agree to cancel the Charter, the
775Owners shall indemnify the Brokers against any loss of
776commission but in such case the commission shall not
777exceed the brokerage on one year’s hire.
77828. Termination (See Clauses 41, 42 and 47)
779(a) Charterers’ Default
780The Owners shall be entitled to withdraw the Vessel from
781the service of the Charterers and terminate the Charter
782with immediate effect by written notice to the Charterers if:
783(i) the Charterers fail to pay hire in accordance with
784Clause 11. However, where there is a failure to
785make punctual payment of hire due to oversight,
786negligence, errors or omissions on the part of the
787Charterers or their bankers, the Owners shall give
788the Charterers written notice of the number of clear
789banking days stated in Box 34 (as recognised at
790the agreed place of payment) in which to rectify
791the failure, and when so rectified within such
792number of days following the Owners’ notice, the
793payment shall stand as regular and punctual.
794Failure by the Charterers to pay hire within the
795number of days stated in Box 34 of their receiving
796the Owners’ notice as provided herein, shall entitle
797the Owners to withdraw the Vessel from the service
798of the Charterers and terminate the Charter without
799further notice;
800(ii) the Charterers fail to comply with the requirements of:
801(1) Clause 6 (Trading Restrictions)
802(2) Clause 13(a) (Insurance and Repairs)
803provided that the Owners shall have the option, by
804written notice to the Charterers, to give the
805Charterers a specified number of days grace within
806which to rectify the failure without prejudice to the
807Owners’ right to withdraw and terminate under this
808Clause if the Charterers fail to comply with such
809notice;
810(iii) the Charterers fail to rectify any failure to comply
811with the requirements of sub-clause 10(a)(i)
812(Maintenance and Repairs) as soon as practically
813possible after the Owners have requested them in
814writing so to do and in any event so that the Vessel’s
815insurance cover is not prejudiced.
816(b) Owners’ Default
817If the Owners shall by any act or omission be in breach
818of their obligations under this Charter to the extent that
819the Charterers are deprived of the use of the Vessel
820and such breach continues for a period of fourteen (14)
821running days after written notice thereof has been given
822by the Charterers to the Owners, the Charterers shall
823be entitled to terminate this Charter with immediate effect
824by written notice to the Owners.
825(c) Loss of Vessel
826This Charter shall be deemed to be terminated if the
827Vessel becomes a total loss or is declared as a
828constructive or compromised or arranged total loss. For 829the purpose of this sub-clause, the Vessel shall not be
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will contribute an infringement of BIMCO's copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
830deemed to be lost unless she has either become an
831actual total loss or agreement has been reached with
832her underwriters in respect of her constructive,
833compromised or arranged total loss or if such agreement
834with her underwriters is not reached it is adjudged by a
835competent tribunal that a constructive loss of the Vessel
836has occurred.
837(d) Either party shall be entitled to terminate this
838Charter with immediate effect by written notice to the
839other party in the event of an order being made or
840resolution passed for the winding up, dissolution,
841liquidation or bankruptcy of the other party (otherwise
842than for the purpose of reconstruction or amalgamation)
843or if a receiver is appointed, or if it suspends payment,
844ceases to carry on business or makes any special
845arrangement or composition with its creditors.
846(e) The termination of this Charter shall be without
847prejudice to all rights accrued due between the parties
848prior to the date of termination and to any claim that
849either party might have.
850 |
29. Repossession (See also Clauses 41, 42 and 47) |
In the event the Vessel is due for redelivery pursuant to Clause 41 or Owners have made a request for redelivery of the Vessel in accordance with the
applicable provisions of Clause 42.1,
851In the event of the termination of this Charter in
852accordance with the applicable provisions of Clause 28,
853the Owners shall have the right to repossess the Vessel
854from the Charterers at her current or next port of call, or
855at a port or place convenient to them without hindrance
856or interference by the Charterers, courts or local
857authorities. Pending physical repossession of the Vessel
858in accordance with this Clause 29, the Charterers shall
859 |
hold the Vessel as gratuitous bailee only to the Owners and the Charterers shall procure that the master and crew follow the directions of the Owners . |
860The Owners shall arrange for an authorised represent-
861ative to board the Vessel as soon as reasonably
862practicable following the termination of the Charter. The
863Vessel shall be deemed to be repossessed by the
864Owners from the Charterers upon the boarding of the
865Vessel by the Owners’ representative. All arrangements
866and expenses relating to the settling of wages,
867disembarkation and repatriation of the Charterers’
868Master, officers and crew shall be the sole responsibility
869of the Charterers.
87030. Dispute Resolution (See Clause 65)
871*)(a) This Contract shall be governed by and construed
872in accordance with English law and any dispute arising
873out of or in connection with this Contract shall be referred
874to arbitration in London in accordance with the Arbitration
875Act 1996 or any statutory modification or re-enactment
876thereof save to the extent necessary to give effect to
877the provisions of this Clause.
878The arbitration shall be conducted in accordance with
879the London Maritime Arbitrators Association (LMAA)
880Terms current at the time when the arbitration proceed-
881ings are commenced.
882The reference shall be to three arbitrators. A party
883wishing to refer a dispute to arbitration shall appoint its
884arbitrator and send notice of such appointment in writing
885to the other party requiring the other party to appoint its
886own arbitrator within 14 calendar days of that notice and
887stating that it will appoint its arbitrator as sole arbitrator
888unless the other party appoints its own arbitrator and
889gives notice that it has done so within the 14 days
890specified. If the other party does not appoint its own
891arbitrator and give notice that it has done so within the
89214 days specified, the party referring a dispute to
893arbitration may, without the requirement of any further
894prior notice to the other party, appoint its arbitrator as
895sole arbitrator and shall advise the other party
896accordingly. The award of a sole arbitrator shall be
897binding on both parties as if he had been appointed by
898agreement.
899Nothing herein shall prevent the parties agreeing in
900writing to vary these provisions to provide for the
901appointment of a sole arbitrator.
902In cases where neither the claim nor any counterclaim
903exceeds the sum of US$50,000 (or such other sum as
904the parties may agree) the arbitration shall be conducted
905in accordance with the LMAA Small Claims Procedure
906current at the time when the arbitration proceedings are
907commenced.
908*) (b) This Contract shall be governed by and construed
909in accordance with Title 9 of the United States Code
910and the Maritime Law of the United States and any
911dispute arising out of or in connection with this Contract
912shall be referred to three persons at New York, one to
913be appointed by each of the parties hereto, and the third
914by the two so chosen; their decision or that of any two
915of them shall be final, and for the purposes of enforcing
916any award, judgement may be entered on an award by
917any court of competent jurisdiction. The proceedings
918shall be conducted in accordance with the rules of the
919Society of Maritime Arbitrators, Inc.
920In cases where neither the claim nor any counterclaim
921exceeds the sum of US$50,000 (or such other sum as
922the parties may agree) the arbitration shall be conducted
923in accordance with the Shortened Arbitration Procedure
924of the Society of Maritime Arbitrators, Inc. current at
925the time when the arbitration proceedings are commenced.
926*) (c) This Contract shall be governed by and construed
927in accordance with the laws of the place mutually agreed
928by the parties and any dispute arising out of or in
929connection with this Contract shall be referred to
930arbitration at a mutually agreed place, subject to the
931procedures applicable there.
932(d) Notwithstanding (a), (b) or (c) above, the parties
933may agree at any time to refer to mediation any
934difference and/or dispute arising out of or in connection
935with this Contract.
936In the case of a dispute in respect of which arbitration
937has been commenced under (a), (b) or (c) above, the
938following shall apply:-
939(i) Either party may at any time and from time to time
940elect to refer the dispute or part of the dispute to
941mediation by service on the other party of a written
942notice (the “Mediation Notice”) calling on the other
943party to agree to mediation.
944(ii) The other party shall thereupon within 14 calendar
945days of receipt of the Mediation Notice confirm that
946they agree to mediation, in which case the parties
947shall thereafter agree a mediator within a further
94814 calendar days, failing which on the application 949of either party a mediator will be appointed promptly
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will contribute an infringement of BIMCO's copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
950by the Arbitration Tribunal (“the Tribunal”) or such
951person as the Tribunal may designate for that
952purpose. The mediation shall be conducted in such
953place and in accordance with such procedure and
954on such terms as the parties may agree or, in the
955event of disagreement, as may be set by the
956mediator.
957(iii) If the other party does not agree to mediate, that
958fact may be brought to the attention of the Tribunal
959and may be taken into account by the Tribunal when
960allocating the costs of the arbitration as between
961the parties.
962(iv) The mediation shall not affect the right of either
963party to seek such relief or take such steps as it
964considers necessary to protect its interest.
965(v) Either party may advise the Tribunal that they have
966agreed to mediation. The arbitration procedure shall
967continue during the conduct of the mediation but
968the Tribunal may take the mediation timetable into
969account when setting the timetable for steps in the
970arbitration.
971(vi) Unless otherwise agreed or specified in the
972mediation terms, each party shall bear its own costs
973incurred in the mediation and the parties shall share
974equally the mediator’s costs and expenses.
975(vii) The mediation process shall be without prejudice
976and confidential and no information or documents
977disclosed during it shall be revealed to the Tribunal
978except to the extent that they are disclosable under
979the law and procedure governing the arbitration.
980(Note: The parties should be aware that the mediation
981process may not necessarily interrupt time limits.)
982(e) If Box 35 in Part I is not appropriately filled in, sub-clause
98330(a) of this Clause shall apply. Sub-clause 30(d) shall
984apply in all cases.
985*) Sub-clauses 30(a), 30(b) and 30(c) are alternatives;
986indicate alternative agreed in Box 35.
98731. Notices (See Clause 46)
988(a) Any notice to be given by either party to the other
989party shall be in writing and may be sent by fax, telex,
990registered or recorded mail or by personal service.
991(b) The address of the Parties for service of such
992communication shall be as stated in Boxes 3 and 4
993respectively.
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will contribute an infringement of BIMCO's copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART III
PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY
(Optional, only to apply if expressly agreed and stated in Box 37)
1. |
Specifications and Building Contract |
2 |
(a) The Vessel shall be constructed in accordance with |
3the Building Contract (hereafter called “the Building
4Contract”) as annexed to this Charter, made between the
5Builders and the Owners and in accordance with the
6specifications and plans annexed thereto, such Building
7Contract, specifications and plans having been counter-
8signed as approved by the Charterers.
9(b) No change shall be made in the Building Contract or
10in the specifications or plans of the Vessel as approved by
11the Charterers as aforesaid, without the Charterers’
12consent.
13(c) The Charterers shall have the right to send their
14representative to the Builders’ Yard to inspect the Vessel
15during the course of her construction to satisfy themselves
16that construction is in accordance with such approved
17specifications and plans as referred to under sub-clause
18(a) of this Clause.
19(d) The Vessel shall be built in accordance with the
20Building Contract and shall be of the description set out
21therein. Subject to the provisions of sub-clause 2(c)(ii)
22hereunder, the Charterers shall be bound to accept the
23Vessel from the Owners, completed and constructed in
24accordance with the Building Contract, on the date of
25delivery by the Builders. The Charterers undertake that
26having accepted the Vessel they will not thereafter raise
27any claims against the Owners in respect of the Vessel’s
28performance or specification or defects, if any.
29Nevertheless, in respect of any repairs, replacements or
30defects which appear within the first 12 months from
31delivery by the Builders, the Owners shall endeavour to
32compel the Builders to repair, replace or remedy any defects
33or to recover from the Builders any expenditure incurred in
34carrying out such repairs, replacements or remedies.
35However, the Owners’ liability to the Charterers shall be
36limited to the extent the Owners have a valid claim against
37the Builders under the guarantee clause of the Building
38Contract (a copy whereof has been supplied to the
39Charterers). The Charterers shall be bound to accept such
40sums as the Owners are reasonably able to recover under
41this Clause and shall make no further claim on the Owners
42for the difference between the amount(s) so recovered and
43the actual expenditure on repairs, replacement or
44remedying defects or for any loss of time incurred.
45Any liquidated damages for physical defects or deficiencies
46shall accrue to the account of the party stated in Box 41(a)
47or if not filled in shall be shared equally between the parties.
48The costs of pursuing a claim or claims against the Builders
49under this Clause (including any liability to the Builders)
50shall be borne by the party stated in Box 41(b) or if not
51filled in shall be shared equally between the parties.
522. Time and Place of Delivery
53(a) Subject to the Vessel having completed her
54acceptance trials including trials of cargo equipment in
55accordance with the Building Contract and specifications
56to the satisfaction of the Charterers, the Owners shall give
57and the Charterers shall take delivery of the Vessel afloat
58when ready for delivery and properly documented at the
59Builders’ Yard or some other safe and readily accessible
60dock, wharf or place as may be agreed between the parties
61hereto and the Builders. Under the Building Contract the
62Builders have estimated that the Vessel will be ready for
63delivery to the Owners as therein provided but the delivery
64date for the purpose of this Charter shall be the date when
65the Vessel is in fact ready for delivery by the Builders after
66completion of trials whether that be before or after as
67indicated in the Building Contract. The Charterers shall not
68be entitled to refuse acceptance of delivery of the Vessel
69and upon and after such acceptance, subject to Clause
701(d), the Charterers shall not be entitled to make any claim
71against the Owners in respect of any conditions,
72representations or warranties, whether express or implied,
73as to the seaworthiness of the Vessel or in respect of delay
74in delivery.
75(b) If for any reason other than a default by the Owners
76under the Building Contract, the Builders become entitled
77under that Contract not to deliver the Vessel to the Owners,
78the Owners shall upon giving to the Charterers written
79notice of Builders becoming so entitled, be excused from
80giving delivery of the Vessel to the Charterers and upon
81receipt of such notice by the Charterers this Charter shall
82cease to have effect.
83(c) If for any reason the Owners become entitled under
84the Building Contract to reject the Vessel the Owners shall,
85before exercising such right of rejection, consult the
86Charterers and thereupon
87(i) if the Charterers do not wish to take delivery of the Vessel
88they shall inform the Owners within seven (7) running days
89by notice in writing and upon receipt by the Owners of such
90notice this Charter shall cease to have effect; or
91(ii) if the Charterers wish to take delivery of the Vessel
92they may by notice in writing within seven (7) running days
93require the Owners to negotiate with the Builders as to the
94terms on which delivery should be taken and/or refrain from
95exercising their right to rejection and upon receipt of such
96notice the Owners shall commence such negotiations and/
97or take delivery of the Vessel from the Builders and deliver
98her to the Charterers;
99(iii) in no circumstances shall the Charterers be entitled to
100reject the Vessel unless the Owners are able to reject the
101Vessel from the Builders;
102(iv) if this Charter terminates under sub-clause (b) or (c) of
103this Clause, the Owners shall thereafter not be liable to the
104Charterers for any claim under or arising out of this Charter
105or its termination.
106(d) Any liquidated damages for delay in delivery under the
107Building Contract and any costs incurred in pursuing a claim
108therefor shall accrue to the account of the party stated in
109Box 41(c) or if not filled in shall be shared equally between
110the parties.
1113. Guarantee Works
112If not otherwise agreed, the Owners authorise the
113Charterers to arrange for the guarantee works to be
114performed in accordance with the building contract terms,
115and hire to continue during the period of guarantee works.
116The Charterers have to advise the Owners about the
117performance to the extent the Owners may request.
1184. Name of Vessel
119The name of the Vessel shall be mutually agreed between
120 |
the Owners and the Charterers and the Vessel shall be |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will contribute an infringement of BIMCO's copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART III
PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY
(Optional, only to apply if expressly agreed and stated in Box 37)
121painted in the colours, display the funnel insignia and fly
122the house flag as required by the Charterers.
1235. Survey on Redelivery
124The Owners and the Charterers shall appoint surveyors
125for the purpose of determining and agreeing in writing the
126condition of the Vessel at the time of re-delivery.
127Without prejudice to Clause 15 (Part II), the Charterers
128shall bear all survey expenses and all other costs, if any,
129including the cost of docking and undocking, if required,
130as well as all repair costs incurred. The Charterers shall
131also bear all loss of time spent in connection with any
132docking and undocking as well as repairs, which shall be
133paid at the rate of hire per day or pro rata.
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will contribute an infringement of BIMCO's copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART IV
HIRE/PURCHASE AGREEMENT
(Optional, only to apply if expressly agreed and stated in Box 42)
1On expiration of this Charter and provided the Charterers
2have fulfilled their obligations according to Part I and II
3as well as Part III, if applicable, it is agreed, that on
4payment of the final payment of hire as per Clause 11
5the Charterers have purchased the Vessel with
6everything belonging to her and the Vessel is fully paid
7for.
8In the following paragraphs the Owners are referred to
9as the Sellers and the Charterers as the Buyers.
10The Vessel shall be delivered by the Sellers and taken
11over by the Buyers on expiration of the Charter.
12The Sellers guarantee that the Vessel, at the time of
13delivery, is free from all encumbrances and maritime
14liens or any debts whatsoever other than those arising
15from anything done or not done by the Buyers or any
16existing mortgage agreed not to be paid off by the time
17of delivery. Should any claims, which have been incurred
18prior to the time of delivery be made against the Vessel,
19the Sellers hereby undertake to indemnify the Buyers
20against all consequences of such claims to the extent it
21can be proved that the Sellers are responsible for such
22claims. Any taxes, notarial, consular and other charges
23and expenses connected with the purchase and
24registration under Buyers’ flag, shall be for Buyers’
25account. Any taxes, consular and other charges and
26expenses connected with closing of the Sellers’ register,
27shall be for Sellers’ account.
28In exchange for payment of the last month’s hire
29instalment the Sellers shall furnish the Buyers with a
30Bill of Sale duly attested and legalized, together with a
31certificate setting out the registered encumbrances, if
32any. On delivery of the Vessel the Sellers shall provide
33for deletion of the Vessel from the Ship’s Register and
34deliver a certificate of deletion to the Buyers.
35The Sellers shall, at the time of delivery, hand to the
36Buyers all classification certificates (for hull, engines,
37anchors, chains, etc.), as well as all plans which may
38be in Sellers’ possession.
39The Wireless Installation and Nautical Instruments,
40unless on hire, shall be included in the sale without any
41extra payment.
42The Vessel with everything belonging to her shall be at
43Sellers’ risk and expense until she is delivered to the
44Buyers, subject to the conditions of this Contract and
45the Vessel with everything belonging to her shall be
46delivered and taken over as she is at the time of delivery,
47after which the Sellers shall have no responsibility for
48possible faults or deficiencies of any description.
49The Buyers undertake to pay for the repatriation of the
50Master, officers and other personnel if appointed by the
51Sellers to the port where the Vessel entered the Bareboat
52Charter as per Clause 3 (Part II) or to pay the equivalent
53cost for their journey to any other place.
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will contribute an infringement of BIMCO's copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART V
PROVISIONS TO APPLY FOR VESSELS REGISTERED IN A BAREBOAT CHARTER REGISTRY
(Optional, only to apply if expressly agreed and stated in Box 43)
11. Definitions
2For the purpose of this PART V, the following terms shall
3have the meanings hereby assigned to them:
4“The Bareboat Charter Registry” shall mean the registry
5of the State whose flag the Vessel will fly and in which
6the Charterers are registered as the bareboat charterers
7during the period of the Bareboat Charter.
8“The Underlying Registry” shall mean the registry of the
9state in which the Owners of the Vessel are registered
10as Owners and to which jurisdiction and control of the
11Vessel will revert upon termination of the Bareboat
12Charter Registration.
132. Mortgage
14The Vessel chartered under this Charter is financed by
15a mortgage and the provisions of Clause 12(b) (Part II)
16shall apply.
173. Termination of Charter by Default
18If the Vessel chartered under this Charter is registered
19in a Bareboat Charter Registry as stated in Box 44, and
20if the Owners shall default in the payment of any amounts
21due under the mortgage(s) specified in Box 28, the
22Charterers shall, if so required by the mortgagee, direct
23the Owners to re-register the Vessel in the Underlying
24Registry as shown in Box 45.
25In the event of the Vessel being deleted from the
26Bareboat Charter Registry as stated in Box 44, due to a
27default by the Owners in the payment of any amounts
28due under the mortgage(s), the Charterers shall have
29the right to terminate this Charter forthwith and without
30prejudice to any other claim they may have against the
31Owners under this Charter.
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will contribute an infringement of BIMCO's copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
EXECUTION VERSION
ADDITIONAL CLAUSES TO BARECON 2001
CLAUSE 32 – CHARTER PERIOD
32.1 |
The period of this Charter (the “Charter Period”) shall, subject to the terms of this Charter, continue for a period of seven (7) years starting from the Commencement Date. |
32.2 |
Notwithstanding the fact that the Charter Period shall commence on the Commencement Date, this Charter shall be: |
(a) |
in full force and effect; and |
(b) |
valid, binding and enforceable against the parties hereto, |
with effect from the date hereof until the end of the Charter Period (subject to the terms of this Charter).
CLAUSE 33 – CANCELLATION
33.1 |
If: |
(a) |
the Vessel is not delivered by the Charterers as sellers to the Owners as buyers under the MOA by the Cancelling Date (or such later date as the parties to the MOA may agree); |
(b) |
it becomes unlawful for the Charterers as sellers and the Owners as buyers to perform or comply with any or all of their obligations under the MOA; or |
(c) |
the MOA expires, is cancelled, terminated, rescinded or suspended or otherwise ceases to remain in full force and effect for any reason (in whole or in part), |
then this Charter shall immediately terminate and be cancelled (without prejudice to Clause 57 (Indemnities) and without the need for either the Owners or the Charterers to take any action whatsoever), provided that the Owners shall be entitled to retain all fees and expenses paid by the Charterers pursuant to Clause 44 (Fees and Expenses) (and without prejudice to Clause 44 (Fees and Expenses) and any clause of the MOA, if such fees have not been paid, the Charterers shall forthwith pay such fees and expenses to the Owners in accordance with Clause 44 (Fees and Expenses)) and such payment shall be irrevocable and unconditional and is acknowledged by the Charterers to be proportionate as to amount, having regard to the legitimate interest of the Owners, in protecting against the Owners’ risk of the Charterers failing to perform its obligations under this Charter. For the avoidance of doubt, the termination of the Charter shall not prejudice the operation of any provision of any Leasing Document which is expressed to survive the termination or cancellation of this Charter.
CLAUSE 34 – DELIVERY AND CHARTER OF VESSEL
34.1 |
This Charter is part of a transaction involving the sale, purchase and charter back of the Vessel and constitutes one of the Leasing Documents. |
34.2 |
The obligation of the Owners to charter the Vessel to the Charterers hereunder is subject to and conditional upon: |
(a) |
no Termination Event or Potential Termination Event having occurred on the date of this Charter and on the Commencement Date; |
(b) |
the representations and warranties contained in Clause 48 (Representations and Warranties) being true and correct on the date hereof and on the Commencement Date; |
(c) |
the Vessel being delivered to the Head Sellers pursuant to the Shipbuilding Contract; |
(d) |
the Vessel being delivered to the Charterers under the Head MOA; |
(e) |
the Vessel being delivered to the Owners pursuant to the MOA; |
(f) |
the Delivery occurring on or before the Cancelling Date; and |
(g) |
the Owners having received from the Charterers: |
(i) |
on or before the date falling one (1) Business Day prior to the Prepositioning Date (or such other period as the Owners may otherwise agree), the documents or evidence set out in Part A of Schedule 2 (Conditions Precedent) in form and substance satisfactory to them; and |
(ii) |
on the Commencement Date and prior to or simultaneously with the Owners executing a dated and timed copy of the protocol of delivery and acceptance evidencing delivery of the Vessel under the MOA and a dated and timed copy of the Acceptance Certificate, the documents or evidence set out in Part B of Schedule 2 (Conditions Precedent) in form and substance satisfactory to them, |
and if any of the documents listed in sub-paragraph (g) above are not in the English language then they shall be accompanied by an English translation where required by the Owners.
34.3 |
On delivery to and acceptance by the Owners (in their capacity as buyers) of the Vessel from the Charterers (in their capacity as sellers) under the MOA, the Vessel shall be deemed to have been delivered to, and accepted without reservation by, the Charterers under this Charter and the Charterers shall become and be entitled to the possession and use of the Vessel on and subject to the terms and conditions of this Charter on the same day as the delivery date of the Vessel under the MOA. |
34.4 |
On Delivery, as evidence of the commencement of the Charter Period, the Charterers shall sign and deliver to the Owners, the Acceptance Certificate. The Charterers shall be deemed to have accepted the Vessel under this Charter, and the commencement of the Charter Period having started, on Delivery even if, for whatever reason, the Acceptance Certificate is not signed. |
34.5 |
The Charterers shall not be entitled for any reason whatsoever to refuse to accept delivery of the Vessel under this Charter once the Vessel has been delivered to and accepted by the Owners (in their capacity as buyers) from the Charterers (in their capacity as sellers) under the MOA, and the Owners shall not be liable for any losses, costs or expenses whatsoever or howsoever arising including without limitation, any loss of profit or any loss or otherwise: |
(a) |
resulting directly or indirectly from any defect or alleged defect in the Vessel or any failure of the Vessel; or |
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(b) |
arising from any delay in the commencement of the Charter Period or any failure of the Charter Period to commence. |
34.6 |
The Owners shall not be obliged to deliver the Vessel to the Charterers with any bunkers and unused lubricating oils and hydraulic oils and greases in storage tanks and unopened drums of the Vessel except for such items which are already on the Vessel on Delivery. The Owners shall not be responsible for the fitness, quality or quantity of any such bunkers and unused lubricating oils and hydraulic oils and greases and the Charterers shall make no claim against Owners in respect of the same. |
34.7 |
The Charterers shall procure receipt by the Owners of the conditions subsequent set out in Part C of Schedule 2 in a form and substance satisfactory to the Owners within the time periods permitted therein. |
CLAUSE 35 – QUIET ENJOYMENT
35.1 |
Subject to the terms of any QEL and provided that: |
(a) |
the Charterers do not breach any term of this Charter or any other Leasing Document to which they are a party; and |
(b) |
no Termination Event or Total Loss has occurred, |
the Owners hereby agree not to disturb or interfere with the Charterers’ lawful use, possession and quiet enjoyment of the Vessel during the Charter Period.
CLAUSE 36 – CHARTERHIRE AND ADVANCE CHARTERHIRE
36.1 |
In consideration of the Owners agreeing to charter the Vessel to the Charterers under this Charter at the request of the Charterers, the Charterers hereby irrevocably and unconditionally agree to pay to the Owners the Charterhire, the Advance Charterhire and all other amounts payable under this Charter in accordance with the terms of this Charter. |
36.2 |
The Charterers shall pay to the Owners on the Commencement Date, an amount which is equal to the difference between the Purchase Price and the Owners’ Costs as of the Commencement Date (the “Advance Charterhire”). The Charterers shall be deemed to have paid the Advance Charterhire to the Owners on the Commencement Date by the Owners (as buyers under the MOA) setting off an amount equal to the Advance Charterhire against a corresponding amount of the Purchase Price payable by the Owners to the Charterers (as sellers) under the MOA. |
36.3 |
The Advance Charterhire shall not bear interest and shall be non-refundable. |
36.4 |
Following Delivery and commencing from the Commencement Date, the Charterers shall pay Charterhire in arrears in quarterly instalments on each Payment Date. Each instalment shall consist of: |
(a) |
a capital element of Charterhire (the “Fixed Charterhire”) which shall be in an amount equivalent to 1/28 of the difference between the Opening Capital Balance and the Expiry Owners’ Costs; and |
(b) |
a variable element of Charterhire (the “Variable Charterhire”) which shall be calculated by applying the aggregate of: |
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(i) |
the applicable Interest Rate for the relevant Hire Period; and |
(ii) |
the Margin, |
to the Owners’ Costs on the immediately preceding Payment Date (or, in the case of the First Payment Date only, on the Commencement Date) for the Hire Period ending on the relevant Payment Date by reference to the actual number of days elapsed.
36.5 |
Charterhire shall be payable in arrears on the following dates (each a “Payment Date”): |
(a) |
the first instalment of Charterhire shall be payable on the date falling three (3) months after the Commencement Date (the “First Payment Date”); and |
(b) |
each subsequent instalment of Charterhire (other than the last instalment of Charterhire) shall be payable quarterly thereafter, with the final instalment of Charterhire payable on the last day of the Charter Period, |
such that there are a total of twenty eight (28) Payment Dates during the Charter Period.
36.6 |
Payment of Charterhire on any Payment Date shall be made in same day available funds and received by the Owners by not later than 5.00 pm (Shanghai time). Any payment of Charterhire which is due to be made on a Payment Date which is not also a Business Day shall be made on the previous Business Day instead. |
36.7 |
Time of payment of the Charterhire and any other payments by the Charterers under this Charter shall be of the essence. |
36.8 |
All payments of the Charterhire and any other moneys payable hereunder shall be made in Dollars. |
36.9 |
All payments of the Charterhire and any other moneys payable hereunder shall be payable by the Charterers to the Owners’ designated bank account as the Owners may notify the Charterers in writing from time to time. |
36.10 |
Payment of the Charterhire and any other amounts under this Charter shall be at the Charterers’ risk until receipt by the Owners. |
36.11 |
The Vessel shall not at any time be deemed off-hire and the Charterers’ obligation to pay the Charterhire and any other amounts payable under this Charter (including but not limited to the Termination Sum or the Total Loss Termination Sum) in Dollars shall be absolute and unconditional under any and all circumstances and shall not be affected by any circumstances of any nature whatsoever including but not limited to: |
(a) |
(except in the case of the Advance Charterhire) any set off, counterclaim, recoupment, defence, claim or other right which the Charterers may at any time have against the Owners or any other person for any reason whatsoever including, without limitation, any act, omission or breach on the part of the Owners under this Charter or any other agreement at any time existing between the Owners and the Charterers; |
(b) |
any change, extension, indulgence or other act or omission in respect of any indebtedness or obligation of the Charterers, or any sale, exchange, release or surrender of, or other dealing in, any security for any such indebtedness or obligation; |
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(c) |
any title defect or encumbrance or any dispossession of the Vessel by title paramount or otherwise; |
(d) |
any defect in the seaworthiness, condition, value, design, merchantability, operation or fitness for use of the Vessel or the ineligibility of the Vessel for any particular trade or for registration or documentation under the laws of any relevant jurisdiction; |
(e) |
the Total Loss or any damage to or forfeiture or court marshall’s or other sale of the Vessel if the Termination Sum, Total Loss Termination Sum or any part thereof remains due; |
(f) |
any libel, attachment, levy, detention, sequestration or taking into custody of the Vessel or any restriction or prevention of or interference with or interruption or cessation in, the use or possession thereof by the Charterers; |
(g) |
any insolvency, bankruptcy, reorganization, arrangement, readjustment, dissolution, liquidation or similar proceedings by or against the Charterers and any other Obligors; |
(h) |
any invalidity, unenforceability, lack of due authorization or other defects, or any failure or delay in performing or complying with any of the terms and provisions of this Charter or any of the Leasing Documents by any party to this Charter or any other person; |
(i) |
any enforcement or attempted enforcement by the Owners of their rights under this Charter or any of the Leasing Documents executed or to be executed pursuant to this Charter; |
(j) |
any loss of use of the Vessel due to deficiency or default or strike of officers or crew, fire, breakdown, damage, accident, defective cargo or any other cause which would or might but for this provision have the effect of terminating or in any way affecting any obligation of the Charterers under this Charter; or |
(k) |
any prevention, delay, deviation or disruption in the use of the Vessel resulting from the wide outbreak of any viruses (including the 2019 novel coronavirus), including but not limited to those caused by: |
(i) |
closure of ports; |
(ii) |
prohibitions or restrictions against the Vessel calling at or passing through certain ports; |
(iii) |
restriction in the movement of personnel and/or shortage of labour affecting the operation of the Vessel or the operation of the ports (including stevedoring operations); |
(iv) |
quarantine regulations affecting the Vessel, its cargo, the crew members or relevant port personnel; |
(v) |
fumigation or cleaning of the Vessel; or |
(vi) |
any claims raised by any sub-charterer or manager of the Vessel that a force majeure event or termination event (or any other analogous event howsoever called) has occurred under the relevant charter agreement or management agreement (as the case may be) of the Vessel as a result of the outbreak of such viruses. |
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36.12 |
All stamp duty, value added tax (for the avoidance of doubt, including without limitation, goods and services tax), withholding or other taxes and import and export duties and all other similar types of charges (for the avoidance of doubt any Owner’s income tax liabilities) which may be levied or assessed on or in connection with: |
(a) |
the operation of this Charter in respect of the hire and all other payments to be made pursuant to this Charter and the remittance thereof to the Owners; and |
(b) |
the import, export, purchase, delivery and re-delivery of the Vessel, |
shall be borne by the Charterers. The Charterers shall pay, if applicable, value added tax and other similar tax levied on any Charterhire and other payments payable under this Charter by addition to, and at the time of payment of, such amounts.
CLAUSE 37 – CHANGES TO INTEREST RATE, DEFAULT INTEREST
37.1 |
If, in relation to any determination of the Interest Rate prior to a Screen Rate Replacement Event: |
(a) |
the Owners determine (which determination shall be conclusive and binding) that by reason of circumstances affecting the Relevant Interbank Market generally, adequate and fair means do not or will not exist for ascertaining LIBOR at the beginning of that Hire Period or the same does not reflect the cost of funding of the Owners; and |
(b) |
the Owners determine (which determination shall be conclusive and binding) that by reason of circumstances affecting the Relevant Interbank Market generally, deposits in Dollars in the required amount for the 3-month period commencing on the first day of that Hire Period are not available to it in the Relevant Interbank Market or from whatever sources it may select to obtain funds for that Hire Period, |
the Owners shall promptly notify the Charterers accordingly.
37.2 |
Immediately following the notification referred to in Clause 37.1 above, the Owners and the Charterers, shall negotiate in good faith with a view to agreeing upon a substitute basis for determining the Interest Rate for that Hire Period. |
37.3 |
If a substitute basis is not so agreed pursuant to Clause 37.2 above or after the occurrence of a Screen Rate Replacement Event but prior to the making of any necessary amendment or waiver in accordance with Clause 37.4 below, the Interest Rate shall be the rate per annum equal to the cost certified by the Owners (expressed as an annual rate of interest) of funding the Owners’ Costs during the relevant Hire Period (as reasonably determined by the Owners). |
37.4 |
On or at any time after the occurrence of a Screen Rate Replacement Event, the Owners are entitled to make any amendment or waiver to the terms of the Leasing Documents (at the Charterers’ cost) which relates to: |
(a) |
providing for the use of a Replacement Benchmark in relation to Dollars in place of (or in addition to) that Screen Rate; and |
(b)
(i) |
aligning any provision of any Leasing Document to the use of that Replacement Benchmark; |
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(ii) |
enabling that Replacement Benchmark to be used for the calculation of the Interest Rate under this Charter (including, without limitation, any consequential changes required to enable that Replacement Benchmark to be used for the purposes of this Charter); |
(iii) |
implementing market conventions applicable to that Replacement Benchmark; |
(iv) |
providing for appropriate fallback (and market disruption) provisions for that Replacement Benchmark; or |
(v) |
subject to Clause 37.5 below, adjusting the pricing to reduce or eliminate, to the extent reasonably practicable, any transfer of economic value from one Party to another as a result of the application of that Replacement Benchmark (and if any adjustment or method for calculating any adjustment has been formally designated, nominated or recommended by the Relevant Nominating Body, the adjustment shall be determined on the basis of that designation, nomination or recommendation), |
and pending any such amendment or waiver and the Replacement Benchmark being utilised under the Leasing Documents to calculate the Interest rate, Clause 37.3 shall apply to the calculation of the Interest Rate.
37.5 |
Upon the Owners’ written notification to the Charterers of the Owners’ intention to negotiate a Replacement Benchmark, the Owners and the Charterers shall enter into negotiations in good faith with a view to agreeing the use of a Replacement Benchmark in relation to dollars in place of that Screen Rate. Such negotiation shall be carried out by each Party in consideration of the then prevailing market practice (including without limitation, SOFR compounded in arrears), factoring into account the economics of the transaction contemplated therein and in particular the Margin initially agreed between Parties. It is hereby agreed that, if the use of a Replacement Benchmark in relation to dollars is not so agreed within ninety (90) days of the Owner’s written notification to the Charterers and the Replacement Benchmark proposed by and acceptable to the Owners is not: |
(a) |
generally accepted in the international or any relevant domestic syndicated loan markets as the appropriate successor to the Screen Rate which is subject to replacement at any relevant time; and/or |
(b) |
SOFR; |
and the rates offered by such Replacement Benchmark are substantially higher than those referred to in paragraphs (a) and (b) of this Clause 37.5, then the Charterers shall have the option to purchase back the Vessel from the Owners by paying the Mandatory Sale Price subject to the Owners receiving from the Charterers a notice in writing not earlier than ninety (90) days of the intended Mandatory Sale Date, and this Charter shall terminate in accordance with the procedures set out in Clause 55A (Mandatory Sale).
37.6 |
If the Charterers fail to make any payment due under this Charter on the due date, they shall pay additional interest on such late payment at a rate which is equal to two per cent. (2%) per annum above the applicable Interest Rate for the relevant Hire Period and the Margin which shall apply prior to, during or following Delivery and shall accrue on a daily basis from the date on which such payment became due up to and excluding the date of payment thereof, and the Charterers and the Owners agree that such default rate is proportionate as to amount, having |
7
regard to the legitimate interest of the Owners, in protecting against the Owners’ risk of the Charterers failing to perform its obligations under this Charter.
37.7 |
All interest (including default interest) and any other payments under this Charter which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a three hundred and sixty (360) days’ year. |
CLAUSE 38 – POSSESSION OF VESSEL
38.1 |
The Charterers shall not, without the prior written consent of the Owners, assign, mortgage or pledge the Vessel or any interest therein and shall not permit the creation or existence of any Security Interest thereon (including for any monies paid in advance and not earned, and for any claims for damages arising from any breach by the Owners of this Charter and other amounts due to the Charterers under this Charter) except for the Permitted Security Interests. |
38.2 |
The Charterers shall promptly notify any party (including without limitation, any sub-charterer) (as the Owners may request) in writing that the Vessel is the property of the Owners and the Charterers shall provide the Owners with a copy of such written notification and evidence that such party has received such written notification. |
38.3 |
If the Vessel is arrested, seized, impounded, forfeited, detained or taken out of their possession or control (whether or not pursuant to any distress, execution or other legal process), the Charterers shall procure the immediate release of the Vessel (whether by providing bail or procuring the provision of security or otherwise do such lawful things as the circumstances may require) and shall immediately notify the Owners of such event and shall indemnify the Owners against all losses, costs or charges incurred by the Owners by reason thereof in re-taking possession or otherwise in re-acquiring the Vessel. |
38.4 |
The Charterers shall pay and discharge or cause any sub-charterer of the Vessel to pay and discharge all obligations and liabilities whatsoever which have given or may give rise to liens on or claims enforceable against the Vessel. The Charterers shall take all reasonable steps to prevent (and shall procure that a sub-charterer shall take all reasonable steps to prevent) an arrest of the Vessel. |
CLAUSE 39 – INSURANCE
39.1 |
The Charterers shall procure that insurances for the Vessel are effected: |
(a) |
in Dollars; |
(b) |
in the case of fire and usual hull and machinery, marine risks and war risks (including blocking and trapping), on an agreed value basis of at least the higher of (i) one hundred percent (100%) of then applicable Fair Market Value of the Vessel and (ii) one hundred and twenty per cent (120%) of the then prevailing Owners’ Costs; |
(c) |
in the case of oil pollution liability risks, for an aggregate amount equal to the higher of (i) US$1,000,000,000 or (ii) the highest level of cover from time to time available under basic protection and indemnity club entry and in the international marine insurance market; |
(d) |
in the case of protection and indemnity risks, in respect of the full tonnage of the Vessel and with a protection and indemnity club which is a member of the International Group of Protection and Indemnity Clubs; |
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(e) |
through brokers approved by the Owners and with first class international insurers and/or underwriters acceptable to the Owners and having a Standard & Poor’s rating of BBB+ or above, a Moody’s rating of A or above or an AM Best rating of A- or above or otherwise acceptable to the Owners; and |
(f) |
otherwise on terms and in form acceptable to the Owners. |
39.2 |
In addition to the terms set out in Clause 13(a) (Insurance and Repairs), the Charterers shall procure that the Obligatory Insurances shall: |
(a) |
subject always to paragraph (b), name the Owners, the Charterers and the Approved Technical Manager as the only named assureds unless the interest of every other named assured or coassured is limited: |
(i) |
in respect of any Obligatory Insurances for hull and machinery and war risks; |
(A) |
to any provable out-of-pocket expenses that they have incurred and which form part of any recoverable claim on underwriters; and |
(B) |
to any third party liability claims where cover for such claims is provided by the policy (and then only in respect of discharge of any claims made against them); and |
(ii) |
in respect of any Obligatory Insurances for protection and indemnity risks, to any recoveries they are entitled to make by way of reimbursement following discharge of any third party liability claims made specifically against them, |
and every other named assured or co-assured has undertaken in writing to the Owners or the Owners’ Financiers (if any) (in such form as they may require) that any deductible shall be apportioned between the Charterers and every other named assured or co-assured (save for the Owners or the Owners’ Financiers (if any)) in proportion to the gross claims made by or paid to each of them and that they shall do all things necessary and provide all documents, evidence and information to enable the Owners and the Owners’ Financiers (if any) in accordance with the terms of the loss payable clause, to collect or recover any moneys which at any time become payable in respect of the Obligatory Insurances;
(b) |
whenever the Owners require in respect of any Owners’ Financiers: |
(i) |
in respect of fire and other usual marine risks and war risks, name (or be amended to name) the same as additional named assured for their rights and interests, warranted no operational interest and with full waiver of rights of subrogation against such Owners’ Financier, but without such financiers thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance; |
(ii) |
in relation to protection and indemnity risks, name (or be amended to name) the same as additional insured or co-assured for their rights and interests to the extent permissible under the relevant protection and indemnity club rules; and |
(iii) |
name the Owners’ Financiers (if any) and the Owners as respectively the first ranking loss payee and the second ranking loss payee (and in the absence of any Owners’ Financiers, the Owners as first ranking loss payee) in accordance with the terms of the relevant loss payable clauses approved by the Owners’ Financiers and the Owners with |
9
such directions for payment in accordance with the terms of such relevant loss payable clause, as the Owners and the Owners’ Financiers (if any) may specify;
(c) |
provide that all payments by or on behalf of the insurers under the Obligatory Insurances to the Owners and/or the Owners’ Financiers (as applicable) shall be made without set-off, counterclaim, deduction or condition whatsoever; |
(d) |
provide that such Obligatory Insurances shall be primary without right of contribution from other insurances which may be carried by the Owners or the Owners’ Financiers (if any); |
(e) |
provide that the Owners and/or the Owners’ Financiers (if any) may make proof of loss if the Charterers fail to do so; and |
(f) |
provide that if any Obligatory Insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of the Owners and/or the Owners’ Financiers (if any), or if any Obligatory Insurance is allowed to lapse for non-payment of premium, such cancellation, change or lapse shall not be effective with respect to the Owners and/or the Owners’ Financiers (if any) for thirty (30) days after receipt by the Owners and/or the Owners’ Financiers (if any) of prior written notice from the insurers of such cancellation, change or lapse. |
39.3 |
The Charterers shall: |
(a) |
at least fourteen (14) days prior to Delivery (or such shorter period agreed by the parties), notify in writing the Owners of the terms and conditions of all Insurances; |
(b) |
at least fourteen (14) days before the expiry of any Obligatory Insurance or otherwise before the change of appointment of any brokers (or other insurers) and any protection and indemnity or war risks association through which Obligatory Insurances are taken from time to time pursuant to this Clause 39 (Insurance), notify the Owners of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom the Charterers propose to renew or obtain that Obligatory Insurance and of the proposed terms of such renewed or new insurance cover and obtain the Owners’ approval to such matters; |
(c) |
at least seven (7) days before the expiry of any Obligatory Insurance, procure that such Obligatory Insurance is renewed or to be renewed on its expiry date in accordance with the provisions of this Charter; |
(d) |
procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal or the effective date of the new insurance and protection and indemnity cover notify the Owners in writing of the terms and conditions of the renewal; and |
(e) |
as soon as practicable after the expiry of any Obligatory Insurance and within thirty (30) days after such expiry, deliver to the Owners a letter of undertaking as required by this Charter in respect of such Insurances for the Vessel as renewed pursuant to Clause 39.3 together with copies of the relevant policies or cover notes or entry certificates duly endorsed with the interest of the Owners and/or the Owners’ Financiers (if any). |
39.4 |
The Charterers shall ensure that all insurance companies and/or underwriters, and/or insurance brokers (if any) provide the Owners with copies (or upon the Owners’ request, originals) of policies, cover notes and certificates of entry relating to the Obligatory Insurances |
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which they are to effect or renew and letter or letters of undertaking in a form required by the Owners or the Owners’ Financiers (if any) and including undertakings by the insurance companies and/or underwriters that:
(a) |
they will have endorsed on each policy, immediately upon issuance, a loss payable clause and a notice of assignment complying with the provisions of this Charter and the Financial Instruments; |
(b) |
they will hold the benefit of such policies and such insurances, to the order of the Owners and/or the Owners’ Financiers (if any) and/or such other party in accordance with the said loss payable clause; |
(c) |
they will advise the Owners and the Owners’ Financiers (if any) promptly of any material change to the terms of the Obligatory Insurances of which they are aware; |
(d) |
they will notify the Owners and the Owners’ Financiers (if any) not less than fourteen (14) days before the expiry of the Obligatory Insurances, in the event of their not having received notice of renewal instructions from the Charterers and, in the event of their receiving instructions to renew, they will promptly notify the Owners and the Owners’ Financiers (if any) of the terms of the instructions; and |
(e) |
if any of the Obligatory Insurances form part of any fleet cover, the Charterers shall procure that the insurance broker(s), or leading insurer, as the case may be, undertakes to the Owners and the Owners’ Financiers (if any) that such insurance broker or insurer will not set off against any sum recoverable in respect of a claim relating to the Vessel under such Obligatory Insurances any premiums due in respect of any other vessel under any fleet cover of which the Vessel forms a part or any premium due for other insurances, they waive any lien on the policies, or any sums received under them, which they might have in respect of such premiums, and they will not cancel such Obligatory Insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of the Vessel forthwith upon being so requested by the Owners or the Owners’ Financiers (if any) and where practicable. |
39.5 |
The Charterers shall ensure that any protection and indemnity and/or war risks associations in which the Vessel is entered provides the Owners and the Owners’ Financiers (if any) with: |
(a) |
a copy of the certificate of entry for the Vessel as soon as such certificate of entry is issued; |
(b) |
a letter or letters of undertaking in such form as may be required by the Owners or the Owners’ Financiers (if any) or in such association’s standard form; and |
(c) |
a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to the Vessel. |
39.6 |
The Charterers shall ensure that all policies relating to the Obligatory Insurances are deposited with the approved brokers (if any) through which the insurances are effected or renewed. |
39.7 |
The Charterers shall procure that all premiums or other sums payable in respect of the Obligatory Insurances are punctually paid and produce all relevant receipts when so required by the Owners. |
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39.8 |
The Charterers shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect. |
39.9 |
The Charterers shall neither do nor omit to do (nor permit to be done or not to be done) any act or thing which would or might render any Obligatory Insurance invalid, void, voidable or unenforceable or render any sum payable under an Obligatory Insurance repayable in whole or in part and, in particular: |
(a) |
the Charterers shall procure that all necessary action is taken and all requirements are complied with which may from time to time be applicable to the Obligatory Insurances, and (without limiting the obligations contained in this Clause) ensure that the Obligatory Insurances are not made subject to any exclusions or qualifications to which the Owners have not given their prior approval (unless such exclusions or qualifications are made in accordance with the rules of a protection and indemnity association which is a member of the International Group of Protection and Indemnity Clubs); |
(b) |
the Charterers shall not make or permit any changes relating to the classification or the classification society of the Vessel or, subject to procuring the provision of a replacement manager’s undertaking in substantially the same form as the Manager’s Undertaking, any changes to the manager or operator of the Vessel unless such changes have, if required, first been approved by the underwriters of the Obligatory Insurances and the Owners or the Owners’ Financiers (if any); |
(c) |
the Charterers shall procure that all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Vessel is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation) are made and the Charterers shall promptly provide the Owners with copies of such declarations and a copy of its valid certificate of financial responsibility; and |
(d) |
the Charterers shall not employ the Vessel, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the Obligatory Insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify. |
39.10 |
The Charterers shall not make or agree to any material alteration to the terms of any Obligatory Insurance nor waive any right relating to any Obligatory Insurance without the prior written consent of the Owners. |
39.11 |
The Charterers shall not settle, compromise or abandon any claim under any Obligatory Insurance for Total Loss or for a Major Casualty, and shall do all things necessary and provide all documents, evidence and information to enable the Owners to collect or recover any moneys which at any time become payable in respect of the Obligatory Insurances. |
39.12 |
The Charterers shall provide the Owners upon written request, copies of all material communications between the Charterers and: |
(a) |
the approved brokers; |
(b) |
the approved protection and indemnity and/or war risks associations; and |
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(c) |
the approved insurers and/or underwriters, |
which relate directly or indirectly to:
(i) |
the Charterers’ obligations relating to the Obligatory Insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and |
(ii) |
any credit arrangements made between the Charterers and any of the persons referred to in paragraphs (a) or (b) above relating wholly or partly to the effecting or maintenance of the Obligatory Insurances; and |
(iii) |
any communication with any party involved in case of a claim under any of the Vessel’s insurances. |
39.13 |
The Charterers shall promptly provide the Owners (or any persons which they may designate) with any information which the Owners may request for the purpose of: |
(a) |
obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the Insurances (including but not limited to the report obtained under Clause 39.16); or |
(b) |
effecting, maintaining or renewing any such insurances as are referred to in Clause 13(a) (Insurance and Repairs) or this Clause 39 (Insurance) or dealing with or considering any matters relating to any such insurances; |
39.14 |
The Charterers shall upon demand fully indemnify the Owners (including if requested by the Owners, make direct payment to the relevant insurer or broker for the same) in respect of all premiums and other expenses which are incurred by: |
(a) |
the Owners in connection with or with a view to effecting, maintaining or renewing an innocent owners interest insurance and an innocent owners additional perils insurance or any similar protective shipowner insurance that is taken out in respect of the Vessel; and/or |
(b) |
the Owners’ Financiers (if any) in connection with or with a view to effecting, maintaining or renewing a mortgagee’s interest insurance, a mortgagee’s additional perils insurance, all protection and indemnity insurance that is taken out in respect of the Vessel, |
in each case as referred to in paragraphs (a) and (b) above, in an amount not exceeding one hundred and twenty per cent (120%) of the Owners’ Costs from time to time and on such other terms, through such insurers and generally in such manner as the Owners or the Owners’ Financiers (as the case may be) may from time to time consider appropriate.
39.15 |
The Charterers shall be solely responsible for and indemnify the Owners in respect of all loss or damage to the Vessel (insofar as the Owners shall not be reimbursed by the proceeds of any insurance in respect thereof) however caused occurring at any time or times before physical possession thereof is retaken by the Owners, with only reasonable wear and tear to the Vessel excepted. |
39.16 |
The Charterers shall reimburse or indemnify the Owners for any expenses incurred or to be incurred by the Owners in obtaining a detailed report signed by an independent firm of marine insurance brokers approved by the Owners dealing with the Obligatory Insurances and stating the opinion of such firm as to the adequacy of the Obligatory Insurances: |
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(a) |
when an agreed form of such detailed report satisfactory to the Owners is obtained as a condition precedent requirement under Part A of Schedule 2 (Conditions Precedent) of this Charter; |
(b) |
when the Owners procure the issuance of such detailed report no more than once every calendar year, unless a Termination Event has occurred in which case such reports may be procured at the Charterer’s cost at any such time; and |
(c) |
further from time to time upon the Owners’ demand where, in the Owners’ opinion, at any time during the Charter Period there has been a material change in the terms of the Insurances and/or a change in the circumstances which would materially adversely affect the adequacy of the Obligatory Insurances. |
39.17 |
The Charterers shall: |
(a) |
keep the Vessel insured at their expense against such other risks (not including loss of hire or earnings risks) which the Owners and the Owners’ Financiers (if any) consider reasonable for a prudent shipowner or operator to insure against for trading, management, operational and/or safety purposes at the relevant time (as notified by the Owners) and which risks are, at that time, generally insured against as market practice by owners or operators of vessels similar to the Vessel and having regard to the availability of such cover in the insurance market at that time; and |
(b) |
upon demand fully indemnify the Owners in respect of all premiums and other expenses incurred by the Owners in respect of any other insurances which the Owners deem necessary and takes out in respect of the Vessel. |
CLAUSE 40 – WARRANTIES RELATING TO VESSEL
40.1 |
It is expressly agreed and acknowledged that the Owners are not the manufacturer or original supplier of the Vessel but that the Owners (in their capacity as buyers) have purchased the Vessel from the Charterers (in their capacity as sellers) pursuant to the MOA at the request of the Charterers, for the purpose of then chartering the Vessel to the Charterers hereunder and that no condition, term, warranty or representation of any kind is or has been given to the Charterers by or on behalf of the Owners in respect of the Vessel (or any part thereof). |
40.2 |
All conditions, terms or warranties express or implied by the law relating to the specifications, quality, description, merchantability or fitness for any purpose of the Vessel (or any part thereof) or otherwise are hereby expressly excluded. |
40.3 |
The Charterers agree and acknowledge that the Owners shall not be liable for any claim, loss, damage, expense or other liability of any kind or nature caused directly or indirectly by the Vessel or by any inadequacy thereof or the use or performance thereof or any repairs thereto or servicing thereof and the Charterers shall not by reason thereof be released from any liability to pay any Charterhire or other payment due under this Charter. |
CLAUSE 41 – TERMINATION AND REDELIVERY
41.1 |
Upon termination of the leasing of the Vessel under this Charter pursuant to Clause 47.2, the Charterers shall be obliged to pay the Owners the Termination Sum on the Termination Date and it is hereby agreed by the parties hereto that: |
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(a) |
without prejudice to Clause 42.2, the obligation to pay the Termination Sum is a continuing obligation and shall survive the termination of the leasing of the Vessel under this Charter and shall continue in full force and effect until irrevocably and unconditionally paid in full; |
(b) |
payment of the Termination Sum is deemed to be proportionate as to amount, having regard to the legitimate interest of the Owners, in protecting against the Owners’ risk of the Charterers failing to perform its obligations under this Charter; and |
(c) |
the Termination Sum shall, depending on the nature of the Termination Event(s) on the basis of which the Owners serve a Termination Notice, be either an obligation to pay damages following acceptance by the Owners of a breach of condition by the Charterers or an obligation to pay an agreed sum in specified circumstances which do not involve a breach of contract by the Charterers. |
41.2 |
If the Charterers fail to make any payment of the Termination Sum on the Termination Date, Clause 37.6 shall apply and the Owners shall be entitled to exercise their rights under Clause 42 (Sale of Vessel by the Owners in the event of Non-Payment of Termination Sum). |
41.3 |
Concurrently with the unconditional and irrevocable payment of the Termination Sum in full pursuant to the terms of this Charter, this Charter shall terminate and the Owners shall (save in the event of Total Loss or in the event that the Vessel has been sold or contracted to be sold pursuant to Clause 42 (Sale of Vessel by the Owners in the event of Non-Payment of Termination Sum)), at the cost of the Charterers, transfer the legal and beneficial ownership of the Vessel on an “as is where is” basis to the Charterers or their nominees free from any registered mortgages, encumbrances, liens, debts or claims incurred or permitted by the Owners (save for those liens, encumbrances and debts incurred by the Charterers or arising out of or in connection with this Charter), and shall execute a bill of sale and a protocol of delivery and acceptance evidencing the same and such sale shall be completed otherwise in accordance with Clause 56.1(a) and 56.1(b). |
41.4 |
The Charterers hereby undertake to indemnify the Owners against any claims incurred in relation to the Vessel prior to such transfer of ownership. Any taxes, notarial, consular and other costs, charges and expenses connected with closing of the Owners’ register shall be for the Charterers’ account. |
41.5 |
On natural expiration of this Charter, unless the Purchase Option Price or the Mandatory Sale Price is paid by the Charterers in accordance with Clause 56 (Sale of the Vessel), the Charterers shall re-deliver the Vessel to the Owners in accordance with Clause 41.6 and shall ensure that they have fulfilled their obligations under this Charter and made payment of all Charterhire and all other moneys pursuant to the terms of this Charter. In such case, the Charterers shall give the Owners not less than 30/20/10/5 running days’ preliminary notice of expected date and range of ports or places of redelivery not less than 5/3/2/1/ running days’ definite notice of expected date and port or place of redelivery. Any changes thereafter in the Vessel’s position shall be notified immediately to the Owners. |
41.6 |
If the Charterers are required to redeliver the Vessel to the Owners pursuant to the terms of this Charter, the Vessel shall be redelivered and taken over safely afloat at a safe and accessible berth or anchorage in such location as the Owners may reasonably require (which, for the avoidance of doubt, shall exclude any war listed area declared by the Joint War Committee). The Charterers shall ensure that, at the time of redelivery to the Owners, the Vessel: |
15
(a) |
be in an equivalent class as she was as at the Commencement Date and without any recommendations or conditions and with valid certificates for not less than six (6) months and free of average damage affecting the Vessel’s classification and in the same or as good structure, state, condition and classification as that in which she was deemed on the Commencement Date, fair wear and tear not affecting the Vessel’s classification excepted; |
(b) |
has passed her 5-year special survey (if applicable), and subsequent second intermediate surveys and drydock at the Charterers’ time and expense without any overdue recommendations or conditions to the satisfaction of the Approved Classification Society; |
(c) |
‘has her survey cycles up-to-date and trading and class certificate valid for at least the number of months agreed in Box 17; |
(d) |
be re-delivered to the Owners together with all spare parts and spare equipment as were on board at the time of Delivery, and any such spare parts and spare equipment on board at the time of re-delivery shall be taken over by the Owners free of charge; |
(e) |
be free of any cargo and Security Interest (save for the Security Interests granted pursuant to the Financial Instruments, if any) subject to the terms of any sub-charter which the Owners have approved pursuant to the terms of this Charter; |
(f) |
be free of any crew and officers unless otherwise instructed by the Owners; |
(g) |
be free of any charter or other employment (unless the Owners wish to retain the continuance of any prevailing charter or as otherwise agreed by the Owners in their absolute discretion or unless such sub-charter has been approved by the Owners pursuant to the terms of this Charter); and |
(h) |
have such amount of bunkers on board the Vessel as would be sufficient to enable the Vessel to sail to the nearest bunker port in compliance with all bunkering fuel content regulations then applicable in such place of redelivery. |
41.7 |
The Charterers warrant that they will not permit (or request any sub-charterer not to) the Vessel to commence a voyage (including any preceding ballast voyage) which cannot reasonably be expected to be completed in time to allow redelivery of the Vessel within any time period required by this Clause 41 (Termination and Redelivery). Notwithstanding the above, should the Charterers fail to redeliver the Vessel within any time period required by this Clause 41 (Termination and Redelivery), the Charterers shall pay the daily equivalent to the rate of Charterhire plus ten per cent. (10%) or to the market rate, whichever is the higher, for the number of days by which the Charter Period is exceeded. |
41.8 |
If the Charterers are required to redeliver the Vessel to the Owners pursuant to the terms of this Charter other than pursuant to Clause 42.1(a), the Owners and Charterers shall mutually appoint a surveyor (the “Joint Surveyor”) for the purpose of determining and agreeing in writing the condition of the Vessel at the time of such redelivery. The Charterers shall provide the Joint Surveyor with all such facilities and access to the Vessel as may be required to enable the Joint Surveyor to conduct its survey of the Vessel and shall take all such actions as may be reasonably recommended by the Joint Surveyor to ensure that the Vessel shall be redelivered in accordance with Clause 41.6. |
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41.9 |
If the Charterers are required to redeliver the Vessel to the Owners pursuant to Clause 42.1(a), the Owners shall appoint surveyors (the “Owners’ Surveyor”) for the purpose of determining and agreeing in writing the condition of the Vessel at the time of such redelivery. The Charterers shall provide the Owners’ Surveyor with all such facilities and access to the Vessel as may be required to enable the Owners’ Surveyor to conduct its survey of the Vessel and shall take all such actions as may be reasonably recommended by the Owners’ Surveyor to ensure that the Vessel shall be redelivered in accordance with Clause 41.6. |
41.10 |
The Owners shall not be obliged to accept redelivery of the Vessel until the Owners are reasonably satisfied that all conditions for the redelivery of the Vessel under this Charter (including without limitation, Clause 41.6) are met, and the Vessel shall (if the redelivery is at the end of the Charter Period) continue to be on-hire under the terms of this Charter until such redelivery. The Owners reserve all rights to recover from the Charterers any costs, expense and/or liabilities incurred or suffered by them (including without limitation, the costs of any repairs which may be required to restore the Vessel to the condition required by Clause 41.6 as a result of the Vessel not being redelivered in accordance with the terms of this Charter. |
41.11 |
The Owners shall, at the time of the redelivery of the Vessel, take over all bunkers, lubricating oil, unbroached provisions, paints, ropes, other consumable stores and spare parts in the Vessel at no cost to the Owners. |
CLAUSE 42 – SALE OF VESSEL BY THE OWNERS IN THE EVENT OF NON-PAYMENT OF TERMINATION SUM
42.1 |
The Charterers agree that should the Termination Sum not be paid on the Termination Date: |
(a) |
save as required to comply with this Clause 42.1, the Charterers’ right to possess and operate the Vessel shall immediately cease and (without in any way affecting the Charterers’ obligation to pay the Charterer the Termination Sum and comply with its other obligations under this Charter) the Charterers shall hold the Vessel as gratuitous bailee only to the Owners, the Charterers shall procure that the master and crew follow the orders and directions of the Owners and the Charterers shall, upon the Owners’ request (at Owners’ sole discretion), be obliged to immediately (and at the Charterers’ own cost) redeliver the Vessel to the Owners at such ready and nearest safe port or location as the Owners may require and for the avoidance of doubt, any such redelivery shall not extinguish the Owners’ right to recover the Termination Sum from the Charterers under this Charter; |
(b) |
the Owners shall be entitled (at Owners’ sole discretion) to operate the Vessel as they may require and may create whatsoever interests thereon, including without limitation charterparties or any other form of employment contracts provided that the Earnings of the Vessel during such period less its operational expenses (the “Net Trading Proceeds”) shall be applied against the Termination Sum and any other amounts payable under the Leasing Documents pursuant to Clause 64 (General Application of Proceeds) provided, that if such use of the Vessel results in the Owners suffering a loss then such losses shall be included in the indemnities contained in Clause 57 (Indemnities) and be added to the Termination Sum; and |
(c) |
the Owners shall be entitled (at Owners’ sole discretion) to immediately thereafter sell the Vessel to any person on such terms as they deem fit, save that if required by the Charterers or the Guarantor and if agreed by the Owners, the Charterers or the Guarantor may within such reasonable time as specified by the Owners (the “Nomination Period”) first nominate or |
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identify a purchaser for the Vessel (a “Nominated Purchaser”) and the Owners may sell the Vessel to such Nominated Purchaser subject to all the following conditions being satisfied:
(i)the Nominated Purchaser is acceptable to the Owners; and
(ii) |
the price to be paid by the Nominated Purchaser (after deducting any commissions, taxes and other costs of sale) is equal to or more than the applicable Termination Sum (unless otherwise agreed by the Owners in their absolute discretion) unless the shortfall is paid by any Obligor or member of the Group on or before such sale, |
and any net sale proceeds (after deducting all fees, taxes, disbursements and any other costs and expenses incurred by the Owners in connection with such sale) (the “Net Sales Proceeds”) derived from any such sale to a Nominated Purchaser or any other person shall be applied towards reduction of the Termination Sum in accordance with Clause 64 (General Application of Proceeds). If the Net Sales Proceeds are not sufficient to settle the Termination Sum in full, the Charterers shall remain liable to pay the shortfall and default interest shall continue to accrue on the unpaid portion of the Termination Sum in accordance with Clause 37.6. The above is without prejudice to all of the Owners’ rights under the Leasing Documents (including to sell the Vessel to any person they deem fit) should there be no agreement as to the Nominated Purchaser.
42.2 |
Notwithstanding Clause 42.1, the Owners may, by written notice to the Charterers at any time after the expiry of the Nomination Period (if applicable pursuant to Clause 42.1(c) above), elect to retain the Vessel instead of selling the Vessel under Clause 42.1(c) above (with such option to elect to retain the Vessel to take effect from such date as they may nominate after the expiry of the Nomination Period Period (if applicable pursuant to Clause 42.1(c) above) (regardless of date of the notice)), and in doing so, the Owners shall first obtain the Fair Market Value of the Vessel (after deducting any commissions, taxes and costs which would be likely to be incurred in connection with a sale of the Vessel) not later than ten (10) days after the date of such nomination and if the Fair Market Value (less such deductions) of the Vessel is less than the Termination Sum as of the date of the determination of the Fair Market Value, the Charterers shall immediately pay the difference to the Owners upon the Owners’ demand. If the Fair Market Value of the Vessel (subject to the aforesaid deductions) exceeds the Termination Sum as at such date, the Owners shall within thirty (30) days (of the date of the notice) pay the difference to the Charterers. |
CLAUSE 43 – TOTAL LOSS
43.1 |
Throughout the Charter Period, the Charterer shall bear the full risk of any Total Loss of or any other damage to the Vessel howsoever arising. If the Vessel becomes a Total Loss after Delivery, the Charterer shall, subject to Clause 43.2, pay the Total Loss Termination Sum to the Owners on the Total Loss Payment Date. Upon such receipt by the Owners of the Total Loss Termination Sum, this Charter shall terminate (without prejudice to any provision of this Charter expressed to survive termination) but until such receipt, the Charterers shall remain liable to make all payments of Charterhire and all other amounts to the Owners under this Charter, notwithstanding that the Vessel has become a Total Loss. |
43.2 |
Any Total Loss Proceeds unconditionally received by the Owners (or the Owners’ Financiers in accordance with the terms of the relevant loss payable clause) shall be applied in accordance with Clause 64 (General Application of Proceeds) and shall satisfy the obligation of the Charterers to pay the Total Loss Termination Sum to the extent received by the Owners or the |
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Owners’ Financiers in accordance with the terms of the relevant loss payable clause). The obligation of the Charterers to pay the Total Loss Termination Sum shall remain unaffected and exist regardless of whether any of the insurers have agreed or refused to meet or has disputed in good faith, the claim for Total Loss.
43.3 |
If the Total Loss Proceeds unconditionally received by the Owners or the Owners’ Financiers in accordance with the terms of the relevant loss payable clause) are less than the Total Loss Termination Sum, the Charterers shall pay such shortfall to the Owner on the Total Loss Payment Date. |
43.4 |
The Owners shall have no obligation to supply to the Charterers with a replacement vessel following the occurrence of a Total Loss. |
CLAUSE 44 – FEES AND EXPENSES
44.1 |
The Charterers shall pay to the Owners a non-refundable arrangement fee (the “Arrangement Fee”) in the amount and at the times agreed in the Fee Letter. |
44.2 |
All costs and expenses including, but not limited to documented legal costs, expenses and other disbursements reasonably incurred by the Owners and each of their legal counsels in relation to preparing, negotiating and executing this Charter and the Leasing Document, shall be for the account of the Charterers (regardless of whether the transaction contemplated by the Leasing Documents actually completes). |
44.3 |
If: |
(a) |
the Charterers request an amendment, waiver or consent; |
(b) |
the Charterers make a request to re-register the Vessel in another Flag State; or |
(c) |
an amendment is required to address the fact that the Screen Rate is not or is likely not to be available for Dollars, |
the Charterers shall, on demand, reimburse the Owners for the amount of all costs and expenses (including legal fees) incurred by the Owners in responding to, evaluating, negotiating or complying with that request or requirement (including, for the avoidance of doubt, any amounts the Owners have to pay under the terms of the Financial Instruments).
44.4 |
All documented costs and expenses incurred by the Owners in relation to the acquisition, registration of title of the Vessel in the Owners’ name in the Flag State together with any and all fees (including but not limited to any vessel registration and tonnage fees and the Owners’ initial and ongoing registration and maintenance costs if required to be registered as a foreign maritime entity or the appointment of resident agents under the laws of the Flag State) payable by the Owners to register, maintain and/or renew such registration, shall be for the account of the Charterers. Without prejudice to the foregoing, if the Flag State requires the Owners to establish a physical presence or office in the jurisdiction of such Flag State, all fees, costs and expenses payable by the Owners to establish and maintain such physical presence or office shall be for the account of the Charterers. The Charterers shall promptly provide the Owners with evidence of payment of the annual register/tonnage tax amounts payable to the Flag State or any other aforesaid costs, expenses and/or taxes when the same fall due. |
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44.5 |
All documented costs and expenses (including legal fees) incurred by the Owners in relation to the transfer of title of the Vessel by the Owners to the Charterers and the re-delivery of the Vessel by the Charterers to the Owners pursuant to Clause 41 (Termination and Redelivery) shall be for the account of the Charterers. |
44.6 |
The Charterers shall, on demand, pay to the Owners the amount of all documented costs and expenses (including legal fees) incurred by the Owners in connection with the enforcement of, or the preservation of any rights under, any Leasing Document, including, without limitation, any action brought by the Owners to arrest or recover possession of the Vessel, and with any proceedings instituted by or against the Owners as a consequence of it entering into a Leasing Document or enforcing those rights. |
CLAUSE 45 – NO WAIVER OF RIGHTS
45.1 |
No neglect, delay, act, omission or indulgence on the part of either Party in enforcing the terms and conditions of this Charter or any other Leasing Document (to which they are party to) shall prejudice the strict rights of that Party or be construed as a waiver thereof nor shall any single or partial exercise of any right of either party preclude any other or further exercise thereof. |
45.2 |
No right or remedy conferred upon either Party by this Charter or any other Leasing Document shall be exclusive of any other right or remedy provided for herein or by law and all such rights and remedies shall be cumulative. |
CLAUSE 46 – NOTICES
46.1 |
Any notice, certificate, demand or other communication to be served, given, made or sent under or in relation to this Charter shall be in English and in writing and (without prejudice to any other valid method or giving, making or sending the same) shall be deemed sufficiently given or made or sent if sent by registered post or by email to the following respective address: |
(a) |
to the Owners: |
c/o CMB Financial Leasing Co., Ltd. |
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21F, China Merchants Bank Building |
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No. 1088 Lujiazui Ring Road |
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Shanghai 200120 |
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The People’s Republic of China |
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Attention: |
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Email: |
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Tel: |
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(b) |
to the Charterers: |
c/o OET CHARTERING INC. |
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Ethnarchou Makariou & D. Falireos Str. 2 |
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185 47, Neo Faliro, Piraeus, Greece |
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Attention: |
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Email: |
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Tel: |
or, if a party hereto changes its address or email address, to such other address (or email address) as that party may notify to the other.
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46.2 |
Any such communication shall be deemed to have reached the party to whom it was addressed (a) when delivered (in case of a registered letter), or (b) when actually received in readable form (in case of an email). A notice or other such communication received on a non-working day or after 5.00 p.m. in the place of receipt shall be deemed to be served on the next following working day in such place. |
CLAUSE 47 – TERMINATION EVENTS
47.1 |
The Owners and the Charterers hereby agree that any of the following events shall constitute a Termination Event: |
(a) |
any Obligor fails to pay or the Owners do not receive on the due date any amount payable pursuant to a Leasing Document, unless such failure to pay is caused by a technical error and payment is made within three (3) Business Days of its due date; |
(b) |
the Charterers breach or omit to observe or perform or procure the performance of any of the undertakings in Clauses 50.1(f), Clause 51 (Financial Covenants), Clause 52 (Valuations), 53.1(b), 53.1(c) and failed to remedy the breach in relation to the Delisting in Clause 50.1(i) above; |
(c) |
the Charterers fail to obtain and/or maintain the Insurances required under Clause 39(Insurance) in accordance with the provisions thereof (or any insurer in respect of such Insurances cancels the Insurances or disclaims liability with respect thereto); |
(d) |
any Obligor commits any other breach of, or omits to observe or perform, any of their other obligations or undertakings in any Leasing Document (other than a breach referred to in paragraphs (a) to (c) above) or any Approved Manager breaches any provision of, or omits to observe or perform, any of their obligations or undertakings in any Manager’s Undertaking unless such breach or omission is in the reasonable opinion of the Owners, remediable and the relevant Obligor or Approved Manager remedies such breach or omission to the satisfaction of the Owners within fifteen (15) Business Days of the earlier of (i) the date of the notice thereof from the Owners or (ii) upon the relevant Obligor or Approved Manager becoming aware of the same; |
(e) |
any representation or warranty made by or on behalf of an Obligor, in or pursuant to any Leasing Document to which it is a party, in the reasonable opinion of the Owners, proves to be materially untrue or misleading when it is made; |
(f) |
any of the following occurs in relation to any Financial Indebtedness of any Obligor: |
(i) |
any Financial Indebtedness is not paid when due or not paid within any originally applicable grace period; |
(ii) |
any Financial Indebtedness is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described) and following the expiry of any applicable grace period; |
(iii) |
any commitment for any Financial Indebtedness is cancelled or suspended by any of its creditors as a result of an event of default (however described) and following the expiry of any applicable grace period; |
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(iv) |
any of its creditors becomes entitled to declare any Financial Indebtedness due and payable prior to its specified maturity as a result of an event of default (however described) and following the expiry of any applicable grace period; or |
(v) |
any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of such Obligors ceases to be available or becomes capable of being terminated or declared due and payable or cash cover is required or becomes capable of being required, as a result of any termination event or event of default (howsoever defined), |
provided that no Termination Event will occur under this paragraph (f) in respect of the Guarantor if the aggregate amount of Financial Indebtedness falling within sub-paragraphs (i) to (v) above (for the Guarantor) is less than US$10,000,000 (or its equivalent in any other currency or currencies);
(g) |
any of the following occurs in relation to any Obligor: |
(i) |
it becomes unable to pay its debts as they fall due; |
(ii) |
any administrative or other receiver is appointed over all or a substantial part of its assets unless as part of a solvent reorganisation which has been approved in writing by the Owners; |
(iii) |
it makes any formal declaration of bankruptcy or any formal statement to the effect that it is insolvent or likely to become insolvent or a winding up or administration order is made in relation to it, or its members or directors of pass a resolution to the effect that it should be wound up, placed in administration or cease to carry on business or it makes any formal statement to the effect that it is reasonably likely to become insolvent; |
(iv) |
a petition is presented in any Relevant Jurisdiction for its winding up or administration, or the appointment of a provisional liquidator over it, unless the petition is being contested in good faith and on substantial grounds and is dismissed or withdrawn within twenty one (21) days of the presentation of the petition; |
(v) |
it petitions a court, or presents any proposal for, any form of judicial or non-judicial suspension or deferral of payments, reorganisation of its debt (or certain of its debt) or arrangement with all or a substantial proportion (by number or value) of their creditors or of any class of them or any such suspension or deferral of payments, reorganisation or arrangement is effected by court order, contract or otherwise; |
(vi) |
any meeting of its members or directors is summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraphs (ii), (iii), (iv) or (v) above; |
(vii) |
in a country other than England and Wales, any event occurs or any procedure is commenced which is similar to any of the foregoing described in paragraphs (ii), (iii), (iv) or (v) above; |
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(viii) |
any expropriation, attachment, sequestration, distress or execution (or any analogous process in any jurisdiction) affects any of its asset or assets (other than a Total Loss of the Vessel); |
(ix) |
it fails to comply with or pay any sum due from it under any final judgment or any final order made or given by a court or tribunal of competent jurisdiction unless the aggregate sum is less than US$10,000,000 in aggregate in respect of the Guarantor; or |
(x) |
if it suspends or ceases to carry on (or threatens to suspend or cease carrying on) all or a material part of its business, |
provided that in the case of an Obligor other than the Charterers and the Guarantor, the occurrence of any of the above events falling within sub-paragraphs (i) to (x) above in respect of such Obligor shall be a Termination Event only if it has or is reasonably likely to have a Material Adverse Effect.
(h) |
any consent, approval, authorisation, license or permit necessary to enable the Charterers to operate or charter the Vessel or to enable any Obligor to (i) comply with any provision of a Leasing Document to which it is a party or (ii) ensure that the obligations of that Obligor or Approved Manager under such Leasing Document are legal, valid, binding or enforceable, is not granted, expires without being renewed, is revoked or becomes, at the relevant time, expressly liable to or otherwise subject to automatic revocation or any condition of such a consent, approval, authorisation, license or permit is not fulfilled or waived within any applicable grace period (resulting in such consent, approval, authorisation, licence or permit being, at the relevant time, subject to automatic revocation or expiration); |
(i) |
any event or circumstance occurs which has or is reasonably likely to have a Material Adverse Effect; |
(j) |
an Obligor suspends or ceases carrying on its business; |
(k) |
the Security Interest constituted by any Security Document is in any way imperilled or in jeopardy or this Charter or any Leasing Document or any Security Interest created by a Security Document: |
(i) |
is cancelled, terminated, rescinded or suspended or otherwise ceases to remain in full force and effect for any reason or no longer constitutes valid, binding and enforceable obligations of any party to that document for any reason whatsoever; or |
(ii) |
is amended or varied without the prior written consent of the Owners, except for any amendment or variation which is expressly permitted by this Charter or any other relevant Leasing Document; |
(l) |
any Obligor or any Approved Manager rescinds, repudiates (or purports to rescind or repudiates or purports to repudiate) a Leasing Document; |
(m) |
it is or has become: |
(i) |
unlawful or prohibited, whether as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or |
23
(ii) |
contrary to, or inconsistent with, any regulation, |
for any Obligor or Approved Manager to maintain or give effect to any of its obligations under any Leasing Document;
(n) |
if it becomes unlawful in any applicable jurisdiction for the Owners to perform any of their obligations as contemplated by this Charter or any other Leasing Document to which they are a party; |
(o) |
any Termination Event (as defined in applicable Other Charter) occurs and is continuing under any Other Charter; |
(p) |
if as a result of any Sanctions, the Owners or the Owners’ Financiers are prohibited from performing any of their obligations under the Leasing Documents, the Financial Instruments or the transactions contemplated under each of these respective documents; |
(q) |
any lease, hire purchase agreement, charter or any other financing arrangement in respect of any Fleet Vessel (other than the Vessel and the Other Vessel) is terminated, cancelled or repudiated by the relevant lessor or owner or financier as a consequence of any termination event or event of default (howsoever defined therein). |
(r) |
if any Obligor: |
(i) |
is or becomes a Prohibited Person; |
(ii) |
is owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person; |
(iii) |
owns or controls a Prohibited Person; |
(iv) |
has a Prohibited Person serving as a director, officer or employee; or |
(r) |
a Change of Control occurs without the prior written consent of the Owners. |
47.2 |
Notwithstanding and without prejudice to Clause 33 (Cancellation), upon the occurrence of any Termination Event which is continuing, the Owners may issue a written notice to the Charterers terminating this leasing of the Vessel under this Charter and demanding payment of the Termination Sum (the “Termination Notice”), whereupon the Charterers shall be obliged to pay the Termination Sum to the Owners on the date specified by the Owners in their sole discretion in the Termination Notice (the “Termination Date”). |
47.3 |
For the avoidance of doubt, notwithstanding any action taken by the Owners following a Termination Event, the Charterers shall remain liable for the outstanding obligations on their part to be performed under this Charter including but not limited to all insurance, operational and maintenance covenants until such time as the Vessel is redelivered to the Owners in accordance with Clause 42 (Sale of Vessel by the Owners in the event of Non-Payment of Termination Sum), or the title is transferred to the Charterers in accordance with Clause 41.3 or the Vessel is sold in accordance with Clause 42 (Sale of Vessel by the Owners in the event of Non-Payment of Termination Sum). |
47.4 |
Without limiting the generality of the foregoing or any other rights of the Owners, if a Termination Event occurs and it is continuing, the Charterers agree and acknowledge that the |
24
Owners shall have the sole and exclusive right and power to (i) settle, compromise, compound, adjust or defend any action, suit or proceeding relating to or pertaining to the Vessel and this Charter, (ii) make proof of loss, appear in and prosecute any action arising from any policy or policies of insurance maintained pursuant to this Charter, and settle, adjust or compromise any claims for loss, damage or destruction under, or take any other action in respect of, any such policy or policies and/or change or appoint a new manager for the Vessel and the appointment of any originally appointed manager may be terminated immediately without any recourse to the Owners.
47.5 |
Each Termination Event shall either be a breach of condition by the Charterers where it involves a breach of this Charter or any of the other Leasing Document by the Charterers or shall otherwise be an agreed terminating event, the occurrence of which gives rise to a right of the Owners to terminate the leasing of the Vessel under this Charter and to exercise its rights under this clause. |
CLAUSE 48 – REPRESENTATIONS AND WARRANTIES
48.1 |
The Charterers represent and warrant to the Owners, save as otherwise stated in this Clause, as of the date hereof, and on each day henceforth until the last day of the Charter Period, as follows: |
(a) |
each of the Obligors is duly incorporated and validly existing under the laws of its jurisdiction of incorporation; |
(b) |
each Obligor and each Approved Manager has the corporate capacity and has taken all corporate actions to obtain and maintain all consents, approvals, authorisations, licenses or permits necessary or desirable for it: |
(i) |
to enable it lawfully to enter into, exercise its rights and comply with and perform its obligations under each of the Leasing Documents to which it is a party; and |
(ii) |
to make each of the Leasing Documents to which it is a party admissible in evidence in its Relevant Jurisdictions; |
(c) |
all consents, approvals, authorisations, licences or permits referred to in Clause 48(b) remain in full force and effect and nothing has occurred which makes any of them liable to revocation; |
(d) |
each Leasing Document to which an Obligor and Approved Manager is a party constitutes such Obligor’s and Approved Manager’s legal, valid and binding obligations enforceable against such party (and where expressed to be a deed, shall be enforceable as a deed) in accordance with its respective terms; |
(e) |
the entry into and performance by each Obligor and the transactions contemplated by, each Leasing Document to which such Obligors and Approved Manager is a party do not and will not conflict with: |
(i) |
any law or regulation applicable to it (including Anti-Money Laundering Laws, Anti-Bribery and Anti-Corruption Laws, Sanctions or laws relating to anti-trust or collusion and laws relating to human rights violation); |
(ii) |
its constitutional documents; and |
25
(iii) |
any agreement or instrument binding upon it or any of its assets or constitute a default or termination event (however described) under any such agreement or instrument; |
(f) |
the choice of governing law as stated in each Leasing Document and the agreement by the relevant parties thereto to refer disputes to the relevant courts or tribunals as stated in such Leasing Document are valid and binding against such parties; |
(g) |
under the laws of the Relevant Jurisdictions of each Obligor and Approved Manager it is not necessary for any of the Leasing Documents to which it is a party to be registered, filed, recorded, notarised or enrolled with any court or other authority in that jurisdiction or that any stamp, registration, notarial or similar taxes or fees be paid on or in relation to the Leasing Documents to which it is a party or the transactions contemplated by those Leasing Documents except payment of associated fees which registration, filings, taxes and fees will be made and paid promptly after the date of the relevant Leasing Documents to which it is a party; |
(h) |
each Security Document to which an Obligor or Approved Manager is a party does now or, as the case may be, will upon execution and delivery create, the Security Interests it purports to create over any assets to which such Security Interest, by its terms, relates, and such Security Interests will, when created or intended to be created, be valid and effective; |
(i) |
no party has any Security Interest (other than the Permitted Security Interests) or any other interest, right or claim over, in or in relation to the Vessel, this Charter, any moneys payable under any Leasing Document or over any assets which are, the subject of the Security Interests created or intended to be created by the Security Documents; |
(j) |
the obligations of each Obligor, under each Leasing Document to which it is a party, are the direct, general and unconditional obligations of such Obligor and rank at least pari passu with all other present and future unsecured and unsubordinated creditors of each Obligor save for any obligation which is mandatorily preferred by law and not by virtue of any contract; |
(k) |
all payments which an Obligor is liable to make under any Leasing Document to which such Obligor is a party may be made by such party without deduction or withholding for or on account of any tax payable under the laws of their jurisdiction of incorporation; |
(l) |
no Obligor has failed to pay all taxes applicable to, or imposed on or in relation to it, its business or if applicable, the Vessel; |
(m) |
no Obligor has breached any law or regulation which breach has or is reasonably likely to have a Material Adverse Effect; |
(n) |
in relation to the Shipbuilding Contract: |
(i) |
all amounts due and payable to the Shipbuilding Contract on or prior to the date hereof have been fully and irrevocably paid to the Builder (receipt of which have been duly acknowledged by the Builder) and there are no outstanding amounts as at the date hereof which are due, owing or payable to the Builder thereunder; and |
(ii) |
on Delivery of the Vessel, there are no unresolved disputes and/or pending claims for payment between the Builder and the Charterers in respect of the Shipbuilding Contract or the Vessel (unless where notified to the Owners and where accepted by the Owners in writing prior to Delivery); |
26
(o) |
to the best of the Charterers’ knowledge, as at the date of this Charter, no Builder’s default nor buyer’s default under the Shipbuilding Contract has occurred which has not been waived unconditionally which will adversely affect the transfer of title of the Vessel under the MOA and/or chartering of the Vessel under this Charter; |
(p) |
no Obligor or other member of the Group, nor any of their subsidiaries, directors or officers, affiliates or any employee, has engaged in any activity or conduct which would violate any Anti-Bribery and Anti-Corruption Laws, laws pertaining to anti-terrorism or Anti-Money Laundering Laws in any applicable jurisdiction and each Obligor and Group member has instituted and maintained policies and procedures designed to prevent violation of such laws, regulations and rules; |
(q) |
no Obligor or other member of the Group, nor any of their subsidiaries, directors or officers, affiliates or employees, has taken or will take any action in furtherance of an offer, payment, promise to pay or authorisation or approval of the payment or giving of money, property, gifts or anything else of value, directly or indirectly, to any government official (which shall include without limitation, any officer or employee of a government or government owned or controlled entity or of a public international organisation or any person acting in an official capacity for and on behalf of the foregoing or any political party or party official or candidate for public office) to influence official action or secure an improper advantage; |
(r) |
no Environmental Claim has been made against any Obligor or any other member of the Group; |
(s) |
no Environmental Incident has occurred and no person has claimed that an Environmental Incident has occurred; |
(t) |
no Termination Event or Potential Termination Event has occurred and is continuing or might reasonably be expected to result from the entry into and performance of this Charter or any other Leasing Document and no other event or circumstance is outstanding which constitutes a default or a termination event (however described) under any other agreement or instrument which is binding on it or to which its assets are subject; |
(u) |
no litigation, arbitration or administrative proceedings or investigations (including proceedings or investigations relating to any alleged or actual breach of the ISM Code or of the ISPS Code) of or before any court, arbitral body or agency have been started against any Obligor which has or is reasonably likely to have a Material Adverse Effect; |
(v) |
the consolidated financial statements delivered pursuant to Clause 49.1(a) are prepared in accordance with IFRS consistently applied and give a true and fair view of (if audited) or fairly represent (if unaudited) the financial condition of each of the Charterers and the Guarantor as at the end of the period to which such financial statements relate; |
(w) |
since the date of the Original Financial Statements or as the case may be, the date of any more recent financial statements delivered pursuant to Clause 49.1(a), there has been no material adverse change in each of the Charterers and the Guarantor or the Group’s business, assets or financial condition; |
(x) |
in relation to any information provided by any Obligor (including any information in relation to the Shipbuilding Contract) for the purposes of this Charter: |
27
(i) |
such information was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated; |
(ii) |
any financial projections contained in such information have been prepared on the basis of recent historical information and on the basis of reasonable assumptions, and |
(iii) |
nothing has occurred or been omitted from any such information and no information has been given or withheld that results in any such information being untrue or misleading; |
(y) |
no corporate action, legal proceeding or other procedure or step described in Clause 47.1(g) or circumstances described in Clause 47.1(f) has been taken or exists or, to their knowledge, threatened in relation to an Obligor; |
(z) |
no Obligors, nor any of its assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement); |
(aa) |
for the purposes of the Regulation, the centre of main interest (as that term is used in Article 3(1) of the Regulation) of each Obligor is situated in its jurisdiction of incorporation and it has no “establishment” (as that term is used in Article 2(10) of the Regulation) in any other jurisdiction; |
(bb) |
no Obligor is a US Tax Obligor and none of them have established a place of business in the United States of America; |
(cc) |
no Obligor has established a place of business in the United Kingdom; |
(dd) |
no Obligor, Approved Manager, sub-charterer and no member of the Group: |
(i) |
is a Prohibited Person; |
(ii) |
is owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person; |
(iii) |
owns or controls a Prohibited Person; or |
(iv) |
has a Prohibited Person serving as a director, officer or, to the best of its knowledge, employee; |
(ee) |
no Obligor nor its respective directors, member, officers and employee, member of the Group, nor any sub-charterer is in breach of applicable Sanctions, has been or is currently being investigated on compliance with Sanctions, have received notice or are aware of any claim, action, suit or proceeding against any of them with respect to Sanctions, or have taken any action to evade the application of Sanctions; and |
(ff) |
any factual information provided by the Charterers (or on their behalf) to the Owners was true and accurate (including all information in relation to the Shipbuilding Contract) as at the date it was provided or as the date at which such information was stated. |
28
CLAUSE 49 – GENERAL INFORMATION UNDERTAKINGS
49.1 |
The Charterers undertake that they shall comply or procure compliance with the following information undertakings commencing from the date hereof and up to the last day of the Charter Period: |
(a) |
they will send to the Owners: |
(i) |
as soon as possible, but in no event later than ninety (90) days after the end of the first half of each financial year of each of the Charterers and the Guarantor, the unaudited semi-annual combined financial accounts of the Guarantor and the unaudited management accounts of the Charterers; |
(ii) |
as soon as possible, but in no event later than one hundred and eighty (180) days after the end of each financial year of the Guarantor, the audited annual combined financial accounts of the Guarantor and the unaudited management accounts of the Charterers, |
(b) |
they will procure that each set of financial statements delivered pursuant to Clause 49.1(a) shall be in English and certified by a duly authorised officer of the relevant company as giving a true and fair view (if audited) or fairly representing (if unaudited) its financial condition and operations as at the date as at which those financial statements were drawn up; |
(c) |
they will promptly provide to the Owners, copies of all notices and minutes relating to any of their extraordinary shareholders’ meetings which are despatched to the shareholders or to their creditors or any class thereof and its constitutional documents where these have been amended or varied (to the extent not contrary to the other provisions of this Charter); |
(d) |
they will provide the Owners as soon as reasonably practicable upon becoming aware of them, the details of: |
(i) |
any litigation, arbitration or administrative proceedings or investigations relating to any alleged or actual breach of any Sanctions, laws pertaining to anti-terrorism or Anti-Money Laundering Laws which are current or pending against any Obligor, Approved Manager, other member of the Group, or, to the best knowledge of the Charterers, any sub-charterer; |
(ii) |
any litigation, arbitration or administrative proceedings or investigations relating to any other matters not referred to in paragraph (i) above (including proceedings or investigations relating to any alleged or actual breach of the ISM Code or of the ISPS Code) in relation to an Obligor; and |
(iii) |
any Termination Event or Potential Termination Event that has occurred (and the steps, if any, being taken to remedy it); |
(e) |
they will, promptly upon a request by the Owners, supply to the Owners a certificate signed by an officer on its behalf certifying that no Termination Event or Potential Termination Event has occurred (or if a Termination Event or Potential Termination Event has occurred, specifying the nature of the Potential Termination Event or Termination Event (and the steps, if any, being taken to remedy it); |
(f) |
they will, as soon as practicable upon the request of the Owners, provide the Owners with any additional financial or other information relating to: |
29
(i) |
themselves, any Obligor and/or the Vessel (including, but not limited to the condition and location of the Vessel, its Earnings and its Insurances); |
(ii) |
the Security Interests relating to any Leasing Documents; |
(iii) |
compliance of each Obligor and any Approved Manager with the terms of the Leasing Documents; |
(iv) |
the financial condition, business and operations of the Obligors; or |
(v) |
to any other matter relevant to, or to any provision of any Leasing Document to which it is a party, |
which may reasonably be requested by the Owners at any time;
(g) |
they shall provide details of the Vessel’s management and employment status (including the entry into any pooling arrangements) at least every six (6) months to the Owners upon a request by the Owners; and |
(h) |
they shall as soon as reasonable practicable notify the Owners in writing if any payments which they or any other Obligor, is liable to make under any Leasing Document is subject to deduction or withholding or any other tax whatsoever; |
CLAUSE 50 – GENERAL UNDERTAKINGS
50.1 |
The Charterers undertake that they shall comply or procure compliance with the following general undertakings commencing from the date hereof and up to the last day of the Charter Period: |
(a) |
they will, and will procure that each other Obligor and each Approved Manager shall, obtain and promptly renew or procure the provision or renewal of and provide copies of, from time to time, any necessary consents, approvals, authorisations, licenses or permits of any regulatory body or authority for the transactions contemplated under each Leasing Document to which any Obligor and each Approved Manager is a party (including without limitation the sale, chartering and operation of the Vessel); |
(b) |
they will at their own cost, and will procure and each other Obligor and each Approved Manager, will: |
(i) |
ensure that any Leasing Document to which they are a party validly creates the obligations and the Security Interests which such Leasing Document purports to create; and |
(ii) |
without limiting the generality of paragraph (i), promptly register, file, record or enrol any Leasing Document to which they are a party with any court or authority in all Relevant Jurisdictions, pay any stamp duty, registration or similar tax in all Relevant Jurisdictions in respect of any Leasing Document to which they are a party, give any notice or take any other step which, is or has become necessary or desirable for any such Leasing Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which such Leasing Document creates; |
30
(c) |
they will not, and will procure each other Obligor and Approved Manager will not, create or permit to subsist any Security Interest over any of its assets which are, the subject of the Security Interests created or intended to be created by the Security Documents, unless with the prior written approval of the Owners and save for Permitted Security Interests; |
(d) |
they will not, and will procure each Obligor will not, change the location of its centre of main interest (as that term is used in Article 3(1) of the Regulation) from that stated in relation to it under 48.1(aa) and it will create no “establishment” (as that term is used in Article 2(10) of the Regulation) in any other jurisdiction; |
(e) |
except with the Owners’ prior written consent, they will not, and will procure each other Obligor will not, make a substantial change to the general nature of their respective businesses from that carried on at the date of this Charter; |
(f) |
except with the Owners’ prior written consent or where expressly permitted under the Leasing Documents, they will not enter into any merger, amalgamation, demerger, solvent reorganisation or corporate reconstruction; |
(g) |
they will not: |
(i) |
enter into any borrowing except for loans from affiliates which are unsecured and fully subordinated to the Owners; |
(ii) |
incur any liabilities or obligations to any party except for those reasonably incurred in the ordinary course of operating, chartering, repairing and maintaining the Vessel; |
(iii) |
be the creditor in respect of any loan or any form of credit to any person; |
(iv) |
give or allow any to be outstanding any guarantee or indemnity to or for the benefit of any person in respect of any obligation of any other person or enter into any document under which they assume any liability of any other person other than any guarantee or indemnity given under the Leasing Documents; |
(v) |
enter into any material agreement other than the Leasing Documents or any other agreement expressly allowed under any term of the Leasing Documents; |
(vi) |
enter into a single transaction or a series of transactions (whether related or not) to sell, lease, transfer or otherwise dispose of any asset (including without limitation the Vessel, its Earnings or its Insurances); and |
(vii) |
without prejudice to the above sub-paragraphs (i) to (vi), enter into any transaction (whether with another member of the Group or otherwise) which are, in any respect, less favourable than those which they could obtain an a bargain made at arms’ length; |
(h) |
they will not, and shall procure that the Guarantor shall not, following the occurrence of a Termination Event which is continuing or where any of the following would result in the occurrence of a Potential Termination Event or Termination Event: |
(i) |
declare, make or pay any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (whether in cash or in kind) on or in respect of its shares (or any class of its shares including any preferred shares); |
31
(ii) |
repay or distribute any dividend or share premium reserve; |
(iii) |
pay any management, advisory or other fee to or to the order of any of its shareholders; or |
(iv) |
redeem, repurchase, defease, retire or repay any of their shares or resolve to do so; and |
(i) |
they shall procure that a Delisting shall not occur provided that if a Delisting shall occur, then the Charterers shall, promptly and in any event no later than the date falling thirty (30) days from the date of such Delisting, make such prepayments or provide additional security to the satisfaction of the Owners. |
CLAUSE 51 – FINANCIAL COVENANTS
51.1 |
The Charterers undertake that they shall procure that the Guarantor shall comply with the following financial covenants during the Charter Period: |
(a) |
the Guarantor’s Leverage Ratio shall not exceed seventy five per cent (75%). |
(b) |
the Guarantor shall maintain Liquid Assets (free of any Security and inclusive of any balances in time deposits) in an amount of not less than the higher of (i) $10,000,000 on an aggregate basis and (ii) $750,000 per Fleet Vessel; |
(c) |
the Guarantors’ Consolidated Net Worth shall not be less than $100,000,000. |
51.2 |
In this Clause 51 (Financial Covenants): |
“Accounting Information” means the annual audited combined financial accounts and the unaudited semi-annual combined financial accounts to be provided to the Owner in accordance with this Charter.
“Adjusted Total Assets” means, at any date, the amount which would be shown as “Total Assets” under the heading “ASSETS” in the balance sheet of the most recent Accounting Information as adjusted for the aggregate difference (positive or negative) between the book value (being the fixed asset value as per the most recent Accounting Information) and the Fleet Market Value minus the Liquid Assets.
“Consolidated Net Worth” means the aggregate of the Consolidated Market Value Adjusted Total Assets less the Consolidated Total Liabilities.
“Consolidated Net Worth” means the aggregate of the Consolidated Market Value Adjusted Total Assets less the Consolidated Total Liabilities.
“Consolidated Current Assets” means the aggregate of the cash and marketable securities, trade and other receivables from persons other than a member of the Group realisable 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, in each case in relation to the Group, as stated in the then most recent and relevant Accounting Information.
“Consolidated Market Value Adjusted Tangible Fixed Assets” means the Fleet Market Value plus the book value (less depreciation computed in accordance with the IFRS consistently
32
applied) on a consolidated basis of all other tangible fixed assets of the Group (excluding the Fleet Vessels), as stated in the then most recent and relevant Accounting Information.
“Consolidated Market Value Adjusted Total Assets” means, at any relevant time, the aggregate of Consolidated Current Assets and Consolidated Market Value Adjusted Tangible Fixed Assets.
“Consolidated Total Liabilities” means the aggregate (as of the date of calculation) of all obligations of the Guarantor then outstanding for the payment or repayment of money as stated under “Total Liabilities” in the financial statements or, as the case may be, management accounts, then most recently required to be delivered pursuant to this Charter including, without limitation:
(a) |
any amounts payable by the Guarantor under leases or similar arrangements over their respective periods; |
(b) |
any credit to the Guarantor from a supplier of goods or under any instalment purchase or other similar arrangement; |
(c) |
the aggregate amount then outstanding of liabilities and obligations of third parties to the extent that they are guaranteed by the Guarantor; |
(d) |
any contingent liabilities (including any taxes or other payments under dispute or arbitration) which have been or should be recorded in the notes to the Guarantor’s financial statements or, as the case may be, management accounts; and |
(e) |
any deferred tax liabilities. |
“Fleet Market Value” means the aggregate Fair Market Value of the Fleet Vessels, and for the purpose of ascertaining the Fair Market Value of the Fleet Vessel, the definition of Fair Market Value in Clause 66 (Definitions) shall apply.
“Leverage Ratio” means, at any date, the ratio (expressed as a percentage) of:
(i)the Total Liabilities minus Liquid Assets; and
(ii)the Adjusted Total Assets.
“Liquid Assets” means, at any date, the amount of cash and cash equivalents which would be shown as “Cash and Cash Equivalents” under the heading “ASSETS” in the balance sheet of the most recent Accounting Information.
“Total Liabilities” means, at any date, the amount which would be shown as “Total current liabilities” plus the amount which would be shown as “Total non-current liabilities”, both under the heading “LIABILITIES AND SHAREHOLDERS’EQUITY” in the balance sheet of the most recent Accounting Information (which, for the avoidance of doubt, shall include potential leasing liabilities and shall only exclude shareholder loans when subordinated, non-interest bearing and not callable at will (minimum one year notice)).
51.3 |
The Charterers shall promptly notify the Owners if the Guarantor agrees to provide any new financial covenants to a creditor (or to amend existing ones such that they materially differ from the financial covenants under Clause 51.1 above placing such creditor in a position which |
33
is comparatively more favourable in terms of the financial covenants than the position of the Owners) under the agreements entered into or to be entered into in connection with any Financial Indebtedness owed by the Guarantor or a Group member to such creditor and agrees that it will and shall procure the Guarantor will promptly enter into such necessary documentation as may be required to amend and supplement (as applicable) this Charter and any applicable Leasing Document so as to reflect and incorporate such more favourable financial covenants into this Charter and any applicable Leasing Document (as the case may be).
CLAUSE 52 – VALUATIONS
52.1 |
The Charterers undertake that they shall comply or procure compliance with the following undertakings commencing from the date hereof and up to the last day of the Charter Period: |
(a) |
they shall at their cost: |
(i) |
provide to the Owners valuations of the Vessel (to be addressed to the Owners) to enable the Owners to determine the Initial Market Value of the Vessel; |
(ii) |
at least once per calendar year as requested by the Owners, provide to the Owners valuations of the Vessel (to be addressed to the Owners) to enable the Owners to determine the Fair Market Value of the Vessel; and |
(iii) |
at any time as requested by the Owners following the occurrence of a Termination Event or a Potential Termination Event, provide to the Owners valuations of the Vessel (to be addressed to the Owners) to enable the Owners to determine the Fair Market Value of the Vessel; and |
(b) |
if at any time, the Vessel’s Fair Market Value falls below an amount equivalent to one hundred and eighteen per cent (118%) of the Owners’ Costs (the “LTV Breach”, and the said difference between the Fair Market Value and the Owners’ Costs shall be referred to as the “shortfall” for the purposes of this paragraph) then the Charterers shall, promptly and in any event no later than the date falling thirty (30) days from the date which the valuations relating to the Vessel’s Fair Market Value are received by the Owners, make payment in an amount such as to eliminate the shortfall which payment shall be applied in the Owners’ sole discretion. |
CLAUSE 53 – VESSEL UNDERTAKINGS
53.1 |
The Charterers undertake that they shall comply or procure compliance with the following Vessel and Sanctions related undertakings commencing from the date hereof and up to the last day of the Charter Period: |
(a) |
they will notify the Owners promptly upon becoming aware: |
(i) |
that any Environmental Claim has been made against the Charterers or in connection with the Vessel, or that any Environmental Incident has occurred; |
(ii) |
of any arrest or detention of the Vessel or any exercise or purported exercise of any lien on that Vessel or its Earnings or any requisition of the Vessel for hire; |
(iii) |
any modification or alteration of the Vessel of a value in excess of $1,000,000; |
34
(iv) |
any casualty or occurrence as a result of which the Vessel has become or is, by the passing of time or otherwise, likely to become, a Major Casualty; and |
(v) |
that a Total Loss has occurred, |
and will keep the Owners fully up-to-date with all developments;
(b) |
they will comply, and will procure that each other Obligor, each other member of the Group, and any sub-charterer will comply, with all Sanctions and all laws and regulations relating to them, the Vessel and its construction, ownership, employment, operation, management and registration, including the ISM Code, the ISPS Code (including the maintenance of an ISSC), all Environmental Laws, all Anti-Money Laundering Laws, laws pertaining to anti-terrorism, Anti-Bribery and Anti-Corruption Laws and the laws of the Vessel’s registry, and in particular, they shall effect and maintain a sanctions compliance policy which, inter alia, implements the recommendations of the Sanctions Advisory, to ensure compliance with all such laws and regulations implemented from time to time, including, without limitation they will, and will procure that each other Obligors, each other member of the Group and each sub-charterer will: |
(i) |
conduct their activities in a manner consistent with US and UN sanctions, as applicable; |
(ii) |
have sufficient resources in place to ensure execution of and compliance with their own sanctions policies by their personnel, e.g., direct hires, contractors, and staff; |
(iii) |
ensure subsidiaries and affiliates comply with the relevant policies, as applicable; |
(iv) |
have relevant controls in place to monitor automatic identification system (AIS) transponders; |
(v) |
have controls in place to screen and assess onboarding or offloading cargo in areas they determine to present a high risk; |
(vi) |
have controls to assess authenticity of bills of lading, as necessary; and |
(vii) |
have controls in place consistent with the Sanctions Advisory, |
(c) |
without limiting Clause 53.1(b), they will procure that: |
(i) |
the Vessel shall not be constructed, operated, employed, managed, used by or for the benefit of a Prohibited Person or in trading to or from a Prohibited Country, including calling at any port of a Prohibited Country; |
(ii) |
the Vessel shall not be used in any manner contrary to Sanctions, or in a manner that creates a risk that an Obligor will become a Prohibited Person; |
(iii) |
notwithstanding any other provision of this paragraph (c), the Vessel shall not be used in trading in any manner that creates a risk that the Vessel will become a Sanctioned Ship; |
(iv) |
the Vessel shall not be traded in any manner which would trigger the operation of any sanctions limitation or exclusion clause (or similar) in the Insurances or in any manner |
35
which would result or would reasonably be expected to result in any Obligor or the Owners becoming a Prohibited Person; and
(v) |
that each charterparty in respect of the Vessel shall contain, for the benefit of the Owners, language which gives effect to the provisions of Clause 53.1(c) as regards Sanctions and of this Clause and which permits refusal of employment or voyage orders if compliance would result in a breach of Sanctions and which prohibits trading to any Prohibited Country; |
(d) |
they will, promptly notify the Owners and provide all information which may be relevant for the purposes of ascertaining whether the Obligors, the Approved Manager and any sub-charterer are in compliance with all laws and regulations and Sanctions applicable to and/or binding on them, and in particular, they shall notify the Owners in writing immediately upon being aware that any of the Charterers’ shareholders, directors, officers or employees is a Prohibited Person or has otherwise become a target of any Sanctions; |
(e) |
save with the Owners’ prior consent in writing (such consent not to be unreasonably withheld) they shall not agree or enter into, and shall procure that the Builder does not agree or enter into, any transaction, agreement, document or do or omit to do anything which will have the effect of varying, amending, supplanting or waiving any term of the Shipbuilding Contract relating to the Builder’s Warranties in a material manner; |
(f) |
save with the Owners’ prior consent in writing, they shall not agree or enter into, and shall procure that each Approved Manager does not agree or enter into, any transaction, arrangement, document or do or omit to do anything which will have the effect of varying, amending, supplementing or waiving any term of the relevant management agreement which would result in an annual increase of the management fee to more than twenty per cent. (20%) of the management fee payable under the relevant management agreement as at the date of this Charter; |
(g) |
they shall not: |
(i) |
change an Approved Manager unless such change in appointment is approved in writing by the Owners (such approval not to be unreasonably withheld or delayed) and provided that such substitute Approved Manager has (prior to accepting its appointment) entered into an undertaking in a form substantially similar to the Manager’s Undertaking or in such other form as may be acceptable to the Owners; or |
(ii) |
terminate or otherwise assign or transfer the relevant management agreement unless with the prior approval in writing by the Owners (such approval not to be unreasonably withheld or delayed); |
(h) |
with effect from and following Delivery, ensure that the Vessel will be registered in the Flag State under the name of the Owners; |
(i) |
the Vessel shall be classed with an Approved Classification Society upon Delivery at the highest classification available for vessels of its type and be free of all overdue recommendations or conditions, and maintain such class during the Charter Period; |
36
(j) |
unless with the Owners’ prior written consent (such consent not to be unreasonably withheld or delayed save that such qualification shall not apply following the occurrence of a Termination Event), they shall not deactivate or lay up the Vessel; |
(k) |
they shall not make any structural change to the Vessel without the prior written consent of the Owners other than a structural change that: |
(i) |
is mandatorily required by any applicable law and regulation; or |
(ii) |
relates to the installation of exhaust gas cleaning systems (scrubbers) and/or ballast water treatment systems (and in the case of the ballast water treatment system, the Charterers shall ensure that the same is installed and a USCG certificate of compliance regarding the same issued on a date prior to 1 July 2022); or |
(iii) |
would not, in the Owners’ reasonable opinion: |
(A) |
have a material adverse effect on the Vessel’s fitness for purpose; |
(B) |
materially alter the structure, type or performance characteristics of the Vessel; and/or |
(C) |
materially diminish the value of the Vessel or have a material adverse effect on the safety, performance or marketability of the Vessel, |
and the Charterers shall provide the Owners with at least fifteen (15) days prior written notice of the commencement of any such alterations (as well as notification of such alterations being completed promptly after such completion) and shall provide the Owners with all information (including without limitation, any plans for the proposed modifications, repairs, replacement, installation or alteration, valuation reports and confirmation of class from the Approved Classification Society) as the Owners may require for the purposes of determining the matters set out in paragraphs (i) to (iii) above together with evidence that the Obligatory Insurances have been appropriately updated, and shall indemnify the Owners against all costs and expenses incurred by the Owners in connection with all such proposed modifications, repairs, replacement, installation or alteration of the Vessel and if such modification, repair or replacement or installation is approved or satisfies the requirements of this Clause, once effected, shall form part of the Vessel;
(l) |
they will procure that each Approved Manager shall, upon the request of the Owners at the expense of the Charterers, furnish the Owners with an inspection report setting out such matters relating to the condition of the Vessel as the Owners may require on an annual basis and if a Termination Event occurs, at such other frequency as the Owners may otherwise require; |
(m) |
subject to the other terms of this Charter, the Charterers may freely sub-charter the Vessel save that the Owners’ prior written consent shall be required: |
(i) |
to any sub-bareboat or demise charter of the Vessel; |
(ii) |
to any other employment of the Vessel which would constitute an Assignable Sub-Charter (and upon the Owners’ consent the Charterers shall assign their rights and interests in such Assignable Sub-Charter to the Owners); and |
37
(iii) |
to any employment of the Vessel which does not permit a transfer of the registered ownership of the Vessel without the consent of the applicable sub-charterer; |
(n) |
they shall procure that all Earnings in connection with the Vessel are paid into the Operating Account and that the Charterers facilitate access by the Owners to information relating to the Operating Account; |
(o) |
they shall ensure that a minimum amount of $500,000 is maintained in the Operating Account at all times during the Charter Period; and |
(p) |
they shall, upon the request of the Owners and at the cost of the Charterers, on or before 31st July in each calendar year, supply or procure the supply to the Owners all information necessary in order for the Owners to comply with its or any Owners’ Financiers’ obligations under the Poseidon Principles in respect of the preceding year, including, without limitation, all ship fuel oil consumption data required to be collected and reported in accordance with Regulation 22A of Annex VI and any Statement of Compliance relating to the Vessel for the preceding calendar year and, for the avoidance of doubt, such information shall be “Confidential Information” for the purposes of Clause 63 (Confidentiality) but the Charterers acknowledge that, in accordance with the Poseidon Principles, such information will form part of the information published regarding the Owners’ and/or Owners’ Financiers’ portfolio climate alignment. |
(q) |
they shall procure that the Vessel is free of encumbrances and liens (save for those created by the Owners or otherwise permitted in writing under the terms of this Charter). |
CLAUSE 54 – INSPECTION OF VESSEL
54.1 |
Without prejudice to Clause 54.2 below, the Owners shall be entitled to inspect or survey the Vessel or instruct a duly authorized surveyor to carry out such survey on their behalf: |
(a) |
to ascertain the condition of the Vessel and satisfy themselves that the Vessel is being properly repaired and maintained; |
(b) |
in dry-dock if the Charterers have not dry-docked the Vessel in accordance with Clause 10(g) (Periodical Dry-docking); |
(c) |
as may be required for classification purposes; and |
(d) |
for any other commercial reason they consider necessary, |
and in doing so, the Charterers shall afford the Owners or their authorised surveyor with all proper facilities in relation to such inspection or survey.
54.2 |
The Owners shall be entitled to exercise its rights of inspection or survey as described under Clause 54.1 (Inspection of Vessel) once a year (subject to provision of reasonable prior notice) without interference to the operation of the Vessel save that upon the occurrence of a Termination Event or Potential Termination Event, the Owners shall have the right to inspect or survey the Vessel at any time (and for the avoidance of doubt, more than once a year). |
54.3 |
The documented costs and fees for any inspection and survey permitted under this Clause shall be paid by the Charterers. |
38
54.4 |
All time used in respect of inspection, survey or repairs pursuant to this Clause shall be for the Charterers’ account and form part of the Charter Period. |
54.5 |
The Charterers shall also permit the Owners to inspect the Vessel’s log books or survey reports whenever requested and shall whenever required by the Owners furnish them with full information regarding any casualties or other accidents or damage to the Vessel. |
CLAUSE 55 – PURCHASE OPTION
55.1 |
The Charterers shall have the option (the “Purchase Option”) to purchase the Vessel on each anniversary date on and from the first (1st) anniversary of the Commencement Date as specified in the Purchase Option Notice (as hereinafter defined) at the applicable Purchase Option Price, subject to the other terms of this Clause 55 (Purchase Option). |
55.2 |
The Purchase Option shall be exercisable only: |
(a) |
upon the Charterers providing not less than sixty (60) days’ written notice (the “Purchase Option Notice”) to purchase the Vessel on a date specified therein (the “Purchase Option Date”) which shall fall on an anniversary of the Commencement Date on or after the first (1st) anniversary of the Commencement Date or on the last day of the Charter Period (as the case may be) subject to Clause 60.1 (unless otherwise agreed by the Owners); and |
(b) |
in the absence of the occurrence of a Potential Termination Event or a Termination Event on or prior to either the date of the Purchase Option Notice or the Purchase Option Date. |
55.3 |
The Purchase Option Notice shall be signed by a duly authorised officer or attorney of the Charterers and, once delivered to the Owners, will in each case be irrevocable and the Charterers shall be bound to pay to the Owners the Purchase Option Price on the Purchase Option Date. |
55.4 |
The sale of the Vessel pursuant to the Charterers’ exercise of the Purchase Option shall be conducted in accordance with Clause 56 (Sale of the Vessel). |
55.5 |
If the Charterers do not exercise the Purchase Option on or before the expiration of the Charter Period: |
(a) |
the Charterers shall pay the Option Premium to Owners on the last day of the Charter Period; |
(b) |
the Charterers shall on the last day of the Charter Period re-deliver the Vessel to the Owners in accordance with Clause 41.6 and shall ensure that they have fulfilled their obligations under this Charter and made payment of the Option Premium, all Charterhire and all other moneys pursuant to the terms of this Charter; and |
(c) |
the Owners shall be entitled (at Owners’ sole discretion) to sell or operate the Vessel as they may require. For the avoidance of doubt, the Charterers agree that should the Option Premium not be paid or not be paid in full on its due date for payment under the terms of this Charter, any net proceeds deriving from the sale or operation of the Vessel by the Owners shall not be applied towards reduction of the unpaid Option Premium, Charterhire or any other moneys due pursuant to the terms of this Charter. |
CLAUSE 55A – MANDATORY SALE
39
If the Mandatory Sale Price becomes payable in accordance with Clause 37.5 (Changes to Interest Rate, Default Interest), the same shall be payable in consideration of the purchase and transfer of the legal and beneficial title of the Vessel pursuant to Clause 56 (Sale of the Vessel). The day on which the Mandatory Sale Price is paid pursuant to Clause 37.5 (Changes to Interest Rate, Default Interest) is a “Mandatory Sale Date” and such transfer of the Vessel provided therein is a “Mandatory Sale”.
CLAUSE 56 – SALE OF THE VESSEL
56.1 |
The sale of the legal and beneficial interest and title in the Vessel pursuant to the Charterers’ exercise of, as the case may be, the Charterers’ Purchase Option under Clause 55 (Purchase Option) or pursuant to Clause 41.3, or the completion of a Mandatory Sale under Clause 55A(Mandatory Sale) shall be on an “as is where is” and subject to the following terms and conditions: |
(a) |
no condition, warranty or representation of any kind is or has been given by or on behalf of the Owners in respect of the Vessel or any part thereof, and accordingly the Charterers hereby confirm that they have not, in entering into this Charter, relied on any condition, warranty or representation by the Owners or any person on the Owners’ behalf, express or implied, whether arising by law or otherwise in relation to the Vessel or any part thereof, including, without limitation, warranties or representations as to the description, suitability, quality, merchantability, fitness for any purpose, value, state, condition, appearance, safety, durability, design or operation of any kind or nature of the Vessel or any part thereof, and the benefit of any such condition, warranty or representation by the Owners is hereby irrevocably and unconditionally waived by the Charterers to the extent permissible under applicable law, and the Charterers hereby also waive any rights which they may have in tort in respect of any of the matters referred to above and irrevocably agree that the Owners shall have no greater liability in tort in respect of any such matter than they would have in contract after taking account of all of the foregoing exclusions. No third party making any representation or warranty relating to the Vessel or any part thereof is the agent of the Owners nor has any such third party authority to bind the Owners thereby. Notwithstanding anything contained above, nothing contained herein is intended to obviate, remove or waive any rights or warranties or other claims relating thereto which the Charterers (or their nominee) or the Owners may have against the manufacturer or supplier of the Vessel or any third party; |
(b) |
the Vessel shall be free from any registered mortgages incurred by the Owners (save for those mortgages, liens, encumbrances and debts arising out of or in connection with this Charter or the Leasing Documents); |
(c) |
the Purchase Option Price, Termination Sum or Mandatory Sale Price (as applicable) shall be paid by (or on behalf of) the Charterers to the Owners together with (without double counting) unpaid amounts of Charterhire, Breakfunding Costs (if applicable), default interest accruing under Clause 37.637.5 (if applicable), fees, expenses and any other moneys owing by or accrued or due from the Charterers under this Charter on or prior to the Purchase Option Date or the Termination Date or the Mandatory Sale Date (as the case may be) which remain unpaid; and |
(d) |
concurrently with the Owners receiving irrevocable payment of the Purchase Option Price or the Termination Sum or the Mandatory Sale Price (as applicable) and all other moneys payable under this Charter in full pursuant to the terms of this Charter, the Owners shall (save in the event of Total Loss) (at Charterers’ cost) transfer the legal and beneficial ownership of the Vessel on an “as is where is” basis to the Charterers or their nominees and shall (at Charterers’ |
40
cost) execute a bill of sale and a protocol of delivery and acceptance evidencing the same and any other document strictly necessary to transfer the title of the Vessel, as well as procure the relevant ship registry to issue a certificate of title or any other evidence provided in accordance with the practice of such registry showing that the Vessel shall be free from any registered mortgages in favour of the Owners, to the Charterers and the relevant ship registry of the Vessel under the Charterers’ flag of choice (and to the extent required for such purposes, the Vessel shall be deemed first to have been redelivered to the Owners), provided that the Owners shall not be obliged to do anything which would (in its reasonable opinion) constitute a breach of the applicable QEL (if any). Any fees (including legal fees), costs or disbursements incurred by the Owners in connection with the Charterers’ exercise of the Purchase Option or transfer of the Vessel following payment of the Termination Sum or Mandatory Sale Price (as the case may be) shall be indemnified or reimbursed by the Charterers to the Owners upon the Owners’ demand on or prior to the Purchase Option Date or date of payment of the Termination Sum or Mandatory Sale Date (as applicable).
CLAUSE 57 – INDEMNITIES
57.1 |
The Charterers shall pay such amounts to the Owners, on the Owners’ demand, in respect of all documented claims, expenses, liabilities, losses, taxes, fees (including but not limited to any vessel registration and tonnage fees) suffered or incurred by or imposed on the Owners arising from this Charter and any Leasing Document, whether prior to, during or after termination of the leasing of this Charter, including without limitation: |
(a) |
as a result of incorporating the Owners in the relevant jurisdiction selected by the Charterers or required for the purpose of flying the flag of the Vessel in a particular jurisdiction; |
(b) |
in connection with delivery, possession, performance, control, registration, repair, survey, insurance, maintenance, manufacture, purchase, ownership or operation of the Vessel (including but not limited to any social security contributions); |
(c) |
in connection with the prevention or release of liens or detention of or requisition, use, operation, redelivery, sale or disposal of the Vessel (or any part of it) and/or whether prior to, during or after termination; |
(d) |
in connection with delay in the scheduled delivery date of the Vessel under the Shipbuilding Contract; |
(e) |
in connection with or following the occurrence of a Termination Event or Potential Termination Event (including without limitation, by reason thereof in re-taking possession or otherwise in acquiring the Vessel pursuant to Clause 38.3). |
Without prejudice to its generality, this Clause covers any claims, expenses, liabilities and losses which arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code, the ISPS Code, the MARPOL Protocol, any Environmental Law or any Sanctions.
57.2 |
The Charterers hereby irrevocably agree to indemnify and hold harmless the Owners against all consequences or liabilities arising from the master, officers or agents signing bills of lading or other documents and any claim, expense, liability or loss incurred by the Owners in liquidating or employing deposits from the Owners’ Financiers or third parties to fund the acquisition of the Vessel pursuant to the MOA, the Head MOA and/or the Shipbuilding Contract. |
41
57.3 |
Notwithstanding anything to the contrary herein (but subject and without prejudice to Clause 33 (Cancellation)) and without prejudice to any right to damages or other claim which the Charterers may have at any time against the Owners under this Charter, the indemnities provided by the Charterers in favour of the Owners shall continue in full force and effect notwithstanding any breach of the terms of this Charter or termination of this Charter pursuant to the terms hereof or termination of this Charter by the Owners. |
57.4 |
All rights which the Charterers have at any time (whether in respect of this Charter or any other transaction) against any Obligors shall be fully subordinated to the rights of the Owners under the Leasing Documents and until the end of this Charter and unless the Owners otherwise direct, the Charterers shall not exercise any rights which it may have (whether in respect of this Charter or any other transaction) by reason of performance by it of its obligations under any Leasing Document or by reason of any amount becoming payable, or liability arising, under this Clause: |
(a) |
to be indemnified by any Obligor; |
(b) |
to claim any contribution from any third party providing security for, or any other guarantor of, any Obligor under any Leasing Document; |
(c) |
to take any benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of any Obligor under any Leasing Document or of any other guarantee or security taken pursuant to, or in connection with, any Leasing Document by any Obligors; |
(d) |
to bring legal or other proceedings for an order requiring any Obligor to make any payment, or perform any obligation, in respect of any Leasing Document; |
(e) |
to exercise any right of set-off against any Obligor; and/or |
(f) |
to claim or prove as a creditor of any Obligor, |
and if the Charterers receive any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to the extent necessary to enable all amounts which may be or become payable to the Owners by any Obligor or in connection with any Leasing Document to be repaid in full on trust for the Owners and shall promptly pay or transfer the same to the Owners.
CLAUSE 58 – NO SET-OFF OR TAX DEDUCTION
58.1 |
All Charterhire and any payment made from the Charterers to enable the Owners to pay all amounts under a Leasing Document shall be paid punctually and: |
(a) |
without any form of set-off, cross claim, condition or counterclaim; |
(b) |
free and clear of any tax deduction or withholding unless required by law; and |
(c) |
net of any bank charges or bank fees. |
58.2 |
Without prejudice to Clause 58.1, if the Owners are required by law to make a tax deduction from any payment: |
(a) |
the Owners shall notify the Charterers as soon as they become aware of the requirement; and |
42
(b) |
the amount due in respect of the payment shall be increased by the amount necessary to ensure that the Owners receive and retain (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which they would otherwise have received. |
58.3 |
The Charterers shall (within three (3) Business Days of demand by Owners) pay to the Owners an amount equal to the loss, liability or cost which the Owners determine will be or has been (directly or indirectly) suffered for or on account of tax by the Owners in respect of a Leasing Document. |
58.4 |
Clause 58.3 shall not apply: |
(a) |
with respect to any tax assessed on the Owners under the law of the jurisdiction in which the Owners are incorporated or, if different, the jurisdiction (or jurisdictions) in which the Owners are treated as resident for tax purposes if that tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by the Owners; or |
(b) |
to the extent a loss, liability or cost is compensated for by an increased payment under Clause 58.2. |
58.5 |
Notwithstanding any other provision to this Charter, if any deduction or withholding or other tax is or will be required to be made by the Charterers or the Owners in respect of a payment to the Owners as a result of the Owners being incorporated in a particular jurisdiction, the Owners shall have the right to transfer their interest in the Vessel (and this Charter) to any person nominated by the Owners and all costs in relation to such transfer shall be for the account of the Charterers. |
58.6 |
If the Charterers compensate the Owners by an increased payment pursuant to Clauses 58.2 or 58.3 and the Owners determine that they have obtained and utilized a tax credit attributable to this increased payment, the Owners shall reimburse the Charterers that increased payment (or part thereof if the tax credit is attributable to only part of such increased payment). |
CLAUSE 59 – INCREASED COSTS
59.1 |
This Clause 59 (Increased Costs) applies if the Owners notify the Charterers that they consider that as a result of: |
(a) |
the introduction or alteration after the date of this Charter of a law or an alteration after the date of this Charter in the manner in which a law is interpreted or applied (disregarding any effect which relates to the application to payments under this Charter of a tax on the Owners’ overall net income); or |
(b) |
complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which the Owners allocates capital resources to their obligations under this Charter) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Charter, |
the Owners (or a parent company of them) has incurred or will incur an “increased cost”.
59.2 |
In this Clause 59 (Increased Costs), “increased cost” means, in relation to the Owners: |
43
(a) |
an additional or increased cost incurred as a result of, or in connection with, the Owners or the Owners’ parent company having entered into, or being a party to, this Charter, or funding the acquisition of the Vessel pursuant to the MOA or performing their obligations under this Charter (including as a result of, or in connection with, incorporating itself in a particular jurisdiction as requested by the Charterers or in order to fly a particular flag in respect of the Vessel); |
(b) |
an additional or increased cost of funding or financing the acquisition of the Vessel pursuant to the MOA; or |
(c) |
a liability to make a payment or a return forgone, which is calculated by reference to any amounts received or receivable by the Owners under this Charter, |
and for the purposes of this Clause, the Owners may in good faith allocate or spread costs an/or losses among their assets and liabilities (or any class of their assets and liabilities) on such basis as they consider appropriate.
59.3 |
Subject to the terms of Clause 59.1, the Charterers shall pay to the Owners, upon receipt of the Owners’ demand and any evidence thereto (where available to the Owners), the amounts which the Owners from time to time notify the Charterers to be necessary to compensate the Owners for the increased cost. |
CLAUSE 60 – MISCELLANEOUS
60.1 |
Unless otherwise expressly stated to the contrary in this Charter, any payment which is due to be made on a day which is not a Business Day shall be made on the preceding Business Day instead. |
60.2 |
If, at any time, any provision of any Leasing Document is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions under the law of that jurisdiction nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired. |
60.3 |
The Charterers waive any rights of sovereign immunity which they or any of their properties may enjoy in any jurisdiction and subjects itself to civil and commercial law with respect to their obligations under this Charter. |
60.4 |
No term of this Charter is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Charter. |
60.5 |
This Charter and each other Leasing Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Charter or that Leasing Document, as the case may be. |
CLAUSE 61 – FATCA
61.1 |
Defined terms |
For the purposes of this Clause 61 (FATCA), the following terms shall have the following meanings:
44
“Code” means the United States Internal Revenue Code of 1986, as amended.
“FATCA” means:
(a) |
sections 1471 to 1474 of the Code or any associated regulations; |
(b) |
any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or |
(c) |
any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the IRS, the US government or any governmental or taxation authority in any other jurisdiction. |
“FATCA Deduction” means a deduction or withholding from a payment under this Charter or the Leasing Documents required by or under FATCA.
“FATCA Exempt Party” means a Relevant Party that is entitled under FATCA to receive payments free from any FATCA Deduction.
“FATCA Non-Exempt Party” means any Relevant Party who is not a FATCA Exempt Party.
“IRS” means the United States Internal Revenue Service or any successor taxing authority or agency of the United States government.
“Relevant Party” means any of the parties to this Charter and the Leasing Documents.
61.2 |
FATCA Information |
(a) |
Subject to paragraph (c) below, each Relevant Party shall, on the date of this Charter, and thereafter within ten (10) Business Days of a reasonable request by another Relevant Party: |
(i) |
confirm to that other party whether it is a FATCA Exempt Party or is not a FATCA Exempt Party; and |
(ii) |
supply to the requesting party (with a copy to all other Relevant Parties) such other form or forms (including IRS Form W-8 or Form W-9 or any successor or substitute form, as applicable) and any other documentation and other information relating to its status under FATCA (including its applicable “pass thru percentage” or other information required under FATCA or other official guidance including intergovernmental agreements) as the requesting party reasonably requests for the purpose of the requesting party’s compliance with FATCA. |
(b) |
If a Relevant Party confirms to any other Relevant Party that it is a FATCA Exempt Party or provides an IRS Form W-8 or W-9 to showing that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, or that the said form provided has ceased to be correct or valid, that party shall so notify all other Relevant Parties or provide the relevant revised form, as applicable, reasonably promptly. |
(c) |
Nothing in this Clause shall oblige any Relevant Party to do anything which would or, in its reasonable opinion, might constitute a breach of any law or regulation, any policy of that party, |
45
any fiduciary duty or any duty of confidentiality, or to disclose any confidential information (including, without limitation, its tax returns and calculations); provided, however, that nothing in this paragraph shall excuse any Relevant Party from providing a true, complete and correct IRS Form W-8 or W-9 (or any successor or substitute form where applicable). Any information provided on such IRS Form W-8 or W-9 (or any successor or substitute forms) shall not be treated as confidential information of such party for purposes of this paragraph.
(d) |
If a Relevant Party fails to confirm its status or to supply forms, documentation or other information requested in accordance with the provisions of this Charter or the provided information is insufficient under FATCA, then: |
(i) |
if that party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such party shall be treated for the purposes of this Charter and the Leasing Documents as if it is a FATCA Non-Exempt Party; and |
(ii) |
if that party failed to confirm its applicable passthru percentage then such party shall be treated for the purposes of this Charter and the Leasing Documents (and payments made thereunder) as if its applicable passthru percentage is 100%, |
until (in each case) such time as the party in question provides sufficient confirmation, forms, documentation or other information to establish the relevant facts.
61.3 |
FATCA Deduction and gross-up by Relevant Party. |
(a) |
If the representation made by the Charterers under 48.1(bb) proves to be untrue or misleading such that the Charterers are required to make a FATCA Deduction, the Charterers shall make the FATCA Deduction and any payment required in connection with that FATCA Deduction within the time allowed and in the minimum amount required by FATCA. |
(b) |
If the Charterers are required to make a FATCA Deduction then the Charterers shall increase the payment due from them to the Owners to an amount which (after making any FATCA Deduction) leaves an amount equal to the payment which would have been due if no FATCA Deduction had been required. |
(c) |
The Charterers shall promptly upon becoming aware that they must make a FATCA Deduction (or that there is any change in the rate or basis of a FATCA Deduction) notify the Owners accordingly. Within thirty (30) days of the Charterers making either a FATCA Deduction or any payment required in connection with that FATCA Deduction, the Charterers shall deliver to the Owners evidence reasonably satisfactory to the Owners that the FATCA Deduction has been made or (as applicable) any appropriate payment paid to the relevant governmental or taxation authority. |
61.4 |
FATCA Deduction by Owners. |
The Owners may make any FATCA Deduction they are required by FATCA to make, and any payment required in connection with that FATCA Deduction, and the Owners shall not be required to increase any payment in respect of which they make such a FATCA Deduction or otherwise compensate the recipient for that FATCA Deduction.
46
61.5 |
FATCA Mitigation. |
Notwithstanding any other provision to this Charter, if a FATCA Deduction is or will be required to be made by any party under Clause 61.4 in respect of a payment to the Owners as a result of the Owners not being a FATCA Exempt Party, the Owners shall have the right to transfer their interest in the Vessel (and this Charter) to any person nominated by the Owners and all costs in relation to such transfer shall be for the account of the Charterers.
CLAUSE 62 – ASSIGNMENT, TRANSFER AND REFINANCING
62.1 |
The Charterers shall not assign or transfer (whether by novation or otherwise) their rights and/or obligations under this Charter or any other Leasing Document. |
62.2 |
The Charterers acknowledge that, at any time during the Charter Period: |
(a) |
the Owners are entitled to enter into certain funding arrangements in relation to the Vessel with the Owners’ Financiers in order to refinance the then outstanding Owners’ Costs (or part thereof), which funding arrangements may be secured, inter alia, by the relevant Financial Instruments; |
(b) |
the Owners may do any of the following as security for the funding arrangements referred to in paragraph (a) above, in each case without consent of the Charterers but with notice to the Charterers: |
(i) |
execute a ship mortgage over the Vessel or any other Financial Instrument in favour of the Owners’ Financiers; |
(ii) |
assign their rights and interests to, in or in connection with this Charter and/or any other Leasing Document in favour of the Owners’ Financiers; |
(iii) |
assign their rights and interests to, in or in connection with the Insurances, the Earnings and the Requisition Compensation of the Vessel in favour of the Owners’ Financiers; and |
(iv) |
enter into any other document or arrangement which is necessary to give effect to such financing arrangements. |
62.3 |
The Charterers undertake to comply, and provide such information and documents reasonably required to enable the Owners to comply, with all such instructions or directions in regard to the employment, insurances, operation, repairs and maintenance of the Vessel as laid down in any Financial Instrument or as may be reasonably directed from time to time during the currency of this Charter by the Owners’ Financiers in conformity with any Financial Instrument. The Charterers further agree and acknowledge for themselves all relevant terms, conditions and provisions of each Financial Instrument (if any) and agree to acknowledge this in writing in any form that may be reasonably required by the Owners’ Financiers subject to not imposing to the Charterers any more onerous obligations than those included in the Leasing Documents. The Charterers further agree to enter into any required acknowledgements of assignments and other customary documents as may be required in connection with the Financing Documents. |
62.4 |
The Owners shall, if requested by the Charterers or any applicable sub-charterer, procure that on or around the time a mortgage over the Vessel is executed in favour of Owners’ Financiers, the Owners’ Financiers shall enter into a QEL with the Owners and the Charterers or any |
47
applicable sub-charterer (in a form to be agreed among the Owners’ Financiers, the Owners, the Charterers and any applicable sub-charterer).
62.5 |
During the Charter Period, the Owners may procure a: |
(a) |
change in the registered ownership of the Vessel; and/or |
(b) |
assign or transfer by novation of any of its rights and obligations under any of the Leasing Documents, |
without the consent of the Charterers to any other financial institution, trust, fund, leasing company or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets provided always that such change of ownership or transfer shall not disturb or interfere with the Charterers’ lawful use, possession and quiet enjoyment of the Vessel during the Charter Period. The Charterers shall be liable to the aforesaid new owner of the Vessel for its performance of all obligations under this Charter (as novated) after any such change of the registered ownership from the Owners to such new owner and the Charterers shall procure that any party to a Leasing Document:
(i) |
becomes liable to the new of owner of the Vessel for its performance of all obligations pursuant to such Leasing Document; and |
(ii) |
enters into all necessary documents or takes any necessary actions required for such Leasing Document and any Security Interest created thereunder remaining in full force and effect (or to be novated and/or re-executed) as from the completion of the relevant sale. |
62.6 |
The Charterers agree and undertake to enter into any such usual documents and provide all necessary assistance as the Owners shall require to complete or perfect the transfer of the Vessel (with the benefit and burden of this Charter) or any novation or assignment made pursuant to this Clause 62 (Assignment, Transfer and Re-financing) at no cost for the Charterers. |
CLAUSE 63 – CONFIDENTIALITY
The Parties agree to keep the terms and conditions of this Charter and any other Leasing Document (the “Confidential Information”) strictly confidential, provided that a Party may disclose Confidential Information in the following cases:
(a) |
it is already known to the public or becomes available to the public other than through the act or omission of the disclosing Party; |
(b) |
it is required to be disclosed under the applicable laws of any Relevant Jurisdiction or by a governmental order, decree, regulation or rule; |
(c) |
in filings with a court or arbitral body in proceedings in which the Confidential Information is relevant and in discovery arising out of such proceedings; |
(d) |
to any other party to a Leasing Document; |
48
(e) |
to (or through) whom a Party assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Leasing Document (as permitted by the terms thereof) provided that such person shall undertake that it would not disclose Confidential information to any other party save for circumstances arising which are similar to those described under this Clause; |
(f) |
to any of the following persons (on a need to know basis): |
(i) |
a shareholder or an Affiliate of either Party or a party referred to in paragraph (d); |
(ii) |
its board of directors, employees or its shareholders; |
(iii) |
professional advisers retained by a disclosing party; |
(iv) |
any rating agencies; |
(v) |
the Approved Classification Society; |
(vi) |
the ship registry of the Flag State; and |
(vii) |
in the case of the disclosing party being the Owners, persons advising on, providing or considering the provision of financing to the Owners or an Affiliate of the Owners, |
provided that the disclosing party shall exercise due diligence to ensure that no such person shall disclose Confidential Information to any other party save for circumstances arising which are similar to those described under this Clause or such other circumstances as may be permitted by all Parties;
(g) |
to any person which is a classification society or other entity which the Owners or the Owners’ Financiers have engaged to make the calculations necessary to enable the Owners and/or the Owners’ Financiers to comply with their reporting obligations under the Poseidon Principles; or |
(h) |
with the prior written consent of all Parties and if required by any Party, subject to a corresponding confidentiality undertaking obtained from the party to whom the Confidential Information is disclosed to. |
CLAUSE 64 – GENERAL APPLICATION OF PROCEEDS
64.1 |
Any Net Trading Proceeds, Net Sales Proceeds, Total Loss Proceeds, any proceeds realised by the Owners in connection with the enforcement of the Security Documents (unless otherwise specified in the Security Documents) and any proceeds received by the Owners from any Other Owner (as trustee for the Owners) shall be applied in the following order of application against amounts payable under the Leasing Documents: |
(a) |
firstly, in or towards any amounts outstanding under the Leasing Documents other than the Termination Sum (including but not limited to any costs and expenses incurred in the enforcement of the Security Documents, to the extent these are not covered under the Termination Sum); |
49
(b) |
secondly, in or towards satisfaction of the Charterers’ obligation to pay the Termination Sum (or such portion of it that then remains unpaid) in any order of application in the amounts comprising the Termination Sum as the Owners may determine; and |
(c) |
thirdly, upon satisfaction in full of all amounts payable to the Owners under the Leasing Documents, in payment of any surplus to the Charterers, but subject always to the terms of the General Assignment. |
CLAUSE 65 – GOVERNING LAW AND ENFORCEMENT
65.1 |
This Charter, and any non-contractual obligations arising out of or in connection with it, shall be governed by English law. |
65.2 |
Any dispute arising out of or in connection with any Leasing Document (including a dispute regarding the existence, validity or termination of any Leasing Document or any non-contractual obligation arising out of or in connection with any Leasing Document) (a “Dispute”) shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause. |
65.3 |
The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. The reference shall be to three (3) arbitrators. A Party wishing to refer the Dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other Party requiring the other Party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other Party appoints its own arbitrator and give notice that it has done so within the fourteen (14) days specified. If the other Party does not appoint its own arbitrator and give notice that it has done so within the fourteen (14) days specified, the Party referring a Dispute to arbitration may, without the requirement of any further prior notice to the other Party, appoint its arbitrator as sole arbitrator and shall advise the other Party accordingly. The award of a sole arbitrator shall be binding on both Parties as if he had been appointed by agreement. Nothing herein shall prevent the Parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. |
65.4 |
In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 (or such other sum as the Parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. |
CLAUSE 66 – DEFINITIONS
66.1 |
In this Charter the following terms shall have the meanings ascribed to them below: |
“Acceptance Certificate” means a certificate substantially in the form set out in Schedule 1 (Acceptance Certificate) to be signed by the Charterers at Delivery.
“Account Bank” means ABN AMRO Bank N.V., Netherlands or such other bank approved by the Owners.
50
“Account Charge” means the document creating charge(s) over the Operating Account executed or to be executed by the Charterers in favour of the Owners.
“Advance Charterhire” has the meaning as defined under Clause 36.2 of the Charter.
“Affiliate” means in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.
“Annex VI” means Annex VI of the Protocol of 1997 to amend the International Convention for the Prevention of Pollution from Ships 1973 (Marpol), as modified by the Protocol of 1978 relating thereto.
“Anti-Bribery and Anti-Corruption Laws” means the US Foreign Corrupt Practices Act of 1977 as amended and the rules and regulations thereunder, the UK Bribery Act of 2010, and/or any similar laws, rules or regulations issued, administered or enforced by the United States, United Kingdom, the European Union or any of its member states, or any other country or governmental agency having jurisdiction over the Owners or any Obligors or their respective subsidiaries.
“Anti-Money Laundering Laws” means all applicable financial record-keeping and reporting requirements, anti-money laundering statutes (including all applicable rules and regulations thereunder) and all applicable related or similar laws, rules, regulations or guidelines, of all jurisdictions including and without limitation, the United States of America, the United Kingdom, Greece, the Republic of the Marshall Islands, Hong Kong and the People’s Republic of China and which in each case are:
(a) |
issued, administered or enforced by any governmental agency having jurisdiction over the Charterers or any other Obligors or their respective subsidiaries; |
(b) |
of any jurisdiction in which the Charterers or any other Obligor conducts business; or |
(c) |
to which the Charterers or any other Obligor is subjected or subject to. |
“Approved Classification Society” means the classification society stipulated in the Shipbuilding Contract or any other classification society which is a member of the International Association of Classification Societies and approved by the Owners in writing.
“Approved Commercial Manager” means OET Chartering Inc. or any other reputable ship management company as may be approved by the Owners in writing prior to its appointment as commercial manager of the Vessel in accordance with this Charter.
“Approved Manager” means the Approved Commercial Manager or the Approved Technical Manager.
“Assignable Sub-charter” means any period time charters relating to the Vessel, whether or not already in existence.
“Approved Technical Manager” means Kyklades Maritime Corporation or any other reputable ship management company as may be approved by the Owners in writing prior to its appointment as technical manager of the Vessel in accordance with this Charter.
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“Approved Valuer” means Clarksons Platou, Simpson Spence Young, Braemar ACM, Arrow, Fearnleys, Maersk Brokers or such other independent and reputable shipbroker nominated by the Charterers and approved by the Owners.
“Arrangement Fee” has the meaning as defined under Clause 44.1.
“Breakfunding Costs” means all breakfunding costs and expenses incurred or payable by the Owners when a repayment or prepayment under the relevant funding arrangement entered into by the Owners for the purpose of financing the Purchase Price (or any part thereof) does not fall on a Payment Date, a Purchase Option Date or a date specified by the Owners in any Termination Notice.
“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for business in the principal business centres of Shanghai, Singapore, Amsterdam and Piraeus or:
(a) |
in respect of a day on which a payment is required to be made or other dealing is due to take place under this Agreement in Dollars, a day on which banks are open in New York City; and |
(b) |
in respect of any Quotation Day or any date on which LIBOR or (if applicable) any Replacement Benchmark is to be determined, a day on which banks are open in London. |
“Builder” has the meaning ascribed to such term in the MOA.
“Builder’s Warranties” means the guarantees and/or warranties provided by the Builder to the Head Sellers under Article IX of the Shipbuilding Contract and assigned by the Head Sellers to the Charterers which the Charterers will on-assign to the Owners pursuant to the Builder’s Warranties Assignment.
“Builder’s Warranties Assignment” means the tripartite assignment executed between (a) the Head Sellers (b) the Charterers and (c) the Owners in relation to the Builder’s Warranties in relation to the Vessel.
“Cancelling Date” has the meaning ascribed to such term in the MOA.
“Change of Control” means:
(a) |
the Guarantor ceasing to directly own one hundred percent (100%) of the shares in the Charterers; or |
(b) |
Mr. Ioannis Alafouzos and Mr. Themistoklis Alafouzos cease to hold less than 35% of the shares (directly or indirectly) of the Guarantor. |
“Charter Period” means the period described in Clause 32.1 unless it is terminated earlier in accordance with the provisions of this Charter.
“Charterhire” means each of, as the context may require, all of the instalments of hire payable hereunder on each applicable Payment Date comprising in each case both Fixed Charterhire and Variable Charterhire, as further detailed in Clause 36.
“Commencement Date” means the date on which Delivery takes place.
52
“Delisting” means the Guarantor ceasing to be listed on the Oslo Stock Exchange (Oslo Børs).
“Delivery” means the physical and legal delivery of the Vessel from the Owners to the Charterers pursuant to the terms of this Charter.
“Dollars” and “US$” mean the lawful currency for the time being of the United States of America.
“Earnings” means all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Charterers and which arise out of the use or operation of the Vessel, including (but not limited to):
(a) |
all freight, hire and passage moneys; |
(b) |
any compensation payable in the event of requisition of the Vessel for hire; |
(c) |
any remuneration for salvage and towage services; |
(d) |
any demurrage and detention moneys; |
(e) |
damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of the Vessel; |
(f) |
all moneys which are at any time payable to the Charterers in relation to general average contribution; and |
(g) |
if and whenever the Vessel is employed on terms whereby any moneys falling within paragraphs (a) to (f) are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to the Vessel. |
“Environmental Claim” means any claim by any governmental, judicial or regulatory authority or any other person which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law and, for this purpose, “claim” includes a claim for damages, compensation, contribution, injury, fines, losses and penalties or any other payment of any kind, including in relation to clean-up and removal, whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset.
“Environmental Incident” means:
(a) |
any release, emission, spill or discharge of Environmentally Sensitive Material whether within the Vessel or from the Vessel into any other vessel or into or upon the air, water, land or soils (including the seabed) or surface water; or |
(b) |
any incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, water, land or soils (including the seabed) or surface water from a vessel other than the Vessel and which involves a collision between the Vessel and such other vessel or some other incident of navigation or operation, in either case, in connection with which the Vessel is actually or potentially liable to be arrested, attached, detained or injuncted and/or the Vessel and/or any Obligors and/or any |
53
operator or manager of the Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or
(c) |
any other incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, water, land or soils (including the seabed) or surface water otherwise than from the Vessel and in connection with which the Vessel is actually or potentially liable to be arrested and/or where any Obligors and/or any operator or manager of the Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action. |
“Environmental Law” means any present or future law relating to pollution or protection of human health or the environment, to conditions in the workplace, to the carriage, generation, handling, storage, use, release or spillage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material.
“Environmentally Sensitive Material” means and includes all contaminants, oil, oil products, toxic substances and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous.
“Expiry Owners’ Costs” means an amount equal to sixty five per cent. (65%) of the Opening Capital Balance.
“Fair Market Value” means the value of the Vessel determined as follows:
(a) |
subject to sub-paragraph (b) below, the arithmetic mean of the valuations shown by two (2) valuation reports each addressed to the Buyers and prepared at the Sellers’ cost: |
(i) |
on a date no earlier than thirty (30) days prior to the relevant date of valuation; |
(ii) |
by Approved Valuers one nominated by the Owners and the other nominated by the Charterers (but with the report addressed to the Owners); |
(iii) |
without physical inspection of the Vessel; and |
(iv) |
on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, without taking into account any charter; and |
(b) |
if there is a discrepancy of five per cent. (5%) or more between the market valuations shown on the two (2) valuation reports obtained pursuant to paragraph (a) above (using the lower valuation figure as the denominator), then a third valuation shall be obtained and prepared on the same terms and conditions as set out under paragraph (a) above (except that the third valuation report additionally required under this sub-paragraph (b) shall be prepared by an Approved Valuer nominated by the Owners), with the arithmetic mean taken from the valuations shown by such three (3) valuation reports. |
“Fee Letter” mean the fee letter referred to under Clause 44.1 for payment of the Arrangement Fee.
54
“Financial Indebtedness” means, in relation to a person (the “debtor”), a liability of the debtor:
(a) |
for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor; |
(b) |
under any loan stock, bond, note or other security issued by the debtor; |
(c) |
under any acceptance credit, guarantee or letter of credit facility made available to the debtor; |
(d) |
under a financial lease, a deferred purchase consideration arrangement (other than deferred payments for assets or services obtained on normal commercial terms in the ordinary course of business) or any other agreement having the commercial effect of a borrowing or raising of money by the debtor; |
(e) |
under any foreign exchange transaction, any interest or currency swap 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 paragraphs (a) to (e) if the references to the debtor referred to the other person. |
“Financial Instruments” means the applicable loan or facility agreement entered into between the Owners (or their affiliate) and the Owners’ Financiers and any mortgage, deed of covenants, assignment in respect of any of the Leasing Documents, assignment in respect of Earnings, Insurances and Requisition Compensation, manager’s undertaking and subordination (including assignment of manager’s interests in the Insurances) or any other financial security instruments granted by the Owners to the Owners’ Financiers as security for the financing or refinancing of the Owners’ acquisition of the Vessel.
“First Payment Date” shall have the meaning as defined under 36.5(a).
“Fixed Charterhire” shall have the meaning as defined under Clause 36.4(a).
“Flag State” means the flag state named in Box 5 of this Charter or any other state or jurisdiction approved in writing by the Owners (whose approval shall not be unreasonably withheld or delayed).
“Fleet Vessel” means any ship or vessel (including, but not limited to, the Vessel and the Other Vessel) from time to time wholly leased, hired, chartered or financed under any lease, hire purchase agreement, charter or any other financing arrangement by affiliates of the Owners and/or the Other Owner to subsidiaries or affiliates of the Guarantor.
“General Assignment” means the assignment agreement executed or to be executed between the Charterers and the Owners in respect of the Vessel, pursuant to which the Charterers shall, inter alia, assign its rights under:
(a) |
the Earnings, Insurances, Requisition Compensation in respect of the Vessel; and |
(b) |
any Assignable Sub-charter; |
55
in favour of the Owners.
“Group” means the Guarantor and its Subsidiaries (whether directly or indirectly owned) from time to time.
“Guarantee” means the guarantee executed by the Guarantor in favour of the Owners on or about the date hereof.
“Guarantor” means Okeanis Eco Tankers Corp., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with registration number 96382 and its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Republic of the Marshall Islands MH 96960.
“Head MOA” means the memorandum of agreement dated 29 June 2021 and made between the Charterers (in their capacity as buyers) and the Head Sellers (in their capacity as sellers), pursuant to which the Head Sellers agreed to sell and the Charterers agreed to purchase the Vessel upon the terms and conditions set out therein.
“Head Sellers” means Sandre Enterprises S.A., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with registration number 106174 and registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro MH 96960.
“Hire Period” means (i) in the case of the first Hire Period, the period commencing on the Commencement Date and ending on the First Payment Date; and (ii) in the case of each subsequent Payment Date, the period of commencing on the last day of the preceding Hire Period and ending on the next occurring Payment Date.
“Holding Company” means, in relation to a person, any other person in relation to which (i) it is a Subsidiary or (ii) it is a Subsidiary of a Subsidiary.
“IAPPC” means a valid international air pollution prevention certificate for the Vessel issued pursuant to the MARPOL Protocol.
“IFRS” means International Financing Reporting Standards.
“Initial Market Value” has the meaning ascribed to such term in the MOA.
“Insurances” means:
(a) |
all policies and contracts of insurance, including entries of the Vessel in any protection and indemnity or war risks association, which are effected in respect of the Vessel or otherwise in relation to it whether before, on or after the date of this Charter; and |
(b) |
all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium and any rights in respect of any claim whether or not the relevant policy, contract of insurance or entry has expired on or before the date of this Charter. |
“Interest Rate” means:
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(a) |
subject to Clause 37.1, for any Hire Period of which the Quotation Day falls before the occurrence of a Screen Rate Replacement Event, LIBOR; |
(b) |
for any Hire Period of which the Quotation Day falls on or after the occurrence of a Screen Rate Replacement Event but before a Replacement Benchmark is implemented pursuant to Clause 37.4, in accordance with Clause 37.3 (unless otherwise agreed by the Owners); and |
(c) |
for any Hire Period of which the Quotation Day falls on or after a Replacement Benchmark is implemented pursuant to Clause 37.4, the rate of interest determined under the Replacement Benchmark. |
“ISM Code” means the International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organisation Assembly as Resolutions A.741 (18) and A.788 (19), as the same may be amended or supplemented from time to time (and the terms “safety management system”, “Safety Management Certificate” and “Document of Compliance” have the same meanings as are given to them in the ISM Code).
“ISPS Code” means the International Ship and Port Security Code as adopted by the Conference of Contracting Governments to the Safety of Life at Sea Convention 1974 on 13 December 2002 and incorporated as Chapter XI-2 of the Safety of Life at Sea Convention 1974, as the same may be supplemented or amended from time to time.
“ISSC” means a valid international ship security certificate for the Vessel issued pursuant to the ISPS Code.
“Joint Surveyor” shall have the meaning as defined under Clause 41.8.
“Leasing Documents” means this Charter, the Guarantee, the MOA, the Fee Letter, any QEL the Security Documents, any other document designated as a “Leasing Document” as agreed between the Charterers and the Owners and each, as the context may require, the “Leasing Document”.
“LIBOR” means, in relation to a Hire Period:
(a) |
the applicable Screen Rate as of the Specified Time for dollars and for a period equal in length to the Hire Period; or |
(b) |
as otherwise determined pursuant to Clause 37 (Changes to Interest Rate, Default Interest), |
and if, in either case, that rate is less than zero, LIBOR shall be deemed to be zero.
“Major Casualty” means any casualty to the Vessel in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds US$2,000,000 or the equivalent in any other currency.
“Manager’s Undertaking” means, in relation to an Approved Manager, a letter of undertaking to be executed by that Approved Manager in favour of the Owners subordinating the rights of that Approved Manager against the Vessel and the Charterers to the rights of the Owners.
57
“Mandatory Sale” has the meaning given to that term in Clause 55A.
“Mandatory Sale Date” has the meaning given to that term in Clause 55A.
“Mandatory Sale Price” means, in respect of the Mandatory Sale Date, the aggregate of:
(a) |
the Owners’ Costs prevailing as at the Mandatory Sale Date; |
(b) |
any Charterhire accrued but unpaid as at the date of payment of the Mandatory Sale Price; |
(c) |
any Breakfunding Costs including any Swap Costs; |
(d) |
any documented legal or other costs incurred by the Owners in connection with the exercise of the Mandatory Sale; and |
(e) |
aside from the amounts described under paragraphs (a) to (d) above, any other moneys due and owing under the Leasing Documents at the Mandatory Sale Date. |
“Margin” means two point four five per cent. (2.45%) per annum.
“MARPOL Protocol” means Annex VI (Regulations for the Prevention of Air Pollution from Ships) to the International Convention for the Prevention of Pollution from Ships 1973 (as amended in 1978 and 1997).
“Material Adverse Effect” means, in the reasonable opinion of the Owners, a material adverse effect on:
(a) |
the business, operations, property, condition (financial or otherwise) of any Obligor or the Group (taken as a whole); or |
(b) |
the ability of any Obligor to perform its obligations under any Leasing Document to which it is a party; or |
(c) |
the validity or enforceability of, or the effectiveness or ranking of any Security Interests granted pursuant to, any of the Leasing Documents or the rights or remedies of the Owners under any of the Leasing Documents. |
“MOA” means the memorandum of agreement dated on or about the date of this Charter and made between the Owners (in their capacity as buyers) and the Charterers (in their capacity as sellers), pursuant to which the Charterers agree to sell and the Owners agree to purchase the Vessel upon the terms and conditions set out therein.
“Net Sales Proceeds” has the meaning given to it under Clause 42.1(c).
“Net Trading Proceeds” has the meaning given to it under Clause 42.1(b).
“Nominated Purchaser” has the meaning given to it under Clause 42.1(c).
“Obligatory Insurances” means any insurances of the Vessel required to be effected by or on behalf of the Charterers pursuant to Clause 39.
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“Obligors” means:
(a) |
the Charterers; |
(b) |
the Guarantor; |
(c) |
the Approved Managers as at the date of this Charter which is an entity within the Group; |
(d) |
any sub-charterer of the Vessel which is an entity within the Group; and |
(e) |
any other party providing security for the Charterers’ obligations under this Charter pursuant to a Security Document or otherwise (except any Approved Manager or sub-charterer which are not entities within the Group). |
“Opening Capital Balance” shall have the same meaning as defined under the MOA.
“Operating Account” means an interest bearing account opened or to be opened in the name of the Charterers with the Account Bank.
“Option Premium” means an amount of US$1,500,000.
“Original Financial Statements” means in relation to the Guarantor, its audited consolidated financial statements for the fiscal year ended 31 December 2020 and its unaudited consolidated financial statements for the fiscal year ended 31 December 2021.
“Original Jurisdiction” means, in relation to an Obligor, the jurisdiction under whose laws they are incorporated as at the date of this Charter.
“Other Charters” means, in relation to each Other Vessel, each bareboat charterparty dated on or around the date of this Charter which is entered into between each applicable Other Owner and each applicable Other Charterer.
“Other Charterer” means, in relation to an Other Vessel, Ark Marine S.A.
“Other Leasing Documents” means the Leasing Documents as defined in the Other Charter.
“Other Owner” means, in relation to an Other Vessel, Sea 289 Leasing Co. Limited.
“Other Vessel” means each, or as the context may require, Hull Number 3211.
“Owners’ Costs” means, on any relevant date, (i) the Opening Capital Balance minus (ii) the aggregate Fixed Charterhire which has been paid by the Charterers and received by the Owners as at such date.
“Owners’ Financier” means any financier providing financing or refinancing facilities to the Owners or any affiliate of the Owners in respect of the Owners’ purchase and/or lease of the Vessel to the Charterers under the terms of the Leasing Documents.
“Owners’ Surveyor” shall have the meaning as defined under Clause 41.9.
“Party” means a party to this Charter, namely the Owners or the Charterers.
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“Payment Date” shall have the meaning as defined under Clause 36.5.
“Permitted Security Interest” means:
(a) |
any Security Interest created by a Security Document or a Financial Instrument; |
(b) |
any lien for unpaid master’s and crew’s wages in accordance with the ordinary course of operation of the Vessel or in accordance with usual reputable maritime practice; |
(c) |
any lien for salvage; |
(d) |
any lien for master’s disbursements incurred in the ordinary course of trading; |
(e) |
any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of the Vessel provided such liens do not secure amounts more than thirty (30) days overdue; |
(f) |
any Security Interest created in favour of a plaintiff or defendant in any action of the court or tribunal before whom such action is brought as security for costs and expenses where the Owners are prosecuting or defending such action in good faith by appropriate steps; and |
(g) |
Security Interests arising by operation of law in respect of taxes which are not overdue or for payment of taxes which are overdue for payment but which are being contested by the Owners or the Charterers in good faith by appropriate steps and in respect of which adequate reserves have been made, |
provided that the foregoing have not arisen due to the default or omission of any Obligor.
“Poseidon Principles” means the financial industry framework for assessing and disclosing the climate alignment of ship finance portfolios published in June 2019 as the same may be amended or replaced to reflect changes in applicable law or regulation or the introduction of or changes to mandatory requirements of the International Maritime Organisation from time to time.
“Potential Termination Event” means, an event or circumstance specified in Clause 47 (Termination Event) which would with the giving of any notice, the lapse of time, and/or a determination of the Owners, constitute a Termination Event.
“Prepositioning Date” shall have the same meaning as defined under the MOA.
“Prohibited Countries” means countries or territories whose government is the target of Sanctions or that is subject to comprehensive country-wide or territory-wide Sanctions (currently and, in any case, as long as the Sanctions remain in place, as regards United States Sanctions, Cuba, Syria, Iran, North Korea, Crimea and Venezuela), including but not limited to or pursuant to the US’s Office of Foreign Assets Control of the U.S.
“Prohibited Person” means any person who is the subject of Sanctions (whether designated by name or by reason of being included in a class of persons to whom the applicable Sanctions apply in accordance with their terms).
“Purchase Option” means the purchase option referred to in Clause 55.1.
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“Purchase Option Date” shall have the meaning ascribed thereto in Clause 55.2.
“Purchase Option Notice” shall have the meaning ascribed thereto in Clause 55.2.
“Purchase Option Price” means, in respect of any Purchase Option Date:
(a) |
if the Purchase Option Date falls on or after the first (1st) anniversary of the Commencement Date but prior to the seventh (7th) anniversary of the Commencement Date, the aggregate of: |
(i) |
the Owners’ Costs prevailing as at the relevant Purchase Option Date; |
(ii) |
the Relevant Fee (if appliable); |
(iii) |
any Charterhire accrued but unpaid as at the date of payment of the Purchase Option Price; |
(iv) |
any Breakfunding Costs including any Swap Costs; |
(v) |
any documented legal or other costs incurred by the Owners in connection with the exercise of the Purchase Option under Clause 55 (Purchase Option); and |
(vi) |
aside from the amounts described under paragraphs (i) to (v) above, any other moneys due and owing under the Leasing Documents at the relevant Purchase Option Date; |
(b) |
if the Purchase Option Date falls on or after the seventh (7th) anniversary of the Commencement Date, the aggregate of: |
(i) |
the Expiry Owners’ Costs; |
(ii) |
any Charterhire accrued but unpaid as at the date of payment of the Purchase Option Price; |
(iii) |
any documented legal or other costs incurred by the Owners in connection with the exercise of the Purchase Option under Clause 55 (Purchase Option); and |
(iv) |
aside from the amounts described under paragraphs (i) to (iii) above, any other moneys due and owing under the Leasing Documents at the relevant Purchase Option Date. |
“Purchase Price” has the meaning given to it in the MOA.
“QEL” means any agreement (entered or, as the context may require, to be entered into) between the Owners, the Owners’ Financiers (if applicable), the Charterers and (if applicable) any sub-charterer.
“Quotation Day” means, in relation to any Hire Period, two (2) Business Days before the first day of that Hire Period unless market practice differs in the Relevant Interbank Market in which
61
case the Quotation Day will be determined by the Owners in accordance with market practice in the Relevant Interbank Market.
“Relevant Interbank Market” means the London interbank market or in the case of any Replacement Benchmark, any applicable replacement interbank market.
“Relevant Jurisdiction” means, in relation to an Obligor:
(a) |
its Original Jurisdiction; |
(b) |
any jurisdiction where any property owned by it and charged under a Leasing Document is situated; |
(c) |
any jurisdiction where it conducts its business; or |
(d) |
any jurisdiction whose laws govern the perfection of any of the Security Documents entered into by it creating a Security Interest. |
“Relevant Nominating Body” means any applicable central bank, regulator or other supervisory authority or a group of them, or any working group or committee sponsored or chaired by, or constituted at the request of, any of them or the Financial Stability Board.
“Replacement Benchmark” means a benchmark rate which is:
(a) |
formally designated, nominated or recommended as the replacement for a Screen Rate by: |
(i) |
the administrator of that Screen Rate; or |
(ii) |
any Relevant Nominating Body, |
and if replacements have, at the relevant time, been formally designated, nominated or recommended under both paragraphs, the “Replacement Benchmark” will be the replacement under paragraph (ii) above;
(b) |
subject to Clause 37.5, in the opinion of the Owners, generally accepted in the international or any relevant domestic syndicated loan markets as the appropriate successor to that Screen Rate; or |
(c) |
subject to Clause 37.5, in the opinion of the Owners, an appropriate successor to a Screen Rate. |
“Relevant Fee” means, in relation to the Vessel, the amount set out corresponding to the relevant Purchase Option Date below:
Relevant Anniversary Date |
Relevant Fee (US$) |
1st Anniversary |
1.5% of the Owners’ Costs |
2nd Anniversary |
1.25% of the Owners’ Costs |
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3rd Anniversary |
1% of the Owners’ Costs |
4th Anniversary |
0.75% of the Owners’ Costs |
5th Anniversary |
0.5% of the Owners’ Costs |
6th Anniversary |
0% of the Owners’ Costs |
“Requisition Compensation” includes all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (a) of the definition of “Total Loss”.
“Sanctions” means any sanctions (including US “secondary sanctions”), embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment, exporting, financing or making assets available (or other activities similar to or connected with any of the foregoing):
(a) |
imposed by law or regulation of the United Kingdom, the Council of the European Union, the United Nations or its Security Council, the People’s Republic of China, the Special Administrative Region of Hong Kong or the United States of America; or |
(b) |
otherwise imposed by any law or regulation which are applicable to and/or binding on any Obligor. |
“Sanctions Advisory” means the Sanctions Advisory for the Maritime Industry, Energy and Metals Sectors, and Related Communities issued May 14, 2020 by the US Department of the Treasury, Department of State and Coast Guard, as may be amended or supplemented, and any similar future advisory.
“Sanctioned Ship” means a ship which is the subject of Sanctions.
“Screen Rate” means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for dollars for the relevant period displayed on page LIBOR01 or LIBOR02 of the Thomson Reuters screen (or any replacement Thomson Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Thomson Reuters. If such page or service ceases to be available, the Owners may specify another page or service displaying the relevant rate.
“Screen Rate Contingency Period” means twenty (20) days.
“Screen Rate Replacement Event” means, in relation to a Screen Rate:
(a) |
the methodology, formula or other means of determining that Screen Rate has, in the opinion of the Owners, materially changed; |
(b)
(i)
63
(A) |
the administrator of that Screen Rate or its supervisor publicly announces that such administrator is insolvent; or |
(B) |
information is published in any order, decree, notice, petition or filing, however described, of or filed with a court, tribunal, exchange, regulatory authority or similar administrative, regulatory or judicial body which reasonably confirms that the administrator of that Screen Rate is insolvent, |
provided that, in each case, at that time, there is no successor administrator to continue to provide that Screen Rate;
(ii) |
the administrator of that Screen Rate publicly announces that it has ceased or will cease, to provide that Screen Rate permanently or indefinitely and, at that time, there is no successor administrator to continue to provide that Screen Rate; |
(iii) |
the supervisor of the administrator of that Screen Rate publicly announces that such Screen Rate has been or will be permanently or indefinitely discontinued; or |
(iv) |
the administrator of that Screen Rate or its supervisor announces that that Screen Rate may no longer be used; or |
(c) |
the administrator of that Screen Rate determines that that Screen Rate should be calculated in accordance with its reduced submissions or other contingency or fallback policies or arrangements and either: |
(i) |
the circumstance(s) or event(s) leading to such determination are not (in the opinion of the Owners) temporary; or |
(ii) |
that Screen Rate is calculated in accordance with any such policy or arrangement for a period no less than the Screen Rate Contingency Period; or |
(d) |
in the opinion of the Owners, that Screen Rate is otherwise no longer appropriate for the purposes of calculating interest under this Charter. |
“Security Documents” means:
(a) |
the Account Charge; |
(b) |
the General Assignment; |
(c) |
the Shares Security; |
(d) |
the Builder’s Warranties Assignment; |
(e) |
each Manager’s Undertaking; and |
(f) |
any other security document conferring any Security Interest in respect of the obligations of the Charterers under or in connection with this Charter. |
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“Security Interest” means:
(a) |
a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or any other security interest of any kind; |
(b) |
the security rights of a plaintiff under an action in rem; or |
(c) |
any other right which confers on a creditor or potential creditor a right or privilege to receive the amount actually or contingently due to it ahead of the general unsecured creditors of the debtor concerned; however this paragraph (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution. |
“Shareholder” means the Guarantor.
“Shares Security” means a first priority charge/pledge over the shares of the Charterers executed or to be executed by the Shareholder in favour of the Owners.
“Shipbuilding Contract” means the shipbuilding contract dated 28 September 2020 entered into between the Head Sellers (as defined in the MOA) and the Builder (in its capacity as seller) for the construction and purchase of the Vessel as may from time to time be amended, supplemented.
“Shipbuilding Contract Price” means the contract price to be paid by the Head Sellers (as defined in the MOA) to the Builder under the Shipbuilding Contract.
“SOFR” means the secured overnight financing rate (SOFR) administered by the Federal Reserve Bank of New York (or any other person which takes over the administration of that rate) published (before any correction, recalculation or republication by the administrator) by the Federal Reserve Bank of New York (or any other person which takes over the publication of that rate).
“Specified Time” means 11.00am London time on the Quotation Day.
“Statement of Compliance” means a Statement of Compliance related to fuel oil consumption pursuant to regulations 6.6 and 6.7 of Annex VI.
“Subsidiary” means a subsidiary within the meaning of section 1159 of the UK Companies Act 2006.
“Swap Costs” means any amount payable by the Owners or documented costs incurred by the Owners (after netting out any gains) as a result of the termination or close-out of any Treasury Transaction entered into in connection with the Leasing Documents.
“Termination Date” has the meaning given to it under Clause 47.2.
“Termination Event” means any event described in Clause 47 (Termination Events).
“Termination Fee” means one point five per cent. (1.50%) of the Owners’ Costs as at the relevant date.
“Termination Notice” has the meaning given to it under Clause 47.2.
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“Termination Sum” means, in respect of any date (such date being referred to as the “Relevant Date” for the purposes of this definition only), the aggregate of (without double counting amounts that may be included in more than one sub-paragraph below):
(a) |
the Owners’ Costs prevailing as at the Relevant Date; |
(b) |
any Variable Charterhire accrued and unpaid as at the date of payment of the Termination Sum; |
(c) |
the Termination Fee; |
(d) |
any Breakfunding Costs including any Swap Costs; |
(e) |
any and all evidenced and documented direct costs, losses and liabilities incurred by the Owners as a result of the early termination of the leasing under this Charter (including any losses based on estimated market charter rates provided by an Approved Valuer of re-chartering the Vessel to another party other than the Charterers for the period up until the natural expiry of the Charter Period) including but not limited to any legal costs, any agency or broker fees incurred in attempting to re-charter or otherwise dispose of the Vessel; |
(f) |
any and all documented costs, losses and liabilities incurred by the Owners in locating, repossessing, recovering, repositioning, berthing, insuring and maintaining the Vessel and/or in collecting any payments due under this Charter and/or in obtaining the due performance of the obligations of the Charterers under this Charter or the other Leasing Documents; and |
(g) |
aside from the amounts described under paragraphs (a) to (f) above, any other moneys due and owing under the Leasing Documents at the Relevant Date including any default interest on amounts under (a) to (f) above. |
“Total Loss” means:
(a) |
any expropriation, confiscation, requisition (other than a requisition for hire) or acquisition of the Vessel, whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority; |
(b) |
any requisition for hire, arrest, condemnation, capture, seizure or detention of the Vessel (including any hijacking or theft but excluding any event specified in paragraph (a) of this definition) unless it is redelivered within thirty (30) days to the full control of the Owners or the Charterers; or |
(c) |
actual, constructive, compromised, agreed or arranged total loss of the Vessel. |
“Total Loss Date” means, in relation to the Total Loss of the Vessel:
(a) |
in the case of a Total Loss occurring under paragraph (a) of the definition of Total Loss, on the date on which the expropriation, confiscation, requisition or, as the case may be, the acquisition of the Vessel is completed by delivery of the Vessel to the relevant |
66
government or official authority or the person or persons claiming to be or to represent the relevant government or official authority;
(b) |
in the case of a Total Loss occurring under paragraph (b) of the definition of Total Loss, the date falling on the expiration of such thirty (30) day period; |
(c) |
in the case of an actual loss of the Vessel, the date on which it occurred; and |
(d) |
in the case of a constructive, compromised, agreed or arranged total loss of the Vessel, the earliest of: |
(i) |
the date when the Vessel was last heard of; |
(ii) |
the date on which a notice of abandonment is given to the insurers; and |
(iii) |
the date of any compromise, arrangement or agreement made by or on behalf of the Charterers with the insurers in which the insurers agree to treat the Vessel as a Total Loss. |
“Total Loss Payment Date” means, following the occurrence of a Total Loss, the earlier of:
(a) |
the date falling ninety (90) days after the Total Loss Date or such later date as the Owners may agree; and |
(b) |
the date on which the Owners receive the Total Loss Proceeds. |
“Total Loss Proceeds” means the proceeds of any policy or contract of insurance or any Requisition Compensation in each case arising in respect of a Total Loss.
“Total Loss Termination Sum” means, in respect of any date (such date being referred to as the “Relevant Date” for the purposes of this definition only), the aggregate of (without double counting amounts that may be included in more than one sub-paragraph below):
(a) |
the Owners’ Costs prevailing as at the Relevant Date; |
(b) |
any Variable Charterhire accrued and unpaid as at the date of payment of the Termination Sum; |
(c) |
any Breakfunding Costs including any Swap Costs; |
(d) |
any and all evidenced and documented direct costs, losses and liabilities incurred by the Owners as a result of the early termination of the leasing under this Charter (including any losses based on estimated market charter rates provided by an Approved Valuer of re-chartering the Vessel to another party other than the Charterers for the period up until the natural expiry of the Charter Period) including but not limited to any legal costs, any agency or broker fees incurred in attempting to re-charter or otherwise dispose of the Vessel; |
(e) |
any and all documented costs, losses and liabilities incurred by the Owners in collecting any payments due under this Charter and/or in obtaining the due performance of the obligations of the Charterers under this Charter or the other Leasing Documents; and |
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(f) |
aside from the amounts described under paragraphs (a) to (f) above, any other moneys due and owing under the Leasing Documents at the Relevant Date including any default interest on amounts under (a) to (f) above. |
“Treasury Transaction” means any derivative transaction entered into in connection with protection against or benefit from any fluctuation in price or rate.
“US” means the United States of America.
“US Tax Obligor” means:
(a) |
a person which is resident for tax purposes in the US; or |
(b) |
a person some or all of whose payments under the Leasing Documents are from sources within the US for US federal income tax purposes. |
“Variable Charterhire” shall have the meaning as defined under Clause 36.4(b).
“Vessel” means the VLCC with hull number 3212 and registered or to be registered under the name of the Owners under the Flag State upon Delivery.
66.2 |
In this Charter: |
“agreed form” means, in relation to a document, such document in a form agreed in writing between the Owners and the Charterers;
“asset” includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;
“company” includes any partnership, joint venture and unincorporated association;
“consent” includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation;
“contingent liability” means a liability which is not certain to arise and/or the amount of which remains unascertained;
“control” over a particular company means the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:
(a) |
cast, or control the casting of, fifty one per cent. (51%) or more of the maximum number of votes that might be cast at a general meeting of such company; or |
(b) |
appoint or remove all, or the majority, of the directors or other equivalent officers of such company; or |
(c) |
give directions with respect to the operating and financial policies of such company with which the directors or other equivalent officers of such company are obliged to comply; |
“document” includes a deed; also a letter or fax or email;
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“expense” means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;
“law” includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;
“legal or administrative action” means any legal proceeding or arbitration and any administrative or regulatory action or investigation;
“liability” includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;
“months” shall be construed in accordance with Clause 66.3;
“person” includes any company; any state, political sub-division of a state and local or municipal authority; and any international organisation;
“policy”, in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;
“protection and indemnity risks” means the usual risks covered by a protection and indemnity association which is a member of the International Group of Protection and Indemnity Clubs including pollution risks, extended passenger cover and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 6 of the International Hull Clauses (1/11/02 or 1/11/03), clause 8 of the Institute Time Clauses (Hulls) (1/10/83) or clause 8 of the Institute Time Clauses (Hulls) (1/11/1995) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;
“regulation” includes any regulation, rule, official directive, request or guideline whether or not having the force of law of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation; and
“tax” includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine.
66.3 |
Meaning of “month” |
A period of one or more “months” ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (“the numerically corresponding day”), but:
(a) |
on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or |
(b) |
on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day; |
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and “month” and “monthly” shall be construed accordingly.
66.4 |
In this Charter: |
(a) |
references to a Leasing Document or any other document being in the form of a particular appendix or to any document referred to in the recitals include references to that form with any modifications to that form which the Owners approve; |
(b) |
references to, or to a provision of, a Leasing Document or any other document are references to it as amended or supplemented, whether before the date of this Charter or otherwise; |
(c) |
references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Charter or otherwise; and |
(d) |
words denoting the singular number shall include the plural and vice versa. |
66.5 |
Headings |
In interpreting a Leasing Document or any provision of a Leasing Document, all clauses, sub-clauses and other headings in that and any other Leasing Document shall be entirely disregarded.
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EXECUTION PAGE
OWNERS |
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SIGNED BY Wong Wai Sum |
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) /s/ Wong Wai Sum |
for and on behalf of |
|
) Attorney-in-Fact |
SEA 290 LEASING CO. LIMITED |
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) |
as attorney-in-fact |
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) |
in the presence of |
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) |
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Witness’ signature: |
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) /s/ Sandrea Mar |
Witness’ name: |
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) Sandrea Mar |
Witness’ address: |
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) Suites 4610-4619 Jardine House |
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) 1 Connaught Place, Hong Kong |
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CHARTERERS |
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SIGNED BY Thaleia Kalafati |
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) /s/ Thaleia Kalafati |
for and on behalf of |
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) |
THETA NAVIGATION LTD |
|
) |
as attorney-in-fact |
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) |
in the presence of |
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) |
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Witness’ signature: |
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) /s/ Ariadne E. Aldous |
Witness’ name: |
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) Ariadne E. Aldous |
Witness’ address: |
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) Attorney at Law, LLM |
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Athens Bar |
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SCHEDULE 1
ACCEPTANCE CERTIFICATE
72
SCHEDULE 2
CONDITIONS PRECEDENT
73
1 |
Dated: 21 March 2022 |
2 |
THETA NAVIGATION LTD, a corporation incorporated with Entity Number 109610 and existing under the laws of the Republic of the Marshall Islands with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (Name of sellers), hereinafter called the “Sellers”, have agreed to sell, and |
3 |
SEA 290 LEASING CO. LIMITED, company incorporated under the laws of Hong Kong with limited liability with its registered office at 27/F, Three Exchange Square, 8 Connaught Place Central, Hong Kong (Name of buyers), hereinafter called the “Buyers”, have agreed to buy: |
4 |
Name of vessel: Hull No. 3212 |
5 |
IMO Number: 9920760 |
6 |
Classification Society: DNV |
7 |
Class Notation: As per Class Certificate |
8 |
Year of Build: 2022 Builder/Yard: Hyundai Heavy Industries Co., Ltd., South Korea |
9Flag: Marshall Islands or otherwise agreedPlace of Registration: N/A GT/NT: 154,500 / 106,657
10 |
hereinafter called the “Vessel”, on the following terms and conditions: |
11 |
Definitions |
“Agreement” means this memorandum of agreement which shall for the avoidance of doubt, include the rider provisions from Clauses 19 to 31.
12 |
“Banking Days” are days on which banks are open both in the country of the currency stipulated for |
13 |
the Purchase Price in Clause 1 (Purchase Price) and in the place of closing stipulated in Clause 8 |
14(Documentation) and(add additional jurisdictions as appropriate).
15 |
“Buyers’ Nominated Flag State” means the Republic of the Marshall Islands (state flag state). |
16 |
“Class” means the class notation referred to above. |
17 |
“Classification Society” means the Society referred to above. |
“Dollars” or “$” mean United States dollars, being the lawful currency of the United States of America.
18 |
“Deposit” shall have the meaning given in Clause 2 (Deposit) |
19 “Deposit Holder” means(state name and location of Deposit Holder) or, if left blank, the
20 |
Sellers’ Bank, which shall hold and release the Deposit in accordance with this Agreement. |
21 |
“In writing” or “written” means a letter handed over from the Sellers to the Buyers or vice versa, a |
22 |
registered letter, e-mail or telefax. |
23 |
“Parties” means the Sellers and the Buyers. |
Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
24“Purchase Price” means the price for the Vessel as stated in Clause 1 (Purchase Price).
25“Sellers’ Account” means(state details of bank account) at the Sellers’ Bank.
26 “Sellers’ Bank” means(state name of bank, branch and details) or, if left blank, the bank
27notified by the Sellers to the Buyers for receipt of the balance of the Purchase Price.
281.Purchase Price - (See Clause 19)
29 |
The Purchase Price is (state currency and amount both in words and figures). |
302.Deposit - intentionally omitted
31 |
As security for the correct fulfilment of this Agreement the Buyers shall lodge a deposit of |
32% (per cent) or, if left blank, 10% (ten per cent), of the Purchase Price (the
33 |
“Deposit”) in an interest bearing account for the Parties with the Deposit Holder within three (3) |
34 |
Banking Days after the date that: |
35 |
(i) this Agreement has been signed by the Parties and exchanged in original or by |
36 |
e-mail or telefax; and |
37 |
(ii) the Deposit Holder has confirmed in writing to the Parties that the account has been |
38 |
opened. |
39 |
The Deposit shall be released in accordance with joint written instructions of the Parties. |
40 |
Interest, if any, shall be credited to the Buyers. Any fee charged for holding and releasing the |
41 |
Deposit shall be borne equally by the Parties. The Parties shall provide to the Deposit Holder |
42 |
all necessary documentation to open and maintain the account without delay. |
433.Payment (See Clause 19)
44 |
On delivery of the Vessel, but not later than three (3) Banking Days after the date that Notice of |
45 |
Readiness has been given in accordance with Clause 5 (Time and place of delivery and |
46 |
notices): |
47 |
(i) the Deposit shall be released to the Sellers; and |
48 |
(ii) the balance of the Purchase Price and all other sums payable on delivery by the Buyers |
49 |
to the Sellers under this Agreement shall be paid in full free of bank charges to the |
50 |
Sellers’ Account. |
514.Inspection - intentionally omitted
52 |
(a)* The Buyers have inspected and accepted the Vessel’s classification records. The Buyers |
53have also inspected the Vessel at/in (state place) on(state date) and have
54 |
accepted the Vessel following this inspection and the sale is outright and definite, subject only |
55 |
to the terms and conditions of this Agreement. |
56 |
(b)* The Buyers shall have the right to inspect the Vessel’s classification records and declare |
57whether same are accepted or not within(state date/period).
58The Sellers shall make the Vessel available for inspection at/in(state place/range) within
59 |
(state date/period). |
Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
60 |
The Buyers shall undertake the inspection without undue delay to the Vessel. Should the |
61 |
Buyers cause undue delay they shall compensate the Sellers for the losses thereby incurred. |
62 |
The Buyers shall inspect the Vessel without opening up and without cost to the Sellers. |
63 |
During the inspection, the Vessel’s deck and engine log books shall be made available for |
64 |
examination by the Buyers. |
65 |
The sale shall become outright and definite, subject only to the terms and conditions of this |
66 |
Agreement, provided that the Sellers receive written notice of acceptance of the Vessel from |
67 |
the Buyers within seventy-two (72) hours after completion of such inspection or after the |
68 |
date/last day of the period stated in Line 59, whichever is earlier. |
69 |
Should the Buyers fail to undertake the inspection as scheduled and/or notice of acceptance of |
70 |
the Vessel’s classification records and/or of the Vessel not be received by the Sellers as |
71 |
aforesaid, the Deposit together with interest earned, if any, shall be released immediately to the |
72 |
Buyers, whereafter this Agreement shall be null and void. |
73 |
*4(a) and 4(b) are alternatives; delete whichever is not applicable. In the absence of deletions, |
74 |
alternative 4(a) shall apply. |
755.Time and place of delivery and notices - (See Clause 24)
76 |
(a) The Vessel shall be delivered and taken over safely afloat at a safe and accessible berth or |
77anchorage at/in(state place/range) in the Sellers’ option.
78Notice of Readiness shall not be tendered before:(date)
79 |
Cancelling Date (see Clauses 5(c), 6 (a)(i), 6 (a) (iii) and 14): |
80 |
(b) The Sellers shall keep the Buyers well informed of the Vessel’s itinerary and shall |
81 |
provide the Buyers with twenty (20), ten (10), five (5) and three (3) days’ notice of the date the |
82 |
Sellers intend to tender Notice of Readiness and of the intended place of delivery. |
83 |
When the Vessel is at the place of delivery and physically ready for delivery in accordance with |
84 |
this Agreement, the Sellers shall give the Buyers a written Notice of Readiness for delivery. |
85 |
(c) If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the |
86 |
Vessel will not be ready for delivery by the Cancelling Date they may notify the Buyers in writing |
87 |
stating the date when they anticipate that the Vessel will be ready for delivery and proposing a |
88 |
new Cancelling Date. Upon receipt of such notification the Buyers shall have the option of |
89 |
either cancelling this Agreement in accordance with Clause 14 (Sellers’ Default) within three (3) |
90 |
Banking Days of receipt of the notice or of accepting the new date as the new Cancelling Date. |
91 |
If the Buyers have not declared their option within three (3) Banking Days of receipt of the |
92 |
Sellers’ notification or if the Buyers accept the new date, the date proposed in the Sellers’ |
93 |
notification shall be deemed to be the new Cancelling Date and shall be substituted for the |
94 |
Cancelling Date stipulated in line 79. |
95 |
If this Agreement is maintained with the new Cancelling Date all other terms and conditions |
96 |
hereof including those contained in Clauses 5(b) and 5(d) shall remain unaltered and in full |
97 |
force and effect. |
98 |
(d) Cancellation, failure to cancel or acceptance of the new Cancelling Date shall be entirely |
Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
99 |
without prejudice to any claim for damages the Buyers may have under Clause 14 (Sellers’ |
100 |
Default) for the Vessel not being ready by the original Cancelling Date. |
101 |
(e) Should the Vessel become an actual, constructive or compromised total loss before delivery |
102 |
the Deposit together with interest earned, if any, shall be released immediately to the Buyers |
103 |
whereafter this Agreement shall be null and void. |
1046.Divers Inspection / Drydocking - intentionally omitted
105 |
(a)* |
106 |
(i) The Buyers shall have the option at their cost and expense to arrange for an underwater |
107 |
inspection by a diver approved by the Classification Society prior to the delivery of the |
108 |
Vessel. Such option shall be declared latest nine (9) days prior to the Vessel’s intended |
109 |
date of readiness for delivery as notified by the Sellers pursuant to Clause 5(b) of this |
110 |
Agreement. The Sellers shall at their cost and expense make the Vessel available for |
111 |
such inspection. This inspection shall be carried out without undue delay and in the |
112 |
presence of a Classification Society surveyor arranged for by the Sellers and paid for by |
113 |
the Buyers. The Buyers’ representative(s) shall have the right to be present at the diver’s |
114 |
inspection as observer(s) only without interfering with the work or decisions of the |
115 |
Classification Society surveyor. The extent of the inspection and the conditions under |
116 |
which it is performed shall be to the satisfaction of the Classification Society. If the |
117 |
conditions at the place of delivery are unsuitable for such inspection, the Sellers shall at |
118 |
their cost and expense make the Vessel available at a suitable alternative place near to |
119 |
the delivery port, in which event the Cancelling Date shall be extended by the additional |
120 |
time required for such positioning and the subsequent re-positioning. The Sellers may |
121 |
not tender Notice of Readiness prior to completion of the underwater inspection. |
122 |
(ii) If the rudder, propeller, bottom or other underwater parts below the deepest load line are |
123 |
found broken, damaged or defective so as to affect the Vessel’s class, then (1) unless |
124 |
repairs can be carried out afloat to the satisfaction of the Classification Society, the |
125 |
Sellers shall arrange for the Vessel to be drydocked at their expense for inspection by |
126 |
the Classification Society of the Vessel’s underwater parts below the deepest load line, |
127 |
the extent of the inspection being in accordance with the Classification Society’s rules (2) |
128 |
such defects shall be made good by the Sellers at their cost and expense to the |
129 |
satisfaction of the Classification Society without condition/recommendation** and (3) the |
130 |
Sellers shall pay for the underwater inspection and the Classification Society’s |
131 |
attendance. |
132 |
Notwithstanding anything to the contrary in this Agreement, if the Classification Society |
133 |
do not require the aforementioned defects to be rectified before the next class |
134 |
drydocking survey, the Sellers shall be entitled to deliver the Vessel with these defects |
135 |
against a deduction from the Purchase Price of the estimated direct cost (of labour and |
136 |
materials) of carrying out the repairs to the satisfaction of the Classification Society, |
137 |
whereafter the Buyers shall have no further rights whatsoever in respect of the defects |
138 |
and/or repairs. The estimated direct cost of the repairs shall be the average of quotes |
139 |
for the repair work obtained from two reputable independent shipyards at or in the |
140 |
vicinity of the port of delivery, one to be obtained by each of the Parties within two (2) |
141 |
Banking Days from the date of the imposition of the condition/recommendation, unless |
142 |
the Parties agree otherwise. Should either of the Parties fail to obtain such a quote within |
143 |
the stipulated time then the quote duly obtained by the other Party shall be the sole basis |
144 |
for the estimate of the direct repair costs. The Sellers may not tender Notice of |
145 |
Readiness prior to such estimate having been established. |
Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
146 |
(iii) If the Vessel is to be drydocked pursuant to Clause 6(a)(ii) and no suitable dry-docking |
147 |
facilities are available at the port of delivery, the Sellers shall take the Vessel to a port |
148 |
where suitable drydocking facilities are available, whether within or outside the delivery |
149 |
range as per Clause 5(a). Once drydocking has taken place the Sellers shall deliver the |
150 |
Vessel at a port within the delivery range as per Clause 5(a) which shall, for the purpose |
151 |
of this Clause, become the new port of delivery. In such event the Cancelling Date shall |
152 |
be extended by the additional time required for the drydocking and extra steaming, but |
153 |
limited to a maximum of fourteen (14) days. |
154 |
(b)* The Sellers shall place the Vessel in drydock at the port of delivery for inspection by the |
155 |
Classification Society of the Vessel’s underwater parts below the deepest load line, the extent |
156 |
of the inspection being in accordance with the Classification Society’s rules. If the rudder, |
157 |
propeller, bottom or other underwater parts below the deepest load line are found broken, |
158 |
damaged or defective so as to affect the Vessel’s class, such defects shall be made good at the |
159 |
Sellers’ cost and expense to the satisfaction of the Classification Society without |
160 |
condition/recommendation**. In such event the Sellers are also to pay for the costs and |
161 |
expenses in connection with putting the Vessel in and taking her out of drydock, including the |
162 |
drydock dues and the Classification Society’s fees. The Sellers shall also pay for these costs |
163 |
and expenses if parts of the tailshaft system are condemned or found defective or broken so as |
164 |
to affect the Vessel’s class. In all other cases, the Buyers shall pay the aforesaid costs and |
165 |
expenses, dues and fees. |
166 |
(c) If the Vessel is drydocked pursuant to Clause 6 (a)(ii) or 6 (b) above: |
167 |
(i) The Classification Society may require survey of the tailshaft system, the extent of the |
168 |
survey being to the satisfaction of the Classification surveyor. If such survey is |
169 |
not required by the Classification Society, the Buyers shall have the option to require the |
170 |
tailshaft to be drawn and surveyed by the Classification Society, the extent of the survey |
171 |
being in accordance with the Classification Society’s rules for tailshaft survey and |
172 |
consistent with the current stage of the Vessel’s survey cycle. The Buyers shall declare |
173 |
whether they require the tailshaft to be drawn and surveyed not later than by the |
174 |
completion of the inspection by the Classification Society. The drawing and refitting of |
175 |
the tailshaft shall be arranged by the Sellers. Should any parts of the tailshaft system be |
176 |
condemned or found defective so as to affect the Vessel’s class, those parts shall be |
177 |
renewed or made good at the Sellers’ cost and expense to the satisfaction of |
178 |
Classification Society without condition/recommendation**. |
179 |
(ii) The costs and expenses relating to the survey of the tailshaft system shall be borne by |
180 |
the Buyers unless the Classification Society requires such survey to be carried out or if |
181 |
parts of the system are condemned or found defective or broken so as to affect the |
182 |
Vessel’s class, in which case the Sellers shall pay these costs and expenses. |
183 |
(iii) The Buyers’ representative(s) shall have the right to be present in the drydock, as |
184 |
observer(s) only without interfering with the work or decisions of the Classification |
185 |
Society surveyor. |
186 |
(iv) The Buyers shall have the right to have the underwater parts of the Vessel cleaned |
187 |
and painted at their risk, cost and expense without interfering with the Sellers’ or the |
188 |
Classification Society surveyor’s work, if any, and without affecting the Vessel’s timely |
189 |
delivery. If, however, the Buyers’ work in drydock is still in progress when the |
190 |
Sellers have completed the work which the Sellers are required to do, the additional |
191 |
docking time needed to complete the Buyers’ work shall be for the Buyers’ risk, cost and |
192 |
expense. In the event that the Buyers’ work requires such additional time, the Sellers |
Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
193 |
may upon completion of the Sellers’ work tender Notice of Readiness for delivery whilst |
194 |
the Vessel is still in drydock and, notwithstanding Clause 5(a), the Buyers shall be |
195 |
obliged to take delivery in accordance with Clause 3 (Payment), whether the Vessel is in |
196 |
drydock or not. |
197 |
*6 (a) and 6 (b) are alternatives; delete whichever is not applicable. In the absence of deletions, |
198 |
alternative 6 (a) shall apply. |
199 |
**Notes or memoranda, if any, in the surveyor’s report which are accepted by the Classification |
200 |
Society without condition/recommendation are not to be taken into account. |
2017.Spares, bunkers and other items
202 |
The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board |
203 |
and on shore. All spare parts and spare equipment including spare tail-end shaft(s) and/or |
204 |
spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of delivery inspection |
205 |
used or unused, whether on board or not shall become the Buyers’ property, but spares on |
206 |
order are excluded. Forwarding charges, if any, shall be for the Buyers’ account. The Sellers |
207 |
are not required to replace spare parts including spare tail-end shaft(s) and spare |
208 |
propeller(s)/propeller blade(s) which are taken out of spare and used as replacement prior to |
209 |
delivery, but the replaced items shall be the property of the Buyers. Unused Sstores and |
210 |
provisions shall be included in the sale and be taken over by the Buyers without extra payment. and any bunkers, lubricating oils and greases on board the Vessel at the time of Delivery shall be taken over by the Buyers at no cost to the Buyersbe excluded from the sale and remain the property of the Sellers (or any sub-charterer as the case may be). |
211 |
Library and forms exclusively for use in the Sellers’ vessel(s) and captain’s, officers’ and crew’s |
212 |
personal belongings including the slop chest are excluded from the sale without compensation, |
213as well as the following additional items:(include list)
214 |
Items on board which are on hire or owned by third parties, listed as follows, are excluded from |
215the sale without compensation:(include list)
216 |
Items on board at the time of inspection which are on hire or owned by third parties, not listed |
217 |
above, shall be replaced or procured by the Sellers prior to delivery at their cost and expense. |
218 |
The Buyers shall take over remaining bunkers and unused lubricating and hydraulic oils and |
219 |
greases in storage tanks and unopened drums and pay either: |
220 |
(a) *the actual net price (excluding barging expenses) as evidenced by invoices or vouchers; or |
221 |
(b) *the current net market price (excluding barging expenses) at the port and date of delivery |
222 |
of the Vessel or, if unavailable, at the nearest bunkering port, |
223 |
for the quantities taken over. |
224 |
Payment under this Clause shall be made at the same time and place and in the same |
225 |
currency as the Purchase Price. |
226 |
“inspection” in this Clause 7, shall mean the Buyers’ inspection according to Clause 4(a) or 4(b) |
227 |
(Inspection), if applicable. If the Vessel is taken over without inspection, the date of this |
228 |
Agreement shall be the relevant date. |
229 |
*(a) and (b) are alternatives, delete whichever is not applicable. In the absence of deletions |
230 |
alternative (a) shall apply. |
Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
2318. Documentation
At the time of delivery, the Buyers shall provide the Sellers with the following documents:
(i) a copy of Certificate of Registration of the Buyers;
(ii) a copy of resolutions or minutes of the meetings of the board of directors of the Buyers according to which they agree to purchase the Vessel and approving the execution of all documents and the doing of all things necessary to give effect to that; and
(iii) a copy of power of attorney of the Buyers appointing one or more representatives to act on behalf of the Buyers in the performance of this Agreement.
232 |
The place of closing: |
233 |
(a) In exchange for payment of the Purchase Price the Sellers shall provide the Buyers with the |
234 |
following delivery documents: |
235 |
(i) Legal Bill(s) of Sale in a form recordable in the Buyers’ Nominated Flag State, |
236 |
transferring title of the Vessel and stating that the Vessel is free from all mortgages, |
237 |
encumbrances and maritime liens or any other debts whatsoever, duly notarially attested |
238 |
and legalised or apostilled, as required by the Buyers’ Nominated Flag State; |
239 |
(ii) Evidence that all necessary corporate, shareholder and other action has been taken by |
240 |
the Sellers to authorise the execution, delivery and performance of this Agreement; |
241 |
(iii) Power of Attorney of the Sellers appointing one or more representatives to act on behalf |
242 |
of the Sellers in the performance of this Agreement, duly notarially attested and legalised |
243 |
or apostilled (as appropriate); |
244 |
(iv) Certificate or Transcript of Registry issued by the competent authorities of the flag state |
245 |
on the date of delivery evidencing the Sellers’ ownership of the Vessel and that the |
246 |
Vessel is free from registered encumbrances and mortgages, to be faxed or e-mailed by |
247 |
such authority to the closing meeting with the original to be sent to the Buyers as soon as |
248 |
possible after delivery of the Vessel; |
249 |
(v) Declaration of Class or (depending on the Classification Society) a Class Maintenance |
250 |
Certificate issued within three (3) Banking Days prior to delivery confirming that the |
251 |
Vessel is in Class free of condition/recommendation; |
252 |
(vi) Certificate of Deletion of the Vessel from the Vessel’s registry or other official evidence of |
253 |
deletion appropriate to the Vessel’s registry at the time of delivery, or, in the event that |
254 |
the registry does not as a matter of practice issue such documentation immediately, a |
255 |
written undertaking by the Sellers to effect deletion from the Vessel’s registry forthwith |
256 |
and provide a certificate or other official evidence of deletion to the Buyers promptly and |
257 |
latest within four (4) weeks after the Purchase Price has been paid and the Vessel has |
258 |
been delivered; |
259 |
(vii) A copy of the Vessel’s Continuous Synopsis Record certifying the date on which the |
260 |
Vessel ceased to be registered with the Vessel’s registry, or, in the event that the registry |
261 |
does not as a matter of practice issue such certificate immediately, a written undertaking |
262 |
from the Sellers to provide the copy of this certificate promptly upon it being issued |
263 |
together with evidence of submission by the Sellers of a duly executed Form 2 stating |
264 |
the date on which the Vessel shall cease to be registered with the Vessel’s registry; |
Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
265 |
(viii) Commercial Invoice for the Vessel; |
266 |
(ix) Commercial Invoice(s) for bunkers, lubricating and hydraulic oils and greases; |
267 |
(x) A copy of the Sellers’ letter to their satellite communication provider cancelling the |
268 |
Vessel’s communications contract which is to be sent immediately after delivery of the |
269 |
Vessel; |
270 |
(xi) Any additional documents as may reasonably be required by the competent authorities of |
271 |
the Buyers’ Nominated Flag State for the purpose of registering the Vessel, provided the |
272 |
Buyers notify the Sellers of any such documents as soon as possible after the date of |
273 |
this Agreement; and |
274 |
(xii) The Sellers’ letter of confirmation that to the best of their knowledge, the Vessel is not |
275 |
black listed by any nation or international organisation. |
276 |
(b) At the time of delivery the Buyers shall provide the Sellers with: |
277 |
(i) Evidence that all necessary corporate, shareholder and other action has been taken by |
278 |
the Buyers to authorise the execution, delivery and performance of this Agreement; and |
279 |
(ii) Power of Attorney of the Buyers appointing one or more representatives to act on behalf |
280 |
of the Buyers in the performance of this Agreement, duly notarially attested and legalised |
281 |
or apostilled (as appropriate). |
282 |
(c) If any of the documents listed in Sub-clauses (a) and (b) above are not in the English |
283 |
language they shall be accompanied by an English translation by an authorised translator or |
284 |
certified by a lawyer qualified to practice in the country of the translated language. |
285 |
(d) The Parties shall to the extent possible exchange copies, drafts or samples of the |
286 |
documents listed in Sub-clause (a) and Sub-clause (b) above for review and comment by the |
287 |
other party not later than (state number of days), or if left blank, nine (9) days prior to the |
288 |
Vessel’s intended date of readiness for delivery as notified by the Sellers pursuant to |
289 |
Clause 5(b) of this Agreement. |
290 |
(e) Concurrent with the exchange of documents in Sub-clause (a) and Sub-clause (b) above, |
291 |
the Sellers shall also hand to the Buyers the classification certificate(s) as well as all plans, |
292 |
drawings and manuals, (excluding ISM/ISPS manuals), which are on board the Vessel. Other |
293 |
certificates which are on board the Vessel shall also be handed over to the Buyers unless |
294 |
the Sellers are required to retain same, in which case the Buyers have the right to take copies. |
295 |
(f) Other technical documentation which may be in the Sellers’ possession shall promptly after |
296 |
delivery be forwarded to the Buyers at their expense, if they so request. The Sellers may keep |
297 |
the Vessel’s log books but the Buyers have the right to take copies of same. |
298 |
(g) The Parties shall sign and deliver to each other a Protocol of Delivery and Acceptance |
299 |
confirming the date and time of delivery of the Vessel from the Sellers to the Buyers. |
3009.Encumbrances
301 |
The Sellers warrant that the Vessel, at the time of deliveryDelivery, is free from all charters (other than the Bareboat Charterr and ), |
302 |
encumbrances, mortgages and maritime liens or any other debts whatsoever, and is not subject |
303 |
to Port State or other administrative detentions. The Sellers hereby undertake to indemnify the |
Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
304 |
Buyers against all consequences of claims made against the Vessel which have been incurred |
305 |
prior to the time of deliveryDelivery. |
30610. Taxes, fees and expenses
307 |
Any taxes, fees and expenses in connection with the purchase of the Vessel and registration in the Buyers’ |
308 |
Nominated Flag State and in connection with the closing of the Sellers’ register and shall be for the Buyers’ account, whereas similar charges in connection |
309 |
with the closing of the Sellers’ register shall be for the Sellers’ account. |
31011. Condition on delivery
311 |
The Vessel with everything belonging to her shall be at the Sellers’ risk and expense until she is |
312 |
delivered to the Buyers but subject to the terms and conditions of this Agreement she shall be delivered and taken over as she was. , but subject to the terms and conditions of this Agreement she shall be |
313 |
delivered and taken over as she was at the time of inspection, fair wear and tear excepted. |
314 |
However, the Vessel shall be delivered free of cargo and free of stowaways with her Class |
315 |
maintained without condition/recommendation*, free of average damage affecting the Vessel’s |
316 |
class, and with her classification certificates and national certificates, as well as all other |
317 |
certificates the Vessel had at the time of inspection, valid and unextended without |
318 |
condition/recommendation* by the Classification Society or the relevant authorities at the time |
319 |
of deliveryDelivery. |
320 |
“inspection” in this Clause 11, shall mean the Buyers’ inspection according to Clause 4(a) or |
321 |
4(b) (Inspections), if applicable. If the Vessel is taken over without inspection, the date of this |
322 |
Agreement shall be the relevant date. |
323 |
*Notes and memoranda, if any, in the surveyor’s report which are accepted by the Classification |
324 |
Society without condition/recommendation are not to be taken into account. |
32512. Name/markings - intentionally omitted
326 |
Upon delivery the Buyers undertake to change the name of the Vessel and alter funnel |
327 |
markings. |
32813. Buyers’ default- intentionally omitted
329 |
Should the Deposit not be lodged in accordance with Clause 2 (Deposit), the Sellers have the |
330 |
right to cancel this Agreement, and they shall be entitled to claim compensation for their losses |
331 |
and for all expenses incurred together with interest. |
332 |
Should the Purchase Price not be paid in accordance with Clause 3 (Payment), the Sellers |
333 |
have the right to cancel this Agreement, in which case the Deposit together with interest |
334 |
earned, if any, shall be released to the Sellers. If the Deposit does not cover their loss, the |
335 |
Sellers shall be entitled to claim further compensation for their losses and for all expenses |
336 |
incurred together with interest. |
33714. Sellers’ default
338 |
Should the Sellers fail to give Notice of Readiness in accordancenotice of the Scheduled Delivery Date by serving a Payment Notice under with Clause 24Clause 5(b) or fail to be |
339 |
ready to validly complete a legal transfer by the Cancelling Date the Buyers shall have the |
340 |
option of cancelling this Agreement. If after Notice of Readinessa Payment Notice has been given but before |
341 |
the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not |
342 |
made physically ready again by the Cancelling Date and new Notice of ReadinessPayment Notice given, the |
Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
343 |
Buyers shall retain their option to cancel. In the event that the Buyers elect to cancel this |
344 |
Agreement, the Deposit together with interest earned, if any, shall be released to them |
345 |
immediately. |
346 |
Should the Sellers fail to give Notice of Readinessa Payment Notice by the Cancelling Date or fail to be ready to |
347 |
validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers |
348 |
for their loss and for all expenses together with interest if their failure is due to proven |
349 |
negligence and whether or not the Buyers cancel this Agreement., and this Agreement shall immediately terminate and be cancelled without the need for either Buyers or Sellers to take any action whatsoever. |
35015. Buyers’ representatives - intentionally omitted
351 |
After this Agreement has been signed by the Parties and the Deposit has been lodged, the |
352 |
Buyers have the right to place two (2) representatives on board the Vessel at their sole risk and |
353 |
expense. |
354 |
These representatives are on board for the purpose of familiarisation and in the capacity of |
355 |
observers only, and they shall not interfere in any respect with the operation of the Vessel. The |
356 |
Buyers and the Buyers’ representatives shall sign the Sellers’ P&I Club’s standard letter of |
357 |
indemnity prior to their embarkation. |
35816. Law and Arbitration (See Clause 30)
359 |
(a) *This Agreement shall be governed by and construed in accordance with English law and |
360 |
any dispute arising out of or in connection with this Agreement shall be referred to arbitration in |
361 |
London in accordance with the Arbitration Act 1996 or any statutory modification or re- |
362 |
enactment thereof save to the extent necessary to give effect to the provisions of this Clause. |
363 |
The arbitration shall be conducted in accordance with the London Maritime Arbitrators |
364 |
Association (LMAA) Terms current at the time when the arbitration proceedings are |
365 |
commenced. |
366 |
The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall |
367 |
appoint its arbitrator and send notice of such appointment in writing to the other party requiring |
368 |
the other party to appoint its own arbitrator within fourteen (14) calendar days of that notice and |
369 |
stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own |
370 |
arbitrator and gives notice that it has done so within the fourteen (14) days specified. If the |
371 |
other party does not appoint its own arbitrator and give notice that it has done so within the |
372 |
fourteen (14) days specified, the party referring a dispute to arbitration may, without the |
373 |
requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator |
374 |
and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on |
375 |
both Parties as if the sole arbitrator had been appointed by agreement. |
376 |
In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 the |
377 |
arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at |
378 |
the time when the arbitration proceedings are commenced. |
379 |
(b) *This Agreement shall be governed by and construed in accordance with Title 9 of the |
380 |
United States Code and the substantive law (not including the choice of law rules) of the State |
381 |
of New York and any dispute arising out of or in connection with this Agreement shall be |
382 |
referred to three (3) persons at New York, one to be appointed by each of the parties hereto, |
383 |
and the third by the two so chosen; their decision or that of any two of them shall be final, and |
384 |
for the purposes of enforcing any award, judgment may be entered on an award by any court of |
385 |
competent jurisdiction. The proceedings shall be conducted in accordance with the rules of the |
Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
386 |
Society of Maritime Arbitrators, Inc. |
387 |
In cases where neither the claim nor any counterclaim exceeds the sum of US$ 100,000 the |
388 |
arbitration shall be conducted in accordance with the Shortened Arbitration Procedure of the |
389 |
Society of Maritime Arbitrators, Inc. |
390 |
(c) This Agreement shall be governed by and construed in accordance with the laws of |
391 |
(state place) and any dispute arising out of or in connection with this Agreement shall be |
392 |
Referred to arbitration at (state place) subject to the procedures applicable there. |
393 |
*16(a), 16(b) and 16(c) are alternatives; delete whichever is not applicable. In the absence of |
394 |
deletions, alternative 16(a) shall apply. |
39517.Notices – (See Clause 25)
396 |
All notices to be provided under this Agreement shall be in writing. |
397 |
Contact details for recipients of notices are as follows: |
398 |
For the Buyers: |
399 |
For the Sellers: |
40018.Entire Agreement
401 |
The terms of this Agreement, its Rider Clauses and the Bareboat Charter comprise the entire agreement between the Buyers and |
402 |
The Sellers in relation to the sale and purchase of the Vessel and supersede all previous |
403 |
Agreements whether oral or written between the Parties in relation thereto. |
404 |
Each of the Parties acknowledges that in entering into this Agreement it has not relied on and |
405 |
shall have no right or remedy in respect of any statement, representation, assurance or |
406 |
warranty (whether or not made negligently) other than as is expressly set out in this Agreement. |
407 |
Any terms implied into this Agreement by any applicably statute or law are hereby excluded to |
408 |
the extent that such exclusion can legally be made. Nothing in this Clause shall limit or exclude |
409 |
any liability for fraud |
For and on behalf of the SellersFor and on behalf of the Buyers
/s/ Thaleia Kalafati/s/ Wong Wai Sum
Name: Thaleia KalafatiName:Wong Wai Sum
Title: Attorney-in-fact Title:Attorney-in-Fact
Copyright © 2012 Norwegian Shipbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed in any form without the prior written permission of the Norwegian Shipbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.
EXECUTION VERSION
RIDER CLAUSES TO MEMORANDUM OF AGREEMENT
DATED 21 March 2022
CLAUSE 19 - PAYMENT OF PURCHASE PRICE BY BUYERS
(a) |
Subject to the provisions of this Agreement, in consideration of the Buyers agreeing to pay the Purchase Price of the Vessel to the Sellers, the Sellers hereby agree to sell and transfer all rights, title and interest in the Vessel absolutely, with full title guarantee, on the Delivery Date. |
(b) |
Subject to the provision of a duly completed Payment Notice to be received by the Buyers not later than five (5) Business Days prior to the Prepositioning Date (as hereinafter defined) and fulfilment of the Remittance Conditions Precedent at least one (1) Business Days prior to the Prepositioning Date, the Purchase Price shall be paid in full by the Buyers to the Sellers as follows: |
(i) |
on the Delivery Date, an amount corresponding to the amount of the Advance Charterhire payable by the Sellers as bareboat charterers of the Vessel to the Buyers as owners under the Bareboat Charter shall be set off against a corresponding amount of the Purchase Price payable under this Agreement; and |
(ii) |
the balance of the Purchase Price in an amount equal to the Opening Capital Balance shall be paid as follows: |
(A) |
the Buyers shall, no later than three (3) Business Days prior to the Vessel’s Scheduled Delivery Date (the “Prepositioning Date”) deposit with the Builder’s Bank the Delivery Payment (Builder) on an unallocated basis in a suspense account with SWIFT MT 103 and a SWIFT MT 199 irrevocable conditional release instruction in a form to be reasonably agreed (each such release instruction, the “SWIFT Payment Instructions”). The amount so deposited under the Delivery Payment (Builder) shall be released upon the signing, timing and release of the SBC Protocol of Delivery and Acceptance (to be countersigned by the Sellers and the Buyers) and the fulfilment of the Delivery Conditions Precedent and otherwise in accordance with the terms set out in the SWIFT Payment Instructions; and |
(B) |
the Buyers shall, by way of a SWIFT MT 103 pay the Delivery Payment (Sellers) to the Sellers’ Bank promptly after and in any case within one (1) Business Day of the release of the Delivery Payment(Builder). |
(c) |
In case of the prepositioning of amounts in (b)(ii)(A) above, interest calculated on the Delivery Payment (Builder) at the rate of the Overnight USD LIBOR plus 245 basis points (the “Remittance Interest”) shall: |
(i) |
in the event that the Vessel is delivered to the Buyers on the Delivery Date, accrue as of the Prepositioning Date (inclusive) until the Delivery Date (exclusive); and |
(ii) |
in the event that the Vessel is not delivered to the Buyers on the Delivery Date, accrue as of the Prepositioning Date until the Delivery Payment (Builder) is returned by the Builder’s Bank to the Buyers in accordance with the SWIFT Payment Instructions (both dates inclusive), |
and the Sellers shall pay to the Buyers the applicable amount of Remittance Interest as notified by the Buyers to the Sellers within three (3) Business Days of the Buyers’ demand.
CLAUSE 20– FURTHER CONDITIONS
The Buyers’ obligation to purchase the Vessel and the Sellers’ obligation to sell the Vessel are further conditional upon:
(a) |
the Vessel being delivered to the Head Sellers pursuant to the Shipbuilding Contract; |
(b) |
the Vessel being delivered to the Sellers pursuant to the Head MOA; |
(c) |
the Delivery taking place on a Business Day on or before the Cancelling Date; |
(d) |
the simultaneous delivery to and acceptance by the Sellers as bareboat charterer of the Vessel in accordance with the terms of the Bareboat Charter; and |
(e) |
no Potential Termination Event or Termination Event having occurred on the Prepositioning Date or the Delivery Date or which would occur on either such date as a result of the performance by the Sellers or Buyers of their respective obligations under this Agreement. |
CLAUSE 21- REPRESENTATIONS AND WARRANTIES OF SELLERS
(a) |
The Sellers represent and warrant to the Buyers on the date hereof, the Prepositioning Date and on the Delivery Date that: |
(i) |
they or the Head Sellers have paid all instalments payable under the Shipbuilding Contract to the Builder (other than the Delivery Instalment (Builder)) and no other amount is due from the Sellers or the Head Sellers to the Builder under the terms of the Shipbuilding Contract; |
(ii) |
they have entered into the Head MOA with the Head Sellers to obtain good and marketable title to the Vessel at the Delivery Date (hence having good and marketable title to the Vessel at the Delivery Date) as part of an agreed procedure free and clear of Security Interests and they have all requisite power and authority to enter and perform its obligations under such Head MOA; |
(iii) |
none of the Sellers or any member of the Group: |
(A) |
is a Prohibited Person; |
(B) |
is owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person; |
(C) |
owns or controls a Prohibited Person; nor |
(D) |
has a Prohibited Person serving as a director, officer or, to the best of the Sellers’ knowledge, employee; |
(iv) |
no part of the Purchase Price nor the Vessel shall be made available, directly or indirectly, to or for the benefit of a Prohibited Person nor shall they be otherwise |
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directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions, or to fund any activity in a Prohibited Country ;
(v) |
they are not in breach of any Anti-Money Laundering Laws and they have instituted and maintained systems, controls, policies and procedures designed to: |
(AA) |
prevent and detect incidences of bribery and corruption, money laundering and terrorism financing; and |
(BB) |
promote and achieve compliance with Anti-Money Laundering Laws including, but not limited to, ensuring thorough and accurate books and records, and utilisation of commercially reasonable efforts to ensure that Affiliates acting on behalf of the Sellers shall act in compliance with Anti-Money Laundering Laws. |
CLAUSE 22– PHYSICAL PRESENCE
If there is any change in the flag state from the Flag State at the date of this Agreement and such new Flag State require the Buyers to have a physical presence or office in the jurisdiction of such Flag State, all documented fees, costs and expense arising out of or in connection with the establishment and maintenance of such physical presence or office by the Buyers shall be borne by the Sellers.
CLAUSE 23- INDEMNITIES
(a) |
The Sellers shall indemnify and pay such amounts to the Buyers in respect of all documented costs, claims, expenses, liabilities, losses, taxes, damages and fees (including but not limited to any legal fees, vessel registration and tonnage fees) suffered or incurred by or imposed on the Buyers arising from this Agreement or in connection with the Delivery, registration (including any fees pertaining to the registration of the owners as foreign maritime entities pursuant to the requirements of the Flag State), purchase and inspection of the Vessel by the Buyers or the funding of all or any portion of the Purchase Price (including but not limited to the event that the Delivery Instalments have been deposited in accordance with Clause 19(b)(ii) but not released or returned in accordance with the SWIFT Payment Instructions) for any reason whatsoever), and whether or not the Vessel is in the possession of or the control of the Sellers or otherwise. |
(b) |
Notwithstanding anything to the contrary herein, the indemnities provided by the Sellers under paragraph (a) above shall continue in full force and effect notwithstanding any breach of the terms of this Agreement or termination of this Agreement pursuant to the terms hereof. |
CLAUSE 24– NOTICE, TIME AND PLACE OF DELIVERY
(a) |
The Sellers shall keep the Buyers well informed of the proposed Delivery Date of the Vessel (including providing the Buyers with copies of all notices of the delivery schedule received from the Builder) and shall in any event specify the Scheduled Delivery Date and proposed place of delivery in the Payment Notice. |
(b) |
The Vessel shall be delivered and taken over at the yard of the Builder contemporaneously with the delivery by the Builder to the Sellers in accordance with the Shipbuilding Contract and the Head MOA on the Delivery Date. |
3
CLAUSE 25– NOTICES
(a) |
Any notice, certificate, demand or other communication to be served, given, made or sent under or in relation to this Agreement shall be in English and in writing and (without prejudice to any other valid method or giving, making or sending the same) shall be deemed sufficiently given or made or sent if sent by registered post or by email to the following respective address: |
(A) |
to the Buyers: |
c/o CMB Financial Leasing Co., Ltd. |
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21F, China Merchants Bank Building |
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No. 1088 Lujiazui Ring Road |
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Shanghai 200120 |
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The People’s Republic of China |
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Attention: |
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Email: |
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Tel: |
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(B) |
to the Sellers: |
c/o OET CHARTERING INC. |
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Ethnarchou Makariou & D. Falireos Str. 2 |
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185 47, Neo Faliro, Piraeus, Greece |
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Attention: |
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Email: |
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Tel: |
or, if a party hereto changes its address or email address, to such other address (or email address) as that party may notify to the other.
(b) |
Any such communication shall be deemed to have reached the party to whom it was addressed (a) when delivered (in case of a registered letter), or (b) when actually received in readable form (in case of an email). A notice or other such communication received on a non-working day or after 5.00 p.m. in the place of receipt shall be deemed to be served on the next following working day in such place. |
CLAUSE 26– NO WAIVER OF RIGHTS
(a) |
No neglect, delay, omission or indulgence on the part of the Buyers in enforcing the terms and conditions of this Agreement shall prejudice the strict rights of the Buyers or be construed as a waiver thereof nor shall any single or partial exercise of any right of either party preclude any other or further exercise thereof. |
(b) |
No right or remedy conferred upon the Buyers by this Agreement shall be exclusive of any other right or remedy provided for herein or by law and all such rights and remedies shall be cumulative. |
CLAUSE 27– NO SET-OFF OR TAX DEDUCTION
(a) |
Any payment made by the Sellers to the Buyers under this Agreement shall be paid: |
4
(i) |
without any form of set-off, cross-claim or condition; and |
(ii) |
free and clear of any tax deduction (other than a FATCA Deduction) or withholding unless required by law. |
(b) |
Without prejudice to paragraph (a) of this Clause, if the Sellers are required by law to make a tax deduction from any payment: |
(i) |
the Sellers shall notify the Buyers as soon as they become aware of the requirement; and |
(ii) |
the amount due in respect of the payment shall be increased by the amount necessary to ensure that the Buyers receive and retain (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which they would otherwise have received. |
(c) |
In this Clause, “tax deduction” means any deduction or withholding for or on account of any present or future tax. |
CLAUSE 28– ASSIGNMENT AND TRANSFER
(a) |
The Sellers shall not assign or transfer (whether by novation or otherwise) their rights and/or obligations under this Agreement except with the Buyers’ prior written consent. |
(b) |
The Buyers may assign or transfer (whether by novation or otherwise) any of their rights under this Agreement in the same way as it may assign or transfer any of their rights under the Bareboat Charter, following which the Sellers shall execute such documents and do all such things as reasonably required by the Buyers to facilitate or effect such assignment or transfer. |
(c) |
Each of the Sellers and Buyers shall bear their own costs arising from any assignment or transfer as permitted under this Clause. |
CLAUSE 29- MISCELLANEOUS
(a) |
Unless otherwise expressly stated to the contrary in this Agreement, any payment which is due to be made on a day which is not a Business Day shall be made on the preceding Business Day instead. |
(b) |
If, at any time, any provision of this Agreement is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions under the law of that jurisdiction nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired. |
(c) |
The Sellers waive any rights of sovereign immunity which they or any of their properties may enjoy in any jurisdiction and subjects itself to civil and commercial law with respect to their obligations under this Agreement. |
(d) |
No term of this Agreement is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Agreement. |
5
(e) |
This Agreement may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Agreement or that Leasing Document, as the case may be. |
CLAUSE 30– GOVERNING LAW AND JURISDICTION
(a) |
This Agreement, and any non-contractual obligations arising out of or in connection with it, are governed by English law. |
(b) |
Any dispute arising out of or in connection with this Agreement (including a dispute regarding the existence, validity or termination of this Agreement or any non-contractual obligation arising out of or in connection with this Agreement) (a “Dispute”) shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause. |
(c) |
The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. The reference shall be to three (3) arbitrators. A Party wishing to refer a Dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other Party requiring the other Party to appoint its own arbitrator within fourteen (14) calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other Party appoints its own arbitrator and give notice that it has done so within the fourteen (14) days specified. If the other Party does not appoint its own arbitrator and give notice that it has done so within the fourteen (14) days specified, the Party referring a Dispute to arbitration may, without the requirement of any further prior notice to the other Party, appoint its arbitrator as sole arbitrator and shall advise the other Party accordingly. The award of a sole arbitrator shall be binding on both Parties as if he had been appointed by agreement. Nothing herein shall prevent the Parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. |
(d) |
In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 (or such other sum as the Parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. |
CLAUSE 31– DEFINITIONS
Unless otherwise specified hereunder, capitalised terms in this Agreement shall have the same meaning as in the Bareboat Charter:
“Approved Valuer” means Clarksons Platou, Simpson Spence Young, Braemar ACM, Arrow, Fearnleys, Maersk Brokers or such other independent and reputable shipbroker nominated by the Sellers and approved by the Buyers.
“Bareboat Charter” means the bareboat charterparty in respect of the Vessel dated on or about the date hereof and entered into between the Buyers as owner and the Sellers as bareboat charterer.
6
“Builder” means Hyundai Heavy Industries Co., Ltd., a company incorporated in South Korea with limited liability and registered address at 1000, Bangeojinsunhwan-doro, Dong-gu, Ulsan, 44032, the Republic of Korea.
“Builder’s Account” means the account as designated and notified by the Builder with the Builder’s Bank in accordance with the Shipbuilding Contract for the purposes of receiving amounts thereunder.
“Builder’s Bank” means such bank or financial institution with which the Builder’s Account is maintained, details of which are notified to the Buyers not less than five (5) Business Days prior to the Prepositioning Date and the identity of which is acceptable to the Buyers.
“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for business in the principal business centres of Shanghai, Singapore, Amsterdam, Seoul and Piraeus and, in respect of a day on which a payment is required to be made or other dealing is due to take place under this Agreement in Dollars, also a day on which commercial banks are open in New York City.
“Cancelling Date” means 26 July 2022 or such later date as may be agreed by the Buyers in their discretion.
“Delivery” means the passing of the legal and beneficial interest in the Vessel from the Sellers to the Buyers pursuant to the terms of this Agreement.
“Delivery Conditions Precedent” means the conditions precedent detailed in Clause 34.2(g)(ii) of the Bareboat Charter.
“Delivery Date” means the date on which Delivery occurs.
“Delivery Payment (Builder)” means the portion of the Opening Capital Balance which is to be paid to the Builder as the final delivery instalment plus Extra Construction Costs (as defined in the Head MOA) as set out in the Payment Notice.
“Delivery Payment (Sellers)” means the portion of the Opening Capital Balance less the Delivery Payment (Builder) as set out in the Payment Notice.
“Delivery Payments” means the Delivery Payment (Builder) and the Delivery Payment (Sellers) and each, as the case may be, the “Delivery Payment”.
“Dispute” shall have the meaning ascribed thereto under Clause 30(b).
“Dollars” and “US$” mean the lawful currency, for the time being, of the United States of America.
“Head MOA” means the memorandum of agreement dated 29 June 2021 and made between the Charterers (in their capacity as buyers) and the Head Sellers (in their capacity as sellers), pursuant to which the Head Sellers agreed to sell and the Charterers agreed to purchase the Vessel upon the terms and conditions set out therein.
“Head Sellers” means Sandre Enterprises S.A., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with registration number 106174 and with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro MH 96960.
“Initial Market Value” means, in relation to the Vessel:
7
(a) |
subject to paragraph (b) below, the arithmetic mean of the valuations shown by two (2) valuation reports each addressed to the Buyers and prepared at the Sellers’ cost: |
(i) |
on a date no earlier than thirty (30) days prior to the Delivery Date; |
(ii) |
by Approved Valuers one nominated by the Buyers and the other nominated by the Sellers (but with the report addressed to Buyers); |
(iii) |
without physical inspection of the Vessel; and |
(iv) |
on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, without taking into account any charter; and |
(b) |
if there is a discrepancy of five per cent (5%) or more between the market valuations shown on the two (2) valuation reports obtained pursuant to paragraph (a) above (using the lower valuation figure as the denominator), then a third valuation shall be obtained and prepared on the same terms and conditions as set out under paragraph (a) above (except that the third valuation report additionally required under this sub-paragraph (b) shall be prepared by an Approved Valuer nominated by the Buyers), with the arithmetic mean taken from the valuations shown by such three (3) valuation reports. |
“MOA Protocol of Delivery and Acceptance” means the protocol of delivery and acceptance recording the time and date of the Delivery of the Vessel under this Agreement to be signed by the Buyers and the Sellers in substantially the form attached as Schedule 2 (Form of Protocol of Delivery and Acceptance).
“Opening Capital Balance” means an amount which is equal to seventy five per cent. (75%) of the Purchase Price.
“Payment Notice” means the payment notice to be submitted by the Sellers to the Buyers to request for the Buyers’ payment of the Purchase Price, which shall be in the form set out in Schedule 1 (Form of Payment Notice) and which shall be signed by at least one officer or authorised attorney of the Sellers.
“Prepositioning Date” shall have the meaning ascribed thereto under Clause 19(b)(ii).
“Purchase Price” means an amount equal to the lowest of:
(a) |
the Initial Market Value; and |
(b) |
$97,000,000. |
“Remittance Conditions Precedent” means the conditions precedent detailed in Clause 34.2(g)(i) of the Bareboat Charter.
“Remittance Interest” shall have the meaning ascribed thereto under Clause 19(c).
“SBC Protocol of Delivery and Acceptance” means the protocol of delivery and acceptance recording the time and date of the Delivery of the Vessel under the Shipbuilding Contract to be signed by the Builder and the Head Seller in the form required under the Shipbuilding Contract.
“Scheduled Delivery Date” means the date of delivery of the Vessel set out in the Payment Notice.
8
“Sellers’ Account” means an account of the Sellers at the Sellers’ Bank.
“Sellers’ Bank” means a bank designated by the Sellers, details of which are notified to the Buyers not less than five (5) Business Days prior to the Prepositioning Date and the identity of which is acceptable to the Buyers.
“Shipbuilding Contract” means the shipbuilding contract dated 28 September 2020 entered into between the Head Sellers (in their capacity as buyers) and the Builder (in its capacity as seller) for the construction and purchase of the Vessel as may from time to time be amended, supplemented.
“SWIFT Payment Instructions” shall have the meaning ascribed thereto under Clause 19(b)(ii).
9
SCHEDULE 1
FORM OF PAYMENT NOTICE
10
SCHEDULE 2
FORM OF PROTOCOL OF DELIVERY AND ACCEPTANCE
11
EXECUTION PAGE
BUYERS |
|
|
|
SIGNED BY |
) |
for and on behalf of |
) /s/ Wong Wai Sum |
SEA 290 LEASING CO. LIMITED |
) Wong Wai Sum |
as attorney-in-fact |
) Attorney-in-Fact |
in the presence of |
) |
|
|
Witness’ signature: |
) /s/ Sandrea Mar |
Witness’ name: |
) Sandrea Mar |
Witness’ address: |
) Suites 4610-4619 Jardine House |
|
) 1 Connaught Place, Hong Kong |
|
|
|
|
|
|
|
|
SELLERS |
|
|
|
SIGNED BY Thaleia Kalafati |
) /s/ Thaleia Kalafati |
for and on behalf of |
) |
THETA NAVIGATION LTD |
) |
as attorney-in-fact |
) |
in the presence of |
) |
|
|
|
) Attorney at Law, LLM |
|
) Athens Bar |
Witness’ signature: |
) /s/ Ariadne E. Aldous |
Witness’ name: |
) Ariadne E. Aldous |
Witness’ address: |
)Athens–Greece,Tel: +306947612955 |
12
EXECUTION VERSION
Dated 26 January 2024
SEA 290 LEASING CO. LIMITED
as Owner
and
THETA NAVIGATION LTD
as Charterer
and
OKEANIS ECO TANKERS CORP.
as Guarantor and Shareholder
AMENDMENT AND RESTATEMENT DEED
relating to a bareboat charter dated 21 March 2022
as amended, supplemented and restated from time to time including by an amendment and
restatement deed dated 29 June 2023 in respect of
one (1) very large crude carrier named m.v. “Nissos Nikouria”
Index
Clause |
Page |
|
|
|
|
1. |
Definitions and Interpretation |
1 |
2 |
Conditions Precedent |
2 |
3 |
Representations |
2 |
4 |
Amendment and Restatement |
3 |
5 |
Further Assurance |
4 |
6 |
Costs and Expenses |
4 |
7 |
Notices |
4 |
8 |
Counterparts |
5 |
9 |
Governing Law |
5 |
10 |
Jurisdiction |
5 |
|
|
|
Schedules |
|
|
|
|
|
Schedule 1 Conditions Precedent |
6 |
|
Schedule 2 Form of Effective Date Notice |
7 |
|
|
|
|
Execution |
|
|
|
|
|
Execution Pages |
9 |
EXECUTION VERSION
THIS DEED is made on 26 January 2024
PARTIES
(1) |
SEA 290 LEASING CO. LIMITED, a company incorporated under the laws of Hong Kong with limited liability whose registered office is at 27/F, Three Exchange Square, 8 Connaught Place, Hong Kong as owner (the “Owner”); |
(2) |
THETA NAVIGATION LTD, a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with entity number 109610 and with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 as charterer (the “Charterer”); and |
(3) |
OKEANIS ECO TANKERS CORP., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with registration number 96382 and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the “Guarantor” and the “Shareholder”). |
BACKGROUND
(A) |
By the Charter, the Owner agreed to bareboat charter one (1) very large crude carrier named m.v. Nissos Nikouria (the “Vessel”) to the Charterer pursuant to the terms and conditions contained therein. |
(B) |
Without prejudice and in addition to the Owner’s rights under the Charter and other Transaction Documents, the Parties have agreed to amend and restate the Charter as set out in this Deed as a result of further commercial negotiations between the Owner and the Charterer, with effect on and from the Effective Date. |
OPERATIVE PROVISIONS
1. |
DEFINITIONS AND INTERPRETATION |
1.1 |
Definitions |
In this Deed:
“Amended and Restated Charter” means the Charter as amended and restated by this Deed pursuant to which the additional clauses of the Charter shall be amended and restated in the form set out in Schedule 3 (Form of Amended and Restated Charter).
“Charter” means the bareboat charter dated 21 March 2022 (as amended and/or supplemented from time to time, including by an amendment and restatement deed dated 29 June 2023) and made between (i) the Owner as owners and (ii) the Charterer as charterers.
“Effective Date” means 3 March 2024 provided that the Owner is satisfied that the conditions precedent specified in Clause 2.1 (Conditions Precedent) are fulfilled and issues the Effective Date Notice.
“Effective Date Notice” means the notice by which the Owner notify the Charterer of the occurrence of the Effective Date, in substantially the form set out in Schedule 2 (Form of Effective Date Notice).
“Obligor” means collectively, the Charterer, the Guarantor and the Shareholder, and “Obligors” means each or any of them, as the context may require.
“Party” means a party to this Deed.
1.2 |
Defined expressions |
Defined expressions in the Charter and the other Leasing Documents shall have the same meanings when used in this Deed unless the context otherwise requires or unless otherwise defined in this Deed.
1.3 |
Application of construction and interpretation provisions of Charter |
Clauses 66.1 to 66.5 (definitions) inclusive of the Charter applies to this Deed as if it were expressly incorporated in it with any necessary modifications.
1.4 |
Designation as a Leasing Document |
The Owner and the Charterer designate this Deed as a Leasing Document.
1.5 |
Third party rights |
(a) |
Unless provided to the contrary in this Deed, a person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Deed. |
(b) |
Notwithstanding any term of any Leasing Document, the consent of any person who is not a party is not required to rescind or vary this Deed at any time. |
2 |
CONDITIONS PRECEDENT |
2.1 |
The occurrence of the Effective Date is subject to: |
(a) |
no Termination Event or Potential Termination Event having occurred on the date of this Deed and on the Effective Date; |
(b) |
the representations and warranties in clause 48 (representations and warranties) of the Charter to be made by the Charterer being true on the date of this Deed and the Effective Date; and |
(c) |
the Owner having received (or waived receipt of) all of the documents and other evidence listed in Schedule 1 (Conditions Precedent) in form and substance satisfactory to the Owner. |
2.2 |
The Owner shall notify the Charterer promptly upon being satisfied as to the satisfaction of the conditions precedent referred to in paragraph 2.1 above by issuing the Effective Date Notice. |
3. |
REPRESENTATIONS |
3.1 |
Charter representations |
The Charterer makes the representations and warranties set out in clause 48 (representations and warranties) of the Charter, as amended and restated by this Deed and updated with appropriate modifications to refer to this Deed, by reference to the circumstances then existing on the date of this Deed and on the Effective Date.
2
3.2 |
Leasing Document representations |
Each Obligor makes the representations and warranties set out in the Leasing Documents to which it is a party, as amended and restated by this Deed and updated with appropriate modifications to refer to this Deed, by reference to the circumstances then existing on the date of this Deed and on the Effective Date.
4 |
AMENDMENT AND RESTATEMENT |
4.1 |
Specific amendments to the Charter |
With effect on and from the Effective Date, the additional clauses of the Charter shall be amended and restated in the form of the Amended and Restated Charter and, as so amended and restated, the Charter shall continue to be binding on each of the parties to it in accordance with its terms as so amended and restated.
4.2 |
Amendments to Leasing Documents |
With effect as of and from the Effective Date, each of the Leasing Documents shall be, and shall be deemed by this Deed to be, amended by the definition of, and references throughout each of the Leasing Documents to, the Charter being construed as if the same referred to the Amended and Restated Charter.
4.3 |
Obligor Confirmation |
On the Effective Date, each Obligor:
(a) |
confirms its acceptance of the Amended and Restated Charter; |
(b) |
agrees that it is bound as an Obligor (as defined in the Amended and Restated Charter); |
(c) |
confirms that the definition of, and references throughout each of the Leasing Documents to, the Charter and any of the other Leasing Documents shall be construed as if the same referred to the Charter and those Leasing Documents as amended and restated by this Deed; |
(d) |
(if it is a Guarantor) confirms that its guarantee and indemnity: |
(i) |
continues to have full force and effect on the terms of the Amended and Restated Charter; and |
(ii) |
extends to the obligations of the relevant Obligors under the Leasing Document as amended and restated by this Deed. |
4.4 |
Security confirmation |
On the Effective Date, each Obligor confirms that:
(a) |
any Security Interest created by it under the Leasing Documents extends to the obligations of the relevant Obligors under the Leasing Documents as amended and restated by this Deed; |
(b) |
the obligations of the relevant Obligors under the Amended and Restated Charter are included in the Secured Liabilities (as defined in the Shares Security); |
3
(c) |
the Security Interests created under the Leasing Documents continues in full force and effect on the terms of the respective Leasing Documents; and |
(d) |
to the extent that this confirmation creates a new Security Interest, such Security Interest shall be on the terms of the Leasing Documents in respect of which this confirmation is given. |
4.5 |
Leasing Documents to remain in full force and effect |
The Leasing Documents shall remain in full force and effect and, from the Effective Date:
(a) |
in the case of the Charter as amended and restated pursuant to Clause 4.1 (Specific amendments to the Charter); |
(b) |
in the case of the Leasing Documents as amended and pursuant to Clause 4.2 (Amendments to Leasing Documents); |
(c) |
the Charter and the applicable provisions of this Deed will be read and construed as one document; |
(d) |
each of the Leasing Documents and the applicable provisions of this Deed will be read and construed as one document; and |
(e) |
except to the extent expressly waived by the amendments effected by this Deed, no waiver is given by this Deed and the Owner expressly reserve all their rights and remedies in respect of any Termination Event under the Leasing Documents |
5 |
FURTHER ASSURANCE |
5.1 |
Each Obligor shall promptly, and in any event within the time period specified by the Owner do all such acts (including procuring or arranging any registration, notarisation or authentication or the giving of any notice) or execute or procure execution of all such documents (including assignments, transfers, mortgages, charges, notices, instructions, acknowledgements, proxies and powers of attorney), as the Owner may specify (and in such form and substance as the Owner may require in favour of the Owner or its nominee(s)) to implement the terms and provisions of this Deed. |
5.2 |
The Owner shall take all such action as is available to them (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any encumbrance conferred or intended to be conferred on the Owner by or pursuant to the Security Documents and the Charter as amended and supplemented by this Deed. |
6 |
COSTS AND EXPENSES |
6.1 |
All costs and expenses (including legal costs and disbursements) incurred by the Owners in the preparation, negotiation, documentation and execution of all documentation in relation to the matters contemplated by this Deed shall be for the account of the Charterer. |
7 |
NOTICES |
7.1 |
Clause 46 (notices) of the Charter, as amended and restated by this Deed apply to this Deed as if it were expressly incorporated in it with any necessary modifications. |
7.2 |
The details of the Guarantor for the purposes of this Deed shall be: |
4
OKEANIS ECO TANKERS CORP.
c/o OET CHARTERING INC.
Ethnarchou Makariou & D. Falireos Str. 2
185 47, Neo Faliro, Piraeus, Greece
Attention:
Email:
Tel:
8 |
COUNTERPARTS |
This Deed may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Deed.
9 |
GOVERNING LAW |
This Deed and any non-contractual obligations arising out of or in connection with it are governed by English law.
10 |
JURISDICTION |
Clause 65 (Governing Law and Enforcement) of the Charter applies to this Deed as if it were expressly incorporated in it with any necessary modifications.
IN WITNESS WHEREOF this Deed has been entered into and delivered as a deed, on the date stated at the beginning of this Deed.
5
SCHEDULE 1
Conditions Precedent
6
SCHEDULE 2
FORM OF EFFECTIVE DATE NOTICE
7
SCHEDULE 3
AMENDED AND RESTATED CHARTER (ADDITIONAL CLAUSES MARKED TO INDICATE AMENDMENTS)
8
1. |
Shipbroker N/A |
2.Place and date |
|
3. |
Owners/Place of business (Cl. 1) SEA 290 LEASING CO. LIMITED, a company incorporated under the laws of Hong Kong with limited liability whose registered office is at27/F, Three Exchange Square, 8 Connaught Place, Hong Kong |
4.Bareboat Charterers/Place of business (Cl. 1) THETA NAVIGATION LTD, a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with Entity Number 109610 and with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 |
|
5. |
Vessel’s name, call sign and flag (Cl. 1 and 3) Vessel name: Hull No. 3212 Call Sign: 9920760 Flag: Marshall Islands or otherwise agreed between Parties |
||
6. |
Type of Vessel VLCC |
7.GT/NT 154,500/106,657 |
|
8. |
When/Where built 2022 Hyundai Heavy Industries, South Korea |
9.Total DWT (abt.) in metric tons on summer freeboard 300,000 |
|
10. |
Classification Society (Cl. 3) DNV |
11. Date of last special survey by the Vessel’s classification society N/A |
|
12 |
Further particulars of Vessel (also indicate minimum number of months’ validity of class certificates agreed acc. to Cl. 3) N/A |
||
13. |
Port or Place of delivery (Cl. 3) Back to back with MOA delivery |
14. Time for delivery (Cl. 4) |
15.Cancelling date (Cl. 5) See definition of “Cancelling Date” and Clause 33 |
16. |
Port or Place of redelivery (Cl. 15) See Clauses 41 and 42 |
17. No. of months’ validity of trading and class certificates upon redelivery (Cl. 15) Six (6) months |
|
18. |
Running days’ notice if other than stated in Cl. 4 |
19.Frequency of dry-docking (Cl. 10(g)) In accordance with Approved Classification Society or requirements of Flag State |
|
20. |
Trading limits (Cl. 6) Worldwide via safe ports/berth/anchorage within International Navigating Limits and always subject to Clause 39 (Insurance) and Clause 53 (Vessel Undertaking) |
||
21. |
Charter period (Cl. 2) See Clause 32 |
22.Charter hire (Cl. 11) See Clause 36 |
|
23. |
New class and other safety requirements (state percentage of Vessel’s insurance value acc. to Box 29)(Cl. 10(a)(ii)) N/A |
||
24. |
Rate of interest payable acc. to Cl. 11 (f) and, if applicable, acc. to PART IV See Clause 37 |
25.Currency and method of payment (Cl. 11) Dollars/Bank transfer |
|
26. |
Place of payment; also state beneficiary and bank account (Cl. 11) See Clause 36 |
27.Bank guarantee/bond (sum and place) (Cl. 24) (optional) N/A |
|
28. |
Mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) applies state date of Financial Instrument and name of Mortgagee(s)/Place of business) (Cl. 12) N/A |
29. Insurance (hull and machinery and war risks) (state value acc. to Cl. 13(f) or, if applicable, acc. to Cl. 14(k)) (also state if Cl. 14 applies) See Clause 39 |
|
30. |
Additional insurance cover, if any, for Owners’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) See Clause 39 |
31. Additional insurance cover, if any, for Charterers’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) See Clause 39 |
|
32. |
Latent defects (only to be filled in if period other than stated in Cl. 3) |
33. Brokerage commission and to whom payable (Cl. 27) N/A |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
|
N/A |
|
|
34. |
Grace period (state number of clear banking days) (Cl. 28) N/A |
35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed Place of Arbitration must be stated (Cl. 30) (c) Clause 30 not applicable. See Clause 65 |
|
36. |
War cancellation (indicate countries agreed) (Cl. 26(f)) N/A |
|
|
37. |
Newbuilding Vessel (indicate with “yes” or “no” whether PART III applies) (optional) Yes, Part III does not apply |
38. Name and place of Builders (only to be filled in if PART III applies) N/A |
|
39. |
Vessel’s Yard Building No. (only to be filled in if PART III applies) N/A |
40. Date of Building Contract (only to be filled in if PART III applies) N/A |
|
41. |
Liquidated damages and costs shall accrue to (state party acc. to Cl. 1) a) N/A b) N/A c) N/A |
||
42. |
Hire/Purchase agreement (indicate with “yes” or “no” whether PART IV applies) (optional) No, Part IV does not apply |
43. Bareboat Charter Registry (indicate with “yes” or “no” whether PART V applies) (optional) No |
|
44. |
Flag and Country of the Bareboat Charter Registry (only to be filled in if PART V applies) N/A |
45. Country of the Underlying Registry (only to be filled in if PART V applies) N/A |
|
46. |
Number of additional clauses covering special provisions, if agreed Clause 32 to Clause 66 |
PREAMBLE - It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter if expressly agreed and stated in Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further. It is further agreed that the Additional Clauses as indicated in Box 46 above, appended to and integrated in this Charter supplement Part I and II of this Charter. In the event of a conflict, the Additional Clauses shall prevail.
Signature (Owners) |
Signature (Charterers) |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
1 |
1. Definitions |
2 |
In this Charter, the following terms shall have the |
3 |
meanings hereby assigned to them: |
4 |
“The Owners” shall mean the party identified in Box 3; |
5 |
“The Charterers” shall mean the party identified in Box 4; |
6 |
“The Vessel” shall mean the vessel named in Box 5 and |
7 |
with particulars as stated in Boxes 6 to 12. |
8 |
“Financial Instrument” has the meaning ascribed to it means the mortgage, deed of |
9 |
in Clause 66.1.covenant or other such financial security instrument as |
10 |
annexed to this Charter and stated in Box 28. |
11 |
2 Charter Period |
12 |
In consideration of the hire detailed in Box 22, |
13 |
the Owners have agreed to let and the Charterers have |
14 |
agreed to hire the Vessel for the period stated in Box 21 |
15 |
(“The Charter Period”). See also Clause 32. |
16 |
3. Delivery |
17 |
(not applicable when Part III applies, as indicated in Box 37) |
18 |
(a) The Owners shall before and at the time of delivery |
19 |
exercise due diligence to make the Vessel seaworthy |
20 |
And in every respect ready in hull, machinery and |
21 |
equipment for service under this Charter. |
22 |
The Vessel shall be delivered by the Owners and taken |
23 |
over by the Charterers at the port or place indicated in |
24 |
Box 13. in such ready safe berth as the Charterers may |
25 |
direct. |
26 |
(b) The Vessel shall be properly documented on |
27 |
delivery in accordance with the laws of the flag State |
28 |
indicated in Box 5 and the requirements of the |
29 |
classification society stated in Box 10. The Vessel upon |
30 |
delivery shall have her survey cycles up to date and |
31 |
trading and class certificates valid for at least the number |
32 |
of months agreed in Box 12. |
33 |
(c) The delivery of the Vessel by the Owners and the |
34 |
taking over of the Vessel by the Charterers shall |
35 |
constitute a full performance by the Owners of all the |
36 |
Owners’ obligations under this Clause 3, and thereafter |
37 |
the Charterers shall not be entitled to make or assert |
38 |
any claim against the Owners on account of any |
39 |
conditions, representations or warranties expressed or |
40 |
implied with respect to the Vessel. but the Owners shall |
41 |
be liable for the cost of but not the time for repairs or |
42 |
renewals occasioned by latent defects in the Vessel, |
43 |
her machinery or appurtenances, existing at the time of |
44 |
delivery under this Charter, provided such defects have |
45 |
manifested themselves within twelve (12) months after |
46 |
delivery unless otherwise provided in Box 32. |
47 |
4. Time for Delivery (See Clause 34) |
48 |
(not applicable when Part III applies, as indicated in Box 37) |
49 |
The Vessel shall not be delivered before the date |
50 |
indicated in Box 14 without the Charterers’ consent and |
51 |
the Owners shall exercise due diligence to deliver the |
52 |
Vessel not later than the date indicated in Box 15. |
53 |
Unless otherwise agreed in Box 18, the Owners shall |
54 |
give the Charterers not less than thirty (30) running days’ |
55 |
preliminary and not less than fourteen (14) running days’ |
56 |
definite notice of the date on which the Vessel is |
57 |
expected to be ready for delivery. |
58 |
The Owners shall keep the Charterers closely advised |
59 |
of possible changes in the Vessel’s position. |
60 |
5. Cancelling (See Clause 33) |
61 |
(not applicable when Part III applies, as indicated in Box 37) |
62 |
(a) Should the Vessel not be delivered latest by the |
63 |
cancelling date indicated in Box 15, the Charterers shall |
64 |
have the option of cancelling this Charter by giving the |
65 |
Owners notice of cancellation within thirty-six (36) |
66 |
running hours after the cancelling date stated in Box |
67 |
15, failing which this Charter shall remain in full force |
68 |
and effect. |
69 |
(b) If it appears that the Vessel will be delayed beyond |
70 |
the cancelling date, the Owners may, as soon as they |
71 |
are in a position to state with reasonable certainty the |
72 |
day on which the Vessel should be ready, give notice |
73 |
thereof to the Charterers asking whether they will |
74 |
exercise their option of cancelling, and the option must |
75 |
then be declared within one hundred and sixty-eight |
76 |
(168) running hours of the receipt by the Charterers of |
77 |
such notice or within thirty-six (36) running hours after |
78 |
the cancelling date, whichever is the earlier. If the |
79 |
Charterers do not then exercise their option of cancelling, |
80 |
the seventh day after the readiness date stated in the |
81 |
Owners’ notice shall be substituted for the cancelling |
82 |
date indicated in Box 15 for the purpose of this Clause 5. |
83 |
(c) Cancellation under this Clause 5 shall be without |
84 |
prejudice to any claim the Charterers may otherwise |
85 |
have on the Owners under this Charter. |
86 |
6. Trading Restrictions (See also Clauses 39.9(d) and |
53.1(c))
87 |
The Vessel shall be employed in lawful trades for the |
88 |
carriage of suitable lawful merchandise within the trading |
89 |
limits indicated in Box 20. |
90 |
The Charterers undertake not to employ the Vessel or |
91 |
suffer the Vessel to be employed otherwise than in |
92 |
conformity with the terms of the contracts of insurance |
93 |
(including any warranties expressed or implied therein) |
94 |
without first obtaining the consent of the insurers to such |
95 |
employment and complying with such requirements as |
96 |
to extra premium or otherwise as the insurers may |
97 |
prescribe. |
98 |
The Charterers also undertake not to employ the Vessel |
99 |
or suffer her employment in any trade or business which |
100 |
is forbidden by the law of any country to which the Vessel |
101 |
may sail or is otherwise illicit or in carrying illicit or |
102 |
prohibited goods or in any manner whatsoever which |
103 |
may render her liable to condemnation, destruction, |
104 |
seizure or confiscation. |
105 |
Notwithstanding any other provisions contained in this |
106 |
Charter it is agreed that nuclear fuels or radioactive |
107 |
products or waste are specifically excluded from the |
108 |
cargo permitted to be loaded or carried under this |
109 |
Charter. This exclusion does not apply to radio-isotopes |
110 |
used or intended to be used for any industrial, |
111 |
commercial, agricultural, medical or scientific purposes |
112 |
provided the Owners’ prior approval has been obtained |
113 |
to loading thereof. |
114 |
7. Surveys on Delivery and Redelivery (See Clauses 41.8 and 41.9) |
115 |
(not applicable when Part III applies, as indicated in Box 37) |
116 |
The Owners and Charterers shall each appoint |
117 |
surveyors for the purpose of determining and agreeing |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
118 |
in writing the condition of the Vessel at the time of |
119 |
delivery and redelivery hereunder (if applicable). The |
Owners shall
120 |
bear all expenses of the On-hire Survey including loss |
121 |
of time, if any, and the Charterers shall bear all expenses |
122 |
of the Off-hire Survey including loss of time, if any, at |
123 |
the daily equivalent to the rate of hire or pro rata thereof. |
124 |
8. Inspection (See Clause 54) |
125 |
The Owners shall have the right at any time after giving |
126 |
reasonable notice to the Charterers to inspect or survey |
127 |
the Vessel or instruct a duly authorised surveyor to carry |
128 |
out such survey on their behalf:- |
129 |
(a) to ascertain the condition of the Vessel and satisfy |
130 |
themselves that the Vessel is being properly repaired |
131 |
and maintained. The costs and fees for such inspection |
132 |
or survey shall be paid by the Owners unless the Vessel |
133 |
is found to require repairs or maintenance in order to |
134 |
achieve the condition so provided; |
135 |
(b) in dry-dock if the Charterers have not dry-docked |
136 |
Her in accordance with Clause 10(g). The costs and fees |
137 |
for such inspection or survey shall be paid by the |
138 |
Charterers; and |
139 |
(c) for any other commercial reason they consider |
140 |
necessary (provided it does not unduly interfere with |
141 |
the commercial operation of the Vessel). The costs and |
142 |
fees for such inspection and survey shall be paid by the |
143 |
Owners. |
144 |
All time used in respect of inspection, survey or repairs |
145 |
shall be for the Charterers’ account and form part of the |
146 |
Charter Period. |
147 |
The Charterers shall also permit the Owners to inspect |
148 |
the Vessel’s log books whenever requested and shall |
149 |
whenever required by the Owners furnish them with full |
150 |
information regarding any casualties or other accidents |
151 |
or damage to the Vessel. |
152 |
9. Inventories, Oil and Stores |
153 |
A complete inventory of the Vessel’s entire equipment, |
154 |
outfit including spare parts, appliances and of all |
155 |
consumable stores on board the Vessel shall be made |
156 |
by the Charterers in conjunction with the Owners on |
157 |
delivery and again on redelivery of the Vessel. The |
158 |
Charterers and the Owners, respectively, shall at the |
159 |
time of delivery and redelivery take over and pay for all |
160 |
bunkers, lubricating oil, unbroached provisions, paints, |
161 |
ropes and other consumable stores (excluding spare |
162 |
parts) in the said Vessel at the then current market prices |
163 |
at the ports of delivery and redelivery, respectively. The |
164 |
Charterers shall ensure that all spare parts listed in the |
165 |
inventory and used during the Charter Period are |
166 |
replaced at their expense prior to redelivery of the |
167 |
Vessel. |
168 |
10. Maintenance and Operation |
169 |
(a)(i)Maintenance and Repairs - During the Charter |
170 |
Period the Vessel shall be in the full possession |
171 |
and at the absolute disposal for all purposes of the |
172 |
Charterers and under their complete control in |
173 |
every respect. The Charterers shall maintain the |
174 |
Vessel, her machinery, boilers, appurtenances and |
175 |
spare parts in a good state of repair, in efficient |
176 |
operating condition and in accordance with good |
177 |
commercial maintenance practice and, except as |
178 |
provided for in Clause 14(l), if applicable, at their |
179 |
own expense they shall at all times keep the |
180 |
Vessel’s Classification Class fully up to date with the |
Classification
181 |
Society indicated in Box 10 and maintain all other |
182 |
necessary certificates in force at all times. |
183 |
(ii) New Class and Other Safety Requirements - In the |
184 |
event of any improvement, structural changes or |
185 |
new equipment becoming necessary for the |
186 |
continued operation of the Vessel by reason of new |
187 |
class requirements or by compulsory legislation, the costs of compliance shall be for the Charterers’ account. |
188 |
costing (excluding the Charterers’ loss of time) |
189 |
more than the percentage stated in Box 23, or if |
190 |
Box 23 is left blank, 5 per cent. of the Vessel’s |
191 |
insurance value as stated in Box 29, then the |
192 |
extent, if any, to which the rate of hire shall be varied |
193 |
and the ratio in which the cost of compliance shall |
194 |
be shared between the parties concerned in order |
195 |
to achieve a reasonable distribution thereof as |
196 |
between the Owners and the Charterers having |
197 |
regard, inter alia, to the length of the period |
198 |
remaining under this Charter shall, in the absence |
199 |
of agreement, be referred to the dispute resolution |
200 |
method agreed in Clause 30. |
201 |
(iii) Financial Security - The Charterers shall maintain |
202 |
financial security or responsibility in respect of third |
203 |
party liabilities as required by any government, |
204 |
including federal, state or municipal or other division |
205 |
or authority thereof, to enable the Vessel, without |
206 |
penalty or charge, lawfully to enter, remain at, or |
207 |
leave any port, place, territorial or contiguous |
208 |
waters of any country, state or municipality in |
209 |
performance of this Charter without any delay. This |
210 |
obligation shall apply whether or not such |
211 |
requirements have been lawfully imposed by such |
212 |
government or division or authority thereof. |
213 |
The Charterers shall make and maintain all arrange- |
214 |
ments by bond or otherwise as may be necessary to |
215 |
satisfy such requirements at the Charterers’ sole |
216 |
expense and the Charterers shall indemnify the Owners |
217 |
against all consequences whatsoever (including loss of |
218 |
time) for any failure or inability to do so. |
219 |
(b) Operation of the Vessel - The Charterers shall at |
220 |
their own expense and by their own procurement man, |
221 |
victual, navigate, operate, supply, fuel and, whenever |
222 |
required, repair the Vessel during the Charter Period |
223 |
and they shall pay all charges and expenses of every |
224 |
kind and nature whatsoever incidental to their use and |
225 |
operation of the Vessel under this Charter, including |
226 |
annual flag State fees of the Flag State and any foreign general |
227 |
municipality and/or state taxes. The Master, officers |
228 |
and crew of the Vessel shall be the servants of the Charterers |
229 |
for all purposes whatsoever, even if for any reason |
230 |
appointed by the Owners. |
231 |
Charterers shall comply with the regulations regarding |
232 |
officers and crew in force in the country of the Vessel’s |
233 |
flag or any other applicable law. |
234 |
(c) The Charterers shall keep the Owners and the |
235 |
mortgagee(s) advised of the intended employment, |
236 |
planned dry-docking and major repairs of the Vessel, |
237 |
as reasonably required. |
238 |
(d) Flag and Name of Vessel – During the Charter |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
239 |
Period, the Charterers shall have the liberty to paint the |
240 |
Vessel in their own colours, install and display their |
241 |
funnel insignia and fly their own house flag. The |
242 |
Charterers shall also have the liberty, with the Owners’ |
243 |
consent, which shall not be unreasonably withheld or delayed, to |
244 |
change the flag and/or the name of the Vessel during |
245 |
the Charter Period (with all fees, costs and expenses arising in relation thereto for the Charterers’ account). Painting and re-painting, instalment |
246 |
and re-instalment, registration and re-registration, if |
247 |
required by the Owners, shall be at the Charterers’ |
248 |
expense and time. |
249 |
(e) Changes to the Vessel – See Clause 53.1(k). Subject to Clause 10(a)(ii), |
250 |
the Charterers shall make no structural changes in the |
251 |
Vessel or changes in the machinery, boilers, appurten- |
252 |
ances or spare parts thereof without in each instance |
253 |
first securing the Owners’ approval thereof. If the Owners |
254 |
so agree, the Charterers shall, if the Owners so require, |
255 |
restore the Vessel to its former condition before the |
256 |
termination of this Charter. |
257 |
(f) Use of the Vessel’s Outfit, Equipment and |
258 |
Appliances - The Charterers shall have the use of all |
259 |
outfit, equipment, and appliances on board the Vessel |
260 |
at the time of delivery, provided the same or their |
261 |
substantial equivalent shall be returned to the Owners |
262 |
on redelivery in the same good order and condition as |
263 |
when received, ordinary wear and tear excepted. The |
264 |
Charterers shall from time to time during the Charter |
265 |
Period replace, renew or substitute such items of equipment as shall be so |
266 |
damaged or worn as to be unfit for use. The Charterers |
267 |
are to procure that all repairs to or replacement of any |
268 |
damaged, worn or lost parts or equipment be effected |
269 |
in such manner (both as regards workmanship and |
270 |
quality of materials) as not to diminish the value of the |
271 |
Vessel provided that the Vessel’s value not to be diminished if the repairs or replacement are effected in accordance with the Classification Society and/or the respective makers’ recommendations. Title of any equipment so replaced, renewed or substituted shall vest in and remain with the Owners. The Charterers have the right to fit additional |
272 |
equipment at their expense and risk but the Charterers |
273 |
shall remove such equipment at the end of the period if |
274 |
requested by the Owners. See also Clause 53.1(k). Any equipment including radio |
275 |
equipment on hire on the Vessel at time of delivery shall |
276 |
be kept and maintained by the Charterers and the |
277 |
Charterers shall assume the obligations and liabilities |
278 |
of the Owners under any lease contracts in connection |
279 |
therewith and shall reimburse the Owners for all |
280 |
expenses incurred in connection therewith, also for any |
281 |
new equipment required in order to comply with radio |
282 |
regulations. |
283 |
(g) Periodical Dry-Docking - The Charterers shall dry- |
284 |
dock the Vessel and clean and paint her underwater |
285 |
parts whenever the same may be necessary, but not |
286 |
less than once during the period stated in Box 19 or, if |
287 |
Box 19 has been left blank, every sixty (60) calendar |
288 |
months after delivery or such other period as may be |
289 |
required by the Classification Society or flag State. |
290 |
11. Hire (See Clause 36) |
291 |
(a) The Charterers shall pay hire due to the Owners |
292 |
punctually in accordance with the terms of this Charter |
293 |
in respect of which time shall be of the essence. |
294 |
(b) The Charterers shall pay to the Owners for the hire |
295 |
of the Vessel a lump sum in the amount indicated in |
296 |
Box 22 which shall be payable not later than every thirty |
297 |
(30) running days in advance, the first lump sum being |
298 |
payable on the date and hour of the Vessel’s delivery to |
299 |
the Charterers. Hire shall be paid continuously |
300 |
throughout the Charter Period. |
301 |
(c) Payment of hire shall be made in cash without |
302 |
discount in the currency and in the manner indicated in |
303 |
Box 25 and at the place mentioned in Box 26. |
304 |
(d) Final payment of hire, if for a period of less than |
305 |
thirty (30) running days, shall be calculated proportionally |
306 |
according to the number of days and hours remaining |
307 |
before redelivery and advance payment to be effected |
308 |
accordingly. |
309 |
(e) Should the Vessel be lost or missing, hire shall |
310 |
cease from the date and time when she was lost or last |
311 |
heard of. The date upon which the Vessel is to be treated |
312 |
as lost or missing shall be ten (10) days after the Vessel |
313 |
was last reported or when the Vessel is posted as |
314 |
missing by Lloyd’s, whichever occurs first. Any hire paid |
315 |
in advance to be adjusted accordingly. |
316 |
(f) Any delay in payment of hire shall entitle the |
317 |
Owners to interest at the rate per annum as agreed |
318 |
in Box 24. If Box 24 has not been filled in, the three months |
319 |
Interbank offered rate in London (LIBOR or its successor) |
320 |
for the currency stated in Box 25, as quoted by the British |
321 |
Bankers’ Association (BBA) on the date when the hire |
322 |
fell due, increased by 2 per cent., shall apply. |
323 |
(g) Payment of interest due under sub-clause 11(f) |
324 |
shall be made within seven (7) running days of the date |
325 |
of the Owners’ invoice specifying the amount payable |
326 |
or, in the absence of an invoice, at the time of the next |
327 |
hire payment date. |
328 |
12. Mortgage (See Clause 62) |
329 |
(only to apply if Box 28 has been appropriately filled in) |
330*)(a) The Owners warrant that they have not effected
331 |
any mortgage(s) of the Vessel and that they shall not |
332 |
effect any mortgage(s) without the prior consent of the |
333 |
Charterers, which shall not be unreasonably withheld. |
334*)(b) The Vessel chartered under this Charter is financed
335 |
by a mortgage according to the Financial Instrument. |
336 |
The Charterers undertake to comply, and provide such |
337 |
information and documents to enable the Owners to |
338 |
comply, with all such instructions or directions in regard |
339 |
to the employment, insurances, operation, repairs and |
340 |
maintenance of the Vessel as laid down in the Financial |
341 |
Instrument or as may be directed from time to time during |
342 |
the currency of the Charter by the mortgagee(s) in |
343 |
conformity with the Financial Instrument. The Charterers |
344 |
confirm that, for this purpose, they have acquainted |
345 |
themselves with all relevant terms, conditions and |
346 |
provisions of the Financial Instrument and agree to |
347 |
acknowledge this in writing in any form that may be |
348 |
required by the mortgagee(s). The Owners warrant that |
349 |
they have not effected any mortgage(s) other than stated |
350 |
in Box 28 and that they shall not agree to any |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
351 |
amendment of the mortgage(s) referred to in Box 28 or |
352 |
effect any other mortgage(s) without the prior consent |
353 |
of the Charterers, which shall not be unreasonably |
354 |
withheld. |
355 |
*) (Optional, Clauses 12(a) and 12(b) are alternatives; |
356 |
indicate alternative agreed in Box 28). |
357 |
13. Insurance and Repairs (See also Clause 39) |
358 |
(a) During the Charter Period the Vessel shall be kept |
359 |
insured in accordance with Clause 39 andby the |
Charterers at their expense against hull
360 |
and machinery, war and Protection and Indemnity risks |
361 |
(and any risks against which it is compulsory to insure |
362 |
for the operation of the Vessel, including but not limited to maintaining |
363 |
financial security in accordance with sub-clause |
364 |
10(a)(iii)) in such form as the Owners shall in writing |
365 |
approve, which approval shall not be un-reasonably |
366 |
withheld. Such insurances shall be arranged by the |
367 |
Charterers to protect the interests of both the Owners |
368 |
and the Charterers and the Owners’ Financiers mortgagee(s) (if any), and |
369 |
The Charterers shall be at liberty to protect under such |
370 |
insurances the interests of any managers they may |
371 |
appoint provided such manager has entered into a manager’s undertaking in form and substance acceptable to the Owners and the Owners’ Financiers |
(if any). Insurance policies shall cover the Owners, the mortgagee(s) (if any), and
372 |
the Charterers according to their respective interests. |
373 |
Subject to the provisions of the agreed loss payable clauses, Financial Instrument, if |
374 |
any, and the approval of the Owners and the insurers, |
375 |
the Charterers shall effect all insured repairs and shall |
376 |
undertake settlement and reimbursement from the |
377 |
insurers of all costs in connection with such repairs as |
378 |
well as insured charges, expenses and liabilities to the |
379 |
extent of coverage under the insurances herein provided |
380 |
for. |
381 |
The Charterers also to remain responsible for and to |
382 |
effect repairs and settlement of costs and expenses |
383 |
incurred thereby in respect of all other repairs not |
384 |
covered by the insurances and/or not exceeding any |
385 |
possible franchise(s) or deductibles provided for in the |
386 |
insurances. |
387 |
All time used for repairs under the provisions of sub- |
388 |
clause 13(a) and for repairs of latent defects according |
389 |
to Clause 3(c) above, including any deviation, shall be |
390 |
for the Charterers’ account. |
391 |
(b) If the conditions of the above insurances permit |
392 |
additional insurance to be placed by the parties, such |
393 |
cover shall be limited to the amount for each party set |
394 |
out in Box 30 and Box 31, respectively. The Owners or |
395 |
the Charterers as the case may be shall immediately |
396 |
furnish the other partyOwners with particulars of any additional |
397 |
insurance effected, including copies of any cover notes |
398 |
or policies and the written consent of the insurers of |
399 |
any such required insurance in any case where the |
400 |
consent of such insurers is necessary. |
401 |
(c) The Charterers shall upon the request of the |
402 |
Owners, provide information and promptly execute such |
403 |
documents as may be required to enable the Owners to |
404 |
comply with the insurance provisions of the Financial |
405 |
Instrument (if any). |
406 |
(d) Subject to the provisions of the Financial Instru- |
407 |
ments and Clause 43, if any, should the Vessel become a Total Loss, an actual, |
408 |
constructive, compromised or agreed total loss under |
409 |
the insurances required under sub-clause 13(a), all |
410 |
insurance payments for such loss shall be paid to the |
411 |
Owners (or, if applicable, the Owners’ Financiers) in accordance with the agreed loss payable clauses. who shall distribute the moneys between the |
412 |
Owners and the Charterers according to their respective |
413 |
interests. The Charterers undertake to notify the Owners and the Owners’ Financiers, |
414 |
and the mortgagee(s), if any, of any occurrences in |
415 |
consequence of which the Vessel is likely to become a |
416 |
tTotal lLoss. as defined in this Clause. |
417 |
(e) The Owners shall upon the request of the |
418 |
Charterers, promptly execute such documents as may |
419 |
be required to enable the Charterers to abandon the |
420 |
Vessel to insurers and claim a constructive total loss. |
421 |
(f) For the purpose of insurance coverage against hull |
422 |
and machinery and war risks under the provisions of |
423 |
sub-clause 13(a), the value of the Vessel is the sum |
424 |
indicated in Clause 39.Box 29. |
425 |
14. Insurance, Repairs and Classification |
426 |
(Optional, only to apply if expressly agreed and stated |
427 |
in Box 29, in which event Clause 13 shall be considered |
428 |
deleted). |
429 |
(a) During the Charter Period the Vessel shall be kept |
430 |
insured by the Owners at their expense against hull and |
431 |
machinery and war risks under the form of policy or |
432 |
policies attached hereto. The Owners and/or insurers |
433 |
shall not have any right of recovery or subrogation |
434 |
against the Charterers on account of loss of or any |
435 |
damage to the Vessel or her machinery or appurt- |
436 |
enances covered by such insurance, or on account of |
437 |
payments made to discharge claims against or liabilities |
438 |
of the Vessel or the Owners covered by such insurance. |
439 |
Insurance policies shall cover the Owners and the |
440 |
Charterers according to their respective interests. |
441 |
(b) During the Charter Period the Vessel shall be kept |
442 |
insured by the Charterers at their expense against |
443 |
Protection and Indemnity risks (and any risks against |
444 |
which it is compulsory to insure for the operation of the |
445 |
Vessel, including maintaining financial security in |
446 |
accordance with sub-clause 10(a)(iii)) in such form as |
447 |
the Owners shall in writing approve which approval shall |
448 |
not be unreasonably withheld. |
449 |
(c) In the event that any act or negligence of the |
450 |
Charterers shall vitiate any of the insurance herein |
451 |
provided, the Charterers shall pay to the Owners all |
452 |
losses and indemnify the Owners against all claims and |
453 |
demands which would otherwise have been covered by |
454 |
such insurance. |
455 |
(d) The Charterers shall, subject to the approval of the |
456 |
Owners or Owners’ Underwriters, effect all insured |
457 |
repairs, and the Charterers shall undertake settlement |
458 |
of all miscellaneous expenses in connection with such |
459 |
repairs as well as all insured charges, expenses and |
460 |
liabilities, to the extent of coverage under the insurances |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
461 |
provided for under the provisions of sub-clause 14(a). |
462 |
The Charterers to be secured reimbursement through |
463 |
the Owners’ Underwriters for such expenditures upon |
464 |
presentation of accounts. |
465 |
(e) The Charterers to remain responsible for and to |
466 |
effect repairs and settlement of costs and expenses |
467 |
incurred thereby in respect of all other repairs not |
468 |
covered by the insurances and/or not exceeding any |
469 |
possible franchise(s) or deductibles provided for in the |
470 |
insurances. |
471 |
(f) All time used for repairs under the provisions of |
472 |
sub-clauses 14(d) and 14(e) and for repairs of latent |
473 |
defects according to Clause 3 above, including any |
474 |
deviation, shall be for the Charterers’ account and shall |
475 |
form part of the Charter Period. |
476 |
The Owners shall not be responsible for any expenses |
477 |
as are incident to the use and operation of the Vessel |
478 |
for such time as may be required to make such repairs. |
479 |
(g) If the conditions of the above insurances permit |
480 |
additional insurance to be placed by the parties such |
481 |
cover shall be limited to the amount for each party set |
482 |
out in Box 30 and Box 31, respectively. The Owners or |
483 |
the Charterers as the case may be shall immediately |
484 |
furnish the other party with particulars of any additional |
485 |
insurance effected, including copies of any cover notes |
486 |
or policies and the written consent of the insurers of |
487 |
any such required insurance in any case where the |
488 |
consent of such insurers is necessary. |
489 |
(h) Should the Vessel become an actual, constructive, |
490 |
compromised or agreed total loss under the insurances |
491 |
required under sub-clause 14(a), all insurance payments |
492 |
for such loss shall be paid to the Owners, who shall |
493 |
distribute the moneys between themselves and the |
494 |
Charterers according to their respective interests. |
495 |
(i) If the Vessel becomes an actual, constructive, |
496 |
compromised or agreed total loss under the insurances |
497 |
arranged by the Owners in accordance with sub-clause |
498 |
14(a), this Charter shall terminate as of the date of such |
499 |
loss. |
500 |
(j) The Charterers shall upon the request of the |
501 |
Owners, promptly execute such documents as may be |
502 |
required to enable the Owners to abandon the Vessel |
503 |
to the insurers and claim a constructive total loss. |
504 |
(k) For the purpose of insurance coverage against hull |
505 |
and machinery and war risks under the provisions of |
506 |
sub-clause 14(a), the value of the Vessel is the sum |
507 |
indicated in Box 29. |
508 |
(l) Notwithstanding anything contained in sub-clause |
509 |
10(a), it is agreed that under the provisions of Clause |
510 |
14, if applicable, the Owners shall keep the Vessel’s |
511 |
Class fully up to date with the Classification Society |
512 |
indicated in Box 10 and maintain all other necessary |
513 |
certificates in force at all times. |
514 |
15. Redelivery (See Clauses 41 and 42) |
515 |
At the expiration of the Charter Period the Vessel shall |
516 |
be redelivered by the Charterers to the Owners at a |
517 |
safe and ice-free port or place as indicated in Box 16, in |
518 |
such ready safe berth as the Owners may direct. The |
519 |
Charterers shall give the Owners not less than thirty |
520 |
(30) running days’ preliminary notice of expected date, |
521 |
range of ports of redelivery or port or place of redelivery |
522 |
and not less than fourteen (14) running days’ definite |
523 |
notice of expected date and port or place of redelivery. |
524 |
Any changes thereafter in the Vessel’s position shall be |
525 |
notified immediately to the Owners. |
526 |
The Charterers warrant that they will not permit the |
527 |
Vessel to commence a voyage (including any preceding |
528 |
ballast voyage) which cannot reasonably be expected |
529 |
to be completed in time to allow redelivery of the Vessel |
530 |
within the Charter Period. Notwithstanding the above, |
531 |
should the Charterers fail to redeliver the Vessel within |
532 |
The Charter Period, the Charterers shall pay the daily |
533 |
equivalent to the rate of hire stated in Box 22 plus 10 |
534 |
per cent. or to the market rate, whichever is the higher, |
535 |
for the number of days by which the Charter Period is |
536 |
exceeded. All other terms, conditions and provisions of |
537 |
this Charter shall continue to apply. |
538 |
Subject to the provisions of Clause 10, the Vessel shall |
539 |
be redelivered to the Owners in the same or as good |
540 |
structure, state, condition and class as that in which she |
541 |
was delivered, fair wear and tear not affecting class |
542 |
excepted. |
543 |
The Vessel upon redelivery shall have her survey cycles |
544 |
up to date and trading and class certificates valid for at |
545 |
least the number of months agreed in Box 17. |
546 |
16. Non-Lien |
547 |
The Charterers will not suffer, nor permit to be continued, |
548 |
any lien or encumbrance incurred by them or their |
549 |
agents, which might have priority over the title and |
550 |
interest of the Owners in the Vessel. The Charterers |
551 |
further agree to fasten to the Vessel in a conspicuous |
552 |
place and to keep so fastened during the Charter Period |
553 |
a notice reading as follows: |
554 |
“This Vessel is the property of (name of Owners). It is |
555 |
under charter to (name of Charterers) and by the terms |
556 |
of the Charter Party neither the Charterers nor the |
557 |
Master have any right, power or authority to create, incur |
558 |
or permit to be imposed on the Vessel any lien |
559 |
whatsoever.” |
560 |
17. Indemnity (See indemnity clauses in Additional Clauses) |
561 |
(a) The Charterers shall indemnify the Owners against |
562 |
any loss, damage or expense incurred by the Owners |
563 |
arising out of or in relation to the operation of the Vessel |
564 |
by the Charterers, and against any lien of whatsoever |
565 |
nature arising out of an event occurring during the |
566 |
Charter Period. If the Vessel be arrested or otherwise |
567 |
detained by reason of claims or liens arising out of her |
568 |
operation hereunder by the Charterers, the Charterers |
569 |
shall at their own expense take all reasonable steps to |
570 |
secure that within a reasonable time the Vessel is |
571 |
released, including the provision of bail. |
572 |
Without prejudice to the generality of the foregoing, the |
573 |
Charterers agree to indemnify the Owners against all |
574 |
consequences or liabilities arising from the Master, |
575 |
officers or agents signing Bills of Lading or other |
576 |
documents. |
577 |
(b) If the Vessel be arrested or otherwise detained by |
578 |
reason of a claim or claims against the Owners, the |
579 |
Owners shall at their own expense take all reasonable |
580 |
steps to secure that within a reasonable time the Vessel |
581 |
is released, including the provision of bail. |
582 |
In such circumstances the Owners shall indemnify the |
583 |
Charterers against any loss, damage or expense |
584 |
incurred by the Charterers (including hire paid under |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
585 |
this Charter) as a direct consequence of such arrest or |
586 |
detention. |
587 |
18. Lien |
588 |
The Owners to shall have a lien upon all cargoes, sub-hires |
589 |
and sub-freights belonging or due to the Charterers or |
590 |
any sub-charterers and any Bill of Lading freight for all |
591 |
claims under this Charter., and the Charterers to have a |
592 |
lien on the Vessel for all moneys paid in advance and |
593 |
not earned. |
594 |
19. Salvage |
595 |
All salvage and towage performed by the Vessel shall |
596 |
be for the Charterers’ benefit and the cost of repairing |
597 |
damage occasioned thereby shall be borne by the |
598 |
Charterers. |
599 |
20. Wreck Removal |
600 |
In the event of the Vessel becoming a wreck or |
601 |
obstruction to navigation the Charterers shall indemnify |
602 |
the Owners against any sums whatsoever which the |
603 |
Owners shall become liable to pay and shall pay in |
604 |
consequence of the Vessel becoming a wreck or |
605 |
obstruction to navigation. |
606 |
21. General Average |
607 |
The Owners shall not contribute to General Average. |
608 |
22. Assignment, Sub-Charter and Sale (See Clause 62) |
609 |
(a) The Charterers shall not assign this Charter nor |
610 |
sub-charter the Vessel on a bareboat basis except with |
611 |
the prior consent in writing of the Owners, which shall |
612 |
not be unreasonably withheld, and subject to such terms |
613 |
and conditions as the Owners shall approve. |
614 |
(b) The Owners shall not sell the Vessel during the |
615 |
currency of this Charter except with the prior written |
616 |
consent of the Charterers, which shall not be unreason- |
617 |
ably withheld, and subject to the buyer accepting an |
618 |
assignment of this Charter. |
619 |
23. Contracts of Carriage |
620*)(a) The Charterers are to procure that all documents
621 |
issued during the Charter Period evidencing the terms |
622 |
and conditions agreed in respect of carriage of goods |
623 |
shall contain a paramount clause incorporating any |
624 |
legislation relating to carrier’s liability for cargo |
625 |
compulsorily applicable in the trade; if no such legislation |
626 |
exists, the documents shall incorporate the Hague-Visby |
627 |
Rules. The documents shall also contain the New Jason |
628 |
Clause and the Both-to-Blame Collision Clause. |
629 |
*) (b) The Charterers are to procure that all passenger |
630 |
tickets issued during the Charter Period for the carriage |
631 |
of passengers and their luggage under this Charter shall |
632 |
contain a paramount clause incorporating any legislation |
633 |
relating to carrier’s liability for passengers and their |
634 |
luggage compulsorily applicable in the trade; if no such |
635 |
legislation exists, the passenger tickets shall incorporate |
636 |
the Athens Convention Relating to the Carriage of |
637 |
Passengers and their Luggage by Sea, 1974, and any |
638 |
protocol thereto. |
639 |
*) Delete as applicable. |
640 |
24. Bank Guarantee |
641 |
(Optional, only to apply if Box 27 filled in) |
642 |
The Charterers undertake to furnish, before delivery of |
643 |
the Vessel, a first class bank guarantee or bond in the |
644 |
sum and at the place as indicated in Box 27 as guarantee |
645 |
for full performance of their obligations under this |
646 |
Charter. |
647 |
25. Requisition/Acquisition |
648 |
(a) In the event of the Requisition for Hire of the Vessel |
649 |
by any governmental or other competent authority |
650 |
(hereinafter referred to as “Requisition for Hire”) |
651 |
irrespective of the date during the Charter Period when |
652 |
“Requisition for Hire” may occur and irrespective of the |
653 |
length thereof and whether or not it be for an indefinite |
654 |
or a limited period of time, and irrespective of whether it |
655 |
may or will remain in force for the remainder of the |
656 |
Charter Period, this Charter shall not be deemed thereby |
657 |
or thereupon to be frustrated or otherwise terminated |
658 |
and the Charterers shall continue to pay the stipulated |
659 |
hire in the manner provided by this Charter until the time |
660 |
when the Charter would have terminated pursuant to |
661 |
any of the provisions hereof. always provided however |
662 |
that in the event of “Requisition for Hire” any Requisition |
663 |
Hire or compensation received or receivable by the |
664 |
Owners shall be payable to the Charterers during the |
665 |
remainder of the Charter Period or the period of the |
666 |
“Requisition for Hire” whichever be the shorter. |
667 |
(b) In the event of the Owners being deprived of their |
668 |
ownership in the Vessel by any Compulsory Acquisition |
669 |
of the Vessel or requisition for title by any governmental |
670 |
or other competent authority (hereinafter referred to as |
671 |
“Compulsory Acquisition”), then, irrespective of the date |
672 |
during the Charter Period when “Compulsory Acqui- |
673 |
sition” may occur, this Charter shall be deemed |
674 |
terminated as of the date of such “Compulsory |
675 |
Acquisition”. In such event Charter Hire to be considered |
676 |
as earned and to be paid up to the date and time of |
677 |
such “Compulsory Acquisition”. |
678 |
26. War |
679 |
(a) Subject to the provisions of the Financial Instruments (if any) FfFor the purpose of this Clause, the words “War |
680 |
Risks” shall include any war (whether actual or |
681 |
threatened), act of war, civil war, hostilities, revolution, |
682 |
rebellion, civil commotion, warlike operations, the laying |
683 |
of mines (whether actual or reported), acts of piracy, |
684 |
acts of terrorists, acts of hostility or malicious damage, |
685 |
blockades (whether imposed against all vessels or |
686 |
imposed selectively against vessels of certain flags or |
687 |
ownership, or against certain cargoes or crews or |
688 |
otherwise howsoever), by any person, body, terrorist or |
689 |
political group, or the Government of any state |
690 |
whatsoever, which may be dangerous or are likely to be |
691 |
or to become dangerous to the Vessel, her cargo, crew |
692 |
or other persons on board the Vessel. |
693 |
(b) The Vessel, unless the written consent of the |
694 |
Owners be first obtained and adequate insurances are in place (and the Charterers may be required to effect special, modified or additional insurance in order to ensure such adequacy to be determined by the Owners acting reasonablyat the Charterer’s costs), shall not continue to or go |
695 |
through any port, place, area or zone (whether of land |
696 |
or sea), or any waterway or canal, where it reasonably |
697 |
appears that the Vessel, her cargo, crew or other |
698 |
persons on board the Vessel, in the reasonable |
699 |
judgement of the Owners, may be, or are likely to be, |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
700 |
exposed to War Risks. The Charterers shall provide the owners with evidence satisfactory in respect of the adequacy of such insurances immediately thereafter. |
Should the Vessel be within any
701 |
such place as aforesaid, which only becomes danger- |
702 |
ous, or is likely to be or to become dangerous, after her |
703 |
entry into it, the Owners shall have the right to require |
704 |
the Vessel to leave such area. |
705 |
(c) The Vessel shall not load contraband cargo, or to |
706 |
pass through any blockade, whether such blockade be |
707 |
imposed on all vessels, or is imposed selectively in any |
708 |
way whatsoever against vessels of certain flags or |
709 |
ownership, or against certain cargoes or crews or |
710 |
otherwise howsoever, or to proceed to an area where |
711 |
she shall be subject, or is likely to be subject to |
712 |
a belligerent’s right of search and/or confiscation. |
713 |
(d) If the insurers of the war risks insurance, when |
714 |
Clause 14 is applicable, should require payment of |
715 |
premiums and/or calls because, pursuant to the |
716 |
Charterers’ orders, the Vessel is within, or is due to enter |
717 |
and remain within, any area or areas which are specified |
718 |
by such insurers as being subject to additional premiums |
719 |
because of War Risks, then such premiums and/or calls |
720 |
shall be reimbursed by the Charterers to the Owners at |
721 |
the same time as the next payment of hire is due. |
722 |
(e) The Charterers shall have the liberty: |
723 |
(i) to comply with all orders, directions, recommend- |
724 |
ations or advice as to departure, arrival, routes, |
725 |
sailing in convoy, ports of call, stoppages, |
726 |
destinations, discharge of cargo, delivery, or in any |
727 |
other way whatsoever, which are given by the |
728 |
Government of the Nation under whose flag the |
729 |
Vessel sails, or any other Government, body or |
730 |
group whatsoever acting with the power to compel |
731 |
compliance with their orders or directions; |
732 |
(ii) to comply with the orders, directions or recom- |
733 |
mendations of any war risks underwriters who have |
734 |
the authority to give the same under the terms of |
735 |
the war risks insurance; |
736 |
(iii) to comply with the terms of any resolution of the |
737 |
Security Council of the United Nations, any |
738 |
directives of the European Community, the effective |
739 |
orders of any other Supranational body which has |
740 |
the right to issue and give the same, and with |
741 |
national laws aimed at enforcing the same to which |
742 |
the Owners are subject, and to obey the orders |
743 |
and directions of those who are charged with their |
744 |
enforcement. |
745 |
(f) In the event of outbreak of war (whether there be a |
746 |
declaration of war or not) (i) between any two or more |
747 |
of the following countries: the United States of America; |
748 |
Russia; the United Kingdom; France; and the People’s |
749 |
Republic of China, (ii) between any two or more of the |
750 |
countries stated in Box 36, both the Owners and the |
751 |
Charterers shall have the right to cancel this Charter, |
752 |
whereupon the Charterers shall redeliver the Vessel to |
753 |
the Owners in accordance with Clause 15, if the Vessel |
754 |
has cargo on board after discharge thereof at |
755 |
destination, or if debarred under this Clause from |
756 |
reaching or entering it at a near, open and safe port as |
757 |
directed by the Owners, or if the Vessel has no cargo |
758 |
on board, at the port at which the Vessel then is or if at |
759 |
sea at a near, open and safe port as directed by the |
760 |
Owners. In all cases hire shall continue to be paid in |
761 |
accordance with Clause 11 and except as aforesaid all |
762 |
other provisions of this Charter shall apply until |
763 |
redelivery the end of the Charter Period. |
764 |
27. Commission |
765 |
The Owners to pay a commission at the rate indicated |
766 |
in Box 33 to the Brokers named in Box 33 on any hire |
767 |
paid under the Charter. If no rate is indicated in Box 33, |
768 |
the commission to be paid by the Owners shall cover |
769 |
the actual expenses of the Brokers and a reasonable |
770 |
fee for their work. |
771 |
If the full hire is not paid owing to breach of the Charter |
772 |
by either of the parties the party liable therefor shall |
773 |
indemnify the Brokers against their loss of commission. |
774 |
Should the parties agree to cancel the Charter, the |
775 |
Owners shall indemnify the Brokers against any loss of |
776 |
commission but in such case the commission shall not |
777 |
exceed the brokerage on one year’s hire. |
778 |
28. Termination (See Clauses 41, 42 and 47) |
779 |
(a) Charterers’ Default |
780 |
The Owners shall be entitled to withdraw the Vessel from |
781 |
the service of the Charterers and terminate the Charter |
782 |
with immediate effect by written notice to the Charterers if: |
783 |
(i) the Charterers fail to pay hire in accordance with |
784 |
Clause 11. However, where there is a failure to |
785 |
make punctual payment of hire due to oversight, |
786 |
negligence, errors or omissions on the part of the |
787 |
Charterers or their bankers, the Owners shall give |
788 |
the Charterers written notice of the number of clear |
789 |
banking days stated in Box 34 (as recognised at |
790 |
the agreed place of payment) in which to rectify |
791 |
the failure, and when so rectified within such |
792 |
number of days following the Owners’ notice, the |
793 |
payment shall stand as regular and punctual. |
794 |
Failure by the Charterers to pay hire within the |
795 |
number of days stated in Box 34 of their receiving |
796 |
the Owners’ notice as provided herein, shall entitle |
797 |
the Owners to withdraw the Vessel from the service |
798 |
of the Charterers and terminate the Charter without |
799 |
further notice; |
800 |
(ii) the Charterers fail to comply with the requirements of: |
801 |
(1) Clause 6 (Trading Restrictions) |
802 |
(2) Clause 13(a) (Insurance and Repairs) |
803 |
provided that the Owners shall have the option, by |
804 |
written notice to the Charterers, to give the |
805 |
Charterers a specified number of days grace within |
806 |
which to rectify the failure without prejudice to the |
807 |
Owners’ right to withdraw and terminate under this |
808 |
Clause if the Charterers fail to comply with such |
809 |
notice; |
810 |
(iii) the Charterers fail to rectify any failure to comply |
811 |
with the requirements of sub-clause 10(a)(i) |
812 |
(Maintenance and Repairs) as soon as practically |
813 |
possible after the Owners have requested them in |
814 |
writing so to do and in any event so that the Vessel’s |
815 |
insurance cover is not prejudiced. |
816 |
(b) Owners’ Default |
817 |
If the Owners shall by any act or omission be in breach |
818 |
of their obligations under this Charter to the extent that |
819 |
the Charterers are deprived of the use of the Vessel |
820 |
and such breach continues for a period of fourteen (14) |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
821 |
running days after written notice thereof has been given |
822 |
by the Charterers to the Owners, the Charterers shall |
823 |
be entitled to terminate this Charter with immediate effect |
824 |
by written notice to the Owners. |
825 |
(c) Loss of Vessel |
826 |
This Charter shall be deemed to be terminated if the |
827 |
Vessel becomes a total loss or is declared as a |
828 |
constructive or compromised or arranged total loss. For |
829 |
the purpose of this sub-clause, the Vessel shall not be |
830 |
deemed to be lost unless she has either become an |
831 |
actual total loss or agreement has been reached with |
832 |
her underwriters in respect of her constructive, |
833 |
compromised or arranged total loss or if such agreement |
834 |
with her underwriters is not reached it is adjudged by a |
835 |
competent tribunal that a constructive loss of the Vessel |
836 |
has occurred. |
837 |
(d) Either party shall be entitled to terminate this |
838 |
Charter with immediate effect by written notice to the |
839 |
other party in the event of an order being made or |
840 |
resolution passed for the winding up, dissolution, |
841 |
liquidation or bankruptcy of the other party (otherwise |
842 |
than for the purpose of reconstruction or amalgamation) |
843 |
or if a receiver is appointed, or if it suspends payment, |
844 |
ceases to carry on business or makes any special |
845 |
arrangement or composition with its creditors. |
846 |
(e) The termination of this Charter shall be without |
847 |
prejudice to all rights accrued due between the parties |
848 |
prior to the date of termination and to any claim that |
849 |
either party might have. |
850 |
29. Repossession (See also Clauses 41, 42 and 47) In the event the Vessel is due for redelivery pursuant to Clause 41 or Owners have made a request for redelivery of the Vessel in accordance with the applicable provisions of Clause 42.1, |
851 |
In the event of the termination of this Charter in |
852 |
accordance with the applicable provisions of Clause 28, |
853 |
the Owners shall have the right to repossess the Vessel |
854 |
from the Charterers at her current or next port of call, or |
855 |
at a port or place convenient to them without hindrance |
856 |
or interference by the Charterers, courts or local |
857 |
authorities. Pending physical repossession of the Vessel |
858 |
in accordance with this Clause 29, the Charterers shall |
859 |
hold the Vessel as gratuitous bailee only to the Owners and the Charterers shall procure that the master and crew follow the directions of the Owners . |
860 |
The Owners shall arrange for an authorised represent- |
861 |
ative to board the Vessel as soon as reasonably |
862 |
practicable following the termination of the Charter. The |
863 |
Vessel shall be deemed to be repossessed by the |
864 |
Owners from the Charterers upon the boarding of the |
865 |
Vessel by the Owners’ representative. All arrangements |
866 |
and expenses relating to the settling of wages, |
867 |
disembarkation and repatriation of the Charterers’ |
868 |
Master, officers and crew shall be the sole responsibility |
869 |
of the Charterers. |
870 |
30. Dispute Resolution (See Clause 65) |
871*)(a) This Contract shall be governed by and construed
872 |
in accordance with English law and any dispute arising |
873 |
out of or in connection with this Contract shall be referred |
874 |
to arbitration in London in accordance with the Arbitration |
875 |
Act 1996 or any statutory modification or re-enactment |
876 |
thereof save to the extent necessary to give effect to |
877 |
the provisions of this Clause. |
878 |
The arbitration shall be conducted in accordance with |
879 |
the London Maritime Arbitrators Association (LMAA) |
880 |
Terms current at the time when the arbitration proceed- |
881 |
ings are commenced. |
882 |
The reference shall be to three arbitrators. A party |
883 |
wishing to refer a dispute to arbitration shall appoint its |
884 |
arbitrator and send notice of such appointment in writing |
885 |
to the other party requiring the other party to appoint its |
886 |
own arbitrator within 14 calendar days of that notice and |
887 |
stating that it will appoint its arbitrator as sole arbitrator |
888 |
unless the other party appoints its own arbitrator and |
889 |
gives notice that it has done so within the 14 days |
890 |
specified. If the other party does not appoint its own |
891 |
arbitrator and give notice that it has done so within the |
892 |
14 days specified, the party referring a dispute to |
893 |
arbitration may, without the requirement of any further |
894 |
prior notice to the other party, appoint its arbitrator as |
895 |
sole arbitrator and shall advise the other party |
896 |
accordingly. The award of a sole arbitrator shall be |
897 |
binding on both parties as if he had been appointed by |
898 |
agreement. |
899 |
Nothing herein shall prevent the parties agreeing in |
900 |
writing to vary these provisions to provide for the |
901 |
appointment of a sole arbitrator. |
902 |
In cases where neither the claim nor any counterclaim |
903 |
exceeds the sum of US$50,000 (or such other sum as |
904 |
the parties may agree) the arbitration shall be conducted |
905 |
in accordance with the LMAA Small Claims Procedure |
906 |
current at the time when the arbitration proceedings are |
907 |
commenced. |
908 |
*) (b) This Contract shall be governed by and construed |
909 |
in accordance with Title 9 of the United States Code |
910 |
and the Maritime Law of the United States and any |
911 |
dispute arising out of or in connection with this Contract |
912 |
shall be referred to three persons at New York, one to |
913 |
be appointed by each of the parties hereto, and the third |
914 |
by the two so chosen; their decision or that of any two |
915 |
of them shall be final, and for the purposes of enforcing |
916 |
any award, judgement may be entered on an award by |
917 |
any court of competent jurisdiction. The proceedings |
918 |
shall be conducted in accordance with the rules of the |
919 |
Society of Maritime Arbitrators, Inc. |
920 |
In cases where neither the claim nor any counterclaim |
921 |
exceeds the sum of US$50,000 (or such other sum as |
922 |
the parties may agree) the arbitration shall be conducted |
923 |
in accordance with the Shortened Arbitration Procedure |
924 |
of the Society of Maritime Arbitrators, Inc. current at |
925 |
the time when the arbitration proceedings are commenced. |
926*)(c) This Contract shall be governed by and construed
927 |
in accordance with the laws of the place mutually agreed |
928 |
by the parties and any dispute arising out of or in |
929 |
connection with this Contract shall be referred to |
930 |
arbitration at a mutually agreed place, subject to the |
931 |
procedures applicable there. |
932 |
(d) Notwithstanding (a), (b) or (c) above, the parties |
933 |
may agree at any time to refer to mediation any |
934 |
difference and/or dispute arising out of or in connection |
935 |
with this Contract. |
936 |
In the case of a dispute in respect of which arbitration |
937 |
has been commenced under (a), (b) or (c) above, the |
938 |
following shall apply:- |
939 |
(i) Either party may at any time and from time to time |
940 |
elect to refer the dispute or part of the dispute to |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
941 |
mediation by service on the other party of a written |
942 |
notice (the “Mediation Notice”) calling on the other |
943 |
party to agree to mediation. |
944 |
(ii) The other party shall thereupon within 14 calendar |
945 |
days of receipt of the Mediation Notice confirm that |
946 |
they agree to mediation, in which case the parties |
947 |
shall thereafter agree a mediator within a further |
948 |
14 calendar days, failing which on the application |
949 |
of either party a mediator will be appointed promptly |
950 |
by the Arbitration Tribunal (“the Tribunal”) or such |
951 |
person as the Tribunal may designate for that |
952 |
purpose. The mediation shall be conducted in such |
953 |
place and in accordance with such procedure and |
954 |
on such terms as the parties may agree or, in the |
955 |
event of disagreement, as may be set by the |
956 |
mediator. |
957 |
(iii) If the other party does not agree to mediate, that |
958 |
fact may be brought to the attention of the Tribunal |
959 |
and may be taken into account by the Tribunal when |
960 |
allocating the costs of the arbitration as between |
961 |
the parties. |
962 |
(iv) The mediation shall not affect the right of either |
963 |
party to seek such relief or take such steps as it |
964 |
considers necessary to protect its interest. |
965 |
(v) Either party may advise the Tribunal that they have |
966 |
agreed to mediation. The arbitration procedure shall |
967 |
continue during the conduct of the mediation but |
968 |
the Tribunal may take the mediation timetable into |
969 |
account when setting the timetable for steps in the |
970 |
arbitration. |
971 |
(vi) Unless otherwise agreed or specified in the |
972 |
mediation terms, each party shall bear its own costs |
973 |
incurred in the mediation and the parties shall share |
974 |
equally the mediator’s costs and expenses. |
975 |
(vii) The mediation process shall be without prejudice |
976 |
and confidential and no information or documents |
977 |
disclosed during it shall be revealed to the Tribunal |
978 |
except to the extent that they are disclosable under |
979 |
the law and procedure governing the arbitration. |
980 |
(Note: The parties should be aware that the mediation |
981 |
process may not necessarily interrupt time limits.) |
982 |
(e) If Box 35 in Part I is not appropriately filled in, sub-clause |
983 |
30(a) of this Clause shall apply. Sub-clause 30(d) shall |
984 |
apply in all cases. |
985 |
*) Sub-clauses 30(a), 30(b) and 30(c) are alternatives; |
986 |
indicate alternative agreed in Box 35. |
987 |
31. Notices (See Clause 46) |
988 |
(a) Any notice to be given by either party to the other |
989 |
party shall be in writing and may be sent by fax, telex, |
990 |
registered or recorded mail or by personal service. |
991(b) The address of the Parties for service of such
992communication shall be as stated in Boxes 3 and 4
993respectively.
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART III
PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY
(Optional, only to apply if expressly agreed and stated in Box 37)
1.Specifications and Building Contract
2(a) The Vessel shall be constructed in accordance with
3the Building Contract (hereafter called “the Building
4Contract”) as annexed to this Charter, made between the
5Builders and the Owners and in accordance with the
6specifications and plans annexed thereto, such Building
7Contract, specifications and plans having been counter-
8signed as approved by the Charterers.
9(b) No change shall be made in the Building Contract or
10in the specifications or plans of the Vessel as approved by
11the Charterers as aforesaid, without the Charterers’
12consent.
13(c) The Charterers shall have the right to send their
14representative to the Builders’ Yard to inspect the Vessel
15during the course of her construction to satisfy themselves
16that construction is in accordance with such approved
17specifications and plans as referred to under sub-clause
18(a) of this Clause.
19(d) The Vessel shall be built in accordance with the
20Building Contract and shall be of the description set out
21therein. Subject to the provisions of sub-clause 2(c)(ii)
22hereunder, the Charterers shall be bound to accept the
23Vessel from the Owners, completed and constructed in
24accordance with the Building Contract, on the date of
25delivery by the Builders. The Charterers undertake that
26having accepted the Vessel they will not thereafter raise
27any claims against the Owners in respect of the Vessel’s
28performance or specification or defects, if any.
29Nevertheless, in respect of any repairs, replacements or
30defects which appear within the first 12 months from
31delivery by the Builders, the Owners shall endeavour to
32compel the Builders to repair, replace or remedy any defects
33or to recover from the Builders any expenditure incurred in
34carrying out such repairs, replacements or remedies.
35However, the Owners’ liability to the Charterers shall be
36limited to the extent the Owners have a valid claim against
37the Builders under the guarantee clause of the Building
38Contract (a copy whereof has been supplied to the
39Charterers). The Charterers shall be bound to accept such
40sums as the Owners are reasonably able to recover under
41this Clause and shall make no further claim on the Owners
42for the difference between the amount(s) so recovered and
43the actual expenditure on repairs, replacement or
44remedying defects or for any loss of time incurred.
45Any liquidated damages for physical defects or deficiencies
46shall accrue to the account of the party stated in Box 41(a)
47or if not filled in shall be shared equally between the parties.
48The costs of pursuing a claim or claims against the Builders
49under this Clause (including any liability to the Builders)
50shall be borne by the party stated in Box 41(b) or if not
51filled in shall be shared equally between the parties.
522. Time and Place of Delivery
53(a) Subject to the Vessel having completed her
54acceptance trials including trials of cargo equipment in
55accordance with the Building Contract and specifications
56to the satisfaction of the Charterers, the Owners shall give
57and the Charterers shall take delivery of the Vessel afloat
58when ready for delivery and properly documented at the
59Builders’ Yard or some other safe and readily accessible
60dock, wharf or place as may be agreed between the parties
61hereto and the Builders. Under the Building Contract the
62Builders have estimated that the Vessel will be ready for
63delivery to the Owners as therein provided but the delivery
64date for the purpose of this Charter shall be the date when
65the Vessel is in fact ready for delivery by the Builders after
66completion of trials whether that be before or after as
67indicated in the Building Contract. The Charterers shall not
68be entitled to refuse acceptance of delivery of the Vessel
69and upon and after such acceptance, subject to Clause
701(d), the Charterers shall not be entitled to make any claim
71against the Owners in respect of any conditions,
72representations or warranties, whether express or implied,
73as to the seaworthiness of the Vessel or in respect of delay
74in delivery.
75(b) If for any reason other than a default by the Owners
76under the Building Contract, the Builders become entitled
77under that Contract not to deliver the Vessel to the Owners,
78the Owners shall upon giving to the Charterers written
79notice of Builders becoming so entitled, be excused from
80giving delivery of the Vessel to the Charterers and upon
81receipt of such notice by the Charterers this Charter shall
82cease to have effect.
83(c) If for any reason the Owners become entitled under
84the Building Contract to reject the Vessel the Owners shall,
85before exercising such right of rejection, consult the
86Charterers and thereupon
87(i) if the Charterers do not wish to take delivery of the Vessel
88they shall inform the Owners within seven (7) running days
89by notice in writing and upon receipt by the Owners of such
90notice this Charter shall cease to have effect; or
91(ii) if the Charterers wish to take delivery of the Vessel
92they may by notice in writing within seven (7) running days
93require the Owners to negotiate with the Builders as to the
94terms on which delivery should be taken and/or refrain from
95exercising their right to rejection and upon receipt of such
96notice the Owners shall commence such negotiations and/
97or take delivery of the Vessel from the Builders and deliver
98her to the Charterers;
99(iii) in no circumstances shall the Charterers be entitled to
100reject the Vessel unless the Owners are able to reject the
101Vessel from the Builders;
102(iv) if this Charter terminates under sub-clause (b) or (c) of
103this Clause, the Owners shall thereafter not be liable to the
104Charterers for any claim under or arising out of this Charter
105or its termination.
106(d) Any liquidated damages for delay in delivery under the
107Building Contract and any costs incurred in pursuing a claim
108therefor shall accrue to the account of the party stated in
109Box 41(c) or if not filled in shall be shared equally between
110the parties.
1113. Guarantee Works
112If not otherwise agreed, the Owners authorise the
113Charterers to arrange for the guarantee works to be
114performed in accordance with the building contract terms,
115and hire to continue during the period of guarantee works.
116The Charterers have to advise the Owners about the
117performance to the extent the Owners may request.
1184. Name of Vessel
119The name of the Vessel shall be mutually agreed between
120the Owners and the Charterers and the Vessel shall be
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART III
PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY
(Optional, only to apply if expressly agreed and stated in Box 37)
121painted in the colours, display the funnel insignia and fly
122the house flag as required by the Charterers.
1235. Survey on Redelivery
124The Owners and the Charterers shall appoint surveyors
125for the purpose of determining and agreeing in writing the
126condition of the Vessel at the time of re-delivery.
127Without prejudice to Clause 15 (Part II), the Charterers
128shall bear all survey expenses and all other costs, if any,
129including the cost of docking and undocking, if required,
130as well as all repair costs incurred. The Charterers shall
131also bear all loss of time spent in connection with any
132docking and undocking as well as repairs, which shall be
133paid at the rate of hire per day or pro rata.
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART IV
HIRE/PURCHASE AGREEMENT
(Optional, only to apply if expressly agreed and stated in Box 42)
1On expiration of this Charter and provided the Charterers
2have fulfilled their obligations according to Part I and II
3as well as Part III, if applicable, it is agreed, that on
4payment of the final payment of hire as per Clause 11
5the Charterers have purchased the Vessel with
6everything belonging to her and the Vessel is fully paid
7for.
8In the following paragraphs the Owners are referred to
9as the Sellers and the Charterers as the Buyers.
10The Vessel shall be delivered by the Sellers and taken
11over by the Buyers on expiration of the Charter.
12The Sellers guarantee that the Vessel, at the time of
13delivery, is free from all encumbrances and maritime
14liens or any debts whatsoever other than those arising
15from anything done or not done by the Buyers or any
16existing mortgage agreed not to be paid off by the time
17of delivery. Should any claims, which have been incurred
18prior to the time of delivery be made against the Vessel,
19the Sellers hereby undertake to indemnify the Buyers
20against all consequences of such claims to the extent it
21can be proved that the Sellers are responsible for such
22claims. Any taxes, notarial, consular and other charges
23and expenses connected with the purchase and
24registration under Buyers’ flag, shall be for Buyers’
25account. Any taxes, consular and other charges and
26expenses connected with closing of the Sellers’ register,
27shall be for Sellers’ account.
28In exchange for payment of the last month’s hire
29instalment the Sellers shall furnish the Buyers with a
30Bill of Sale duly attested and legalized, together with a
31certificate setting out the registered encumbrances, if
32any. On delivery of the Vessel the Sellers shall provide
33for deletion of the Vessel from the Ship’s Register and
34deliver a certificate of deletion to the Buyers.
35The Sellers shall, at the time of delivery, hand to the
36Buyers all classification certificates (for hull, engines,
37anchors, chains, etc.), as well as all plans which may
38be in Sellers’ possession.
39The Wireless Installation and Nautical Instruments,
40unless on hire, shall be included in the sale without any
41extra payment.
42The Vessel with everything belonging to her shall be at
43Sellers’ risk and expense until she is delivered to the
44Buyers, subject to the conditions of this Contract and
45the Vessel with everything belonging to her shall be
46delivered and taken over as she is at the time of delivery,
47after which the Sellers shall have no responsibility for
48possible faults or deficiencies of any description.
49The Buyers undertake to pay for the repatriation of the
50Master, officers and other personnel if appointed by the
51Sellers to the port where the Vessel entered the Bareboat
52Charter as per Clause 3 (Part II) or to pay the equivalent
53 |
cost for their journey to any other place. |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART V
PROVISIONS TO APPLY FOR VESSELS REGISTERED IN A BAREBOAT CHARTER REGISTRY
(Optional, only to apply if expressly agreed and stated in Box 43)
11.Definitions
2For the purpose of this PART V, the following terms shall
3have the meanings hereby assigned to them:
4“The Bareboat Charter Registry” shall mean the registry
5of the State whose flag the Vessel will fly and in which
6the Charterers are registered as the bareboat charterers
7during the period of the Bareboat Charter.
8“The Underlying Registry” shall mean the registry of the
9state in which the Owners of the Vessel are registered
10as Owners and to which jurisdiction and control of the
11Vessel will revert upon termination of the Bareboat
12Charter Registration.
132.Mortgage
14The Vessel chartered under this Charter is financed by
15a mortgage and the provisions of Clause 12(b) (Part II)
16shall apply.
173.Termination of Charter by Default
18If the Vessel chartered under this Charter is registered
19in a Bareboat Charter Registry as stated in Box 44, and
20if the Owners shall default in the payment of any amounts
21due under the mortgage(s) specified in Box 28, the
22Charterers shall, if so required by the mortgagee, direct
23the Owners to re-register the Vessel in the Underlying
24Registry as shown in Box 45.
25In the event of the Vessel being deleted from the
26Bareboat Charter Registry as stated in Box 44, due to a
27default by the Owners in the payment of any amounts
28due under the mortgage(s), the Charterers shall have
29the right to terminate this Charter forthwith and without
30prejudice to any other claim they may have against the
31 |
Owners under this Charter. |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
EXECUTION VERSION
ADDITIONAL CLAUSES TO BARECON 2001 ORIGINALLY DATED 21 MARCH 2022 AND FURTHER
AMENDED BY AN AMENDMENT AND RESTATEMENT DEED DATED 29 JUNE 2023
CLAUSE 32 – CHARTER PERIOD
32.1 |
The period of this Charter (the “Charter Period”) shall, subject to the terms of this Charter, continue for a period of seven (7) years starting start from the Commencement Date and end on the date falling eighty-four (84) months from 3 March 2024 (3 March 2024 being the “Reference Date”). |
32.2 |
Notwithstanding the fact that the Charter Period shall commence on the Commencement Date, this Charter shall be: |
(a) |
in full force and effect; and |
(b) |
valid, binding and enforceable against the parties hereto, |
with effect from the date hereof until the end of the Charter Period (subject to the terms of this Charter).
CLAUSE 33 – CANCELLATION
33.1 |
If: |
(a) |
the Vessel is not delivered by the Charterers as sellers to the Owners as buyers under the MOA by the Cancelling Date (or such later date as the parties to the MOA may agree); |
(b) |
it becomes unlawful for the Charterers as sellers and the Owners as buyers to perform or comply with any or all of their obligations under the MOA; or |
(c) |
the MOA expires, is cancelled, terminated, rescinded or suspended or otherwise ceases to remain in full force and effect for any reason (in whole or in part), |
then this Charter shall immediately terminate and be cancelled (without prejudice to Clause 57 (Indemnities) and without the need for either the Owners or the Charterers to take any action whatsoever), provided that the Owners shall be entitled to retain all fees and expenses paid by the Charterers pursuant to Clause 44 (Fees and Expenses) (and without prejudice to Clause 44 (Fees and Expenses) and any clause of the MOA, if such fees have not been paid, the Charterers shall forthwith pay such fees and expenses to the Owners in accordance with Clause 44 (Fees and Expenses)) and such payment shall be irrevocable and unconditional and is acknowledged by the Charterers to be proportionate as to amount, having regard to the legitimate interest of the Owners, in protecting against the Owners’ risk of the Charterers failing to perform its obligations under this Charter. For the avoidance of doubt, the termination of the Charter shall not prejudice the operation of any provision of any Leasing Document which is expressed to survive the termination or cancellation of this Charter.
CLAUSE 34 – DELIVERY AND CHARTER OF VESSEL
34.1 |
This Charter is part of a transaction involving the sale, purchase and charter back of the Vessel and constitutes one of the Leasing Documents. |
34.2 |
The obligation of the Owners to charter the Vessel to the Charterers hereunder is subject to and conditional upon: |
(a) |
no Termination Event or Potential Termination Event having occurred on the date of this Charter and on the Commencement Date; |
(b) |
the representations and warranties contained in Clause 48 (Representations and Warranties) being true and correct on the date hereof and on the Commencement Date; |
(c) |
the Vessel being delivered to the Head Sellers pursuant to the Shipbuilding Contract; |
(d) |
the Vessel being delivered to the Charterers under the Head MOA; |
(e) |
the Vessel being delivered to the Owners pursuant to the MOA; |
(f) |
the Delivery occurring on or before the Cancelling Date; and |
(g) |
the Owners having received from the Charterers: |
(i) |
on or before the date falling one (1) Business Day prior to the Prepositioning Date (or such other period as the Owners may otherwise agree), the documents or evidence set out in Part A of Schedule 2 (Conditions Precedent) in form and substance satisfactory to them; and |
(ii) |
on the Commencement Date and prior to or simultaneously with the Owners executing a dated and timed copy of the protocol of delivery and acceptance evidencing delivery of the Vessel under the MOA and a dated and timed copy of the Acceptance Certificate, the documents or evidence set out in Part B of Schedule 2 (Conditions Precedent) in form and substance satisfactory to them, |
and if any of the documents listed in sub-paragraph (g) above are not in the English language then they shall be accompanied by an English translation where required by the Owners.
34.3 |
On delivery to and acceptance by the Owners (in their capacity as buyers) of the Vessel from the Charterers (in their capacity as sellers) under the MOA, the Vessel shall be deemed to have been delivered to, and accepted without reservation by, the Charterers under this Charter and the Charterers shall become and be entitled to the possession and use of the Vessel on and subject to the terms and conditions of this Charter on the same day as the delivery date of the Vessel under the MOA. |
34.4 |
On Delivery, as evidence of the commencement of the Charter Period, the Charterers shall sign and deliver to the Owners, the Acceptance Certificate. The Charterers shall be deemed to have accepted the Vessel under this Charter, and the commencement of the Charter Period having started, on Delivery even if, for whatever reason, the Acceptance Certificate is not signed. |
34.5 |
The Charterers shall not be entitled for any reason whatsoever to refuse to accept delivery of the Vessel under this Charter once the Vessel has been delivered to and accepted by the Owners (in their capacity as buyers) from the Charterers (in their capacity as sellers) under the MOA, and the Owners shall not be liable for any losses, costs or expenses whatsoever or howsoever arising including without limitation, any loss of profit or any loss or otherwise: |
2
(a) |
resulting directly or indirectly from any defect or alleged defect in the Vessel or any failure of the Vessel; or |
(b) |
arising from any delay in the commencement of the Charter Period or any failure of the Charter Period to commence. |
34.6 |
The Owners shall not be obliged to deliver the Vessel to the Charterers with any bunkers and unused lubricating oils and hydraulic oils and greases in storage tanks and unopened drums of the Vessel except for such items which are already on the Vessel on Delivery. The Owners shall not be responsible for the fitness, quality or quantity of any such bunkers and unused lubricating oils and hydraulic oils and greases and the Charterers shall make no claim against Owners in respect of the same. |
34.7 |
The Charterers shall procure receipt by the Owners of the conditions subsequent set out in Part C of Schedule 2 in a form and substance satisfactory to the Owners within the time periods permitted therein. |
CLAUSE 35 – QUIET ENJOYMENT
35.1Subject to the terms of any QEL and provided that:
(a) |
the Charterers do not breach any term of this Charter or any other Leasing Document to which they are a party; and |
(b) |
no Termination Event or Total Loss has occurred, |
the Owners hereby agree not to disturb or interfere with the Charterers’ lawful use, possession and quiet enjoyment of the Vessel during the Charter Period.
CLAUSE 36 – CHARTERHIRE AND ADVANCE CHARTERHIRE
36.1 |
In consideration of the Owners agreeing to charter the Vessel to the Charterers under this Charter at the request of the Charterers, the Charterers hereby irrevocably and unconditionally agree to pay to the Owners the Charterhire, the Advance Charterhire and all other amounts payable under this Charter in accordance with the terms of this Charter. |
36.2 |
The Charterers shall pay to the Owners on the Commencement Date, an amount which is equal to the difference between the Purchase Price and the Owners’ Costs as of the Commencement Date (the “Advance Charterhire”). The Charterers shall be deemed to have paid the Advance Charterhire to the Owners on the Commencement Date by the Owners (as buyers under the MOA) setting off an amount equal to the Advance Charterhire against a corresponding amount of the Purchase Price payable by the Owners to the Charterers (as sellers) under the MOA. |
36.3 |
The Advance Charterhire shall not bear interest and shall be non-refundable. |
36.4 |
Following Delivery and commencing from the Commencement Date but ending on and including the Reference Date, the Charterers shall pay Charterhire in arrears in quarterly instalments on each Payment Date. Each instalment shall consist of: |
3
(a) |
a capital element of Charterhire (the “Initial Fixed Charterhire”) which shall be in an amount equivalent to 1/28 of the difference between the Opening Capital Balance and the Expiry Owners’ Costs; and |
(b) |
a variable element of Charterhire (the “Initial Variable Charterhire”) which shall be calculated by applying the aggregate of: |
(i) |
the applicable Interest Rate for the relevant Hire Period; and |
(ii) |
the Margin; and |
(iii) |
the Credit Adjustment Spread, |
to the Owners’ Costs on the immediately preceding Payment Date (or, in the case of the First Payment Date only, on the Commencement Date) for the Hire Period ending on the relevant Payment Date by reference to the actual number of days elapsed.
36.5 |
Following the Reference Date (but excluding such date) for the rest of the Charter Period, the Charterers shall pay Charterhire in arrears in quarterly instalments on each Payment Date. Each instalment shall consist of: |
(a) |
a capital element of Charterhire (the “Fixed Charterhire”) which shall be in an amount equivalent to 1/28 of the difference between the Amended Owners’ Costs and the Amended Expiry Owners’ Costs; and |
(b) |
a variable element of Charterhire (the “Variable Charterhire”) which shall be calculated by applying the aggregate of: |
(i) |
the applicable Interest Rate for the relevant Hire Period; and |
(ii) |
the Amended Margin, |
to the Owners’ Costs on the immediately preceding Payment Date (in case of the first payment following the Reference Date, to the Amended Owners’ Costs) for the Hire Period ending on the relevant Payment Date by reference to the actual number of days elapsed.
36.636.5Charterhire shall be payable in arrears on the following dates (each a “Payment Date”):
(a) |
the first instalment of Charterhire shall be payable on the date falling three (3) months after the Commencement Date (the “First Payment Date”); and |
(b) |
each subsequent instalment of Charterhire (other than the last instalment of Charterhire) shall be payable quarterly thereafter, with the final instalment of Charterhire payable on the last day of the Charter Period, |
such that there are a total of twenty eight (28thirty five (35) Payment Dates during the Charter Period.
36.7 |
36.6Payment of Charterhire on any Payment Date shall be made in same day available funds and received by the Owners by not later than 5.00 pm (Shanghai time). Any payment of |
4
Charterhire which is due to be made on a Payment Date which is not also a Business Day shall be made on the previous Business Day instead.
36.8 |
36.7Time of payment of the Charterhire and any other payments by the Charterers under this Charter shall be of the essence. |
36.9 |
36.8All payments of the Charterhire and any other moneys payable hereunder shall be made in Dollars. |
36.10 |
36.9All payments of the Charterhire and any other moneys payable hereunder shall be payable by the Charterers to the Owners’ designated bank account as the Owners may notify the Charterers in writing from time to time. |
36.11 |
36.10Payment of the Charterhire and any other amounts under this Charter shall be at the Charterers’ risk until receipt by the Owners. |
36.12 |
36.11The Vessel shall not at any time be deemed off-hire and the Charterers’ obligation to pay the Charterhire and any other amounts payable under this Charter (including but not limited to the Termination Sum or the Total Loss Termination Sum) in Dollars shall be absolute and unconditional under any and all circumstances and shall not be affected by any circumstances of any nature whatsoever including but not limited to: |
(a) |
(except in the case of the Advance Charterhire) any set off, counterclaim, recoupment, defence, claim or other right which the Charterers may at any time have against the Owners or any other person for any reason whatsoever including, without limitation, any act, omission or breach on the part of the Owners under this Charter or any other agreement at any time existing between the Owners and the Charterers; |
(b) |
any change, extension, indulgence or other act or omission in respect of any indebtedness or obligation of the Charterers, or any sale, exchange, release or surrender of, or other dealing in, any security for any such indebtedness or obligation; |
(c) |
any title defect or encumbrance or any dispossession of the Vessel by title paramount or otherwise; |
(d) |
any defect in the seaworthiness, condition, value, design, merchantability, operation or fitness for use of the Vessel or the ineligibility of the Vessel for any particular trade or for registration or documentation under the laws of any relevant jurisdiction; |
(e) |
the Total Loss or any damage to or forfeiture or court marshall’s or other sale of the Vessel if the Termination Sum, Total Loss Termination Sum or any part thereof remains due; |
(f) |
any libel, attachment, levy, detention, sequestration or taking into custody of the Vessel or any restriction or prevention of or interference with or interruption or cessation in, the use or possession thereof by the Charterers; |
(g) |
any insolvency, bankruptcy, reorganization, arrangement, readjustment, dissolution, liquidation or similar proceedings by or against the Charterers and any other Obligors; |
5
(h) |
any invalidity, unenforceability, lack of due authorization or other defects, or any failure or delay in performing or complying with any of the terms and provisions of this Charter or any of the Leasing Documents by any party to this Charter or any other person; |
(i) |
any enforcement or attempted enforcement by the Owners of their rights under this Charter or any of the Leasing Documents executed or to be executed pursuant to this Charter; |
(j) |
any loss of use of the Vessel due to deficiency or default or strike of officers or crew, fire, breakdown, damage, accident, defective cargo or any other cause which would or might but for this provision have the effect of terminating or in any way affecting any obligation of the Charterers under this Charter; or |
(k) |
any prevention, delay, deviation or disruption in the use of the Vessel resulting from the wide outbreak of any viruses (including the 2019 novel coronavirus), including but not limited to those caused by: |
(i) |
closure of ports; |
(ii) |
prohibitions or restrictions against the Vessel calling at or passing through certain ports; |
(iii) |
restriction in the movement of personnel and/or shortage of labour affecting the operation of the Vessel or the operation of the ports (including stevedoring operations); |
(iv) |
quarantine regulations affecting the Vessel, its cargo, the crew members or relevant port personnel; |
(v) |
fumigation or cleaning of the Vessel; or |
(vi) |
any claims raised by any sub-charterer or manager of the Vessel that a force majeure event or termination event (or any other analogous event howsoever called) has occurred under the relevant charter agreement or management agreement (as the case may be) of the Vessel as a result of the outbreak of such viruses. |
36.13 |
36.12All stamp duty, value added tax (for the avoidance of doubt, including without limitation, goods and services tax), withholding or other taxes and import and export duties and all other similar types of charges (for the avoidance of doubt any Owner’s income tax liabilities) which may be levied or assessed on or in connection with: |
(a) |
the operation of this Charter in respect of the hire and all other payments to be made pursuant to this Charter and the remittance thereof to the Owners; and |
(b) |
the import, export, purchase, delivery and re-delivery of the Vessel, |
shall be borne by the Charterers. The Charterers shall pay, if applicable, value added tax and other similar tax levied on any Charterhire and other payments payable under this Charter by addition to, and at the time of payment of, such amounts.
CLAUSE 37 – CHANGES TO INTEREST RATE, DEFAULT INTEREST
37.1
6
(a) |
Interpolated Term SOFR: If, in relation to any determination of the Interest Rate prior to a Published Rate Replacement Event, the Owners determine (which determination shall be conclusive and binding) that Term SOFR is not available for a Hire Period, the applicable Interest Rate shall be the Interpolated Term SOFR. |
(b) |
Historic Term SOFR: If paragraph (a) above applies but it is not possible to calculate the Interpolated Term SOFR for the relevant Hire Period, the applicable Interest Rate shall be the Historic Term SOFR. |
(c) |
Interpolated Historic Term SOFR: if paragraph (b) above applies but no Historic Term SOFR is available for the relevant Hire Period, the applicable Interest Rate shall be the Interpolated Historic Term SOFR. |
(d) |
Cost of Funds: if paragraph (c) above applies but it is not possible to calculate the Interpolated Historic Term SOFR, Clause 37.2 below shall apply. |
37.2 |
(i) If this Clause 37.2 applies to any Hire Period pursuant to Clause 37.1(d) above; or (ii) after the occurrence of a Published Rate Replacement Event but prior to the making of any necessary amendment or waiver in accordance with Clause 37.3 below; or (iii) if the Charterers receive notification from the Owners that the costs of funding of the Owners would be in excess of the Market Disruption Rate, the Interest Rate shall be the rate per annum which is the cost certified by the Owners (expressed as an annual rate of interest) of funding the Owners’ Costs during the relevant Hire Period (as reasonably determined by the Owners). |
37.3 |
If a Published Rate Replacement Event has occurred in relation to the Published Rate, the Owners are entitled to make any amendment or waiver to the terms of the Leasing Documents with the consent of the Charterers (at the Charterers’ cost) which relates to: |
(a) |
providing for the use of a Replacement Reference Rate in place of (or in addition to) that Published Rate; and |
(b)
(i) |
aligning any provision of any Leasing Document to the use of that Replacement Reference Rate; |
(ii) |
enabling that Replacement Reference Rate to be used for the calculation of the Interest Rate under this Charter (including, without limitation, any consequential changes required to enable that Replacement Reference Rate to be used for the purposes of this Charter); |
(iii) |
implementing market conventions applicable to that Replacement Reference Rate; |
(iv) |
providing for appropriate fallback (and market disruption) provisions for that Replacement Reference Rate; |
(v) |
adjusting the pricing to reduce or eliminate, to the extent reasonably practicable, any transfer of economic value from one Party to another as a result of the application of that Replacement Reference Rate (and if any adjustment or method for calculating any adjustment has been formally designated, nominated or recommended by the |
7
Relevant Nominating Body, the adjustment shall be determined on the basis of that designation, nomination or recommendation),
and pending any such amendment or waiver and the Replacement Reference Rate being utilised under the Leasing Documents to calculate the Interest Rate, Clause 37.2 shall apply to the calculation of the Interest Rate.
37.4 |
If the Charterers fail to make any payment due under this Charter on the due date, they shall pay additional interest on such late payment at a rate which is equal to two per cent. (2%) per annum above the applicable Interest Rate for the relevant Hire Period and the Margin and the Credit Adjustment Spread which shall apply prior to, during or following Delivery and shall accrue on a daily basis from the date on which such payment became due up to and excluding the date of payment thereof, and the Charterers and the Owners agree that such default rate is proportionate as to amount, having regard to the legitimate interest of the Owners, in protecting against the Owners’ risk of the Charterers failing to perform its obligations under this Charter. : |
(a) |
prior to and including the Reference Date, the applicable Interest Rate for the relevant Hire Period and the Margin and the Credit Adjustment Spread; and |
(b) |
following and excluding the Reference Date, the applicable Interest Rate for the relevant Hire Period and the Amended Margin, which shall apply prior to, during or following Delivery and shall accrue on a daily basis from the date on which payment became due up to and excluding the date of payment thereof and the Charterers and the Owners agree that such default rate is proportionate as to amount, having regard to the legitimate interest of the Owners, in protecting against the Owners’ risk of the Charterers failing to perform its obligations under this Charter. |
37.5 |
All interest (including default interest) and any other payments under this Charter which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a three hundred and sixty (360) days’ year. |
CLAUSE 38 – POSSESSION OF VESSEL
38.1 |
The Charterers shall not, without the prior written consent of the Owners, assign, mortgage or pledge the Vessel or any interest therein and shall not permit the creation or existence of any Security Interest thereon (including for any monies paid in advance and not earned, and for any claims for damages arising from any breach by the Owners of this Charter and other amounts due to the Charterers under this Charter) except for the Permitted Security Interests. |
38.2 |
The Charterers shall promptly notify any party (including without limitation, any sub-charterer) (as the Owners may request) in writing that the Vessel is the property of the Owners and the Charterers shall provide the Owners with a copy of such written notification and evidence that such party has received such written notification. |
38.3 |
If the Vessel is arrested, seized, impounded, forfeited, detained or taken out of their possession or control (whether or not pursuant to any distress, execution or other legal process), the Charterers shall procure the immediate release of the Vessel (whether by providing bail or procuring the provision of security or otherwise do such lawful things as the circumstances may require) and shall immediately notify the Owners of such event and shall indemnify the Owners |
8
against all losses, costs or charges incurred by the Owners by reason thereof in re-taking possession or otherwise in re-acquiring the Vessel.
38.4 |
The Charterers shall pay and discharge or cause any sub-charterer of the Vessel to pay and discharge all obligations and liabilities whatsoever which have given or may give rise to liens on or claims enforceable against the Vessel. The Charterers shall take all reasonable steps to prevent (and shall procure that a sub-charterer shall take all reasonable steps to prevent) an arrest of the Vessel. |
CLAUSE 39 – INSURANCE
39.1The Charterers shall procure that insurances for the Vessel are effected:
(a) |
in Dollars; |
(b) |
in the case of fire and usual hull and machinery, marine risks and war risks (including blocking and trapping), on an agreed value basis of at least the higher of (i) one hundred per cent (100%) of then applicable Fair Market Value of the Vessel and (ii) one hundred and twenty per cent (120%) of the then prevailing Owners’ Costs; |
(c) |
in the case of oil pollution liability risks, for an aggregate amount equal to the higher of (i) US$1,000,000,000 or (ii) the highest level of cover from time to time available under basic protection and indemnity club entry and in the international marine insurance market; |
(d) |
in the case of protection and indemnity risks, in respect of the full tonnage of the Vessel and with a protection and indemnity club which is a member of the International Group of Protection and Indemnity Clubs; |
(e) |
through brokers approved by the Owners and with first class international insurers and/or underwriters acceptable to the Owners and having a Standard & Poor’s rating of BBB+ or above, a Moody’s rating of A or above or an AM Best rating of A- or above or otherwise acceptable to the Owners; and |
(f) |
otherwise on terms and in form acceptable to the Owners. |
39.2 |
In addition to the terms set out in Clause 13(a) (Insurance and Repairs), the Charterers shall procure that the Obligatory Insurances shall: |
(a) |
subject always to paragraph (b), name the Owners, the Charterers and the Approved Technical Manager as the only named assureds unless the interest of every other named assured or co-assured is limited: |
(i)in respect of any Obligatory Insurances for hull and machinery and war risks;
(A) |
to any provable out-of-pocket expenses that they have incurred and which form part of any recoverable claim on underwriters; and |
(B) |
to any third party liability claims where cover for such claims is provided by the policy (and then only in respect of discharge of any claims made against them); and |
9
(ii) |
in respect of any Obligatory Insurances for protection and indemnity risks, to any recoveries they are entitled to make by way of reimbursement following discharge of any third party liability claims made specifically against them, |
and every other named assured or co-assured has undertaken in writing to the Owners or the Owners’ Financiers (if any) (in such form as they may require) that any deductible shall be apportioned between the Charterers and every other named assured or co-assured (save for the Owners or the Owners’ Financiers (if any)) in proportion to the gross claims made by or paid to each of them and that they shall do all things necessary and provide all documents, evidence and information to enable the Owners and the Owners’ Financiers (if any) in accordance with the terms of the loss payable clause, to collect or recover any moneys which at any time become payable in respect of the Obligatory Insurances;
(b) |
whenever the Owners require in respect of any Owners’ Financiers: |
(i) |
in respect of fire and other usual marine risks and war risks, name (or be amended to name) the same as additional named assured for their rights and interests, warranted no operational interest and with full waiver of rights of subrogation against such Owners’ Financier, but without such financiers thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance; |
(ii) |
in relation to protection and indemnity risks, name (or be amended to name) the same as additional insured or co-assured for their rights and interests to the extent permissible under the relevant protection and indemnity club rules; and |
(iii) |
name the Owners’ Financiers (if any) and the Owners as respectively the first ranking loss payee and the second ranking loss payee (and in the absence of any Owners’ Financiers, the Owners as first ranking loss payee) in accordance with the terms of the relevant loss payable clauses approved by the Owners’ Financiers and the Owners with such directions for payment in accordance with the terms of such relevant loss payable clause, as the Owners and the Owners’ Financiers (if any) may specify; |
(c) |
provide that all payments by or on behalf of the insurers under the Obligatory Insurances to the Owners and/or the Owners’ Financiers (as applicable) shall be made without set-off, counterclaim, deduction or condition whatsoever; |
(d) |
provide that such Obligatory Insurances shall be primary without right of contribution from other insurances which may be carried by the Owners or the Owners’ Financiers (if any); |
(e) |
provide that the Owners and/or the Owners’ Financiers (if any) may make proof of loss if the Charterers fail to do so; and |
(f) |
provide that if any Obligatory Insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of the Owners and/or the Owners’ Financiers (if any), or if any Obligatory Insurance is allowed to lapse for non-payment of premium, such cancellation, change or lapse shall not be effective with respect to the Owners and/or the Owners’ Financiers (if any) for thirty (30) days after receipt by the Owners and/or the Owners’ Financiers (if any) of prior written notice from the insurers of such cancellation, change or lapse. |
39.3The Charterers shall:
10
(a) |
at least fourteen (14) days prior to Delivery (or such shorter period agreed by the parties), notify in writing the Owners of the terms and conditions of all Insurances; |
(b) |
at least fourteen (14) days before the expiry of any Obligatory Insurance or otherwise before the change of appointment of any brokers (or other insurers) and any protection and indemnity or war risks association through which Obligatory Insurances are taken from time to time pursuant to this Clause 39 (Insurance), notify the Owners of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom the Charterers propose to renew or obtain that Obligatory Insurance and of the proposed terms of such renewed or new insurance cover and obtain the Owners’ approval to such matters; |
(c) |
at least seven (7) days before the expiry of any Obligatory Insurance, procure that such Obligatory Insurance is renewed or to be renewed on its expiry date in accordance with the provisions of this Charter; |
(d) |
procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal or the effective date of the new insurance and protection and indemnity cover notify the Owners in writing of the terms and conditions of the renewal; and |
(e) |
as soon as practicable after the expiry of any Obligatory Insurance and within thirty (30) days after such expiry, deliver to the Owners a letter of undertaking as required by this Charter in respect of such Insurances for the Vessel as renewed pursuant to Clause 39.3 together with copies of the relevant policies or cover notes or entry certificates duly endorsed with the interest of the Owners and/or the Owners’ Financiers (if any). |
39.4 |
The Charterers shall ensure that all insurance companies and/or underwriters, and/or insurance brokers (if any) provide the Owners with copies (or upon the Owners’ request, originals) of policies, cover notes and certificates of entry relating to the Obligatory Insurances which they are to effect or renew and letter or letters of undertaking in a form required by the Owners or the Owners’ Financiers (if any) and including undertakings by the insurance companies and/or underwriters that: |
(a) |
they will have endorsed on each policy, immediately upon issuance, a loss payable clause and a notice of assignment complying with the provisions of this Charter and the Financial Instruments; |
(b) |
they will hold the benefit of such policies and such insurances, to the order of the Owners and/or the Owners’ Financiers (if any) and/or such other party in accordance with the said loss payable clause; |
(c) |
they will advise the Owners and the Owners’ Financiers (if any) promptly of any material change to the terms of the Obligatory Insurances of which they are aware; |
(d) |
they will notify the Owners and the Owners’ Financiers (if any) not less than fourteen (14) days before the expiry of the Obligatory Insurances, in the event of their not having received notice of renewal instructions from the Charterers and, in the event of their receiving instructions to renew, they will promptly notify the Owners and the Owners’ Financiers (if any) of the terms of the instructions; and |
11
(e) |
if any of the Obligatory Insurances form part of any fleet cover, the Charterers shall procure that the insurance broker(s), or leading insurer, as the case may be, undertakes to the Owners and the Owners’ Financiers (if any) that such insurance broker or insurer will not set off against any sum recoverable in respect of a claim relating to the Vessel under such Obligatory Insurances any premiums due in respect of any other vessel under any fleet cover of which the Vessel forms a part or any premium due for other insurances, they waive any lien on the policies, or any sums received under them, which they might have in respect of such premiums, and they will not cancel such Obligatory Insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of the Vessel forthwith upon being so requested by the Owners or the Owners’ Financiers (if any) and where practicable. |
39.5 |
The Charterers shall ensure that any protection and indemnity and/or war risks associations in which the Vessel is entered provides the Owners and the Owners’ Financiers (if any) with: |
(a) |
a copy of the certificate of entry for the Vessel as soon as such certificate of entry is issued; |
(b) |
a letter or letters of undertaking in such form as may be required by the Owners or the Owners’ Financiers (if any) or in such association’s standard form; and |
(c) |
a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to the Vessel. |
39.6 |
The Charterers shall ensure that all policies relating to the Obligatory Insurances are deposited with the approved brokers (if any) through which the insurances are effected or renewed. |
39.7 |
The Charterers shall procure that all premiums or other sums payable in respect of the Obligatory Insurances are punctually paid and produce all relevant receipts when so required by the Owners. |
39.8 |
The Charterers shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect. |
39.9 |
The Charterers shall neither do nor omit to do (nor permit to be done or not to be done) any act or thing which would or might render any Obligatory Insurance invalid, void, voidable or unenforceable or render any sum payable under an Obligatory Insurance repayable in whole or in part and, in particular: |
(a) |
the Charterers shall procure that all necessary action is taken and all requirements are complied with which may from time to time be applicable to the Obligatory Insurances, and (without limiting the obligations contained in this Clause) ensure that the Obligatory Insurances are not made subject to any exclusions or qualifications to which the Owners have not given their prior approval (unless such exclusions or qualifications are made in accordance with the rules of a protection and indemnity association which is a member of the International Group of Protection and Indemnity Clubs); |
(b) |
the Charterers shall not make or permit any changes relating to the classification or the classification society of the Vessel or, subject to procuring the provision of a replacement manager’s undertaking in substantially the same form as the Manager’s Undertaking, any |
12
changes to the manager or operator of the Vessel unless such changes have, if required, first been approved by the underwriters of the Obligatory Insurances and the Owners or the Owners’ Financiers (if any);
(c) |
the Charterers shall procure that all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Vessel is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation) are made and the Charterers shall promptly provide the Owners with copies of such declarations and a copy of its valid certificate of financial responsibility; and |
(d) |
the Charterers shall not employ the Vessel, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the Obligatory Insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify. |
39.10 |
The Charterers shall not make or agree to any material alteration to the terms of any Obligatory Insurance nor waive any right relating to any Obligatory Insurance without the prior written consent of the Owners. |
39.11 |
The Charterers shall not settle, compromise or abandon any claim under any Obligatory Insurance for Total Loss or for a Major Casualty, and shall do all things necessary and provide all documents, evidence and information to enable the Owners to collect or recover any moneys which at any time become payable in respect of the Obligatory Insurances. |
39.12 |
The Charterers shall provide the Owners upon written request, copies of all material communications between the Charterers and: |
(a) |
the approved brokers; |
(b) |
the approved protection and indemnity and/or war risks associations; and |
(c) |
the approved insurers and/or underwriters, |
which relate directly or indirectly to:
(i) |
the Charterers’ obligations relating to the Obligatory Insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and |
(ii) |
any credit arrangements made between the Charterers and any of the persons referred to in paragraphs (a) or (b) above relating wholly or partly to the effecting or maintenance of the Obligatory Insurances; and |
(iii) |
any communication with any party involved in case of a claim under any of the Vessel’s insurances. |
39.13 |
The Charterers shall promptly provide the Owners (or any persons which they may designate) with any information which the Owners may request for the purpose of: |
13
(a) |
obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the Insurances (including but not limited to the report obtained under Clause 39.16); or |
(b) |
effecting, maintaining or renewing any such insurances as are referred to in Clause 13(a) (Insurance and Repairs) or this Clause 39 (Insurance) or dealing with or considering any matters relating to any such insurances; |
39.14 |
The Charterers shall upon demand fully indemnify the Owners (including if requested by the Owners, make direct payment to the relevant insurer or broker for the same) in respect of all premiums and other expenses which are incurred by: |
(a) |
the Owners in connection with or with a view to effecting, maintaining or renewing an innocent owners interest insurance and an innocent owners additional perils insurance or any similar protective shipowner insurance that is taken out in respect of the Vessel; and/or |
(b) |
the Owners’ Financiers (if any) in connection with or with a view to effecting, maintaining or renewing a mortgagee’s interest insurance, a mortgagee’s additional perils insurance, all protection and indemnity insurance that is taken out in respect of the Vessel, |
in each case as referred to in paragraphs (a) and (b) above, in an amount not exceeding one hundred and twenty per cent (120%) of the Owners’ Costs from time to time and on such other terms, through such insurers and generally in such manner as the Owners or the Owners’ Financiers (as the case may be) may from time to time consider appropriate.
39.15 |
The Charterers shall be solely responsible for and indemnify the Owners in respect of all loss or damage to the Vessel (insofar as the Owners shall not be reimbursed by the proceeds of any insurance in respect thereof) however caused occurring at any time or times before physical possession thereof is retaken by the Owners, with only reasonable wear and tear to the Vessel excepted. |
39.16 |
The Charterers shall reimburse or indemnify the Owners for any expenses incurred or to be incurred by the Owners in obtaining a detailed report signed by an independent firm of marine insurance brokers approved by the Owners dealing with the Obligatory Insurances and stating the opinion of such firm as to the adequacy of the Obligatory Insurances: |
(a) |
when an agreed form of such detailed report satisfactory to the Owners is obtained as a condition precedent requirement under Part A of Schedule 2 (Conditions Precedent) of this Charter; |
(b) |
when the Owners procure the issuance of such detailed report no more than once every calendar year, unless a Termination Event has occurred in which case such reports may be procured at the Charterer’s cost at any such time; and |
(c) |
further from time to time upon the Owners’ demand where, in the Owners’ opinion, at any time during the Charter Period there has been a material change in the terms of the Insurances and/or a change in the circumstances which would materially adversely affect the adequacy of the Obligatory Insurances. |
39.17 |
The Charterers shall: |
14
(a) |
keep the Vessel insured at their expense against such other risks (not including loss of hire or earnings risks) which the Owners and the Owners’ Financiers (if any) consider reasonable for a prudent shipowner or operator to insure against for trading, management, operational and/or safety purposes at the relevant time (as notified by the Owners) and which risks are, at that time, generally insured against as market practice by owners or operators of vessels similar to the Vessel and having regard to the availability of such cover in the insurance market at that time; and |
(b) |
upon demand fully indemnify the Owners in respect of all premiums and other expenses incurred by the Owners in respect of any other insurances which the Owners deem necessary and takes out in respect of the Vessel. |
CLAUSE 40 – WARRANTIES RELATING TO VESSEL
40.1 |
It is expressly agreed and acknowledged that the Owners are not the manufacturer or original supplier of the Vessel but that the Owners (in their capacity as buyers) have purchased the Vessel from the Charterers (in their capacity as sellers) pursuant to the MOA at the request of the Charterers, for the purpose of then chartering the Vessel to the Charterers hereunder and that no condition, term, warranty or representation of any kind is or has been given to the Charterers by or on behalf of the Owners in respect of the Vessel (or any part thereof). |
40.2 |
All conditions, terms or warranties express or implied by the law relating to the specifications, quality, description, merchantability or fitness for any purpose of the Vessel (or any part thereof) or otherwise are hereby expressly excluded. |
40.3 |
The Charterers agree and acknowledge that the Owners shall not be liable for any claim, loss, damage, expense or other liability of any kind or nature caused directly or indirectly by the Vessel or by any inadequacy thereof or the use or performance thereof or any repairs thereto or servicing thereof and the Charterers shall not by reason thereof be released from any liability to pay any Charterhire or other payment due under this Charter. |
40.4 |
The Charterers further agree and acknowledge that the Owners are not operating the Vessel and the liability to surrender any Emission Allowances in respect of the Vessel under any applicable Emission Scheme shall lie with the Charterers and/or any other organisation or person whom the Charterers have contractually agreed to take over all duties and responsibilities (including any sub-charterer of the Vessel or the Approved Manager) imposed by the ISM Code, and the Charterers hereby agree that they shall promptly upon the Owners’ request, provide and submit a signed mandate letter in the form acceptable to the Owners and the relevant authority and any other information and documents as required by the Owners and/or the relevant authority. |
40.5 |
Without prejudice to Clause 40.4, in relation to EU ETS: |
(a) |
the Charterers acknowledge that if the Vessel stops at ports in the European Union, they will incur liabilities under EU ETS and Fuel EU Maritime; |
(b) |
the Charterers acknowledge and agree that if they intend to sail the Vessel into ports in the European Union, the Charterers shall register the Vessel as part of a Shipping Company (as defined under the EU ETS) as required under the EU ETS and shall comply in all respects with the EU ETS and Fuel EU Maritime; |
15
(c) |
if required by the Owners, the Charterers shall provide a letter in a format to be agreed by the Owners confirming that they have assumed responsibility for the operation of the Vessel from the Owners (the “ETS and Fuel EU Maritime Letter”); and |
(d) |
the Charterers shall submit the ETS and Fuel EU Maritime Letter to the relevant administering authority upon registration of the Vessel to the EU ETS and shall provide the Owners with evidence of such registration within fourteen (14) days. |
CLAUSE 41 – TERMINATION AND REDELIVERY
41.1 |
Upon termination of the leasing of the Vessel under this Charter pursuant to Clause 47.2, the Charterers shall be obliged to pay the Owners the Termination Sum on the Termination Date and it is hereby agreed by the parties hereto that: |
(a) |
without prejudice to Clause 42.2, the obligation to pay the Termination Sum is a continuing obligation and shall survive the termination of the leasing of the Vessel under this Charter and shall continue in full force and effect until irrevocably and unconditionally paid in full; |
(b) |
payment of the Termination Sum is deemed to be proportionate as to amount, having regard to the legitimate interest of the Owners, in protecting against the Owners’ risk of the Charterers failing to perform its obligations under this Charter; and |
(c) |
the Termination Sum shall, depending on the nature of the Termination Event(s) on the basis of which the Owners serve a Termination Notice, be either an obligation to pay damages following acceptance by the Owners of a breach of condition by the Charterers or an obligation to pay an agreed sum in specified circumstances which do not involve a breach of contract by the Charterers. |
41.2 |
If the Charterers fail to make any payment of the Termination Sum on the Termination Date, Clause 37.6 37.4 shall apply and the Owners shall be entitled to exercise their rights under Clause 42 (Sale of Vessel by the Owners in the event of Non-Payment of Termination Sum). |
41.3 |
Concurrently with the unconditional and irrevocable payment of the Termination Sum in full pursuant to the terms of this Charter, this Charter shall terminate and the Owners shall (save in the event of Total Loss or in the event that the Vessel has been sold or contracted to be sold pursuant to Clause 42 (Sale of Vessel by the Owners in the event of Non-Payment of Termination Sum)), at the cost of the Charterers, transfer the legal and beneficial ownership of the Vessel on an “as is where is” basis to the Charterers or their nominees free from any registered mortgages, encumbrances, liens, debts or claims incurred or permitted by the Owners (save for those liens, encumbrances and debts incurred by the Charterers or arising out of or in connection with this Charter), and shall execute a bill of sale and a protocol of delivery and acceptance evidencing the same and such sale shall be completed otherwise in accordance with Clause 56.1(a) and 56.1(b). |
41.4 |
The Charterers hereby undertake to indemnify the Owners against any claims incurred in relation to the Vessel prior to such transfer of ownership. Any taxes, notarial, consular and other costs, charges and expenses connected with closing of the Owners’ register shall be for the Charterers’ account. |
16
41.5 |
On natural expiration of this Charter, unless the Purchase Option Price or the Mandatory Sale Price is paid by the Charterers in accordance with Clause 56 (Sale of the Vessel), the Charterers shall re-deliver the Vessel to the Owners in accordance with Clause 41.6 and shall ensure that they have fulfilled their obligations under this Charter and made payment of all Charterhire and all other moneys pursuant to the terms of this Charter. In such case, the Charterers shall give the Owners not less than 30/20/10/5 running days’ preliminary notice of expected date and range of ports or places of redelivery not less than 5/3/2/1/ running days’ definite notice of expected date and port or place of redelivery. Any changes thereafter in the Vessel’s position shall be notified immediately to the Owners. |
41.6 |
If the Charterers are required to redeliver the Vessel to the Owners pursuant to the terms of this Charter, the Vessel shall be redelivered and taken over safely afloat at a safe and accessible berth or anchorage in such location as the Owners may reasonably require (which, for the avoidance of doubt, shall exclude any war listed area declared by the Joint War Committee). The Charterers shall ensure that, at the time of redelivery to the Owners, the Vessel: |
(a) |
be in an equivalent class as she was as at the Commencement Date and without any recommendations or conditions and with valid certificates for not less than six (6) months and free of average damage affecting the Vessel’s classification and in the same or as good structure, state, condition and classification as that in which she was deemed on the Commencement Date, fair wear and tear not affecting the Vessel’s classification excepted; |
(b) |
has passed her 5-year special survey (if applicable), and subsequent second intermediate surveys and drydock at the Charterers’ time and expense without any overdue recommendations or conditions to the satisfaction of the Approved Classification Society; |
(c) |
‘has her survey cycles up-to-date and trading and class certificate valid for at least the number of months agreed in Box 17; |
(d) |
be re-delivered to the Owners together with all spare parts and spare equipment as were on board at the time of Delivery, and any such spare parts and spare equipment on board at the time of re-delivery shall be taken over by the Owners free of charge; |
(e) |
be free of any cargo and Security Interest (save for the Security Interests granted pursuant to the Financial Instruments, if any) subject to the terms of any sub-charter which the Owners have approved pursuant to the terms of this Charter; |
(f) |
be free of any crew and officers unless otherwise instructed by the Owners; |
(g) |
be free of any charter or other employment (unless the Owners wish to retain the continuance of any prevailing charter or as otherwise agreed by the Owners in their absolute discretion or unless such sub-charter has been approved by the Owners pursuant to the terms of this Charter); and |
(h) |
have such amount of bunkers on board the Vessel as would be sufficient to enable the Vessel to sail to the nearest bunker port in compliance with all bunkering fuel content regulations then applicable in such place of redelivery. |
41.7 |
The Charterers warrant that they will not permit (or request any sub-charterer not to) the Vessel to commence a voyage (including any preceding ballast voyage) which cannot |
17
reasonably be expected to be completed in time to allow redelivery of the Vessel within any time period required by this Clause 41 (Termination and Redelivery). Notwithstanding the above, should the Charterers fail to redeliver the Vessel within any time period required by this Clause 41 (Termination and Redelivery), the Charterers shall pay the daily equivalent to the rate of Charterhire plus ten per cent. (10%) or to the market rate, whichever is the higher, for the number of days by which the Charter Period is exceeded.
41.8 |
If the Charterers are required to redeliver the Vessel to the Owners pursuant to the terms of this Charter other than pursuant to Clause 42.1(a), the Owners and Charterers shall mutually appoint a surveyor (the “Joint Surveyor”) for the purpose of determining and agreeing in writing the condition of the Vessel at the time of such redelivery. The Charterers shall provide the Joint Surveyor with all such facilities and access to the Vessel as may be required to enable the Joint Surveyor to conduct its survey of the Vessel and shall take all such actions as may be reasonably recommended by the Joint Surveyor to ensure that the Vessel shall be redelivered in accordance with Clause 41.6. |
41.9 |
If the Charterers are required to redeliver the Vessel to the Owners pursuant to Clause 42.1(a), the Owners shall appoint surveyors (the “Owners’ Surveyor”) for the purpose of determining and agreeing in writing the condition of the Vessel at the time of such redelivery. The Charterers shall provide the Owners’ Surveyor with all such facilities and access to the Vessel as may be required to enable the Owners’ Surveyor to conduct its survey of the Vessel and shall take all such actions as may be reasonably recommended by the Owners’ Surveyor to ensure that the Vessel shall be redelivered in accordance with Clause 41.6. |
41.10 |
The Owners shall not be obliged to accept redelivery of the Vessel until the Owners are reasonably satisfied that all conditions for the redelivery of the Vessel under this Charter (including without limitation, Clause 41.6) are met, and the Vessel shall (if the redelivery is at the end of the Charter Period) continue to be on-hire under the terms of this Charter until such redelivery. The Owners reserve all rights to recover from the Charterers any costs, expense and/or liabilities incurred or suffered by them (including without limitation, the costs of any repairs which may be required to restore the Vessel to the condition required by Clause 41.6 as a result of the Vessel not being redelivered in accordance with the terms of this Charter. |
41.11 |
The Owners shall, at the time of the redelivery of the Vessel, take over all bunkers, lubricating oil, unbroached provisions, paints, ropes, other consumable stores and spare parts in the Vessel at no cost to the Owners. |
CLAUSE 42 – SALE OF VESSEL BY THE OWNERS IN THE EVENT OF NON-PAYMENT OF TERMINATION SUM
42.1The Charterers agree that should the Termination Sum not be paid on the Termination Date:
(a) |
save as required to comply with this Clause 42.1, the Charterers’ right to possess and operate the Vessel shall immediately cease and (without in any way affecting the Charterers’ obligation to pay the Charterer the Termination Sum and comply with its other obligations under this Charter) the Charterers shall hold the Vessel as gratuitous bailee only to the Owners, the Charterers shall procure that the master and crew follow the orders and directions of the Owners and the Charterers shall, upon the Owners’ request (at Owners’ sole discretion), be obliged to immediately (and at the Charterers’ own cost) redeliver the Vessel to the Owners at such ready and nearest safe port or location as the Owners may require and for the avoidance |
18
of doubt, any such redelivery shall not extinguish the Owners’ right to recover the Termination Sum from the Charterers under this Charter;
(b) |
the Owners shall be entitled (at Owners’ sole discretion) to operate the Vessel as they may require and may create whatsoever interests thereon, including without limitation charterparties or any other form of employment contracts provided that the Earnings of the Vessel during such period less its operational expenses (the “Net Trading Proceeds”) shall be applied against the Termination Sum and any other amounts payable under the Leasing Documents pursuant to Clause 64 (General Application of Proceeds) provided, that if such use of the Vessel results in the Owners suffering a loss then such losses shall be included in the indemnities contained in Clause 57 (Indemnities) and be added to the Termination Sum; and |
(c) |
the Owners shall be entitled (at Owners’ sole discretion) to immediately thereafter sell the Vessel to any person on such terms as they deem fit, save that if required by the Charterers or the Guarantor and if agreed by the Owners, the Charterers or the Guarantor may within such reasonable time as specified by the Owners (the “Nomination Period”) first nominate or identify a purchaser for the Vessel (a “Nominated Purchaser”) and the Owners may sell the Vessel to such Nominated Purchaser subject to all the following conditions being satisfied: |
(i) |
the Nominated Purchaser is acceptable to the Owners; and |
(ii) |
the price to be paid by the Nominated Purchaser (after deducting any commissions, taxes and other costs of sale) is equal to or more than the applicable Termination Sum (unless otherwise agreed by the Owners in their absolute discretion) unless the shortfall is paid by any Obligor or member of the Group on or before such sale, |
and any net sale proceeds (after deducting all fees, taxes, disbursements and any other costs and expenses incurred by the Owners in connection with such sale) (the “Net Sales Proceeds”) derived from any such sale to a Nominated Purchaser or any other person shall be applied towards reduction of the Termination Sum in accordance with Clause 64 (General Application of Proceeds). If the Net Sales Proceeds are not sufficient to settle the Termination Sum in full, the Charterers shall remain liable to pay the shortfall and default interest shall continue to accrue on the unpaid portion of the Termination Sum in accordance with Clause 37.637.4. The above is without prejudice to all of the Owners’ rights under the Leasing Documents (including to sell the Vessel to any person they deem fit) should there be no agreement as to the Nominated Purchaser.
42.2 |
Notwithstanding Clause 42.1, the Owners may, by written notice to the Charterers at any time after the expiry of the Nomination Period (if applicable pursuant to Clause 42.1(c) above), elect to retain the Vessel instead of selling the Vessel under Clause 42.1(c) above (with such option to elect to retain the Vessel to take effect from such date as they may nominate after the expiry of the Nomination Period (if applicable pursuant to Clause 42.1(c) above) (regardless of date of the notice)), and in doing so, the Owners shall first obtain the Fair Market Value of the Vessel (after deducting any commissions, taxes and costs which would be likely to be incurred in connection with a sale of the Vessel) not later than ten (10) days after the date of such nomination and if the Fair Market Value (less such deductions) of the Vessel is less than the Termination Sum as of the date of the determination of the Fair Market Value, the Charterers shall immediately pay the difference to the Owners upon the Owners’ demand. If the Fair Market Value of the Vessel (subject to the aforesaid deductions) exceeds the Termination Sum |
19
as at such date, the Owners shall within thirty (30) days (of the date of the notice) pay the difference to the Charterers.
CLAUSE 43 – TOTAL LOSS
43.1 |
Throughout the Charter Period, the Charterer shall bear the full risk of any Total Loss of or any other damage to the Vessel howsoever arising. If the Vessel becomes a Total Loss after Delivery, the Charterer shall, subject to Clause 43.2, pay the Total Loss Termination Sum to the Owners on the Total Loss Payment Date. Upon such receipt by the Owners of the Total Loss Termination Sum, this Charter shall terminate (without prejudice to any provision of this Charter expressed to survive termination) but until such receipt, the Charterers shall remain liable to make all payments of Charterhire and all other amounts to the Owners under this Charter, notwithstanding that the Vessel has become a Total Loss. |
43.2 |
Any Total Loss Proceeds unconditionally received by the Owners (or the Owners’ Financiers in accordance with the terms of the relevant loss payable clause) shall be applied in accordance with Clause 64 (General Application of Proceeds) and shall satisfy the obligation of the Charterers to pay the Total Loss Termination Sum to the extent received by the Owners or the Owners’ Financiers in accordance with the terms of the relevant loss payable clause). The obligation of the Charterers to pay the Total Loss Termination Sum shall remain unaffected and exist regardless of whether any of the insurers have agreed or refused to meet or has disputed in good faith, the claim for Total Loss. |
43.3 |
If the Total Loss Proceeds unconditionally received by the Owners or the Owners’ Financiers in accordance with the terms of the relevant loss payable clause) are less than the Total Loss Termination Sum, the Charterers shall pay such shortfall to the Owner on the Total Loss Payment Date. |
43.4 |
The Owners shall have no obligation to supply to the Charterers with a replacement vessel following the occurrence of a Total Loss. |
CLAUSE 44 – FEES AND EXPENSES
44.1 |
The Charterers shall pay to the Owners a non-refundable arrangement fee (the “Arrangement Fee”) in the amount and at the times agreed in the Fee Letter. The Charterers shall pay to the Owners a further non-refundable arrangement fee (the “Further Arrangement Fee”) in the amount and at the times agreed in the Further Arrangement Fee Letter. |
44.2 |
All costs and expenses including, but not limited to documented legal costs, expenses and other disbursements reasonably incurred by the Owners and each of their legal counsels in relation to preparing, negotiating and executing this Charter and the Leasing Document, shall be for the account of the Charterers (regardless of whether the transaction contemplated by the Leasing Documents actually completes). |
44.3If:
(a) |
the Charterers request an amendment, waiver or consent; or |
(b) |
the Charterers make a request to re-register the Vessel in another Flag State; or |
20
the Charterers shall, on demand, reimburse the Owners for the amount of all costs and expenses (including legal fees) incurred by the Owners in responding to, evaluating, negotiating or complying with that request or requirement (including, for the avoidance of doubt, any amounts the Owners have to pay under the terms of the Financial Instruments).
44.4 |
All documented costs and expenses incurred by the Owners in relation to the acquisition, registration of title of the Vessel in the Owners’ name in the Flag State together with any and all fees (including but not limited to any vessel registration and tonnage fees and the Owners’ initial and ongoing registration and maintenance costs if required to be registered as a foreign maritime entity or the appointment of resident agents under the laws of the Flag State) payable by the Owners to register, maintain and/or renew such registration, shall be for the account of the Charterers. Without prejudice to the foregoing, if the Flag State requires the Owners to establish a physical presence or office in the jurisdiction of such Flag State, all fees, costs and expenses payable by the Owners to establish and maintain such physical presence or office shall be for the account of the Charterers. The Charterers shall promptly provide the Owners with evidence of payment of the annual register/tonnage tax amounts payable to the Flag State or any other aforesaid costs, expenses and/or taxes when the same fall due. |
44.5 |
All documented costs and expenses (including legal fees) incurred by the Owners in relation to the transfer of title of the Vessel by the Owners to the Charterers and the re-delivery of the Vessel by the Charterers to the Owners pursuant to Clause 41 (Termination and Redelivery) shall be for the account of the Charterers. |
44.6 |
The Charterers shall, on demand, pay to the Owners the amount of all documented costs and expenses (including legal fees) incurred by the Owners in connection with the enforcement of, or the preservation of any rights under, any Leasing Document, including, without limitation, any action brought by the Owners to arrest or recover possession of the Vessel, and with any proceedings instituted by or against the Owners as a consequence of it entering into a Leasing Document or enforcing those rights. |
44.7 |
The Charterers shall on demand reimburse the Owners for the amount of all costs and expenses (including legal fees) reasonably incurred by the Owners in connection with any amendment, waiver or consent relating to any change arising as a result of an amendment required under Clause 37.437.3. |
CLAUSE 45 – NO WAIVER OF RIGHTS
45.1 |
No neglect, delay, act, omission or indulgence on the part of either Party in enforcing the terms and conditions of this Charter or any other Leasing Document (to which they are party to) shall prejudice the strict rights of that Party or be construed as a waiver thereof nor shall any single or partial exercise of any right of either party preclude any other or further exercise thereof. |
45.2 |
No right or remedy conferred upon either Party by this Charter or any other Leasing Document shall be exclusive of any other right or remedy provided for herein or by law and all such rights and remedies shall be cumulative. |
CLAUSE 46 – NOTICES
46.1 |
Any notice, certificate, demand or other communication to be served, given, made or sent under or in relation to this Charter shall be in English and in writing and (without prejudice to |
21
any other valid method or giving, making or sending the same) shall be deemed sufficiently given or made or sent if sent by registered post or by email to the following respective address:
(a) |
to the Owners: |
c/o CMB Financial Leasing Co., Ltd. 21F, China Merchants Bank Building No. 1088 Lujiazui Ring Road Shanghai 200120 The People’s Republic of China Attention: Email: Tel: |
(b) |
to the Charterers: |
c/o OET CHARTERING INC. Ethnarchou Makariou & D. Falireos Str. 2 185 47, Neo Faliro, Piraeus, Greece Attention: Email: Tel: |
or, if a party hereto changes its address or email address, to such other address (or email address) as that party may notify to the other.
46.2 |
Any such communication shall be deemed to have reached the party to whom it was addressed (a) when delivered (in case of a registered letter), or (b) when actually received in readable form (in case of an email). A notice or other such communication received on a non-working day or after 5.00 p.m. in the place of receipt shall be deemed to be served on the next following working day in such place. |
CLAUSE 47 – TERMINATION EVENTS
47.1 |
The Owners and the Charterers hereby agree that any of the following events shall constitute a Termination Event: |
(a) |
any Obligor fails to pay or the Owners do not receive on the due date any amount payable pursuant to a Leasing Document, unless such failure to pay is caused by a technical error and payment is made within three (3) Business Days of its due date; |
(b) |
the Charterers breach or omit to observe or perform or procure the performance of any of the undertakings in Clauses 50.1(f), Clause 51 (Financial Covenants), Clause 52 (Valuations), 53.1(b), 53.1(c) and failed to remedy the breach in relation to the Delisting in Clause 50.1(i) above; |
(c) |
the Charterers fail to obtain and/or maintain the Insurances required under Clause 39(Insurance) in accordance with the provisions thereof (or any insurer in respect of such Insurances cancels the Insurances or disclaims liability with respect thereto); |
(d) |
any Obligor commits any other breach of, or omits to observe or perform, any of their other obligations or undertakings in any Leasing Document (other than a breach referred to in |
22
paragraphs (a) to (c) above) or any Approved Manager breaches any provision of, or omits to observe or perform, any of their obligations or undertakings in any Manager’s Undertaking unless such breach or omission is in the reasonable opinion of the Owners, remediable and the relevant Obligor or Approved Manager remedies such breach or omission to the satisfaction of the Owners within fifteen (15) Business Days of the earlier of (i) the date of the notice thereof from the Owners or (ii) upon the relevant Obligor or Approved Manager becoming aware of the same;
(e) |
any representation or warranty made by or on behalf of an Obligor, in or pursuant to any Leasing Document to which it is a party, in the reasonable opinion of the Owners, proves to be materially untrue or misleading when it is made; |
(f) |
any of the following occurs in relation to any Financial Indebtedness of any Obligor: |
(i) |
any Financial Indebtedness is not paid when due or not paid within any originally applicable grace period; |
(ii) |
any Financial Indebtedness is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described) and following the expiry of any applicable grace period; |
(iii) |
any commitment for any Financial Indebtedness is cancelled or suspended by any of its creditors as a result of an event of default (however described) and following the expiry of any applicable grace period; |
(iv) |
any of its creditors becomes entitled to declare any Financial Indebtedness due and payable prior to its specified maturity as a result of an event of default (however described) and following the expiry of any applicable grace period; or |
(v) |
any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of such Obligors ceases to be available or becomes capable of being terminated or declared due and payable or cash cover is required or becomes capable of being required, as a result of any termination event or event of default (howsoever defined), |
provided that no Termination Event will occur under this paragraph (f) in respect of the Guarantor if the aggregate amount of Financial Indebtedness falling within sub-paragraphs (i) to (v) above (for the Guarantor) is less than US$10,000,000 (or its equivalent in any other currency or currencies);
(g) |
any of the following occurs in relation to any Obligor: |
(i) |
it becomes unable to pay its debts as they fall due; |
(ii) |
any administrative or other receiver is appointed over all or a substantial part of its assets unless as part of a solvent reorganisation which has been approved in writing by the Owners; |
(iii) |
it makes any formal declaration of bankruptcy or any formal statement to the effect that it is insolvent or likely to become insolvent or a winding up or administration order |
23
is made in relation to it, or its members or directors of pass a resolution to the effect that it should be wound up, placed in administration or cease to carry on business or it makes any formal statement to the effect that it is reasonably likely to become insolvent;
(iv) |
a petition is presented in any Relevant Jurisdiction for its winding up or administration, or the appointment of a provisional liquidator over it, unless the petition is being contested in good faith and on substantial grounds and is dismissed or withdrawn within twenty one (21) days of the presentation of the petition; |
(v) |
it petitions a court, or presents any proposal for, any form of judicial or non-judicial suspension or deferral of payments, reorganisation of its debt (or certain of its debt) or arrangement with all or a substantial proportion (by number or value) of their creditors or of any class of them or any such suspension or deferral of payments, reorganisation or arrangement is effected by court order, contract or otherwise; |
(vi) |
any meeting of its members or directors is summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraphs (ii), (iii), (iv) or (v) above; |
(vii) |
in a country other than England and Wales, any event occurs or any procedure is commenced which is similar to any of the foregoing described in paragraphs (ii), (iii), (iv) or (v) above; |
(viii) |
any expropriation, attachment, sequestration, distress or execution (or any analogous process in any jurisdiction) affects any of its asset or assets (other than a Total Loss of the Vessel); |
(ix) |
it fails to comply with or pay any sum due from it under any final judgment or any final order made or given by a court or tribunal of competent jurisdiction unless the aggregate sum is less than US$10,000,000 in aggregate in respect of the Guarantor; or |
(x) |
if it suspends or ceases to carry on (or threatens to suspend or cease carrying on) all or a material part of its business, |
provided that in the case of an Obligor other than the Charterers and the Guarantor, the occurrence of any of the above events falling within sub-paragraphs (i) to (x) above in respect of such Obligor shall be a Termination Event only if it has or is reasonably likely to have a Material Adverse Effect.
(h) |
any consent, approval, authorisation, license or permit necessary to enable the Charterers to operate or charter the Vessel or to enable any Obligor to (i) comply with any provision of a Leasing Document to which it is a party or (ii) ensure that the obligations of that Obligor or Approved Manager under such Leasing Document are legal, valid, binding or enforceable, is not granted, expires without being renewed, is revoked or becomes, at the relevant time, expressly liable to or otherwise subject to automatic revocation or any condition of such a consent, approval, authorisation, license or permit is not fulfilled or waived within any applicable grace period (resulting in such consent, approval, authorisation, licence or permit being, at the relevant time, subject to automatic revocation or expiration); |
24
(i) |
any event or circumstance occurs which has or is reasonably likely to have a Material Adverse Effect; |
(j) |
an Obligor suspends or ceases carrying on its business; |
(k) |
the Security Interest constituted by any Security Document is in any way imperilled or in jeopardy or this Charter or any Leasing Document or any Security Interest created by a Security Document: |
(i) |
is cancelled, terminated, rescinded or suspended or otherwise ceases to remain in full force and effect for any reason or no longer constitutes valid, binding and enforceable obligations of any party to that document for any reason whatsoever; or |
(ii) |
is amended or varied without the prior written consent of the Owners, except for any amendment or variation which is expressly permitted by this Charter or any other relevant Leasing Document; |
(l) |
any Obligor or any Approved Manager rescinds, repudiates (or purports to rescind or repudiates or purports to repudiate) a Leasing Document; |
(m) |
it is or has become: |
(i) |
unlawful or prohibited, whether as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or |
(ii) |
contrary to, or inconsistent with, any regulation, |
for any Obligor or Approved Manager to maintain or give effect to any of its obligations under any Leasing Document;
(n) |
if it becomes unlawful in any applicable jurisdiction for the Owners to perform any of their obligations as contemplated by this Charter or any other Leasing Document to which they are a party; |
(o) |
any Termination Event (as defined in an applicable Other Charter) occurs and is continuing under any Other Charter or a Termination Event (as defined in the Additional Other Charter) occurs and is continuing under the Additional Other Charter; |
(p) |
if as a result of any Sanctions, the Owners or the Owners’ Financiers are prohibited from performing any of their obligations under the Leasing Documents, the Financial Instruments or the transactions contemplated under each of these respective documents; |
(q) |
any lease, hire purchase agreement, charter or any other financing arrangement in respect of any Fleet Vessel (other than the Vessel, the Additional Other Vessel and the Other Vessel) is terminated, cancelled or repudiated by the relevant lessor or owner or financier as a consequence of any termination event or event of default (howsoever defined therein). |
(r) |
if any Obligor: |
(i) |
is or becomes a Prohibited Person; |
25
(ii) |
is owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person; |
(iii) |
owns or controls a Prohibited Person; |
(iv) |
has a Prohibited Person serving as a director, officer or employee; or |
(r) |
a Change of Control occurs without the prior written consent of the Owners. |
47.2 |
Notwithstanding and without prejudice to Clause 33 (Cancellation), upon the occurrence of any Termination Event which is continuing, the Owners may issue a written notice to the Charterers terminating this leasing of the Vessel under this Charter and demanding payment of the Termination Sum (the “Termination Notice”), whereupon the Charterers shall be obliged to pay the Termination Sum to the Owners on the date specified by the Owners in their sole discretion in the Termination Notice (the “Termination Date”). |
47.3 |
For the avoidance of doubt, notwithstanding any action taken by the Owners following a Termination Event, the Charterers shall remain liable for the outstanding obligations on their part to be performed under this Charter including but not limited to all insurance, operational and maintenance covenants until such time as the Vessel is redelivered to the Owners in accordance with Clause 42 (Sale of Vessel by the Owners in the event of Non-Payment of Termination Sum), or the title is transferred to the Charterers in accordance with Clause 41.3 or the Vessel is sold in accordance with Clause 42 (Sale of Vessel by the Owners in the event of Non-Payment of Termination Sum). |
47.4 |
Without limiting the generality of the foregoing or any other rights of the Owners, if a Termination Event occurs and it is continuing, the Charterers agree and acknowledge that the Owners shall have the sole and exclusive right and power to (i) settle, compromise, compound, adjust or defend any action, suit or proceeding relating to or pertaining to the Vessel and this Charter, (ii) make proof of loss, appear in and prosecute any action arising from any policy or policies of insurance maintained pursuant to this Charter, and settle, adjust or compromise any claims for loss, damage or destruction under, or take any other action in respect of, any such policy or policies and/or change or appoint a new manager for the Vessel and the appointment of any originally appointed manager may be terminated immediately without any recourse to the Owners. |
47.5 |
Each Termination Event shall either be a breach of condition by the Charterers where it involves a breach of this Charter or any of the other Leasing Document by the Charterers or shall otherwise be an agreed terminating event, the occurrence of which gives rise to a right of the Owners to terminate the leasing of the Vessel under this Charter and to exercise its rights under this clause. |
CLAUSE 48 – REPRESENTATIONS AND WARRANTIES
48.1 |
The Charterers represent and warrant to the Owners, save as otherwise stated in this Clause, as of the date hereof, and on each day henceforth until the last day of the Charter Period, as follows: |
(a) |
each of the Obligors is duly incorporated and validly existing under the laws of its jurisdiction of incorporation; |
26
(b) |
each Obligor and each Approved Manager has the corporate capacity and has taken all corporate actions to obtain and maintain all consents, approvals, authorisations, licenses or permits necessary or desirable for it: |
(i) |
to enable it lawfully to enter into, exercise its rights and comply with and perform its obligations under each of the Leasing Documents to which it is a party; and |
(ii) |
to make each of the Leasing Documents to which it is a party admissible in evidence in its Relevant Jurisdictions; |
(c) |
all consents, approvals, authorisations, licences or permits referred to in Clause 48(b) remain in full force and effect and nothing has occurred which makes any of them liable to revocation; |
(d) |
each Leasing Document to which an Obligor and Approved Manager is a party constitutes such Obligor’s and Approved Manager’s legal, valid and binding obligations enforceable against such party (and where expressed to be a deed, shall be enforceable as a deed) in accordance with its respective terms; |
(e) |
the entry into and performance by each Obligor and the transactions contemplated by, each Leasing Document to which such Obligors and Approved Manager is a party do not and will not conflict with: |
(i) |
any law or regulation applicable to it (including Anti-Money Laundering Laws, Anti-Bribery and Anti-Corruption Laws, Sanctions or laws relating to anti-trust or collusion and laws relating to human rights violation); |
(ii) |
its constitutional documents; and |
(iii) |
any agreement or instrument binding upon it or any of its assets or constitute a default or termination event (however described) under any such agreement or instrument; |
(f) |
the choice of governing law as stated in each Leasing Document and the agreement by the relevant parties thereto to refer disputes to the relevant courts or tribunals as stated in such Leasing Document are valid and binding against such parties; |
(g) |
under the laws of the Relevant Jurisdictions of each Obligor and Approved Manager it is not necessary for any of the Leasing Documents to which it is a party to be registered, filed, recorded, notarised or enrolled with any court or other authority in that jurisdiction or that any stamp, registration, notarial or similar taxes or fees be paid on or in relation to the Leasing Documents to which it is a party or the transactions contemplated by those Leasing Documents except payment of associated fees which registration, filings, taxes and fees will be made and paid promptly after the date of the relevant Leasing Documents to which it is a party; |
(h) |
each Security Document to which an Obligor or Approved Manager is a party does now or, as the case may be, will upon execution and delivery create, the Security Interests it purports to create over any assets to which such Security Interest, by its terms, relates, and such Security Interests will, when created or intended to be created, be valid and effective; |
(i) |
no party has any Security Interest (other than the Permitted Security Interests) or any other interest, right or claim over, in or in relation to the Vessel, this Charter, any moneys payable |
27
under any Leasing Document or over any assets which are, the subject of the Security Interests created or intended to be created by the Security Documents;
(j) |
the obligations of each Obligor, under each Leasing Document to which it is a party, are the direct, general and unconditional obligations of such Obligor and rank at least pari passu with all other present and future unsecured and unsubordinated creditors of each Obligor save for any obligation which is mandatorily preferred by law and not by virtue of any contract; |
(k) |
all payments which an Obligor is liable to make under any Leasing Document to which such Obligor is a party may be made by such party without deduction or withholding for or on account of any tax payable under the laws of their jurisdiction of incorporation; |
(l) |
no Obligor has failed to pay all taxes applicable to, or imposed on or in relation to it, its business or if applicable, the Vessel; |
(m) |
no Obligor has breached any law or regulation which breach has or is reasonably likely to have a Material Adverse Effect; |
(n) |
in relation to the Shipbuilding Contract: |
(i) |
all amounts due and payable to the Shipbuilding Contract on or prior to the date hereof have been fully and irrevocably paid to the Builder (receipt of which have been duly acknowledged by the Builder) and there are no outstanding amounts as at the date hereof which are due, owing or payable to the Builder thereunder; and |
(ii) |
on Delivery of the Vessel, there are no unresolved disputes and/or pending claims for payment between the Builder and the Charterers in respect of the Shipbuilding Contract or the Vessel (unless where notified to the Owners and where accepted by the Owners in writing prior to Delivery); |
(o) |
to the best of the Charterers’ knowledge, as at the date of this Charter, no Builder’s default nor buyer’s default under the Shipbuilding Contract has occurred which has not been waived unconditionally which will adversely affect the transfer of title of the Vessel under the MOA and/or chartering of the Vessel under this Charter; |
(p) |
no Obligor or other member of the Group, nor any of their subsidiaries, directors or officers, affiliates or any employee, has engaged in any activity or conduct which would violate any Anti-Bribery and Anti-Corruption Laws, laws pertaining to anti-terrorism or Anti-Money Laundering Laws in any applicable jurisdiction and each Obligor and Group member has instituted and maintained policies and procedures designed to prevent violation of such laws, regulations and rules; |
(q) |
no Obligor or other member of the Group, nor any of their subsidiaries, directors or officers, affiliates or employees, has taken or will take any action in furtherance of an offer, payment, promise to pay or authorisation or approval of the payment or giving of money, property, gifts or anything else of value, directly or indirectly, to any government official (which shall include without limitation, any officer or employee of a government or government owned or controlled entity or of a public international organisation or any person acting in an official capacity for and on behalf of the foregoing or any political party or party official or candidate for public office) to influence official action or secure an improper advantage; |
28
(r) |
no Environmental Claim has been made against any Obligor or any other member of the Group; |
(s) |
no Environmental Incident has occurred and no person has claimed that an Environmental Incident has occurred; |
(t) |
no Termination Event or Potential Termination Event has occurred and is continuing or might reasonably be expected to result from the entry into and performance of this Charter or any other Leasing Document and no other event or circumstance is outstanding which constitutes a default or a termination event (however described) under any other agreement or instrument which is binding on it or to which its assets are subject; |
(u) |
no litigation, arbitration or administrative proceedings or investigations (including proceedings or investigations relating to any alleged or actual breach of the ISM Code or of the ISPS Code) of or before any court, arbitral body or agency have been started against any Obligor which has or is reasonably likely to have a Material Adverse Effect; |
(v) |
the consolidated financial statements delivered pursuant to Clause 49.1(a) are prepared in accordance with IFRS consistently applied and give a true and fair view of (if audited) or fairly represent (if unaudited) the financial condition of each of the Charterers and the Guarantor as at the end of the period to which such financial statements relate; |
(w) |
since the date of the Original Financial Statements or as the case may be, the date of any more recent financial statements delivered pursuant to Clause 49.1(a), there has been no material adverse change in each of the Charterers and the Guarantor or the Group’s business, assets or financial condition; |
(x) |
in relation to any information provided by any Obligor (including any information in relation to the Shipbuilding Contract) for the purposes of this Charter: |
(i) |
such information was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated; |
(ii) |
any financial projections contained in such information have been prepared on the basis of recent historical information and on the basis of reasonable assumptions, and |
(iii) |
nothing has occurred or been omitted from any such information and no information has been given or withheld that results in any such information being untrue or misleading; |
(y) |
no corporate action, legal proceeding or other procedure or step described in Clause 47.1(g) or circumstances described in Clause 47.1(f) has been taken or exists or, to their knowledge, threatened in relation to an Obligor; |
(z) |
no Obligors, nor any of its assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement); |
(aa) |
for the purposes of the Regulation, the centre of main interest (as that term is used in Article 3(1) of the Regulation) of each Obligor is situated in its jurisdiction of incorporation Greece and it has no “establishment” (as that term is used in Article 2(10) of the Regulation) in any other jurisdiction; |
29
(bb) |
no Obligor is a US Tax Obligor and none of them have established a place of business in the United States of America; |
(cc) |
no Obligor has established a place of business in the United Kingdom; |
(dd) |
no Obligor, Approved Manager, sub-charterer and no member of the Group: |
(i) |
is a Prohibited Person; |
(ii) |
is owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person; |
(iii) |
owns or controls a Prohibited Person; or |
(iv) |
has a Prohibited Person serving as a director, officer or, to the best of its knowledge, employee; |
(ee) |
no Obligor nor its respective directors, member, officers and employee, member of the Group, nor any sub-charterer is in breach of applicable Sanctions, has been or is currently being investigated on compliance with Sanctions, have received notice or are aware of any claim, action, suit or proceeding against any of them with respect to Sanctions, or have taken any action to evade the application of Sanctions; and |
(ff) |
any factual information provided by the Charterers (or on their behalf) to the Owners was true and accurate (including all information in relation to the Shipbuilding Contract) as at the date it was provided or as the date at which such information was stated. |
CLAUSE 49 – GENERAL INFORMATION UNDERTAKINGS
49.1 |
The Charterers undertake that they shall comply or procure compliance with the following information undertakings commencing from the date hereof and up to the last day of the Charter Period: |
(a) |
they will send to the Owners: |
(i) |
as soon as possible, but in no event later than ninety (90) days after the end of the first half of each financial year of each of the Charterers and the Guarantor, the unaudited semi-annual combined financial accounts of the Guarantor and the unaudited management accounts of the Charterers; |
(ii) |
as soon as possible, but in no event later than one hundred and eighty (180) days after the end of each financial year of the Guarantor, the audited annual combined financial accounts of the Guarantor and the unaudited management accounts of the Charterers, |
(b) |
they will procure that each set of financial statements delivered pursuant to Clause 49.1(a) shall be in English and certified by a duly authorised officer of the relevant company as giving a true and fair view (if audited) or fairly representing (if unaudited) its financial condition and operations as at the date as at which those financial statements were drawn up; |
(c) |
they will promptly provide to the Owners, copies of all notices and minutes relating to any of their extraordinary shareholders’ meetings which are despatched to the shareholders or to |
30
their creditors or any class thereof and its constitutional documents where these have been amended or varied (to the extent not contrary to the other provisions of this Charter);
(d) |
they will provide the Owners as soon as reasonably practicable upon becoming aware of them, the details of: |
(i) |
any litigation, arbitration or administrative proceedings or investigations relating to any alleged or actual breach of any Sanctions, laws pertaining to anti-terrorism or Anti-Money Laundering Laws which are current or pending against any Obligor, Approved Manager, other member of the Group, or, to the best knowledge of the Charterers, any sub-charterer; |
(ii) |
any litigation, arbitration or administrative proceedings or investigations relating to any other matters not referred to in paragraph (i) above (including proceedings or investigations relating to any alleged or actual breach of the ISM Code or of the ISPS Code) in relation to an Obligor; and |
(iii) |
any Termination Event or Potential Termination Event that has occurred (and the steps, if any, being taken to remedy it); |
(e) |
they will, promptly upon a request by the Owners, supply to the Owners a certificate signed by an officer on its behalf certifying that no Termination Event or Potential Termination Event has occurred (or if a Termination Event or Potential Termination Event has occurred, specifying the nature of the Potential Termination Event or Termination Event (and the steps, if any, being taken to remedy it); |
(f) |
they will, as soon as practicable upon the request of the Owners, provide the Owners with any additional financial or other information relating to: |
(i) |
themselves, any Obligor and/or the Vessel (including, but not limited to the condition and location of the Vessel, its Earnings and its Insurances); |
(ii) |
the Security Interests relating to any Leasing Documents; |
(iii) |
compliance of each Obligor and any Approved Manager with the terms of the Leasing Documents; |
(iv) |
the financial condition, business and operations of the Obligors; or |
(v) |
to any other matter relevant to, or to any provision of any Leasing Document to which it is a party, |
which may reasonably be requested by the Owners at any time;
(g) |
they shall provide details of the Vessel’s management and employment status (including the entry into any pooling arrangements) at least every six (6) months to the Owners upon a request by the Owners; and |
(h) |
they shall as soon as reasonable practicable notify the Owners in writing if any payments which they or any other Obligor, is liable to make under any Leasing Document is subject to deduction or withholding or any other tax whatsoever; |
31
CLAUSE 50 – GENERAL UNDERTAKINGS
50.1 |
The Charterers undertake that they shall comply or procure compliance with the following general undertakings commencing from the date hereof and up to the last day of the Charter Period: |
(a) |
they will, and will procure that each other Obligor and each Approved Manager shall, obtain and promptly renew or procure the provision or renewal of and provide copies of, from time to time, any necessary consents, approvals, authorisations, licenses or permits of any regulatory body or authority for the transactions contemplated under each Leasing Document to which any Obligor and each Approved Manager is a party (including without limitation the sale, chartering and operation of the Vessel); |
(b) |
they will at their own cost, and will procure and each other Obligor and each Approved Manager, will: |
(i) |
ensure that any Leasing Document to which they are a party validly creates the obligations and the Security Interests which such Leasing Document purports to create; and |
(ii) |
without limiting the generality of paragraph (i), promptly register, file, record or enrol any Leasing Document to which they are a party with any court or authority in all Relevant Jurisdictions, pay any stamp duty, registration or similar tax in all Relevant Jurisdictions in respect of any Leasing Document to which they are a party, give any notice or take any other step which, is or has become necessary or desirable for any such Leasing Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which such Leasing Document creates; |
(c) |
they will not, and will procure each other Obligor and Approved Manager will not, create or permit to subsist any Security Interest over any of its assets which are, the subject of the Security Interests created or intended to be created by the Security Documents, unless with the prior written approval of the Owners and save for Permitted Security Interests; |
(d) |
they will not, and will procure each Obligor will not, change the location of its centre of main interest (as that term is used in Article 3(1) of the Regulation) from that stated in relation to it under 48.1(aa) and it will create no “establishment” (as that term is used in Article 2(10) of the Regulation) in any other jurisdiction; |
(e) |
except with the Owners’ prior written consent, they will not, and will procure each other Obligor will not, make a substantial change to the general nature of their respective businesses from that carried on at the date of this Charter; |
(f) |
except with the Owners’ prior written consent or where expressly permitted under the Leasing Documents, they will not enter into any merger, amalgamation, demerger, solvent reorganisation or corporate reconstruction; |
(g) |
they will not: |
(i) |
enter into any borrowing except for loans from affiliates which are unsecured and fully subordinated to the Owners; |
32
(ii) |
incur any liabilities or obligations to any party except for those reasonably incurred in the ordinary course of operating, chartering, repairing and maintaining the Vessel; |
(iii) |
be the creditor in respect of any loan or any form of credit to any person; |
(iv) |
give or allow any to be outstanding any guarantee or indemnity to or for the benefit of any person in respect of any obligation of any other person or enter into any document under which they assume any liability of any other person other than any guarantee or indemnity given under the Leasing Documents; |
(v) |
enter into any material agreement other than the Leasing Documents or any other agreement expressly allowed under any term of the Leasing Documents; |
(vi) |
enter into a single transaction or a series of transactions (whether related or not) to sell, lease, transfer or otherwise dispose of any asset (including without limitation the Vessel, its Earnings or its Insurances); and |
(vii) |
without prejudice to the above sub-paragraphs (i) to (vi), enter into any transaction (whether with another member of the Group or otherwise) which are, in any respect, less favourable than those which they could obtain an a bargain made at arms’ length; |
(h) |
they will not, and shall procure that the Guarantor shall not, following the occurrence of a Termination Event which is continuing or where any of the following would result in the occurrence of a Potential Termination Event or Termination Event: |
(i) |
declare, make or pay any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (whether in cash or in kind) on or in respect of its shares (or any class of its shares including any preferred shares); |
(ii) |
repay or distribute any dividend or share premium reserve; |
(iii) |
pay any management, advisory or other fee to or to the order of any of its shareholders; or |
(iv) |
redeem, repurchase, defease, retire or repay any of their shares or resolve to do so; and |
(i) |
they shall procure that a Delisting shall not occur provided that if a Delisting shall occur, then the Charterers shall, promptly and in any event no later than the date falling thirty (30) days from the date of such Delisting, make such prepayments or provide additional security to the satisfaction of the Owners. |
CLAUSE 51 – FINANCIAL COVENANTS
51.1 |
The Charterers undertake that they shall procure that the Guarantor shall comply with the following financial covenants during the Charter Period: |
(a) |
the Guarantor’s Leverage Ratio shall not exceed seventy five per cent (75%). |
33
(b) |
the Guarantor shall maintain Liquid Assets (free of any Security and inclusive of any balances in time deposits) in an amount of not less than the higher of (i) $10,000,000 on an aggregate basis and (ii) $750,000 per Fleet Vessel; |
(c) |
the Guarantors’ Consolidated Net Worth shall not be less than $100,000,000. |
51.2In this Clause 51 (Financial Covenants):
“Accounting Information” means the annual audited combined financial accounts and the unaudited semi-annual combined financial accounts to be provided to the Owner in accordance with this Charter.
“Adjusted Total Assets” means, at any date, the amount which would be shown as “Total Assets” under the heading “ASSETS” in the balance sheet of the most recent Accounting Information as adjusted for the aggregate difference (positive or negative) between the book value (being the fixed asset value as per the most recent Accounting Information) and the Fleet Market Value minus the Liquid Assets.
“Consolidated Net Worth” means the aggregate of the Consolidated Market Value Adjusted Total Assets less the Consolidated Total Liabilities.
“Consolidated Net Worth” means the aggregate of the Consolidated Market Value Adjusted Total Assets less the Consolidated Total Liabilities.
“Consolidated Current Assets” means the aggregate of the cash and marketable securities, trade and other receivables from persons other than a member of the Group realisable 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, in each case in relation to the Group, as stated in the then most recent and relevant Accounting Information.
“Consolidated Market Value Adjusted Tangible Fixed Assets” means the Fleet Market Value plus the book value (less depreciation computed in accordance with the IFRS consistently applied) on a consolidated basis of all other tangible fixed assets of the Group (excluding the Fleet Vessels), as stated in the then most recent and relevant Accounting Information.
“Consolidated Market Value Adjusted Total Assets” means, at any relevant time, the aggregate of Consolidated Current Assets and Consolidated Market Value Adjusted Tangible Fixed Assets.
“Consolidated Total Liabilities” means the aggregate (as of the date of calculation) of all obligations of the Guarantor then outstanding for the payment or repayment of money as stated under “Total Liabilities” in the financial statements or, as the case may be, management accounts, then most recently required to be delivered pursuant to this Charter including, without limitation:
(a) |
any amounts payable by the Guarantor under leases or similar arrangements over their respective periods; |
(b) |
any credit to the Guarantor from a supplier of goods or under any instalment purchase or other similar arrangement; |
34
(c) |
the aggregate amount then outstanding of liabilities and obligations of third parties to the extent that they are guaranteed by the Guarantor; |
(d) |
any contingent liabilities (including any taxes or other payments under dispute or arbitration) which have been or should be recorded in the notes to the Guarantor’s financial statements or, as the case may be, management accounts; and |
(e) |
any deferred tax liabilities. |
“Fleet Market Value” means the aggregate Fair Market Value of the Fleet Vessels, and for the purpose of ascertaining the Fair Market Value of the Fleet Vessel, the definition of Fair Market Value in Clause 66 (Definitions) shall apply.
“Leverage Ratio” means, at any date, the ratio (expressed as a percentage) of:
(i) |
the Total Liabilities minus Liquid Assets; and |
(ii) |
the Adjusted Total Assets. |
“Liquid Assets” means, at any date, the amount of cash and cash equivalents which would be shown as “Cash and Cash Equivalents” under the heading “ASSETS” in the balance sheet of the most recent Accounting Information.
“Total Liabilities” means, at any date, the amount which would be shown as “Total current liabilities” plus the amount which would be shown as “Total non-current liabilities”, both under the heading “LIABILITIES AND SHAREHOLDERS’EQUITY” in the balance sheet of the most recent Accounting Information (which, for the avoidance of doubt, shall include potential leasing liabilities and shall only exclude shareholder loans when subordinated, non-interest bearing and not callable at will (minimum one year notice)).
51.3 |
The Charterers shall promptly notify the Owners if the Guarantor agrees to provide any new financial covenants to a creditor (or to amend existing ones such that they materially differ from the financial covenants under Clause 51.1 above placing such creditor in a position which is comparatively more favourable in terms of the financial covenants than the position of the Owners) under the agreements entered into or to be entered into in connection with any Financial Indebtedness owed by the Guarantor or a Group member to such creditor and agrees that it will and shall procure the Guarantor will promptly enter into such necessary documentation as may be required to amend and supplement (as applicable) this Charter and any applicable Leasing Document so as to reflect and incorporate such more favourable financial covenants into this Charter and any applicable Leasing Document (as the case may be). |
CLAUSE 52 – VALUATIONS
52.1 |
The Charterers undertake that they shall comply or procure compliance with the following undertakings commencing from the date hereof and up to the last day of the Charter Period: |
(a) |
they shall at their cost: |
(i) |
provide to the Owners valuations of the Vessel (to be addressed to the Owners) to enable the Owners to determine the Initial Market Value of the Vessel; |
35
(ii) |
at least once per calendar year as requested by the Owners, provide to the Owners valuations of the Vessel (to be addressed to the Owners) to enable the Owners to determine the Fair Market Value of the Vessel; and |
(iii) |
at any time as requested by the Owners following the occurrence of a Termination Event or a Potential Termination Event, provide to the Owners valuations of the Vessel (to be addressed to the Owners) to enable the Owners to determine the Fair Market Value of the Vessel; and |
(b) |
if at any time, the Vessel’s Fair Market Value falls below an amount equivalent to one hundred and eighteen per cent (118%) of the Owners’ Costs (the “LTV Breach”, and the said difference between the Fair Market Value and the Owners’ Costs shall be referred to as the “shortfall” for the purposes of this paragraph) then the Charterers shall, promptly and in any event no later than the date falling thirty (30) days from the date which the valuations relating to the Vessel’s Fair Market Value are received by the Owners, make payment in an amount such as to eliminate the shortfall which payment shall be applied in the Owners’ sole discretion. |
CLAUSE 53 – VESSEL UNDERTAKINGS
53.1 |
The Charterers undertake that they shall comply or procure compliance with the following Vessel and Sanctions related undertakings commencing from the date hereof and up to the last day of the Charter Period: |
(a) |
they will notify the Owners promptly upon becoming aware: |
(i) |
that any Environmental Claim has been made against the Charterers or in connection with the Vessel, or that any Environmental Incident has occurred; |
(ii) |
of any arrest or detention of the Vessel or any exercise or purported exercise of any lien on that Vessel or its Earnings or any requisition of the Vessel for hire; |
(iii) |
any modification or alteration of the Vessel of a value in excess of $1,000,000; |
(iv) |
any casualty or occurrence as a result of which the Vessel has become or is, by the passing of time or otherwise, likely to become, a Major Casualty; and |
(v) |
that a Total Loss has occurred, |
and will keep the Owners fully up-to-date with all developments;
(b) |
they will comply, and will procure that each other Obligor, each other member of the Group, and any sub-charterer will comply, with all Sanctions and all laws and regulations relating to them, the Vessel and its construction, ownership, employment, operation, management and registration, including the ISM Code, the ISPS Code (including the maintenance of an ISSC), all Environmental Laws, all Anti-Money Laundering Laws, laws pertaining to anti-terrorism, Anti-Bribery and Anti-Corruption Laws and the laws of the Vessel’s registry, and in particular, they shall effect and maintain a sanctions compliance policy which, inter alia, implements the recommendations of the Sanctions Advisory, to ensure compliance with all such laws and regulations implemented from time to time, including, without limitation they will, and will procure that each other Obligors, each other member of the Group and each sub-charterer will: |
36
(i) |
conduct their activities in a manner consistent with US and UN sanctions, as applicable; |
(ii) |
have sufficient resources in place to ensure execution of and compliance with their own sanctions policies by their personnel, e.g., direct hires, contractors, and staff; |
(iii) |
ensure subsidiaries and affiliates comply with the relevant policies, as applicable; |
(iv) |
have relevant controls in place to monitor automatic identification system (AIS) transponders; |
(v) |
have controls in place to screen and assess onboarding or offloading cargo in areas they determine to present a high risk; |
(vi) |
have controls to assess authenticity of bills of lading, as necessary; and |
(vii) |
have controls in place consistent with the Sanctions Advisory, |
(c) |
without limiting Clause 53.1(b), they will procure that: |
(i) |
the Vessel shall not be constructed, operated, employed, managed, used by or for the benefit of a Prohibited Person or in trading to or from a Prohibited Country, including calling at any port of a Prohibited Country; |
(ii) |
the Vessel shall not be used in any manner contrary to Sanctions, or in a manner that creates a risk that an Obligor will become a Prohibited Person; |
(iii) |
notwithstanding any other provision of this paragraph (c), the Vessel shall not be used in trading in any manner that creates a risk that the Vessel will become a Sanctioned Ship; |
(iv) |
the Vessel shall not be traded in any manner which would trigger the operation of any sanctions limitation or exclusion clause (or similar) in the Insurances or in any manner which would result or would reasonably be expected to result in any Obligor or the Owners becoming a Prohibited Person; and |
(v) |
that each charterparty in respect of the Vessel shall contain, for the benefit of the Owners, language which gives effect to the provisions of Clause 53.1(c) as regards Sanctions and of this Clause and which permits refusal of employment or voyage orders if compliance would result in a breach of Sanctions and which prohibits trading to any Prohibited Country; |
(vi) |
it and any sub-charterer of the Vessel or the Approved Manager will cooperate and exchange all relevant data and information in a timely manner to facilitate compliance with any applicable Emissions Scheme and enable each party to calculate the amount of Emissions Allowances in respect of the Vessel that must be surrendered to the authorities of the applicable Emissions Scheme for the Charter Period and that each relevant party will supply the relevant authority of such Emission Scheme with relevant mandating documents to surrender such allowances to ensure that the Owners and the Charterers will be in compliance with all Environmental Laws; |
37
(d) |
they will, promptly notify the Owners and provide all information which may be relevant for the purposes of ascertaining whether the Obligors, the Approved Manager and any sub-charterer are in compliance with all laws and regulations and Sanctions applicable to and/or binding on them, and in particular, they shall notify the Owners in writing immediately upon being aware that any of the Charterers’ shareholders, directors, officers or employees is a Prohibited Person or has otherwise become a target of any Sanctions; |
(e) |
save with the Owners’ prior consent in writing (such consent not to be unreasonably withheld) they shall not agree or enter into, and shall procure that the Builder does not agree or enter into, any transaction, agreement, document or do or omit to do anything which will have the effect of varying, amending, supplanting or waiving any term of the Shipbuilding Contract relating to the Builder’s Warranties in a material manner; |
(f) |
save with the Owners’ prior consent in writing, they shall not agree or enter into, and shall procure that each Approved Manager does not agree or enter into, any transaction, arrangement, document or do or omit to do anything which will have the effect of varying, amending, supplementing or waiving any term of the relevant management agreement which would result in an annual increase of the management fee to more than twenty per cent. (20%) of the management fee payable under the relevant management agreement as at the date of this Charter; |
(g) |
they shall not: |
(i) |
change an Approved Manager unless such change in appointment is approved in writing by the Owners (such approval not to be unreasonably withheld or delayed) and provided that such substitute Approved Manager has (prior to accepting its appointment) entered into an undertaking in a form substantially similar to the Manager’s Undertaking or in such other form as may be acceptable to the Owners; or |
(ii) |
terminate or otherwise assign or transfer the relevant management agreement unless with the prior approval in writing by the Owners (such approval not to be unreasonably withheld or delayed); |
(h) |
with effect from and following Delivery, ensure that the Vessel will be registered in the Flag State under the name of the Owners; |
(i) |
the Vessel shall be classed with an Approved Classification Society upon Delivery at the highest classification available for vessels of its type and be free of all overdue recommendations or conditions, and maintain such class during the Charter Period; |
(j) |
unless with the Owners’ prior written consent (such consent not to be unreasonably withheld or delayed save that such qualification shall not apply following the occurrence of a Termination Event), they shall not deactivate or lay up the Vessel; |
(k) |
they shall not make any structural change to the Vessel without the prior written consent of the Owners other than a structural change that: |
(i) |
is mandatorily required by any applicable law and regulation; or |
(ii) |
relates to the installation of exhaust gas cleaning systems (scrubbers) and/or ballast water treatment systems (and in the case of the ballast water treatment system, the |
38
Charterers shall ensure that the same is installed and a USCG certificate of compliance regarding the same issued on a date prior to 1 July 2022); or
(iii) |
would not, in the Owners’ reasonable opinion: |
(A) |
have a material adverse effect on the Vessel’s fitness for purpose; |
(B) |
materially alter the structure, type or performance characteristics of the Vessel; and/or |
(C) |
materially diminish the value of the Vessel or have a material adverse effect on the safety, performance or marketability of the Vessel, |
and the Charterers shall provide the Owners with at least fifteen (15) days prior written notice of the commencement of any such alterations (as well as notification of such alterations being completed promptly after such completion) and shall provide the Owners with all information (including without limitation, any plans for the proposed modifications, repairs, replacement, installation or alteration, valuation reports and confirmation of class from the Approved Classification Society) as the Owners may require for the purposes of determining the matters set out in paragraphs (i) to (iii) above together with evidence that the Obligatory Insurances have been appropriately updated, and shall indemnify the Owners against all costs and expenses incurred by the Owners in connection with all such proposed modifications, repairs, replacement, installation or alteration of the Vessel and if such modification, repair or replacement or installation is approved or satisfies the requirements of this Clause, once effected, shall form part of the Vessel;
(l) |
they will procure that each Approved Manager shall, upon the request of the Owners at the expense of the Charterers, furnish the Owners with an inspection report setting out such matters relating to the condition of the Vessel as the Owners may require on an annual basis and if a Termination Event occurs, at such other frequency as the Owners may otherwise require; |
(m) |
subject to the other terms of this Charter, the Charterers may freely sub-charter the Vessel save that the Owners’ prior written consent shall be required: |
(i) |
to any sub-bareboat or demise charter of the Vessel; |
(ii) |
to any other employment of the Vessel which would constitute an Assignable Sub-Charter (and upon the Owners’ consent the Charterers shall assign their rights and interests in such Assignable Sub-Charter to the Owners); and |
(iii) |
to any employment of the Vessel which does not permit a transfer of the registered ownership of the Vessel without the consent of the applicable sub-charterer; |
(n) |
they shall procure that all Earnings in connection with the Vessel are paid into the Operating Account and that the Charterers facilitate access by the Owners to information relating to the Operating Account; |
(o) |
they shall ensure that a minimum amount of $500,000 is maintained in the Operating Account at all times during the Charter Period; and |
39
(p) |
they shall, upon the request of the Owners and at the cost of the Charterers, on or before 31st July in each calendar year, supply or procure the supply to the Owners all information necessary in order for the Owners to comply with its or any Owners’ Financiers’ obligations under the Poseidon Principles in respect of the preceding year, including, without limitation, all ship fuel oil consumption data required to be collected and reported in accordance with Regulation 22A of Annex VI and any Statement of Compliance relating to the Vessel for the preceding calendar year and, for the avoidance of doubt, such information shall be “Confidential Information” for the purposes of Clause 63 (Confidentiality) but the Charterers acknowledge that, in accordance with the Poseidon Principles, such information will form part of the information published regarding the Owners’ and/or Owners’ Financiers’ portfolio climate alignment. |
(q) |
they shall procure that the Vessel is free of encumbrances and liens (save for those created by the Owners or otherwise permitted in writing under the terms of this Charter). |
CLAUSE 54 – INSPECTION OF VESSEL
54.1 |
Without prejudice to Clause 54.2 below, the Owners shall be entitled to inspect or survey the Vessel or instruct a duly authorized surveyor to carry out such survey on their behalf: |
(a) |
to ascertain the condition of the Vessel and satisfy themselves that the Vessel is being properly repaired and maintained; |
(b) |
in dry-dock if the Charterers have not dry-docked the Vessel in accordance with Clause 10(g) (Periodical Dry-docking); |
(c) |
as may be required for classification purposes; and |
(d) |
for any other commercial reason they consider necessary, |
and in doing so, the Charterers shall afford the Owners or their authorised surveyor with all proper facilities in relation to such inspection or survey.
54.2 |
The Owners shall be entitled to exercise its rights of inspection or survey as described under Clause 54.1 (Inspection of Vessel) once a year (subject to provision of reasonable prior notice) without interference to the operation of the Vessel save that upon the occurrence of a Termination Event or Potential Termination Event, the Owners shall have the right to inspect or survey the Vessel at any time (and for the avoidance of doubt, more than once a year). |
54.3 |
The documented costs and fees for any inspection and survey permitted under this Clause shall be paid by the Charterers. |
54.4 |
All time used in respect of inspection, survey or repairs pursuant to this Clause shall be for the Charterers’ account and form part of the Charter Period. |
54.5 |
The Charterers shall also permit the Owners to inspect the Vessel’s log books or survey reports whenever requested and shall whenever required by the Owners furnish them with full information regarding any casualties or other accidents or damage to the Vessel. |
40
CLAUSE 55 – PURCHASE OPTION
55.1 |
The Charterers shall have the option (the “Purchase Option”) to purchase the Vessel on each anniversary date on and Payment Date as from the first (1st) anniversary of the Commencement Reference Date as specified in the Purchase Option Notice (as hereinafter defined) at the applicable Purchase Option Price, subject to the other terms of this Clause 55 (Purchase Option). |
55.2 |
The Purchase Option shall be exercisable only: |
(a) |
upon the Charterers providing not less than sixty (60) days’ written notice (the “Purchase Option Notice”) to purchase the Vessel on a date specified therein (the “Purchase Option Date”) which shall fall on an anniversary of the Commencement Date on or after the first (1st) anniversary of the Commencement Date a Payment Date described in Clause 55.1 or on the last day of the Charter Period (as the case may be) subject to Clause 60.1 (unless otherwise agreed by the Owners); and |
(b) |
in the absence of the occurrence of a Potential Termination Event or a Termination Event on or prior to either the date of the Purchase Option Notice or the Purchase Option Date. |
55.3 |
The Purchase Option Notice shall be signed by a duly authorised officer or attorney of the Charterers and, once delivered to the Owners, will in each case be irrevocable and the Charterers shall be bound to pay to the Owners the Purchase Option Price on the Purchase Option Date. |
55.4 |
The sale of the Vessel pursuant to the Charterers’ exercise of the Purchase Option shall be conducted in accordance with Clause 56 (Sale of the Vessel). |
55.5 |
If the Charterers do not exercise the Purchase Option on or before the expiration of the Charter Period: |
(a) |
the Charterers shall pay the Option Premium to Owners on the last day of the Charter Period; |
(b) |
the Charterers shall on the last day of the Charter Period re-deliver the Vessel to the Owners in accordance with Clause 41.6 and shall ensure that they have fulfilled their obligations under this Charter and made payment of the Option Premium, all Charterhire and all other moneys pursuant to the terms of this Charter; and |
(c) |
the Owners shall be entitled (at Owners’ sole discretion) to sell or operate the Vessel as they may require. For the avoidance of doubt, the Charterers agree that should the Option Premium not be paid or not be paid in full on its due date for payment under the terms of this Charter, any net proceeds deriving from the sale or operation of the Vessel by the Owners shall not be applied towards reduction of the unpaid Option Premium, Charterhire or any other moneys due pursuant to the terms of this Charter. |
CLAUSE 55A – MANDATORY SALE DELIBERATELY LEFT BLANK
If the Mandatory Sale Price becomes payable in accordance with Clause 37.5 (Changes to Interest Rate, Default Interest), the same shall be payable in consideration of the purchase and transfer of the legal and beneficial title of the Vessel pursuant to Clause 56 (Sale of the Vessel). The day on which the
41
Mandatory Sale Price is paid pursuant to Clause 37.5 (Changes to Interest Rate, Default Interest) is a “Mandatory Sale Date” and such transfer of the Vessel provided therein is a “Mandatory Sale”.
CLAUSE 56 – SALE OF THE VESSEL
56.1 |
The sale of the legal and beneficial interest and title in the Vessel pursuant to the Charterers’ exercise of, as the case may be, the Charterers’ Purchase Option under Clause 55 (Purchase Option) or pursuant to Clause 41.3, or the completion of a Mandatory Sale under Clause 55A (Mandatory Sale) shall be on an “as is where is” and subject to the following terms and conditions: |
(a) |
no condition, warranty or representation of any kind is or has been given by or on behalf of the Owners in respect of the Vessel or any part thereof, and accordingly the Charterers hereby confirm that they have not, in entering into this Charter, relied on any condition, warranty or representation by the Owners or any person on the Owners’ behalf, express or implied, whether arising by law or otherwise in relation to the Vessel or any part thereof, including, without limitation, warranties or representations as to the description, suitability, quality, merchantability, fitness for any purpose, value, state, condition, appearance, safety, durability, design or operation of any kind or nature of the Vessel or any part thereof, and the benefit of any such condition, warranty or representation by the Owners is hereby irrevocably and unconditionally waived by the Charterers to the extent permissible under applicable law, and the Charterers hereby also waive any rights which they may have in tort in respect of any of the matters referred to above and irrevocably agree that the Owners shall have no greater liability in tort in respect of any such matter than they would have in contract after taking account of all of the foregoing exclusions. No third party making any representation or warranty relating to the Vessel or any part thereof is the agent of the Owners nor has any such third party authority to bind the Owners thereby. Notwithstanding anything contained above, nothing contained herein is intended to obviate, remove or waive any rights or warranties or other claims relating thereto which the Charterers (or their nominee) or the Owners may have against the manufacturer or supplier of the Vessel or any third party; |
(b) |
the Vessel shall be free from any registered mortgages incurred by the Owners (save for those mortgages, liens, encumbrances and debts arising out of or in connection with this Charter or the Leasing Documents); |
(c) |
the Purchase Option Price, or Termination Sum or Mandatory Sale Price (as applicable) shall be paid by (or on behalf of) the Charterers to the Owners together with (without double counting) unpaid amounts of Charterhire, Breakfunding Costs (if applicable), default interest accruing under Clause 37.6 37.4 (if applicable), fees, expenses and any other moneys owing by or accrued or due from the Charterers under this Charter on or prior to the Purchase Option Date or the Termination Date or the Mandatory Sale Date (as the case may be) which remain unpaid; and |
(d) |
concurrently with the Owners receiving irrevocable payment of the Purchase Option Price or the Termination Sum or the Mandatory Sale Price (as applicable) and all other moneys payable under this Charter in full pursuant to the terms of this Charter, the Owners shall (save in the event of Total Loss) (at Charterers’ cost) transfer the legal and beneficial ownership of the Vessel on an “as is where is” basis to the Charterers or their nominees and shall (at Charterers’ cost) execute a bill of sale and a protocol of delivery and acceptance evidencing the same and any other document strictly necessary to transfer the title of the Vessel, as well as procure the |
42
relevant ship registry to issue a certificate of title or any other evidence provided in accordance with the practice of such registry showing that the Vessel shall be free from any registered mortgages in favour of the Owners, to the Charterers and the relevant ship registry of the Vessel under the Charterers’ flag of choice (and to the extent required for such purposes, the Vessel shall be deemed first to have been redelivered to the Owners), provided that the Owners shall not be obliged to do anything which would (in its reasonable opinion) constitute a breach of the applicable QEL (if any). Any fees (including legal fees), costs or disbursements incurred by the Owners in connection with the Charterers’ exercise of the Purchase Option or transfer of the Vessel following payment of the Termination Sum or Mandatory Sale Price (as the case may be) shall be indemnified or reimbursed by the Charterers to the Owners upon the Owners’ demand on or prior to the Purchase Option Date or date of payment of the Termination Sum or Mandatory Sale Date (as applicable).
CLAUSE 57 – INDEMNITIES
57.1 |
The Charterers shall pay such amounts to the Owners, on the Owners’ demand, in respect of all documented claims, expenses, liabilities, losses, taxes, fees (including but not limited to any vessel registration and tonnage fees) suffered or incurred by or imposed on the Owners arising from this Charter and any Leasing Document, whether prior to, during or after termination of the leasing of this Charter, including without limitation: |
(a) |
as a result of incorporating the Owners in the relevant jurisdiction selected by the Charterers or required for the purpose of flying the flag of the Vessel in a particular jurisdiction; |
(b) |
in connection with delivery, possession, performance, control, registration, repair, survey, insurance, maintenance, manufacture, purchase, ownership or operation of the Vessel (including but not limited to any social security contributions); |
(c) |
in connection with the prevention or release of liens or detention of or requisition, use, operation, redelivery, sale or disposal of the Vessel (or any part of it) and/or whether prior to, during or after termination; |
(d) |
in connection with delay in the scheduled delivery date of the Vessel under the Shipbuilding Contract; |
(e) |
in connection with or following the occurrence of a Termination Event or Potential Termination Event (including without limitation, by reason thereof in re-taking possession or otherwise in acquiring the Vessel pursuant to Clause 38.3). |
Without prejudice to its generality, this Clause covers any claims, expenses, liabilities and losses which arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code, the ISPS Code, the MARPOL Protocol, any Environmental Law or any Sanctions.
57.2 |
The Charterers hereby irrevocably agree to indemnify and hold harmless the Owners against all consequences or liabilities arising from the master, officers or agents signing bills of lading or other documents and any claim, expense, liability or loss incurred by the Owners in liquidating or employing deposits from the Owners’ Financiers or third parties to fund the acquisition of the Vessel pursuant to the MOA, the Head MOA and/or the Shipbuilding Contract. |
43
57.3 |
Notwithstanding anything to the contrary herein (but subject and without prejudice to Clause 33 (Cancellation)) and without prejudice to any right to damages or other claim which the Charterers may have at any time against the Owners under this Charter, the indemnities provided by the Charterers in favour of the Owners shall continue in full force and effect notwithstanding any breach of the terms of this Charter or termination of this Charter pursuant to the terms hereof or termination of this Charter by the Owners. |
57.4 |
All rights which the Charterers have at any time (whether in respect of this Charter or any other transaction) against any Obligors shall be fully subordinated to the rights of the Owners under the Leasing Documents and until the end of this Charter and unless the Owners otherwise direct, the Charterers shall not exercise any rights which it may have (whether in respect of this Charter or any other transaction) by reason of performance by it of its obligations under any Leasing Document or by reason of any amount becoming payable, or liability arising, under this Clause: |
(a) |
to be indemnified by any Obligor; |
(b) |
to claim any contribution from any third party providing security for, or any other guarantor of, any Obligor under any Leasing Document; |
(c) |
to take any benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of any Obligor under any Leasing Document or of any other guarantee or security taken pursuant to, or in connection with, any Leasing Document by any Obligors; |
(d) |
to bring legal or other proceedings for an order requiring any Obligor to make any payment, or perform any obligation, in respect of any Leasing Document; |
(e) |
to exercise any right of set-off against any Obligor; and/or |
(f) |
to claim or prove as a creditor of any Obligor, |
and if the Charterers receive any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to the extent necessary to enable all amounts which may be or become payable to the Owners by any Obligor or in connection with any Leasing Document to be repaid in full on trust for the Owners and shall promptly pay or transfer the same to the Owners.
CLAUSE 58 – NO SET-OFF OR TAX DEDUCTION
58.1 |
All Charterhire and any payment made from the Charterers to enable the Owners to pay all amounts under a Leasing Document shall be paid punctually and: |
(a) |
without any form of set-off, cross claim, condition or counterclaim; |
(b) |
free and clear of any tax deduction or withholding unless required by law; and |
(c) |
net of any bank charges or bank fees. |
58.2 |
Without prejudice to Clause 58.1, if the Owners are required by law to make a tax deduction from any payment: |
44
(a) |
the Owners shall notify the Charterers as soon as they become aware of the requirement; and |
(b) |
the amount due in respect of the payment shall be increased by the amount necessary to ensure that the Owners receive and retain (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which they would otherwise have received. |
58.3 |
The Charterers shall (within three (3) Business Days of demand by Owners) pay to the Owners an amount equal to the loss, liability or cost which the Owners determine will be or has been (directly or indirectly) suffered for or on account of tax by the Owners in respect of a Leasing Document. |
58.4 |
Clause 58.3 shall not apply: |
(a) |
with respect to any tax assessed on the Owners under the law of the jurisdiction in which the Owners are incorporated or, if different, the jurisdiction (or jurisdictions) in which the Owners are treated as resident for tax purposes if that tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by the Owners; or |
(b) |
to the extent a loss, liability or cost is compensated for by an increased payment under Clause 58.2. |
58.5 |
Notwithstanding any other provision to this Charter, if any deduction or withholding or other tax is or will be required to be made by the Charterers or the Owners in respect of a payment to the Owners as a result of the Owners being incorporated in a particular jurisdiction, the Owners shall have the right to transfer their interest in the Vessel (and this Charter) to any person nominated by the Owners and all costs in relation to such transfer shall be for the account of the Charterers. |
58.6 |
If the Charterers compensate the Owners by an increased payment pursuant to Clauses 58.2 or 58.3 and the Owners determine that they have obtained and utilized a tax credit attributable to this increased payment, the Owners shall reimburse the Charterers that increased payment (or part thereof if the tax credit is attributable to only part of such increased payment). |
CLAUSE 59 – INCREASED COSTS
59.1 |
This Clause 59 (Increased Costs) applies if the Owners notify the Charterers that they consider that as a result of: |
(a) |
the introduction or alteration after the date of this Charter of a law or an alteration after the date of this Charter in the manner in which a law is interpreted or applied (disregarding any effect which relates to the application to payments under this Charter of a tax on the Owners’ overall net income); or |
(b) |
complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which the Owners allocates capital resources to their obligations under this Charter) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Charter, |
the Owners (or a parent company of them) has incurred or will incur an “increased cost”.
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59.2 |
In this Clause 59 (Increased Costs), “increased cost” means, in relation to the Owners: |
(a) |
an additional or increased cost incurred as a result of, or in connection with, the Owners or the Owners’ parent company having entered into, or being a party to, this Charter, or funding the acquisition of the Vessel pursuant to the MOA or performing their obligations under this Charter (including as a result of, or in connection with, incorporating itself in a particular jurisdiction as requested by the Charterers or in order to fly a particular flag in respect of the Vessel); |
(b) |
an additional or increased cost of funding or financing the acquisition of the Vessel pursuant to the MOA; or |
(c) |
a liability to make a payment or a return forgone, which is calculated by reference to any amounts received or receivable by the Owners under this Charter, |
and for the purposes of this Clause, the Owners may in good faith allocate or spread costs an/or losses among their assets and liabilities (or any class of their assets and liabilities) on such basis as they consider appropriate.
59.3 |
Subject to the terms of Clause 59.1, the Charterers shall pay to the Owners, upon receipt of the Owners’ demand and any evidence thereto (where available to the Owners), the amounts which the Owners from time to time notify the Charterers to be necessary to compensate the Owners for the increased cost. |
CLAUSE 60 – MISCELLANEOUS
60.1 |
Unless otherwise expressly stated to the contrary in this Charter, any payment which is due to be made on a day which is not a Business Day shall be made on the preceding Business Day instead. |
60.2 |
If, at any time, any provision of any Leasing Document is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions under the law of that jurisdiction nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired. |
60.3 |
The Charterers waive any rights of sovereign immunity which they or any of their properties may enjoy in any jurisdiction and subjects itself to civil and commercial law with respect to their obligations under this Charter. |
60.4 |
No term of this Charter is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Charter. |
60.5 |
This Charter and each other Leasing Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Charter or that Leasing Document, as the case may be. |
46
CLAUSE 61 – FATCA
61.1Defined terms
For the purposes of this Clause 61 (FATCA), the following terms shall have the following meanings:
“Code” means the United States Internal Revenue Code of 1986, as amended.
“FATCA” means:
(a) |
sections 1471 to 1474 of the Code or any associated regulations; |
(b) |
any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or |
(c) |
any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the IRS, the US government or any governmental or taxation authority in any other jurisdiction. |
“FATCA Deduction” means a deduction or withholding from a payment under this Charter or the Leasing Documents required by or under FATCA.
“FATCA Exempt Party” means a Relevant Party that is entitled under FATCA to receive payments free from any FATCA Deduction.
“FATCA Non-Exempt Party” means any Relevant Party who is not a FATCA Exempt Party.
“IRS” means the United States Internal Revenue Service or any successor taxing authority or agency of the United States government.
“Relevant Party” means any of the parties to this Charter and the Leasing Documents.
61.2FATCA Information
(a) |
Subject to paragraph (c) below, each Relevant Party shall, on the date of this Charter, and thereafter within ten (10) Business Days of a reasonable request by another Relevant Party: |
(i) |
confirm to that other party whether it is a FATCA Exempt Party or is not a FATCA Exempt Party; and |
(ii) |
supply to the requesting party (with a copy to all other Relevant Parties) such other form or forms (including IRS Form W-8 or Form W-9 or any successor or substitute form, as applicable) and any other documentation and other information relating to its status under FATCA (including its applicable “pass thru percentage” or other information required under FATCA or other official guidance including intergovernmental agreements) as the requesting party reasonably requests for the purpose of the requesting party’s compliance with FATCA. |
47
(b) |
If a Relevant Party confirms to any other Relevant Party that it is a FATCA Exempt Party or provides an IRS Form W-8 or W-9 to showing that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, or that the said form provided has ceased to be correct or valid, that party shall so notify all other Relevant Parties or provide the relevant revised form, as applicable, reasonably promptly. |
(c) |
Nothing in this Clause shall oblige any Relevant Party to do anything which would or, in its reasonable opinion, might constitute a breach of any law or regulation, any policy of that party, any fiduciary duty or any duty of confidentiality, or to disclose any confidential information (including, without limitation, its tax returns and calculations); provided, however, that nothing in this paragraph shall excuse any Relevant Party from providing a true, complete and correct IRS Form W-8 or W-9 (or any successor or substitute form where applicable). Any information provided on such IRS Form W-8 or W-9 (or any successor or substitute forms) shall not be treated as confidential information of such party for purposes of this paragraph. |
(d) |
If a Relevant Party fails to confirm its status or to supply forms, documentation or other information requested in accordance with the provisions of this Charter or the provided information is insufficient under FATCA, then: |
(i) |
if that party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such party shall be treated for the purposes of this Charter and the Leasing Documents as if it is a FATCA Non-Exempt Party; and |
(ii) |
if that party failed to confirm its applicable passthru percentage then such party shall be treated for the purposes of this Charter and the Leasing Documents (and payments made thereunder) as if its applicable passthru percentage is 100%, |
until (in each case) such time as the party in question provides sufficient confirmation, forms, documentation or other information to establish the relevant facts.
61.3 |
FATCA Deduction and gross-up by Relevant Party. |
(a) |
If the representation made by the Charterers under 48.1(bb) proves to be untrue or misleading such that the Charterers are required to make a FATCA Deduction, the Charterers shall make the FATCA Deduction and any payment required in connection with that FATCA Deduction within the time allowed and in the minimum amount required by FATCA. |
(b) |
If the Charterers are required to make a FATCA Deduction then the Charterers shall increase the payment due from them to the Owners to an amount which (after making any FATCA Deduction) leaves an amount equal to the payment which would have been due if no FATCA Deduction had been required. |
(c) |
The Charterers shall promptly upon becoming aware that they must make a FATCA Deduction (or that there is any change in the rate or basis of a FATCA Deduction) notify the Owners accordingly. Within thirty (30) days of the Charterers making either a FATCA Deduction or any payment required in connection with that FATCA Deduction, the Charterers shall deliver to the Owners evidence reasonably satisfactory to the Owners that the FATCA Deduction has been made or (as applicable) any appropriate payment paid to the relevant governmental or taxation authority. |
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61.4 |
FATCA Deduction by Owners. |
The Owners may make any FATCA Deduction they are required by FATCA to make, and any payment required in connection with that FATCA Deduction, and the Owners shall not be required to increase any payment in respect of which they make such a FATCA Deduction or otherwise compensate the recipient for that FATCA Deduction.
61.5 |
FATCA Mitigation. |
Notwithstanding any other provision to this Charter, if a FATCA Deduction is or will be required to be made by any party under Clause 61.4 in respect of a payment to the Owners as a result of the Owners not being a FATCA Exempt Party, the Owners shall have the right to transfer their interest in the Vessel (and this Charter) to any person nominated by the Owners and all costs in relation to such transfer shall be for the account of the Charterers.
CLAUSE 62 – ASSIGNMENT, TRANSFER AND REFINANCING
62.1 |
The Charterers shall not assign or transfer (whether by novation or otherwise) their rights and/or obligations under this Charter or any other Leasing Document. |
62.2 |
The Charterers acknowledge that, at any time during the Charter Period: |
(a) |
the Owners are entitled to enter into certain funding arrangements in relation to the Vessel with the Owners’ Financiers in order to refinance the then outstanding Owners’ Costs (or part thereof), which funding arrangements may be secured, inter alia, by the relevant Financial Instruments; |
(b) |
the Owners may do any of the following as security for the funding arrangements referred to in paragraph (a) above, in each case without consent of the Charterers but with notice to the Charterers: |
(i) |
execute a ship mortgage over the Vessel or any other Financial Instrument in favour of the Owners’ Financiers; |
(ii) |
assign their rights and interests to, in or in connection with this Charter and/or any other Leasing Document in favour of the Owners’ Financiers; |
(iii) |
assign their rights and interests to, in or in connection with the Insurances, the Earnings and the Requisition Compensation of the Vessel in favour of the Owners’ Financiers; and |
(iv) |
enter into any other document or arrangement which is necessary to give effect to such financing arrangements. |
62.3 |
The Charterers undertake to comply, and provide such information and documents reasonably required to enable the Owners to comply, with all such instructions or directions in regard to the employment, insurances, operation, repairs and maintenance of the Vessel as laid down in any Financial Instrument or as may be reasonably directed from time to time during the currency of this Charter by the Owners’ Financiers in conformity with any Financial Instrument. The Charterers further agree and acknowledge for themselves all relevant terms, conditions and provisions of each Financial Instrument (if any) and agree to acknowledge this in writing |
49
in any form that may be reasonably required by the Owners’ Financiers subject to not imposing to the Charterers any more onerous obligations than those included in the Leasing Documents. The Charterers further agree to enter into any required acknowledgements of assignments and other customary documents as may be required in connection with the Financing Documents.
62.4 |
The Owners shall, if requested by the Charterers or any applicable sub-charterer, procure that on or around the time a mortgage over the Vessel is executed in favour of Owners’ Financiers, the Owners’ Financiers shall enter into a QEL with the Owners and the Charterers or any applicable sub-charterer (in a form to be agreed among the Owners’ Financiers, the Owners, the Charterers and any applicable sub-charterer). |
62.5 |
During the Charter Period, the Owners may procure a: |
(a) |
change in the registered ownership of the Vessel; and/or |
(b) |
assign or transfer by novation of any of its rights and obligations under any of the Leasing Documents, |
without the consent of the Charterers to any other financial institution, trust, fund, leasing company or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets provided always that such change of ownership or transfer shall not disturb or interfere with the Charterers’ lawful use, possession and quiet enjoyment of the Vessel during the Charter Period. The Charterers shall be liable to the aforesaid new owner of the Vessel for its performance of all obligations under this Charter (as novated) after any such change of the registered ownership from the Owners to such new owner and the Charterers shall procure that any party to a Leasing Document:
(i) |
becomes liable to the new of owner of the Vessel for its performance of all obligations pursuant to such Leasing Document; and |
(ii) |
enters into all necessary documents or takes any necessary actions required for such Leasing Document and any Security Interest created thereunder remaining in full force and effect (or to be novated and/or re-executed) as from the completion of the relevant sale. |
62.6 |
The Charterers agree and undertake to enter into any such usual documents and provide all necessary assistance as the Owners shall require to complete or perfect the transfer of the Vessel (with the benefit and burden of this Charter) or any novation or assignment made pursuant to this Clause 62 (Assignment, Transfer and Re-financing) at no cost for the Charterers. |
CLAUSE 63 – CONFIDENTIALITY
The Parties agree to keep the terms and conditions of this Charter and any other Leasing Document (the “Confidential Information”) strictly confidential, provided that a Party may disclose Confidential Information in the following cases:
(a) |
it is already known to the public or becomes available to the public other than through the act or omission of the disclosing Party; |
50
(b) |
it is required to be disclosed under the applicable laws of any Relevant Jurisdiction or by a governmental order, decree, regulation or rule; |
(c) |
in filings with a court or arbitral body in proceedings in which the Confidential Information is relevant and in discovery arising out of such proceedings; |
(d) |
to any other party to a Leasing Document; |
(e) |
to (or through) whom a Party assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Leasing Document (as permitted by the terms thereof) provided that such person shall undertake that it would not disclose Confidential information to any other party save for circumstances arising which are similar to those described under this Clause; |
(f) |
to any of the following persons (on a need to know basis): |
(i) |
a shareholder or an Affiliate of either Party or a party referred to in paragraph (d); |
(ii) |
its board of directors, employees or its shareholders; |
(iii) |
professional advisers retained by a disclosing party; |
(iv) |
any rating agencies; |
(v) |
the Approved Classification Society; |
(vi) |
the ship registry of the Flag State; and |
(vii) |
in the case of the disclosing party being the Owners, persons advising on, providing or considering the provision of financing to the Owners or an Affiliate of the Owners, |
provided that the disclosing party shall exercise due diligence to ensure that no such person shall disclose Confidential Information to any other party save for circumstances arising which are similar to those described under this Clause or such other circumstances as may be permitted by all Parties;
(g) |
to any person which is a classification society or other entity which the Owners or the Owners’ Financiers have engaged to make the calculations necessary to enable the Owners and/or the Owners’ Financiers to comply with their reporting obligations under the Poseidon Principles; or |
(h) |
with the prior written consent of all Parties and if required by any Party, subject to a corresponding confidentiality undertaking obtained from the party to whom the Confidential Information is disclosed to. |
CLAUSE 64 – GENERAL APPLICATION OF PROCEEDS
64.1 |
Any Net Trading Proceeds, Net Sales Proceeds, Total Loss Proceeds, any proceeds realised by the Owners in connection with the enforcement of the Security Documents (unless otherwise specified in the Security Documents) and any proceeds received by the Owners from any Other |
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Owner (as trustee for the Owners) shall be applied in the following order of application against amounts payable under the Leasing Documents:
(a) |
firstly, in or towards any amounts outstanding under the Leasing Documents other than the Termination Sum (including but not limited to any costs and expenses incurred in the enforcement of the Security Documents, to the extent these are not covered under the Termination Sum); |
(b) |
secondly, in or towards satisfaction of the Charterers’ obligation to pay the Termination Sum (or such portion of it that then remains unpaid) in any order of application in the amounts comprising the Termination Sum as the Owners may determine; and |
(c) |
thirdly, upon satisfaction in full of all amounts payable to the Owners under the Leasing Documents, in payment of any surplus to the Charterers, but subject always to the terms of the General Assignment. |
CLAUSE 65 – GOVERNING LAW AND ENFORCEMENT
65.1 |
This Charter, and any non-contractual obligations arising out of or in connection with it, shall be governed by English law. |
65.2 |
Any dispute arising out of or in connection with any Leasing Document (including a dispute regarding the existence, validity or termination of any Leasing Document or any non-contractual obligation arising out of or in connection with any Leasing Document) (a “Dispute”) shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause. |
65.3 |
The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. The reference shall be to three (3) arbitrators. A Party wishing to refer the Dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other Party requiring the other Party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other Party appoints its own arbitrator and give notice that it has done so within the fourteen (14) days specified. If the other Party does not appoint its own arbitrator and give notice that it has done so within the fourteen (14) days specified, the Party referring a Dispute to arbitration may, without the requirement of any further prior notice to the other Party, appoint its arbitrator as sole arbitrator and shall advise the other Party accordingly. The award of a sole arbitrator shall be binding on both Parties as if he had been appointed by agreement. Nothing herein shall prevent the Parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. |
65.4 |
In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 (or such other sum as the Parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. |
52
CLAUSE 66 – DEFINITIONS
66.1 |
In this Charter the following terms shall have the meanings ascribed to them below: |
“Acceptance Certificate” means a certificate substantially in the form set out in Schedule 1 (Acceptance Certificate) to be signed by the Charterers at Delivery.
“Account Bank” means ABN AMRO Bank N.V., Netherlands or such other bank approved by the Owners.
“Account Charge” means the document creating charge(s) over the Operating Account executed or to be executed by the Charterers in favour of the Owners.
“Additional Other Charter” means, in relation to the Additional Other Vessel, the bareboat charterparty to be entered into between the Additional Other Owner and the Additional Other Charterer.
“Additional Other Charterer” means Moonsprite Shipping Corp., a corporation incorporated under the laws of the Republic of the Marshall Islands with registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960.
“Additional Other Owner” means Sea 112 Leasing Co. Limited, a company incorporated under the laws of Hong Kong with registered address at 46/F, Champion Tower 3, Garden Road, Central, Hong Kong.
“Additional Other Vessel” means m.v. Nissos Anafi with IMO number 9856086 currently flagged under the laws of the Republic of the Marshall Islands.
“Advance Charterhire” has the meaning as defined under Clause 36.2 of the Charter.
“Affiliate” means in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.
“Amended Expiry Owners’ Costs” means US$40,921,875.
“Amended Margin” means 2.00% per annum.
“Amended Owners’ Costs” means US$66,384,375 which is equal to the Owners’ Costs as at the Reference Date, for the avoidance of doubt, after having deducted the Initial Fixed Charterhire due and payable on the Reference Date.
“Annex VI” means Annex VI of the Protocol of 1997 to amend the International Convention for the Prevention of Pollution from Ships 1973 (Marpol), as modified by the Protocol of 1978 relating thereto.
“Anti-Bribery and Anti-Corruption Laws” means the US Foreign Corrupt Practices Act of 1977 as amended and the rules and regulations thereunder, the UK Bribery Act of 2010, and/or any similar laws, rules or regulations issued, administered or enforced by the United States, United Kingdom, the European Union or any of its member states, or any other country or governmental agency having jurisdiction over the Owners or any Obligors or their respective subsidiaries.
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“Anti-Money Laundering Laws” means all applicable financial record-keeping and reporting requirements, anti-money laundering statutes (including all applicable rules and regulations thereunder) and all applicable related or similar laws, rules, regulations or guidelines, of all jurisdictions including and without limitation, the United States of America, the United Kingdom, Greece, the Republic of the Marshall Islands, Hong Kong and the People’s Republic of China and which in each case are:
(a) |
issued, administered or enforced by any governmental agency having jurisdiction over the Charterers or any other Obligors or their respective subsidiaries; |
(b) |
of any jurisdiction in which the Charterers or any other Obligor conducts business; or |
(c) |
to which the Charterers or any other Obligor is subjected or subject to. |
“Approved Classification Society” means the classification society stipulated in the Shipbuilding Contract or any other classification society which is a member of the International Association of Classification Societies and approved by the Owners in writing.
“Approved Commercial Manager” means OET Chartering Inc. or any other reputable ship management company as may be approved by the Owners in writing prior to its appointment as commercial manager of the Vessel in accordance with this Charter.
“Approved Manager” means the Approved Commercial Manager or the Approved Technical Manager.
“Assignable Sub-charter” means any period time charters relating to the Vessel, whether or not already in existence.
“Approved Technical Manager” means Kyklades Maritime Corporation or any other reputable ship management company as may be approved by the Owners in writing prior to its appointment as technical manager of the Vessel in accordance with this Charter.
“Approved Valuer” means Clarksons Platou, Simpson Spence Young, Braemar ACM, Arrow, Fearnleys, Maersk Brokers or such other independent and reputable shipbroker nominated by the Charterers and approved by the Owners.
“Arrangement Fee” has the meaning as defined under Clause 44.1.
“Breakfunding Costs” means all breakfunding costs and expenses incurred or payable by the Owners when a repayment or prepayment under the relevant funding arrangement entered into by the Owners for the purpose of financing the Purchase Price (or any part thereof) does not fall on a Payment Date, a Purchase Option Date or a date specified by the Owners in any Termination Notice.
“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for business in the principal business centres of Shanghai, Singapore, Amsterdam and Piraeus or:
(a) |
in respect of a day on which a payment is required to be made or other dealing is due to take place under this Agreement in Dollars, a day on which banks are open in New York City; and |
54
(b) |
in respect of the calculation of any Initial Variable Charterhire or Variable Charterhire, a US Government Securities Business Day. |
“Builder” has the meaning ascribed to such term in the MOA.
“Builder’s Warranties” means the guarantees and/or warranties provided by the Builder to the Head Sellers under Article IX of the Shipbuilding Contract and assigned by the Head Sellers to the Charterers which the Charterers will on-assign to the Owners pursuant to the Builder’s Warranties Assignment.
“Builder’s Warranties Assignment” means the tripartite assignment executed between (a) the Head Sellers (b) the Charterers and (c) the Owners in relation to the Builder’s Warranties in relation to the Vessel.
“Cancelling Date” has the meaning ascribed to such term in the MOA.
“Change of Control” means:
(a) |
the Guarantor ceasing to directly own one hundred percent (100%) of the shares in the Charterers; or |
(b) |
Mr. Ioannis Alafouzos and Mr. Themistoklis Alafouzos cease to hold less than 35% of the shares (directly or indirectly) of the Guarantor. |
“Charter Period” means the period described in Clause 32.1 unless it is terminated earlier in accordance with the provisions of this Charter.
“Charterhire” means each of, as the context may require, all of the instalments of hire payable hereunder on each applicable Payment Date comprising in each case either (before the Reference Date) both Initial Fixed Charterhire and Initial Variable Charterhire or (after the Reference Date) both Fixed Charterhire and Variable Charterhire, as further detailed in Clause 36.
“Commencement Date” means the date on which Delivery takes place.
“Credit Adjustment Spread” means zero point one five per cent. (0.15%);
“Delisting” means the Guarantor ceasing to be listed on the Oslo Stock Exchange (Oslo Børs). both:
(a) |
the Oslo Stock Exchange (Oslo Børs); and |
(b) |
the New York Stock Exchange. |
“Delivery” means the physical and legal delivery of the Vessel from the Owners to the Charterers pursuant to the terms of this Charter.
“Dollars” and “US$” mean the lawful currency for the time being of the United States of America.
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“Earnings” means all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Charterers and which arise out of the use or operation of the Vessel, including (but not limited to):
(a) |
all freight, hire and passage moneys; |
(b) |
any compensation payable in the event of requisition of the Vessel for hire; |
(c) |
any remuneration for salvage and towage services; |
(d) |
any demurrage and detention moneys; |
(e) |
damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of the Vessel; |
(f) |
all moneys which are at any time payable to the Charterers in relation to general average contribution; and |
(g) |
if and whenever the Vessel is employed on terms whereby any moneys falling within paragraphs (a) to (f) are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to the Vessel. |
“Emissions Allowances” means an allowance, credit, quota, permit or equivalent, representing a right of a vessel to emit a specified quantity of greenhouse gas emissions recognised by the Emissions Scheme.
“Emissions Scheme” means a greenhouse gas emissions trading scheme which for the purposes of this Charter shall include the EU ETS and any other similar systems imposed by applicable lawful authorities that regulate the issuance, allocation, trading or surrendering of Emissions Allowances.
“Environmental Claim” means any claim by any governmental, judicial or regulatory authority or any other person which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law and, for this purpose, “claim” includes a claim for damages, compensation, contribution, injury, fines, losses and penalties or any other payment of any kind, including in relation to clean-up and removal, whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset.
“Environmental Incident” means:
(a) |
any release, emission, spill or discharge of Environmentally Sensitive Material whether within the Vessel or from the Vessel into any other vessel or into or upon the air, water, land or soils (including the seabed) or surface water; or |
(b) |
any incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, water, land or soils (including the seabed) or surface water from a vessel other than the Vessel and which involves a collision between the Vessel and such other vessel or some other incident of navigation or operation, in either |
56
case, in connection with which the Vessel is actually or potentially liable to be arrested, attached, detained or injuncted and/or the Vessel and/or any Obligors and/or any operator or manager of the Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or
(c) |
any other incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, water, land or soils (including the seabed) or surface water otherwise than from the Vessel and in connection with which the Vessel is actually or potentially liable to be arrested and/or where any Obligors and/or any operator or manager of the Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action. |
“Environmental Law” means any present or future law relating to pollution or protection of human health or the environment, to conditions in the workplace, to the carriage, generation, handling, storage, use, release or spillage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material including any law pertaining to any Emission Scheme.
“Environmentally Sensitive Material” means and includes all contaminants, oil, oil products, toxic substances and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous.
“EU ETS” means the European Union Emissions Trading System specifically applicable to shipping pursuant to the European Directive 2023/959 amending European Directive 2003/87/EC and Commission Implementing Regulation (EU) 2023/2599 of 22 November 2023 laying down rules for the application of Directive 2003/97/EC of the European Parliament and of the Council as regards the administration of shipping companies by administering authorities in respect of a shipping company.
“ETS and Fuel EU Maritime Letter” shall have the meaning as defined under Clause 40.5(c).
“Expiry Owners’ Costs” means an amount equal to sixty five per cent. (65%) of the Opening Capital Balance.
“Fair Market Value” means the value of the Vessel determined as follows:
(a) |
subject to sub-paragraph (b) below, the arithmetic mean of the valuations shown by two (2) valuation reports each addressed to the Buyers and prepared at the Sellers’ cost: |
(i) |
on a date no earlier than thirty (30) days prior to the relevant date of valuation; |
(ii) |
by Approved Valuers one nominated by the Owners and the other nominated by the Charterers (but with the report addressed to the Owners); |
(iii) |
without physical inspection of the Vessel; and |
(iv) |
on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, without taking into account any charter; and |
57
(b) |
if there is a discrepancy of five per cent. (5%) or more between the market valuations shown on the two (2) valuation reports obtained pursuant to paragraph (a) above (using the lower valuation figure as the denominator), then a third valuation shall be obtained and prepared on the same terms and conditions as set out under paragraph (a) above (except that the third valuation report additionally required under this sub-paragraph (b) shall be prepared by an Approved Valuer nominated by the Owners), with the arithmetic mean taken from the valuations shown by such three (3) valuation reports. |
“Fee Letter” mean the fee letter referred to under Clause 44.1 for payment of the Arrangement Fee.
“Financial Indebtedness” means, in relation to a person (the “debtor”), a liability of the debtor:
(a) |
for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor; |
(b) |
under any loan stock, bond, note or other security issued by the debtor; |
(c) |
under any acceptance credit, guarantee or letter of credit facility made available to the debtor; |
(d) |
under a financial lease, a deferred purchase consideration arrangement (other than deferred payments for assets or services obtained on normal commercial terms in the ordinary course of business) or any other agreement having the commercial effect of a borrowing or raising of money by the debtor; |
(e) |
under any foreign exchange transaction, any interest or currency swap 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 paragraphs (a) to (e) if the references to the debtor referred to the other person. |
“Financial Instruments” means the applicable loan or facility agreement entered into between the Owners (or their affiliate) and the Owners’ Financiers and any mortgage, deed of covenants, assignment in respect of any of the Leasing Documents, assignment in respect of Earnings, Insurances and Requisition Compensation, manager’s undertaking and subordination (including assignment of manager’s interests in the Insurances) or any other financial security instruments granted by the Owners to the Owners’ Financiers as security for the financing or refinancing of the Owners’ acquisition of the Vessel.
“First Payment Date” shall have the meaning as defined under 36.5(a36.6(a).
“Fixed Charterhire” shall have the meaning as defined under Clause 36.4(a36.5(a).
“Flag State” means the flag state named in Box 5 of this Charter or any other state or jurisdiction approved in writing by the Owners (whose approval shall not be unreasonably withheld or delayed).
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“Fleet Vessel” means any ship or vessel (including, but not limited to, the Vessel, the Additional Other Vessel and the Other Vessel) from time to time wholly leased, hired, chartered or financed under any lease, hire purchase agreement, charter or any other financing arrangement by affiliates of the Owners and/or the Other Owner to subsidiaries or affiliates of the Guarantor.
“Fuel EU Maritime” means Fuel EU Maritime Regulation 2023/1805 dated 13 September 2023 on the use of renewable and low-carbon fuels in maritime transport, and amending Directive 2009/16/EC.
“Further Arrangement Fee” has the meaning as defined under Clause 44.1.
“Further Arrangement Fee Letter” means the fee letter referred to under Clause 44.1 for payment of the Further Arrangement Fee.
“General Assignment” means the assignment agreement executed or to be executed between the Charterers and the Owners in respect of the Vessel, pursuant to which the Charterers shall, inter alia, assign its rights under:
(a) |
the Earnings, Insurances, Requisition Compensation in respect of the Vessel; and |
(b) |
any Assignable Sub-charter; in favour of the Owners. |
“Group” means the Guarantor and its Subsidiaries (whether directly or indirectly owned) from time to time.
“Guarantee” means the guarantee executed by the Guarantor in favour of the Owners on or about the date hereof.
“Guarantor” means Okeanis Eco Tankers Corp., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with registration number 96382 and its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Republic of the Marshall Islands MH 96960.
“Head MOA” means the memorandum of agreement dated 29 June 2021 and made between the Charterers (in their capacity as buyers) and the Head Sellers (in their capacity as sellers), pursuant to which the Head Sellers agreed to sell and the Charterers agreed to purchase the Vessel upon the terms and conditions set out therein.
“Head Sellers” means Sandre Enterprises S.A., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with registration number 106174 and registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro MH 96960.
“Hire Period” means (i) in the case of the first Hire Period, the period commencing on the Commencement Date and ending on the First Payment Date; and (ii) in the case of each subsequent Payment Date, the period of commencing on the last day of the preceding Hire Period and ending on the next occurring Payment Date.
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“Historic Term SOFR” means, in relation to any Hire Period, the most recent applicable Term SOFR for a period equal in length to that Hire Period and which is as of a day which is no more than three US Government Securities Business Days before the Quotation Day.
“Holding Company” means, in relation to a person, any other person in relation to which (i) it is a Subsidiary or (ii) it is a Subsidiary of a Subsidiary.
“IAPPC” means a valid international air pollution prevention certificate for the Vessel issued pursuant to the MARPOL Protocol.
“IFRS” means International Financing Reporting Standards.
“Initial Fixed Charterhire” has the meaning defined in Clause 36.4(a).
“Initial Market Value” has the meaning ascribed to such term in the MOA.
“Initial Variable Charterhire” has the meaning defined in Clause 36.4(b).
“Insurances” means:
(a) |
all policies and contracts of insurance, including entries of the Vessel in any protection and indemnity or war risks association, which are effected in respect of the Vessel or otherwise in relation to it whether before, on or after the date of this Charter; and |
(b) |
all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium and any rights in respect of any claim whether or not the relevant policy, contract of insurance or entry has expired on or before the date of this Charter. |
“Interpolated Historic Term SOFR” means, in relation to any Hire Period, the rate (rounded to the same number of decimal places as Term SOFR) which results from interpolating on a linear basis between:
(A) |
either: |
(1) |
the most recent applicable Term SOFR (as of a day which is not more than three US Government Securities Business Days before the Quotation Day) for the longest period (for which Term SOFR is available) which is less than the Hire Period; or |
(2) |
if no such Term SOFR is available for a period which is less than the Hire Period, SOFR for a day which is no more than five US Government Securities Business Days (and no less than two US Government Securities Business Days) before the Quotation Day; and |
(B) |
the most recent applicable Term SOFR (as of a day which is not more than three US Government Securities Business Days before the Quotation Day) for the shortest period (for which Term SOFR is available) which exceeds the Hire Period. |
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“Interpolated Term SOFR” means, in relation to any Hire Period, the rate (rounded to the same number of decimal places as Term SOFR) which results from interpolating on a linear basis between:
(A)either:
(1) |
the applicable Term SOFR (as of the Quotation Day in respect of that Hire Period) for the longest period (for which Term SOFR is available) which is less than that Hire Period; or |
(2) |
if no such Term SOFR is available for a period which is less than that Hire Period, SOFR for the day which is two US Government Securities Business Days before the Quotation Day; and |
(B) |
the applicable Term SOFR (as of the Quotation Day in respect of that Hire Period) for the shortest period (for which Term SOFR is available) which exceeds that Hire Period. |
“Interest Rate” means, for any Hire Period, the applicable Reference Rate.
“ISM Code” means the International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organisation Assembly as Resolutions A.741 (18) and A.788 (19), as the same may be amended or supplemented from time to time (and the terms “safety management system”, “Safety Management Certificate” and “Document of Compliance” have the same meanings as are given to them in the ISM Code).
“ISPS Code” means the International Ship and Port Security Code as adopted by the Conference of Contracting Governments to the Safety of Life at Sea Convention 1974 on 13 December 2002 and incorporated as Chapter XI-2 of the Safety of Life at Sea Convention 1974, as the same may be supplemented or amended from time to time.
“ISSC” means a valid international ship security certificate for the Vessel issued pursuant to the ISPS Code.
“Joint Surveyor” shall have the meaning as defined under Clause 41.8.
“Leasing Documents” means this Charter, the Guarantee, the MOA, the Fee Letter, the Further Fee Letter, any QEL , the Security Documents, any other document designated as a “Leasing Document” as agreed between the Charterers and the Owners and each, as the context may require, the “Leasing Document”.
“Major Casualty” means any casualty to the Vessel in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds US$2,000,000 or the equivalent in any other currency.
“Manager’s Undertaking” means, in relation to an Approved Manager, a letter of undertaking to be executed by that Approved Manager in favour of the Owners subordinating the rights of that Approved Manager against the Vessel and the Charterers to the rights of the Owners.
“Mandatory Sale” has the meaning given to that term in Clause 55A.
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“Mandatory Sale Date” has the meaning given to that term in Clause 55A.
“Mandatory Sale Price” means, in respect of the Mandatory Sale Date, the aggregate of:
(a) |
the Owners’ Costs prevailing as at the Mandatory Sale Date; |
(b) |
any Charterhire accrued but unpaid as at the date of payment of the Mandatory Sale Price; |
(c) |
any Breakfunding Costs including any Swap Costs; |
(d) |
any documented legal or other costs incurred by the Owners in connection with the exercise of the Mandatory Sale; and |
(e) |
aside from the amounts described under paragraphs (a) to (d) above, any other moneys due and owing under the Leasing Documents at the Mandatory Sale Date. |
“Margin” means two point four five per cent. (2.45%) per annum.
“Market Disruption Rate” means :
(a) |
prior to the Reference Date, the percentage rate per annum which is the aggregate of the Reference Rate and the Credit Adjustment Spread.; and |
(b) |
following the Reference Date, the Reference Rate. |
“MARPOL Protocol” means Annex VI (Regulations for the Prevention of Air Pollution from Ships) to the International Convention for the Prevention of Pollution from Ships 1973 (as amended in 1978 and 1997).
“Material Adverse Effect” means, in the reasonable opinion of the Owners, a material adverse effect on:
(a) |
the business, operations, property, condition (financial or otherwise) of any Obligor or the Group (taken as a whole); or |
(b) |
the ability of any Obligor to perform its obligations under any Leasing Document to which it is a party; or |
(c) |
the validity or enforceability of, or the effectiveness or ranking of any Security Interests granted pursuant to, any of the Leasing Documents or the rights or remedies of the Owners under any of the Leasing Documents. |
“MOA” means the memorandum of agreement dated on or about the date of this Charter and made between the Owners (in their capacity as buyers) and the Charterers (in their capacity as sellers), pursuant to which the Charterers agree to sell and the Owners agree to purchase the Vessel upon the terms and conditions set out therein.
“Net Sales Proceeds” has the meaning given to it under Clause 42.1(c).
“Net Trading Proceeds” has the meaning given to it under Clause 42.1(b).
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“Nominated Purchaser” has the meaning given to it under Clause 42.1(c).
“Obligatory Insurances” means any insurances of the Vessel required to be effected by or on behalf of the Charterers pursuant to Clause 39.
“Obligors” means:
(a) |
the Charterers; |
(b) |
the Guarantor; |
(c) |
the Approved Managers as at the date of this Charter which is an entity within the Group; |
(d) |
any sub-charterer of the Vessel which is an entity within the Group; and |
(e) |
any other party providing security for the Charterers’ obligations under this Charter pursuant to a Security Document or otherwise (except any Approved Manager or sub-charterer which are not entities within the Group). |
“Opening Capital Balance” shall have the same meaning as defined under the MOA.
“Operating Account” means an interest bearing account opened or to be opened in the name of the Charterers with the Account Bank.
“Option Premium” means an amount of US$1,500,000US$6,000,000.
“Original Financial Statements” means in relation to the Guarantor, its audited consolidated financial statements for the fiscal year ended 31 December 2020 and its unaudited consolidated financial statements for the fiscal year ended 31 December 2021.
“Original Jurisdiction” means, in relation to an Obligor, the jurisdiction under whose laws they are incorporated as at the date of this Charter.
“Other Charters” means, in relation to each Other Vessel, each bareboat charterparty dated on or around the date of this Charter which is entered into between each applicable Other Owner and each applicable Other Charterer.
“Other Charterer” means, in relation to an Other Vessel, Ark Marine S.A..
“Other Leasing Documents” means the Leasing Documents as defined in the Other Charter.
“Other Owner” means, in relation to an Other Vessel, Sea 289 Leasing Co. Limited.
“Other Vessel” means each, or as the context may require, Hull Number 3211.
“Owners’ Costs” means, on any relevant date, (i) the Opening Capital Balance minus (ii) the aggregate of Initial Fixed Charterhire and Fixed Charterhire which has been paid by the Charterers and received by the Owners as at such date.
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“Owners’ Financier” means any financier providing financing or refinancing facilities to the Owners or any affiliate of the Owners in respect of the Owners’ purchase and/or lease of the Vessel to the Charterers under the terms of the Leasing Documents.
“Owners’ Surveyor” shall have the meaning as defined under Clause 41.9.
“Party” means a party to this Charter, namely the Owners or the Charterers.
“Payment Date” shall have the meaning as defined under Clause 36.536.6.
“Permitted Security Interest” means:
(a) |
any Security Interest created by a Security Document or a Financial Instrument; |
(b) |
any lien for unpaid master’s and crew’s wages in accordance with the ordinary course of operation of the Vessel or in accordance with usual reputable maritime practice; |
(c) |
any lien for salvage; |
(d) |
any lien for master’s disbursements incurred in the ordinary course of trading; |
(e) |
any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of the Vessel provided such liens do not secure amounts more than thirty (30) days overdue; |
(f) |
any Security Interest created in favour of a plaintiff or defendant in any action of the court or tribunal before whom such action is brought as security for costs and expenses where the Owners are prosecuting or defending such action in good faith by appropriate steps; and |
(g) |
Security Interests arising by operation of law in respect of taxes which are not overdue or for payment of taxes which are overdue for payment but which are being contested by the Owners or the Charterers in good faith by appropriate steps and in respect of which adequate reserves have been made, |
provided that the foregoing have not arisen due to the default or omission of any Obligor.
“Poseidon Principles” means the financial industry framework for assessing and disclosing the climate alignment of ship finance portfolios published in June 2019 as the same may be amended or replaced to reflect changes in applicable law or regulation or the introduction of or changes to mandatory requirements of the International Maritime Organisation from time to time.
“Potential Termination Event” means, an event or circumstance specified in Clause 47 (Termination Event) which would with the giving of any notice, the lapse of time, and/or a determination of the Owners, constitute a Termination Event.
“Prepositioning Date” shall have the same meaning as defined under the MOA.
“Prohibited Countries” means countries or territories whose government is the target of Sanctions or that is subject to comprehensive country-wide or territory-wide Sanctions (currently and, in any case, as long as the Sanctions remain in place, as regards United States Sanctions, Cuba, Syria, Iran, North Korea, Crimea and Venezuela), including , in particular but not limited to or pursuant to the US’s Office of Foreign Assets Asset Control of the U.S. US Department of Treasury (“OFAC”). {WFW: Consistency with Nissos Anafi BBC}
64
“Prohibited Person” means any person who is the subject of Sanctions (whether designated by name or by reason of being included in a class of persons to whom the applicable Sanctions apply in accordance with their terms).
“Published Rate” means Term SOFR for three (3) months.
“Published Rate Replacement Event” means, in relation to a Published Rate:
(a) |
the methodology, formula or other means of determining that Published Rate has, in the opinion of the Owners and the Charterers, materially changed; |
(b) |
(i) |
(I) |
the administrator of that Published Rate or its supervisor publicly announces that such administrator is insolvent; or |
(II) |
information is published in an order, decree, notice, petition or filing, howsoever described, of or filed with a court, tribunal, exchange, regulatory authority or similar administrative, regulatory or judicial body which reasonably confirms that the administrator of that Published Rate is insolvent, |
provided that, in each case, at that time, there is no successor administrator to continue to provide that Published Rate;
(ii) |
the administrator of that Published Rate publicly announces that it has ceased or will cease, to provide that Published Rate permanently or indefinitely and, at that time, there is no successor administrator to continue to provide that Published Rate; |
(iii) |
the supervisor of the administrator of that Published Rate publicly announces that such Published Rate has been or will be permanently or indefinitely continued; or |
(iv) |
the administrator of that Published Rate or its supervisor publicly announces that that Published Rate may no longer be used; or |
(c) |
the administrator of that Published Rate (or the administrator of an interest rate which is a constituent element of that Published Rate) determines that that Published Rate should be calculated in accordance with its reduced submissions or other contingency or fallback policies or arrangements and either: |
(i) |
the circumstance(s) or event(s) leading to such determination are not (in the opinion of the Owners and the Charterers) temporary; or |
65
(ii) |
that Published Rate is calculated in accordance with any such policy or arrangement for a period no less than a time period approved by the Owners and the Charterers; or |
(d) |
in the opinion of the Owners and the Charterers, that Published Rate is otherwise no longer appropriate for the purposes of calculating interest under this Charter. |
“Purchase Option” means the purchase option referred to in Clause 55.1.
“Purchase Option Date” shall have the meaning ascribed thereto in Clause 55.2.
“Purchase Option Notice” shall have the meaning ascribed thereto in Clause 55.2.
“Purchase Option Price” means, in respect of any Purchase Option Date:
(a) |
if If the Purchase Option Date falls on or after the first (1st) anniversary of the Commencement Reference Date but prior to the seventh (7th) anniversary of the Commencement Reference Date, the aggregate of: |
(i) |
the Owners’ Costs prevailing as at the relevant Purchase Option Date; |
(ii) |
the Relevant Fee (if appliable); |
(ii) |
(iii)any Charterhire accrued but unpaid as at the date of payment of the Purchase Option Price; |
(iii) |
(iv)any Breakfunding Costs including any Swap Costs; |
(iv) |
(v)any documented legal or other costs incurred by the Owners in connection with the exercise of the Purchase Option under Clause 55 (Purchase Option); and |
(v) |
(vi)aside from the amounts described under paragraphs (i) to (viv) above, any other moneys due and owing under the Leasing Documents at the relevant Purchase Option Date; |
(b) |
if the Purchase Option Date falls on or after the seventh (7th) anniversary of the Commencement Reference Date, the aggregate of: |
(i) |
the Amended Expiry Owners’ Costs; |
(ii) |
any Charterhire accrued but unpaid as at the date of payment of the Purchase Option Price; |
(iii) |
any documented legal or other costs incurred by the Owners in connection with the exercise of the Purchase Option under Clause 55 (Purchase Option); and |
(iv) |
aside from the amounts described under paragraphs (i) to (iii) above, any other moneys due and owing under the Leasing Documents at the relevant Purchase Option Date. |
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“Purchase Price” has the meaning given to it in the MOA.
“QEL” means any agreement (entered or, as the context may require, to be entered into) between the Owners, the Owners’ Financiers (if applicable), the Charterers and (if applicable) any sub-charterer.
“Quotation Day” means, in relation to any Hire Period, two (2) US Government Securities Business Days before the first day of that Hire Period unless market practice differs in the relevant syndicated loan market in which case the Quotation Day will be determined by the Owners in accordance with that market practice (and if quotations would normally be given on more than one day, the Quotation Day will be the last of those days).
“Reference Rate” means, in relation to a Hire Period:
(a) |
the applicable Term SOFR for three (3) months as of 5:00pm New York time on the Quotation Day for dollars; or |
(b) |
as otherwise determined pursuant to Clause 37 (Changes to Interest Rate, Default Interest), |
and if, in either case, (i) prior to (and including) the Reference Date, the aggregate of that rate and the Credit Adjustment Spread is less than zero, the Reference Rate shall be deemed to be such a rate that the aggregate of the Reference Rate and the Credit Adjustment Spread is zero and (ii) following (and excluding) the Reference Date, if that rate is less than zero, the Reference Rate shall be deemed to be zero.
“Relevant Jurisdiction” means, in relation to an Obligor:
(a) |
its Original Jurisdiction; |
(b) |
any jurisdiction where any property owned by it and charged under a Leasing Document is situated; |
(c) |
any jurisdiction where it conducts its business; or |
(d) |
any jurisdiction whose laws govern the perfection of any of the Security Documents entered into by it creating a Security Interest. |
“Relevant Nominating Body” means any applicable central bank, regulator or other supervisory authority or a group of them, or any working group or committee sponsored or chaired by, or constituted at the request of, any of them or the Financial Stability Board.
“Relevant Fee” means, in relation to the Vessel, the amount set out corresponding to the relevant Purchase Option Date below:
Relevant Anniversary Date |
Relevant Fee (US$) |
1st Anniversary |
1.5% of the Owners’ Costs |
2nd Anniversary |
1.25% of the Owners’ Costs |
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3rd Anniversary |
1% of the Owners’ Costs |
4th Anniversary |
0.75% of the Owners’ Costs |
5th Anniversary |
0.5% of the Owners’ Costs |
6th Anniversary |
0% of the Owners’ Costs |
“Replacement Reference Rate” means a reference rate which is:
(a) |
formally designated, nominated or recommended as the replacement for a Published Rate by: |
(i)the administrator of that Published Rate (provided that the market or economic reality that such benchmark rate measures is the same as that measured by that Published Rate); or
(ii)any Relevant Nominating Body,
and if replacements have, at the relevant time, been formally designated, nominated or recommended under both paragraphs, the “Replacement Reference Rate” will be the replacement under sub-paragraph (ii) above;
(b) |
in the opinion of the Owners and the Charterers, generally accepted in the international or any relevant domestic syndicated loan markets as the appropriate successor or alternative to that Published Rate; or |
(c) |
in the opinion of the Owners and the Charterers, an appropriate successor or alternative to a Published Rate. |
“Requisition Compensation” includes all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (a) of the definition of “Total Loss”.
“Sanctions” means any sanctions (including US “secondary sanctions”), embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment, exporting, financing or making assets available (or other activities similar to or connected with any of the foregoing):
(a) |
imposed by law or regulation of the United Kingdom, the Council of the European Union, the United Nations or its Security Council, the People’s Republic of China, the Special Administrative Region of Hong Kong or the United States of America; or |
(b) |
otherwise imposed by any law or regulation which are applicable to and/or binding on any Obligor. |
“Sanctions Advisory” means the Sanctions Advisory for the Maritime Industry, Energy and Metals Sectors, and Related Communities issued May 14, 2020 by the US Department of the Treasury, Department of State and Coast Guard, as may be amended or supplemented, and any similar future advisory.
68
“Sanctioned Ship” means a ship which is the subject of Sanctions.
“Security Documents” means:
(a) |
the Account Charge; |
(b) |
the General Assignment; |
(c) |
the Shares Security; |
(d) |
the Builder’s Warranties Assignment; |
(e) |
each Manager’s Undertaking; and |
(f) |
any other security document conferring any Security Interest in respect of the obligations of the Charterers under or in connection with this Charter. |
“Security Interest” means:
(a) |
a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or any other security interest of any kind; |
(b) |
the security rights of a plaintiff under an action in rem; or |
(c) |
any other right which confers on a creditor or potential creditor a right or privilege to receive the amount actually or contingently due to it ahead of the general unsecured creditors of the debtor concerned; however this paragraph (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution. |
“Shareholder” means the Guarantor.
“Shares Security” means a first priority charge/pledge over the shares of the Charterers executed or to be executed by the Shareholder in favour of the Owners.
“Shipbuilding Contract” means the shipbuilding contract dated 28 September 2020 entered into between the Head Sellers (as defined in the MOA) and the Builder (in its capacity as seller) for the construction and purchase of the Vessel as may from time to time be amended, supplemented.
“Shipbuilding Contract Price” means the contract price to be paid by the Head Sellers (as defined in the MOA) to the Builder under the Shipbuilding Contract.
“SOFR” means the secured overnight financing rate (SOFR) administered by the Federal Reserve Bank of New York (or any other person which takes over the administration of that rate) published (before any correction, recalculation or republication by the administrator) by the Federal Reserve Bank of New York (or any other person which takes over the publication of that rate).
“Statement of Compliance” means a Statement of Compliance related to fuel oil consumption pursuant to regulations 6.6 and 6.7 of Annex VI.
69
“Subsidiary” means a subsidiary within the meaning of section 1159 of the UK Companies Act 2006.
“Swap Costs” means any amount payable by the Owners or documented costs incurred by the Owners (after netting out any gains) as a result of the termination or close-out of any Treasury Transaction entered into in connection with the Leasing Documents.
“Termination Date” has the meaning given to it under Clause 47.2.
“Termination Event” means any event described in Clause 47 (Termination Events).
“Termination Fee” means one point five per cent. (1.50%) of the Owners’ Costs as at the relevant date.
“Termination Notice” has the meaning given to it under Clause 47.2.
“Term SOFR” means the term SOFR reference rate administered by CME Group Benchmark Administration Limited (or any other person which takes over the administration of that rate) for the relevant period published (before any correction, recalculation or republication by that administrator) by CME Group Benchmark Administration Limited (or any other person which takes over the administration of that rate).
“Termination Sum” means, in respect of any date (such date being referred to as the “Relevant Date” for the purposes of this definition only), the aggregate of (without double counting amounts that may be included in more than one sub-paragraph below):
(a) |
the Owners’ Costs prevailing as at the Relevant Date; |
(b) |
any Variable Charterhire accrued and unpaid as at the date of payment of the Termination Sum; |
(c) |
the Termination Fee; |
(d) |
any Breakfunding Costs including any Swap Costs; |
(e) |
any and all evidenced and documented direct costs, losses and liabilities incurred by the Owners as a result of the early termination of the leasing under this Charter (including any losses based on estimated market charter rates provided by an Approved Valuer of re-chartering the Vessel to another party other than the Charterers for the period up until the natural expiry of the Charter Period) including but not limited to any legal costs, any agency or broker fees incurred in attempting to re-charter or otherwise dispose of the Vessel; |
(f) |
any and all documented costs, losses and liabilities incurred by the Owners in locating, repossessing, recovering, repositioning, berthing, insuring and maintaining the Vessel and/or in collecting any payments due under this Charter and/or in obtaining the due performance of the obligations of the Charterers under this Charter or the other Leasing Documents; and |
70
(g) |
aside from the amounts described under paragraphs (a) to (f) above, any other moneys due and owing under the Leasing Documents at the Relevant Date including any default interest on amounts under (a) to (f) above. |
“Total Loss” means:
(a) |
any expropriation, confiscation, requisition (other than a requisition for hire) or acquisition of the Vessel, whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority; |
(b) |
any requisition for hire, arrest, condemnation, capture, seizure or detention of the Vessel (including any hijacking or theft but excluding any event specified in paragraph (a) of this definition) unless it is redelivered within thirty (30) days to the full control of the Owners or the Charterers; or |
(c) |
actual, constructive, compromised, agreed or arranged total loss of the Vessel. |
“Total Loss Date” means, in relation to the Total Loss of the Vessel:
(a) |
in the case of a Total Loss occurring under paragraph (a) of the definition of Total Loss, on the date on which the expropriation, confiscation, requisition or, as the case may be, the acquisition of the Vessel is completed by delivery of the Vessel to the relevant government or official authority or the person or persons claiming to be or to represent the relevant government or official authority; |
(b) |
in the case of a Total Loss occurring under paragraph (b) of the definition of Total Loss, the date falling on the expiration of such thirty (30) day period; |
(c) |
in the case of an actual loss of the Vessel, the date on which it occurred; and |
(d) |
in the case of a constructive, compromised, agreed or arranged total loss of the Vessel, the earliest of: |
(i) |
the date when the Vessel was last heard of; |
(ii) |
the date on which a notice of abandonment is given to the insurers; and |
(iii) |
the date of any compromise, arrangement or agreement made by or on behalf of the Charterers with the insurers in which the insurers agree to treat the Vessel as a Total Loss. |
“Total Loss Payment Date” means, following the occurrence of a Total Loss, the earlier of:
(a) |
the date falling ninety (90) days after the Total Loss Date or such later date as the Owners may agree; and |
(b) |
the date on which the Owners receive the Total Loss Proceeds. |
71
“Total Loss Proceeds” means the proceeds of any policy or contract of insurance or any Requisition Compensation in each case arising in respect of a Total Loss.
“Total Loss Termination Sum” means, in respect of any date (such date being referred to as the “Relevant Date” for the purposes of this definition only), the aggregate of (without double counting amounts that may be included in more than one sub-paragraph below):
(a) |
the Owners’ Costs prevailing as at the Relevant Date; |
(b) |
any Variable Charterhire accrued and unpaid as at the date of payment of the Termination Sum; |
(c) |
any Breakfunding Costs including any Swap Costs; |
(d) |
any and all evidenced and documented direct costs, losses and liabilities incurred by the Owners as a result of the early termination of the leasing under this Charter (including any losses based on estimated market charter rates provided by an Approved Valuer of re-chartering the Vessel to another party other than the Charterers for the period up until the natural expiry of the Charter Period) including but not limited to any legal costs, any agency or broker fees incurred in attempting to re-charter or otherwise dispose of the Vessel; |
(e) |
any and all documented costs, losses and liabilities incurred by the Owners in collecting any payments due under this Charter and/or in obtaining the due performance of the obligations of the Charterers under this Charter or the other Leasing Documents; and |
(f) |
aside from the amounts described under paragraphs (a) to (e) above, any other moneys due and owing under the Leasing Documents at the Relevant Date including any default interest on amounts under (a) to (e) above. |
“Treasury Transaction” means any derivative transaction entered into in connection with protection against or benefit from any fluctuation in price or rate.
“US” means the United States of America.
“US Government Securities Business Day” means any day other than:
(a) |
a Saturday or a Sunday; and |
(b) |
a day on which the Securities Industry and Financial Markets Association (or any successor organisation) recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in US Government securities. |
“US Tax Obligor” means:
(a) |
a person which is resident for tax purposes in the US; or |
(b) |
a person some or all of whose payments under the Leasing Documents are from sources within the US for US federal income tax purposes. |
72
“Variable Charterhire” shall have the meaning as defined under Clause 36.4(b36.5(b).
“Vessel” means the VLCC with hull number 3212 and registered or to be registered under the name of the Owners under the Flag State upon Delivery.
66.2 |
In this Charter: |
“agreed form” means, in relation to a document, such document in a form agreed in writing between the Owners and the Charterers;
“asset” includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;
“company” includes any partnership, joint venture and unincorporated association;
“consent” includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation;
“contingent liability” means a liability which is not certain to arise and/or the amount of which remains unascertained;
“control” over a particular company means the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:
(a) |
cast, or control the casting of, fifty one per cent. (51%) or more of the maximum number of votes that might be cast at a general meeting of such company; or |
(b) |
appoint or remove all, or the majority, of the directors or other equivalent officers of such company; or |
(c) |
give directions with respect to the operating and financial policies of such company with which the directors or other equivalent officers of such company are obliged to comply; |
“document” includes a deed; also a letter or fax or email;
“expense” means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;
“law” includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;
“legal or administrative action” means any legal proceeding or arbitration and any administrative or regulatory action or investigation;
“liability” includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;
“months” shall be construed in accordance with Clause 66.3;
73
“person” includes any company; any state, political sub-division of a state and local or municipal authority; and any international organisation;
“policy”, in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;
“protection and indemnity risks” means the usual risks covered by a protection and indemnity association which is a member of the International Group of Protection and Indemnity Clubs including pollution risks, extended passenger cover and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 6 of the International Hull Clauses (1/11/02 or 1/11/03), clause 8 of the Institute Time Clauses (Hulls)
(1/10/83) or clause 8 of the Institute Time Clauses (Hulls) (1/11/1995) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;
“regulation” includes any regulation, rule, official directive, request or guideline whether or not having the force of law of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation; and
“tax” includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine.
66.3 |
Meaning of “month” |
A period of one or more “months” ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (“the numerically corresponding day”), but:
(a) |
on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or |
(b) |
on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day; |
and “month” and “monthly” shall be construed accordingly.
66.4 |
In this Charter: |
(a) |
references to a Leasing Document or any other document being in the form of a particular appendix or to any document referred to in the recitals include references to that form with any modifications to that form which the Owners approve; |
(b) |
references to, or to a provision of, a Leasing Document or any other document are references to it as amended or supplemented, whether before the date of this Charter or otherwise; |
(c) |
references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Charter or otherwise; and |
74
(d) |
words denoting the singular number shall include the plural and vice versa. |
66.5 |
Headings |
In interpreting a Leasing Document or any provision of a Leasing Document, all clauses, sub-clauses and other headings in that and any other Leasing Document shall be entirely disregarded.
75
EXECUTION PAGE
OWNERS |
|
|
|
SIGNED BY |
) |
for and on behalf of |
) |
SEA 290 LEASING CO. LIMITED |
) |
as attorney-in-fact |
) |
in the presence of |
) |
|
|
Witness’ signature: |
) |
Witness’ name: |
) |
Witness’ address: |
) |
|
|
|
|
|
|
CHARTERERS |
|
|
|
SIGNED BY |
) |
for and on behalf of |
) |
THETA NAVIGATION LTD |
|
as attorney-in-fact |
) |
in the presence of |
) |
|
|
Witness’ signature: |
) |
Witness’ name: |
) |
Witness’ address: |
) |
76
SCHEDULE 1
ACCEPTANCE CERTIFICATE
77
SCHEDULE 2
CONDITIONS PRECEDENT
78
EXECUTION PAGES
OWNER |
|
|
|
EXECUTED AND DELIVERED AS A DEED |
) |
by Wan Tsz Chun |
) /s/ Wan Tsz Chun |
|
) |
Its |
) |
for and on behalf of |
) |
SEA 290 LEASING CO. LIMITED |
) |
in the presence of: |
) |
|
|
Witness’ signature: |
) /s/ CHAN Wai Yan Regina |
Witness’ name: CHAN Wai Yan Regina |
) |
Witness’ address: Suites 4610-4619, Jardine House |
) |
1 Connaught Place, Hong Kong |
|
|
|
CHARTERER |
|
|
|
EXECUTED AND DELIVERED AS A DEED |
) |
by Thaleia Kalafati |
) /s/ Thaleia Kalafati |
attorney-in-fact |
) |
for and on behalf of |
) |
THETA NAVIGATION LTD |
) |
in the presence of: |
) |
|
|
Witness’ signature: |
) /s/ Eirini Chaidemenou |
Witness’ name: Eirini Chaidemenou |
) |
Witness’ address: Attorney at Law |
) |
Athens Bar Association |
|
Athens - Greece |
|
|
|
GUARANTOR AND SHAREHOLDER |
|
|
|
EXECUTED AND DELIVERED AS A DEED |
) |
by Thaleia Kalafati |
) /s/ Thaleia Kalafati |
attorney-in-fact |
) |
for and on behalf of |
) |
OKEANIS ECO TANKERS CORP. |
) |
in the presence of: |
) |
|
|
Witness’ signature: |
) /s/ Eirini Chaidemenou |
Witness’ name: Eirini Chaidemenou |
) |
Witness’ address: Attorney at Law |
) |
Athens Bar Association |
|
Athens - Greece |
|
9
EXECUTION VERSION
Dated 21 March 2022
OKEANIS ECO TANKERS CORP.
as Guarantor
– and –
SEA 290 LEASING CO. LIMITED
as Owner
GUARANTEE
relating to a Bareboat Charter of one (1) very large crude carrier
with Builder’s Hull No. 3212
INDEX
Clause |
Page |
|
1 |
INTERPRETATION |
1 |
|
|
|
2 |
GUARANTEE |
2 |
|
|
|
3 |
LIABILITY AS PRINCIPAL AND INDEPENDENT DEBTOR |
3 |
|
|
|
4 |
EXPENSES |
3 |
|
|
|
5 |
ADJUSTMENT OF TRANSACTIONS |
4 |
|
|
|
6 |
PAYMENTS |
4 |
|
|
|
7 |
INTEREST |
4 |
|
|
|
8 |
SUBORDINATION |
4 |
|
|
|
9 |
ENFORCEMENT |
5 |
|
|
|
10 |
REPRESENTATIONS AND WARRANTIES |
5 |
|
|
|
11 |
UNDERTAKINGS |
7 |
|
|
|
12 |
JUDGMENTS AND CURRENCY INDEMNITY |
11 |
|
|
|
13 |
SET-OFF |
11 |
|
|
|
14 |
SUPPLEMENTAL |
12 |
|
|
|
15 |
ASSIGNMENT |
13 |
|
|
|
16 |
NOTICES |
14 |
|
|
|
17 |
INVALIDITY OF LEASING DOCUMENTS |
14 |
|
|
|
18 |
INCORPORATION OF BAREBOAT CHARTER PROVISIONS |
15 |
|
|
|
19 |
GOVERNING LAW AND JURISDICTION |
15 |
|
|
|
SCHEDULE 1 |
16 |
|
|
|
|
FORM OF COMPLIANCE CERTIFICATE |
16 |
|
|
|
|
EXECUTION PAGE |
17 |
EXECUTION VERSION
THIS GUARANTEE is made on 21 March 2022
BETWEEN
(1) |
OKEANIS ECO TANKERS CORP., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with registration number 96382 and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the “Guarantor”); and |
(2) |
SEA 290 LEASING CO. LIMITED, a company incorporated under the laws of Hong Kong with registration number 3089456 whose registered office is at 27/F, Three Exchange Square, 8 Connaught Place Central, Hong Kong (the “Owner”, which expression includes its successors and assigns). |
BACKGROUND
(A) |
By a bareboat charter dated 21 March 2022 (the “Bareboat Charter”) and made between (i) the Owner as owner and (ii) Theta Navigation Ltd as charterer (the “Bareboat Charterer”), the Owner has agreed to bareboat charter the Vessel to the Bareboat Charterer pursuant to the terms and conditions contained therein. |
(B) |
The Guarantor is a shareholder of the Bareboat Charterer and holds 100 per cent of all of the issued shares in the Bareboat Charterer. |
(C) |
The execution and delivery to the Owner of this Guarantee is one of the conditions to the purchase of the Vessel by the Owner from the Bareboat Charterer in accordance with the MOA and the chartering of the Vessel by the Owner to the Bareboat Charterer under the Bareboat Charter. |
(D) |
This Guarantee is the Guarantee referred to in the Bareboat Charter. |
IT IS AGREED as follows:
1 |
INTERPRETATION |
1.1 |
Defined expressions. Words and expressions defined in the Bareboat Charter shall have the same meanings when used in this Guarantee unless the context otherwise requires. |
1.2 |
Construction of certain terms. In this Guarantee: |
“bankruptcy” includes a liquidation, receivership or administration and any form of suspension of payments, arrangement with creditors or reorganisation under any corporate or insolvency law of any country.
“Code” means the United States Internal Revenue Code of 1986, as amended.
“Compliance Certificate” means a certificate in the form set out in Schedule 1 (Form of Compliance Certificate) or in any other form agreed between the Guarantor and the Owner.
“control” over a particular company means the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:
(a) |
cast, or control the casting of, more than 51 per cent, of the maximum number of votes that might be cast at a general meeting of such company; |
(b) |
appoint or remove all, or the majority, of the directors or other equivalent officers of such company; or |
(c) |
give directions with respect to the operating and financial policies of such company with which the directors or other equivalent officers of such company are obliged to comply; |
“FATCA” means:
(a) |
sections 1471 to 1474 of the Code or any associated regulations; |
(b) |
any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or |
(c) |
any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the IRS, the US government or any governmental or taxation authority in any other jurisdiction. |
“FATCA Deduction” means a deduction or withholding from a payment under the Bareboat Charter or the Leasing Documents required by or under FATCA.
“FATCA Exempt Party” means a Relevant Party that is entitled under FATCA to receive payments free from any FATCA Deduction.
“Okeanis Group” means the Guarantor and each of the Guarantor’s Subsidiaries (whether directly or indirectly owner) from time to time.
“Party” means a party to this Guarantee.
“Subsidiary” means a subsidiary within the meaning of section 1159 of the Companies Act 2006.
“US Tax Obligor” means:
(a) |
a Party which is resident for tax purposes in the United States of America; or |
(b) |
a Party some or all of whose payments under this Guarantee, the Bareboat Charter are from sources within the United States for US federal income tax purposes. |
1.3References to “Bareboat Charterer”.References to the Bareboat Charterer under this Guarantee shall, for the avoidance of doubt, include reference to the Bareboat Charterer in its various capacities under the Leasing Documents.
1.4 |
Application of construction and interpretation provisions of Bareboat Charter |
Clauses 66.2 to 66.5 of the Bareboat Charter apply, with any necessary modifications, to this Guarantee.
2 |
GUARANTEE |
2.1 |
Guarantee and indemnity. The Guarantor unconditionally and irrevocably: |
(a) |
guarantees the due payment of all amounts payable by the Bareboat Charterer under or in connection with the Leasing Documents; |
2
(b) |
guarantees the punctual performance by the Bareboat Charterer of all the Bareboat Charterer’s obligations under or in connection with the Leasing Documents; |
(c) |
undertakes to pay to the Owner, immediately on the Owner’s demand as if it was the principal obligor, any such amount which is not paid by the Bareboat Charterer when due and payable under or in connection with the Leasing Documents; and |
(d) |
undertakes to fully indemnify, as an independent and primary obligation, the Owner immediately on its demand in respect of all documented claims, expenses, liabilities, costs and losses which are made or brought against or incurred by the Owner as a result of or in connection with any obligation or liability of the Bareboat Charterer under the Leasing Documents and/or any obligation or liability guaranteed by the Guarantor being or becoming unenforceable, invalid, void or illegal; and the amount recoverable under this indemnity shall be equal to the amount which the Owner would otherwise have been entitled to recover under the applicable Leasing Documents. |
2.2 |
No limit on number of demands. The Owner may serve more than one (1) demand under Clause 2.1. |
2.3 |
Guarantee of whole amount. |
This Guarantee shall be construed and take effect as a guarantee of all amounts due to the Owner under the Leasing Documents (or any of them).
3 |
LIABILITY AS PRINCIPAL AND INDEPENDENT DEBTOR |
3.1 |
Principal and independent debtor. The Guarantor shall be liable under this Guarantee as a principal and independent debtor and accordingly it shall not have, as regards this Guarantee, any of the rights or defences of a surety. |
3.2 |
Waiver of rights and defences. Without limiting the generality of Clause 3.1, the Guarantor shall neither be discharged by, nor have any claim against the Owner in respect of: |
(a) |
any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor or any other person; |
(b) |
any amendment or supplement being made to any Leasing Document (however fundamental and whether or not more onerous); |
(c) |
any arrangement or concession (including a rescheduling or acceptance of partial payments) relating to, or affecting, any Leasing Document; |
(d) |
any release or loss (even though negligent) of any right or Security Interest created by any Leasing Document; |
(e) |
any failure (even though negligent) promptly or properly to exercise or enforce any such right or Security Interest, including a failure to realise for its full market value an asset covered by such a Security Interest; |
(f) |
any Leasing Document being or later becoming void, unenforceable, illegal or invalid or otherwise defective in whole or in part for any reason, including a neglect to register it or |
(g) |
any insolvency or similar proceedings. |
4 |
EXPENSES |
4.1 |
Costs of preservation of rights, enforcement etc. The Guarantor shall pay to the Owner on its demand the amount of all documented expenses (including, without limitation, out of |
3
pocket expenses and legal fees) incurred by the Owner in connection with the enforcement of, or the preservation of any rights under this Guarantee or any Leasing Document, including any advice, claim or proceedings relating to this Guarantee or any Leasing Document.
4.2 |
Fees and expenses payable under Leasing Documents. Clause 4.1 is without prejudice to the Guarantor’s liabilities in respect of the Bareboat Charterer’s obligations under any Leasing Document to which it is a party. |
5 |
ADJUSTMENT OF TRANSACTIONS |
5.1 |
Reinstatement of obligation to pay. The Guarantor shall pay to the Owner on its demand any amount which the Owner is required, or agrees, to pay pursuant to any claim by, or settlement with, a trustee in bankruptcy of the Bareboat Charterer on the ground that the Bareboat Charter (as the case may be), or a payment by the Bareboat Charterer or other Obligor, was invalid or on any similar ground. |
6 |
PAYMENTS |
6.1 |
Method of payments. Any amount due under this Guarantee shall be paid: |
(a) |
in immediately available funds; |
(b) |
to such account as the Owner may from time to time notify to the Guarantor; |
(c) |
without any form of set-off, cross-claim or condition; and |
(d) |
free and clear of any tax deduction or withholding for or on account of any tax payable except a tax deduction or withholding which the Guarantor is required by law to make. |
6.2 |
Grossing-up for taxes. If the Guarantor is required by law to make a tax deduction, the amount due to the Owner shall be increased by the amount necessary to ensure that the Owner receives and retains a net amount which, after the tax deduction, is equal to the full amount that it would otherwise have received. |
7 |
INTEREST |
7.1 |
Accrual of interest. Any amount due under this Guarantee shall carry interest after the date on which the Owner demands payment of it until it is actually paid, unless interest on that same amount also accrues under the relevant Leasing Document. |
7.2 |
Calculation of interest. Interest under this Guarantee shall be calculated and accrue in the same way as interest under clause 37 of the Bareboat Charter, as applicable. |
7.3 |
Guarantee extends to interest payable under Leasing Documents. For the avoidance of doubt, it is confirmed that this Guarantee covers all interest payable under the Leasing Documents. |
8 |
SUBORDINATION |
8.1 |
Subordination of rights of Guarantor. All rights which the Guarantor at any time has (whether in respect of this Guarantee or any other transaction) against the Bareboat Charterer or any other Obligor or their respective assets shall be fully subordinated to the rights of the Owner under the Leasing Documents and, in particular, the Guarantor shall not: |
(a) |
claim, or in a bankruptcy of the Bareboat Charterer or any Obligor prove for, any amount payable to the Guarantor by the Bareboat Charterer or any Obligor, whether in respect of this Guarantee or any other transaction; |
4
(b) |
take or enforce any Security Interest for any such amount; |
(c) |
claim to set-off any such amount against any amount payable by the Guarantor to the Bareboat Charterer or any Obligor; or |
(d) |
claim any subrogation or other right in respect of any Leasing Document or any sum received or recovered by the Owner under the Leasing Documents. |
9 |
ENFORCEMENT |
9.1 |
No requirement to commence proceedings against Bareboat Charterer. The Owner will not need to commence any proceedings under, or enforce any Security Interest created by any Leasing Document before claiming or commencing proceedings under this Guarantee. |
9.2 |
Conclusive evidence of certain matters. However, as against the Guarantor: |
(a) |
any judgment or order of a court in any Relevant Jurisdiction in connection with any Leasing Document; and |
(b) |
any statement or admission of the Bareboat Charterer in connection with any Leasing Document, |
shall be binding and conclusive as to all matters of fact and law to which it relates.
10 |
REPRESENTATIONS AND WARRANTIES |
10.1 |
General. The Guarantor represents and warrants to the Owner, as at the date of this Guarantee and throughout the Charter Period, as follows. |
10.2 |
Status. |
(a) |
The Guarantor is duly incorporated and validly existing and in good standing under the laws of the Republic of the Marshall Islands. |
(b) |
The Guarantor is not a US Tax Obligor. |
10.3 |
Corporate power. |
(a) |
The Guarantor has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it: |
(i) |
to execute this Guarantee or any other Security Document to which it is a party; and |
(ii) |
to make all the payments contemplated by, and to comply with, this Guarantee or any other Security Document to which it is a party. |
(b) |
For the avoidance of doubt, the Guarantor executes this Guarantee in furtherance of its corporate purposes pursuant to s.16 of the Marshall Islands’ Business Corporations Act, as amended, and no authorisation by vote of its shareholders is (or shall be) required for it to execute this Guarantee. |
10.4 |
Consents in force. All the consents referred to in Clause 10.3 remain in force and nothing has occurred which makes any of them liable to revocation. |
10.5 |
Legal validity. This Guarantee and the Security Documents to which it is a party constitute the Guarantor’s legal, valid and binding obligations enforceable against the Guarantor in accordance with their terms subject to any relevant insolvency laws affecting creditors’ rights generally. |
5
10.6 |
No third party Security Interests. Without limiting the generality of Clause 10.5, at the time of the execution and delivery of this Guarantee and any other Security Document to which the Guarantor is a party: |
(a) |
the Guarantor will have the right to create all the Security Interests which that Security Document purports to create; and |
(b) |
no third party will have any Security Interest (except for Permitted Security Interests) or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates. |
10.7 |
No conflicts. The execution by the Guarantor of this Guarantee and any other Security Document to which it is a party and its compliance with this Guarantee and such Security Documents will not involve or lead to a contravention of: |
(a) |
any law or regulation; or |
(b) |
the constitutional documents of the Guarantor; or |
(c) |
any contractual or other obligation or restriction which is binding on the Guarantor or any of its assets. |
10.8 |
No withholding taxes. All payments which the Guarantor is liable to make under this Guarantee and the Security Documents to which it is a party may be made without deduction or withholding for or on account of any tax payable under any law of any Relevant Jurisdiction. |
10.9 |
No default. No Termination Event or Potential Termination Event has occurred and is continuing. |
10.10 |
Information. All information which has been provided in writing by or on behalf of the Guarantor to the Owner in connection with any Security Document satisfies the requirements of Clause 11.2; all audited and unaudited accounts which have been so provided satisfies the requirements of Clause 11.4; and there has been no Material Adverse Effect in the financial position or state of affairs of the Guarantor from that disclosed in the latest of those accounts. |
10.11 |
No litigation. No legal or administrative action involving the Guarantor has been commenced or taken which has or is reasonably likely to have a Material Adverse Effect. |
10.12 |
Restricted Persons. Neither the Guarantor, nor any of its directors, officers or employees or any person acting on its behalf is a Restricted Person or otherwise a target of applicable Sanctions. |
10.13 |
Sanctions. None of the Guarantor nor its directors, officers or employees are in breach of applicable Sanctions laws, have been or are currently being investigated on compliance with Sanctions, have received notice of or are aware of any claim, action, suit, proceeding or investigation against them with respect of Sanctions and none of them have taken any action to evade the application of Sanctions. |
10.14 |
Anti-Money Laundering Laws. The Guarantor is not in breach of any Anti-Money Laundering Laws and has instituted and maintained systems, controls, policies and procedures designed to: |
(i) |
prevent and detect incidences of bribery and corruption, money laundering and terrorism financing; and |
(ii) |
promote and achieve compliance with Anti-Money Laundering Laws including, but not limited to, ensuring thorough and accurate books and records, and utilization of best |
6
efforts to ensure that Affiliates acting on behalf of the Guarantor shall act in compliance with Anti-Money Laundering Laws.
10.15 |
Taxes paid. The Guarantor has paid all taxes applicable to, or imposed on or in relation to the Guarantor or its business. |
10.16 |
Provisions of Leasing Documents. The Guarantor is fully familiar with and agrees with all provisions of the Leasing Documents to which the Bareboat Charterer is a party. |
10.17 |
No waiver. No oral or written statement has been made to the Guarantor by or on behalf of the Owner or any other person which could be construed as a waiver of any provisions of this Guarantee or a statement of intention not to enforce this Guarantee in accordance with its terms. |
11 |
UNDERTAKINGS |
11.1 |
General. The Guarantor undertakes with the Owner to comply with the following provisions of this Clause 11 at all times during the Charter Period, except as the Owner may otherwise permit. |
11.2 |
Information provided to be accurate. All financial and other information which is provided in writing by or on behalf of the Guarantor under or in connection with this Guarantee will be true and not misleading and will not omit any material fact or consideration. |
11.3 |
Provision of financial statements. The Guarantor will send to the Owner: |
(a) |
as soon as possible, but in no event later than one hundred and eighty (180) days after the end of each financial year of the Guarantor, the audited annual combined financial reports of the Guarantor for that financial year; |
(b) |
as soon as possible, but in no event later than ninety (90) days after the end of each half-year, the consolidated semi-annual management accounts of the Guarantor certified as to their correctness by at least one officer of the Guarantor; and |
(c) |
such financial and other information as the Owner or its financiers may reasonably request. |
11.4 |
Form of financial statements. All accounts (audited and unaudited) delivered under Clause 11.3 will: |
(a) |
be prepared in accordance with all applicable laws and generally accepted accounting principles consistently applied; |
(b) |
give a true and fair view of the state of affairs of the Guarantor and the Okeanis Group at the date of those accounts and of their profit for the period to which those accounts relate; |
(c) |
fully disclose or provide for all significant liabilities of the Guarantor and the Okeanis Group; and |
(d) |
if not in the English language, be accompanied by an English translation duly certified as to its correctness. |
11.5 |
Shareholder and creditor notices. The Guarantor will send the Owner, at the same time as they are despatched, copies of all material communications in relation to any Leasing Document. |
11.6 |
Consents. The Guarantor will maintain in force and promptly obtain or renew, and will, upon the request of the Owner, promptly send certified copies to the Owner of, all consents required: |
7
(a) |
for the Guarantor to perform its obligations under this Guarantee and any other Security Document to which it is a party; and |
(b) |
for the validity or enforceability of this Guarantee and any other Security Document to which it is a party, |
and the Guarantor will comply with the terms of all such consents.
11.7 |
Maintenance of Security Interests. The Guarantor will: |
(a) |
at its own cost, do all that it reasonably can to ensure that any Security Document to which it is a party validly creates the obligations and the Security Interests which it purports to create; and |
(b) |
without limiting the generality of paragraph (a) above, at its own cost, promptly register, file, record or enrol any Security Document to which it is a party with any court or authority in all Relevant Jurisdictions, pay any stamp, registration or similar tax in all Relevant Jurisdictions in respect of any Security Document to which it is a party, give any notice or take any other step which may be or become necessary or desirable for any Security Document to which it is a party to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates. |
11.8 |
Notification of litigation. The Guarantor will provide the Owner with details of any legal, arbitral or administrative action which are current, threatened or pending against the Guarantor as soon as such action is instituted. |
11.9 |
Notification of default. The Guarantor will notify the Owner as soon as the Guarantor becomes aware of: |
(a) |
the occurrence of a Termination Event or a Potential Termination Event; or |
(b) |
any matter which indicates that a Termination Event or a Potential Termination Event may have occurred, |
and will thereafter keep the Owner fully up-to-date with all developments.
11.10 |
Maintenance of status. The Guarantor will maintain its separate corporate existence as a corporation and remain in good standing under the laws of the Republic of the Marshall Islands. |
11.11 |
Negative Pledge. The Guarantor shall procure that the Bareboat Charterer will not create or permit to arise any Security Interest over any asset present or future except for the Permitted Security Interests. |
11.12 |
No disposal of assets, change of business. The Guarantor shall not, and shall procure that the Bareboat Charterer will not: |
(a) |
transfer, lease or otherwise dispose of all or a substantial part of its assets, whether by one transaction or a number of transactions, whether related or not except in the usual course of its trading operations; or |
(b) |
make any substantial change to the nature of its business or its corporate structure from that existing at the date of this Guarantee, provided that no breach of this clause will occur if (a) and (b) occurs in relation to the Guarantor but such event does not cause a Material Adverse Effect. |
11.13 |
No payment of dividend. The Guarantor shall not make or pay any dividend or other distribution of its share capital (including in relation to any preferred shares) following the |
8
occurrence of a Termination Event which is continuing or where the payment of such dividend or distribution of such share capital will result in the occurrence of a Potential Termination Event or Termination Event.
11.14 |
No merger etc. The Guarantor shall procure that the Bareboat Charterer will not, enter into any form of merger, sub-division, amalgamation, demerger, reorganisation or corporate reconstruction. |
11.15 |
Maintenance of ownership of Bareboat Charterer. The Guarantor shall remain the direct owner of one hundred percent (100%) of the shares in the Charterers. |
11.16 |
Sanctions. The Guarantor shall comply with all applicable laws and regulations in respect of Sanctions, and in particular, the Guarantor shall effect and maintain a sanctions compliance policy to ensure compliance with all such laws and regulations implemented from time to time. |
11.17Anti-Money Laundering Laws.The Guarantor shall conduct its business in compliance with Anti-Money Laundering Laws and maintain systems, controls, policies and procedures designed to promote and achieve ongoing compliance with Anti-Money Laundering Laws.
11.18 |
FATCA. The Guarantor shall not, and shall procure that the Bareboat Charterer will not become a US Tax Obligor. |
11.19 |
Financial covenants. The Guarantor shall ensure that, at all times: |
(a) |
the Guarantor’s Leverage Ratio shall not exceed seventy five per cent (75%). |
(b) |
it shall maintain Liquid Assets (free of any Security and inclusive of any balances in time deposits) in an amount of not less than the higher of (i) $10,000,000 on an aggregate basis and (ii) $750,000 per Fleet Vessel; |
(c) |
its Consolidated Net Worth shall not be less than $100,000,000. |
For the purposes of this Clause 11.19;
“Accounting Information” means the annual audited combined financial accounts and the unaudited semi-annual combined financial accounts to be provided to the Owner in accordance with the Bareboat Charter.
“Adjusted Total Assets” means, at any date, the amount which would be shown as “Total Assets” under the heading “ASSETS” in the balance sheet of the most recent Accounting Information as adjusted for the aggregate difference (positive or negative) between the book value (being the fixed asset value as per the most recent Accounting Information) and the Fleet Market Value minus the Liquid Assets.
“Consolidated Net Worth” means the aggregate of the Consolidated Market Value Adjusted Total Assets less the Consolidated Total Liabilities.
“Consolidated Net Worth” means the aggregate of the Consolidated Market Value Adjusted Total Assets less the Consolidated Total Liabilities.
“Consolidated Current Assets” means the aggregate of the cash and marketable securities, trade and other receivables from persons other than a member of the Group realisable 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, in each case in relation to the Group, as stated in the then most recent and relevant Accounting Information.
9
“Consolidated Market Value Adjusted Tangible Fixed Assets” means the Fleet Market Value plus the book value (less depreciation computed in accordance with the IFRS consistently applied) on a consolidated basis of all other tangible fixed assets of the Group (excluding the Fleet Vessels), as stated in the then most recent and relevant Accounting Information.
“Consolidated Market Value Adjusted Total Assets” means, at any relevant time, the aggregate of Consolidated Current Assets and Consolidated Market Value Adjusted Tangible Fixed Assets.
“Consolidated Total Liabilities” means the aggregate (as of the date of calculation) of all obligations of the Guarantor then outstanding for the payment or repayment of money as stated under “Total Liabilities” in the financial statements or, as the case may be, management accounts, then most recently required to be delivered pursuant to this Charter including, without limitation:
(a) |
any amounts payable by the Guarantor under leases or similar arrangements over their respective periods; |
(b) |
any credit to the Guarantor from a supplier of goods or under any instalment purchase or other similar arrangement; |
(c) |
the aggregate amount then outstanding of liabilities and obligations of third parties to the extent that they are guaranteed by the Guarantor; |
(d) |
any contingent liabilities (including any taxes or other payments under dispute or arbitration) which have been or should be recorded in the notes to the Guarantor’s financial statements or, as the case may be, management accounts; and |
(e) |
any deferred tax liabilities. |
“Fleet Market Value” means the aggregate Fair Market Value of the Fleet Vessels.
“Leverage Ratio” means, at any date, the ratio (expressed as a percentage) of:
(a) |
the Total Liabilities minus Liquid Assets; and |
(b) |
the Adjusted Total Assets. |
“Liquid Assets” means, at any date, the amount of cash and cash equivalents which would be shown as “Cash and Cash Equivalents” under the heading “ASSETS” in the balance sheet of the most recent Accounting Information.
“Total Liabilities” means, at any date, the amount which would be shown as “Total current liabilities” plus the amount which would be shown as “Total non-current liabilities”, both under the heading “LIABILITIES AND SHAREHOLDERS’EQUITY” in the balance sheet of the most recent Accounting Information (which, for the avoidance of doubt, shall include potential leasing liabilities and shall only exclude shareholder loans when subordinated, non-interest bearing and not callable at will (minimum one year notice)).
11.20 |
Compliance Certificate. |
(a) |
The Guarantor shall supply to the Owner, a Compliance Certificate setting out (in reasonable detail) computations as to compliance with Clause 11.19 (financial covenants) together with: |
10
(i) |
the annual consolidated financial reports of the Guarantor to be provided to the Owner in accordance with Clause 11.3(a); and |
(ii) |
semi-annual consolidated accounts of the Guarantor to be provided to the Owner in accordance with Clause 11.3(b); and |
(b) |
Each Compliance Certificate shall be signed by an officer of the Guarantor as appropriate. |
11.21 |
Listing. |
The Guarantor shall remain listed on the Oslo Stock Exchange (Oslo Børs) and shall procure that the Charterers will make the necessary prepayments or provide additional security under Clause 50.1(i) of the Bareboat Charter should it cease to be listed on the Oslo Stock Exchange (Oslo Børs).
12 |
JUDGMENTS AND CURRENCY INDEMNITY |
12.1 |
Judgments relating to Leasing Documents. This Guarantee shall cover any amount payable by the Bareboat Charterer under or in connection with any judgment relating to any Leasing Document. |
12.2 |
Currency indemnity. If any sum due from the Guarantor to the Owner under this Guarantee or under any order or judgment relating to this Guarantee has to be converted from the currency in which this Guarantee provided for the sum to be paid (the “Contractual Currency”) into another currency (the “Payment Currency”) for the purpose of: |
(a) |
making or lodging any claim or proof against the Guarantor, whether in its liquidation, any arrangement involving it or otherwise; or |
(b) |
obtaining an order or judgment from any court or other tribunal; or |
(c) |
enforcing any such order or judgment; |
the Guarantor shall indemnify the Owner against the loss arising when the amount of the payment actually received by the Owner is converted at the available rate of exchange into the Contractual Currency.
In this Clause 12.2, the “available rate of exchange” means the rate at which the Owner is able, at the opening of business (Beijing time) on the Business Day after it receives the sum concerned, to purchase the Contractual Currency with the Payment Currency.
13 |
SET-OFF |
13.1 |
Application of credit balances. The Owner or any affiliate of the Owner may without prior notice: |
(a) |
apply any balance (whether or not then due) which at any time stands to the credit of any account in the name of the Guarantor at any office in any country of the Owner or its affiliate in or towards satisfaction of any sum then due from the Guarantor to the Owner or its affiliate under this Guarantee and any other Security Document; and |
(b) |
for that purpose: |
(i) |
break, or alter the maturity of, all or any part of a deposit of the Guarantor; |
(ii) |
convert or translate all or any part of a deposit or other credit balance into Dollars; and |
11
(iii) |
enter into any other transaction or make any entry with regard to the credit balance which the Owner or its affiliate considers appropriate. |
13.2 |
Existing rights unaffected. The Owner or its affiliate shall not be obliged to exercise any of its rights under Clause 13.1; and those rights shall be without prejudice and in addition to any right of set-off, combination of accounts, charge, lien or other right or remedy to which the Owner or its affiliate is entitled (whether under the general law or any document). |
14 |
SUPPLEMENTAL |
14.1 |
Continuing guarantee. This Guarantee shall remain in force as a continuing security at all times from the date of this Guarantee up to the last day of the Charter Period. |
14.2 |
Rights cumulative, non-exclusive. The Owner’s rights under and in connection with this Guarantee are cumulative, may be exercised as often as appears expedient and shall not be taken to exclude or limit any right or remedy conferred by law. |
14.3 |
No impairment of rights under Guarantee. If the Owner omits to exercise, delays in exercising or invalidly exercises any of its rights under this Guarantee, that shall not impair that or any other right of the Owner under this Guarantee. |
14.4 |
Severability of provisions. If any provision of this Guarantee is or subsequently becomes void, illegal, unenforceable or otherwise invalid, that shall not affect the validity, legality or enforceability of its other provisions. |
14.5 |
Guarantee not affected by other security. This Guarantee shall not impair, nor be impaired by, any other guarantee, any Security Interest or any right of set-off or netting or to combine accounts which the Owner may now or later hold in connection with the Leasing Documents. |
14.6 |
Guarantor bound by Leasing Documents. The Guarantor agrees with the Owner to be bound by all provisions of each Leasing Document in the same way as if those provisions had been set out (with any necessary modifications) in this Guarantee. |
14.7 |
Applicability of provisions of Guarantee to other Security Interests. Any Security Interest which the Guarantor creates (whether at the time at which it signs this Guarantee or at any later time) to secure any liability under this Guarantee shall be a principal and independent security, and Clauses 3 and 17 shall, with any necessary modifications, apply to it, notwithstanding that the document creating the Security Interest neither describes it as a principal or independent security nor includes provisions similar to Clauses 3 and 17. |
14.8 |
Applicability of provisions of Guarantee to other rights. Clauses 3 and 17 shall also apply to any right of set-off or netting or to combine accounts which the Guarantor creates by an agreement entered into at the time of this Guarantee or at any later time (notwithstanding that the agreement does not include provisions similar to Clauses 3 and 17), being an agreement referring to this Guarantee. |
14.9 |
Third party rights. A person who is not a party to this Guarantee has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Guarantee. |
14.10 |
Counterparts. This Guarantee may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Guarantee. |
14.11 |
FATCA Information. |
(a) |
Subject to paragraph (c) below, each Party shall, on the date of this Guarantee, and thereafter within ten (10) Business Days of a reasonable request by the other Party: |
12
(i) |
confirm to the other Party whether it is: |
(A) |
a FATCA Exempt Party; or |
(B) |
not a FATCA Exempt Party; and |
(ii) |
supply to the requesting party (with a copy to all other Relevant Parties) such other form or forms (including IRS Form W-8 or Form W-9 or any successor or substitute form, as applicable) and any other documentation and other information relating to its status under FATCA (including its applicable “pass thru percentage” or other information required under FATCA or other official guidance including intergovernmental agreements) as the requesting party reasonably requests for the purposes of the requesting party’s compliance with FATCA. |
(b) |
If a Relevant Party confirms to any other Relevant Party that it is a FATCA Exempt Party or provides an IRD Form W-8 or W-9 to showing that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, or that the said form provided has ceased to be correct or valid, that Party shall notify the other Party reasonably promptly. |
(c) |
Nothing in this Clause shall oblige any Relevant Party to do anything which would or, in its reasonable opinion, might constitute a breach of any law or regulation, any policy of that party, any fiduciary duty or any duty of confidentiality, or to disclose any confidential information (including, without limitation, its tax returns and calculations); provided, however, that nothing in this paragraph shall excuse any Relevant Party from providing a true, complete and correct IRS Form W-8 or W-9 (or any successor or substitute form where applicable). Any information provided on such IRS Form W-8 or W-9 (or any successor or substitute forms) shall not be treated as confidential information of such party for purposes of this paragraph. |
(d) |
If a Relevant Party fails to confirm its status or to supply forms, documentation or other information requested in accordance with the provisions of this Guarantee or the provided information is insufficient under FATCA, then: |
(i) |
if that Party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such Party shall be treated for the purposes of this Guarantee and the Leasing Documents as if it is not a FATCA Exempt Party; and |
(ii) |
if that Party failed to confirm its applicable passthru percentage then such Party shall be treated for the purposes of the Leasing Documents (and payments made thereunder) as if its applicable passthru percentage is 100%, |
until (in each case) such time as the Party in question provides sufficient confirmation, forms, documentation or other information to establish the relevant facts.
15 |
ASSIGNMENT |
15.1 |
Assignment by Charterer. The Charterer shall not assign or transfer (whether by novation or otherwise) its rights and/or obligations under this Guarantee. |
15.2 |
Assignment by Owner. The Owner may assign any of its rights and transfer any of its obligations under this Guarantee to the same extent as it may transfer the same under the other Leasing Documents to which it is a party subject always to the provisions of the Bareboat Charter. |
13
16 |
NOTICES |
16.1 |
Notices. Any notice, certificate, demand or other communication to be served, given made or sent under or in relation to this Guarantee shall be in English and in writing and (without prejudice to any other valid method or giving making or sending the same) shall be deemed sufficiently given or made or sent if sent by registered post or by email to the following respective addresses: |
(A) |
to the Owner: |
c/o CMB Financial Leasing Co., Ltd 21F, China Merchants Bank Building No. 1088, Lujiazui Ring Road Shanghai 200120 The People’s Republic of China Attention: Email: Tel: |
(B) |
to the Guarantor: |
c/o OET CHARTERING INC. Ethnarchou Makariou & D. Falireos Str. 2 185 47, Neo Faliro, Piraeus, Greece Attention: Email: Tel: |
or, if a party hereto changes its address, to such other address as that party may notify to the other.
16.2 |
Validity of demands. A demand under this Guarantee shall be valid notwithstanding that it is served: |
(a) |
on the date on which the amount to which it relates is payable by the Bareboat Charterer under a Leasing Document; and |
(b) |
at the same time as the service of the Termination Notice referred to under clause 47.2 of the Bareboat Charter; |
and a demand under this Guarantee should specifically refer to each amount payable under or in connection with a Leasing Document.
17 |
INVALIDITY OF LEASING DOCUMENTS |
17.1 |
Invalidity of Leasing Documents. In the event of: |
(a) |
any Leasing Document now being or later becoming, with immediate or retrospective effect, void, illegal, unenforceable or otherwise invalid for any other reason whatsoever, whether of a similar kind or not; or |
(b) |
without limiting the scope of paragraph (a), a bankruptcy or insolvency of any Obligor, the introduction of any law or any other matter resulting in any Obligor being discharged from liability under any Leasing Document, or the Bareboat Charter ceasing to operate (for example, by interest ceasing to accrue), |
this Guarantee shall cover any amount which would have been or become payable under or in connection with a Leasing Document if such Leasing Document had been and remained entirely valid, legal and enforceable, or the Bareboat Charterer had not suffered bankruptcy or insolvency, or any combination of such events or circumstances, as the case may be, and
14
the Bareboat Charterer had remained fully liable under it for obligations whether invalidly incurred or validly incurred but subsequently retrospectively invalidated; and references in this Guarantee to amounts payable by the Bareboat Charterer under or in connection with a Leasing Document shall include references to any amount which would have so been or become payable as aforesaid.
18 |
INCORPORATION OF BAREBOAT CHARTER PROVISIONS |
18.1 |
The following provisions of the Bareboat Charter apply to this Guarantee as if they were expressly incorporated therein with any necessary modifications: |
Clause 45 (No waiver of rights);
Clause 58 (No set-off or tax deduction);
Clause 61 (FATCA); and
Clause 63 (Confidentiality).
18.2 |
Clause 18.1 is without prejudice to the application to this Guarantee of any provision of the Bareboat Charter which, by its terms, applies or relates to this Guarantee. |
19 |
GOVERNING LAW AND JURISDICTION |
19.1 |
This Guarantee and any non-contractual obligations arising out of or in connection with it are governed by English law. |
19.2 |
Any dispute arising out of or in connection with this Guarantee shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause 19. The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. |
19.3 |
The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the 14 days specified, the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if he had been appointed by agreement. Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. |
19.4 |
In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. Where the reference is to three arbitrators the procedure for making appointments shall be in accordance with the procedure for full arbitration stated above. |
THIS GUARANTEE has been executed and delivered as a deed on the date stated at the beginning of this Guarantee.
15
SCHEDULE 1
FORM OF COMPLIANCE CERTIFICATE
16
EXECUTION PAGE
|
|
|
GUARANTOR |
|
|
|
|
|
EXECUTED AND DELIVERED AS A DEED |
) |
|
by |
) |
Thaleia Kalafati |
as an attorney-in-fact |
) |
/s/ Thaleia Kalafati |
for and on behalf of |
) |
|
OKEANIS ECO TANKERS CORP. |
) |
|
In the presence of: |
) |
/s/ Ariadne E. Aldous |
|
) |
Attorney at Law, LLM |
Witness’ signature: |
) |
Athens Bar |
Witness’ name: |
) |
Ariadne E. Aldous |
Witness’ address: |
) |
Athens - Greece, Tel +306947612955 |
|
|
|
|
|
|
OWNER |
|
|
|
|
|
SIGNED, SEALED AND DELIVERED AS A DEED |
) |
|
by |
) |
Wong Wai Sum |
as an attorney-in-fact |
) |
/s/ Wong Wai Sum |
for and on behalf of |
) |
|
SEA 290 LEASING CO. LIMITED |
) |
|
In the presence of: |
) |
|
|
) |
|
Witness’ signature: |
) |
/s/ Sandrea Mar |
Witness’ name: |
) |
Sandrea Mar |
Witness’ address: |
) |
Suites 4610-4619 Jardine House |
|
|
1 Connaught Place, Hong Kong |
17
Exhibit 4.11
Dated 31 January 2024
US$34,700,000
TERM LOAN FACILITY
OMEGA ONE MARINE CORP.
as Borrower
and
OKEANIS ECO TANKERS CORP.
as Guarantor
and
THE FINANCIAL INSTITUTIONS
listed in Part B of Schedule 1
as Original Lenders
and
KEXIM ASIA LIMITED
as Mandated Lead Arranger
and
KEXIM ASIA LIMITED
as Facility Agent
and
KEXIM ASIA LIMITED
as Security Agent
FACILITY AGREEMENT
relating to
the refinancing of the existing indebtedness secured over m.t “MILOS”
Index
Clause |
|
Page |
|
|
|
Section 1 Interpretation |
2 |
|
1 |
Definitions and Interpretation |
2 |
Section 2 The Facility |
29 |
|
2 |
The Facility |
29 |
3 |
Purpose |
30 |
4 |
Conditions of Utilisation |
30 |
Section 3 Utilisation |
32 |
|
5 |
Utilisation |
32 |
Section 4 Repayment, Prepayment and Cancellation |
34 |
|
6 |
Repayment |
34 |
7 |
Prepayment and Cancellation |
35 |
Section 5 Costs of Utilisation |
38 |
|
8 |
Interest |
38 |
9 |
Interest Periods |
39 |
10 |
Changes to the Calculation of Interest |
39 |
11 |
Fees |
41 |
Section 6 Additional Payment Obligations |
43 |
|
12 |
Tax Gross Up and Indemnities |
43 |
13 |
Increased Costs |
47 |
14 |
Other Indemnities |
48 |
15 |
Mitigation by the Finance Parties |
51 |
16 |
Costs and Expenses |
52 |
Section 7 Guarantee |
53 |
|
17 |
Guarantee and Indemnity |
53 |
Section 8 Representations, Undertakings and Events of Default |
56 |
|
18 |
Representations |
56 |
19 |
Information Undertakings |
62 |
20 |
Financial Covenants |
66 |
21 |
General Undertakings |
67 |
22 |
Insurance Undertakings |
74 |
23 |
General Ship Undertakings |
79 |
24 |
Security Cover |
88 |
25 |
Accounts and application of Earnings |
89 |
26 |
Events of Default |
92 |
Section 9 Changes to Parties |
97 |
|
27 |
Changes to the Lenders |
97 |
28 |
Changes to the Transaction Obligors |
101 |
Section 10 The Finance Parties |
103 |
|
29 |
The Facility Agent and the Mandated Lead Arranger |
103 |
30 |
The Security Agent |
114 |
31 |
Conduct of Business by the Finance Parties |
129 |
32 |
Sharing among the Finance Parties |
129 |
Section 11 Administration |
131 |
|
33 |
Payment Mechanics |
131 |
34 |
Set-Off |
134 |
35 |
Bail-In |
134 |
36 |
Notices |
135 |
37 |
Calculations and Certificates |
137 |
38 |
Partial Invalidity |
137 |
39 |
Remedies and Waivers |
137 |
40 |
Settlement or Discharge Conditional |
138 |
41 |
Irrevocable Payment |
138 |
42 |
Amendments and Waivers |
138 |
43 |
Confidential Information |
142 |
44 |
Confidentiality of Funding Rates |
146 |
45 |
Counterparts |
147 |
Section 12 Governing Law and Enforcement |
148 |
|
46 |
Governing Law |
148 |
47 |
Enforcement |
148 |
Schedules
Schedule 1 The Parties |
149 |
|
|
Part A The Obligors |
149 |
|
Part B The Original Lenders |
149 |
|
Part C The Servicing Parties |
149 |
Schedule 2 Conditions Precedent |
150 |
|
|
Part A Conditions Precedent to Utilisation Request |
150 |
|
Part B Conditions Precedent to Utilisation |
150 |
|
Part C |
150 |
|
Conditions Precedent to Release of Prepositioned Funds |
150 |
Schedule 3 UtilisatIon Request |
151 |
|
Schedule 4 Form of Transfer Certificate |
152 |
|
Schedule 5 Form of Assignment Agreement |
153 |
|
Schedule 6 Form of Compliance Certificate |
154 |
|
Schedule 7 Timetables |
155 |
|
Schedule 8 |
156 |
Execution
Execution Pages |
158 |
THIS AGREEMENT is made on 31 January 2024
PARTIES
(1)OMEGA ONE MARINE CORP., a corporation incorporated in the Republic of the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 as borrower (the “Borrower”)
(2)OKEANIS ECO TANKERS CORP., a corporation incorporated in the Republic of the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 as guarantor (the “Guarantor”)
(3)THE FINANCIAL INSTITUTIONS listed in Part B of Schedule 1 (The Parties) as lenders (the “Original Lenders”)
(4)KEXIM ASIA LIMITED of Unit 2904, 29/F., Central Plaza, 18 Harbour Road, Wanchai, Hong Kong as mandated lead arranger (the “Mandated Lead Arranger”)
(5)KEXIM ASIA LIMITED as agent of the other Finance Parties (the “Facility Agent”)
(6)KEXIM ASIA LIMITED as security agent for the Secured Parties (the “Security Agent”)
BACKGROUND
(A)The Lenders have agreed to make available to the Borrower a facility in an amount of up to the lesser of (i) $34,700,000 and (ii) 170 per cent. of the Initial Market Value of the Ship, in a single advance for the purpose of refinancing the Existing Indebtedness secured over the Ship.
OPERATIVE PROVISIONS
SECTION 1
INTERPRETATION
1DEFINITIONS AND INTERPRETATION
1.1Definitions
In this Agreement:
“Account Bank” means ABN AMRO Bank N.V., acting through its office at Gustav Mahlerlaan 10, 1082 PP Amsterdam, the Netherlands or any replacement bank or other financial institution as may be approved by the Facility Agent acting with the authorisation of the Majority Lenders.
“Account Security” means a document creating Security over any Account in agreed form.
“Accounts” means the Earnings Account and the Debt Service Reserve Account.
“Affiliate” means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.
“Anti-Corruption Laws” means any and all laws, rules and regulations concerning or relating to the prevention or prohibition of bribery or corruption, including but not limited to the U.S. Foreign Corrupt Practices Act of 1977, as amended, the UK Bribery Act 2010 and any related or similar laws rules, or regulations, in each case issued, administered or enforced by the relevant authority in any applicable jurisdiction.
“Anti-Money Laundering Laws” means any and all laws, rules and regulations concerning or relating to combating money laundering or terrorism financing, including but not limited to the U.S. Bank Secrecy Act, as amended by Title III of the USA Patriot Act, and any related or similar laws, rules, or regulations, in each case issued, administered or enforced by the relevant authority in any applicable jurisdiction.
“Approved Brokers” means any firm or firms of insurance brokers approved in writing by the Facility Agent, acting with the authorisation of the Majority Lenders.
“Approved Classification” means, Lloyd’s Register, with the Approved Classification Society or the equivalent classification with another Approved Classification Society.
“Approved Classification Society” means Lloyd’s Register, or any other classification society approved in writing by the Facility Agent acting with the authorisation of the Majority Lenders.
“Approved Commercial Manager” means OET Chartering Inc., a corporation incorporated in the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 or any other person approved in writing by the Facility Agent acting with the authorisation of the Majority Lenders as the commercial manager of the Ship.
“Approved Flag” means as at the date of this Agreement, the Greek flag or such other flag approved in writing by the Facility Agent acting with the authorisation of the Majority Lenders.
2
“Approved Manager” means the Approved Commercial Manager or the Approved Technical Manager.
“Approved Technical Manager” means Kyklades Maritime Corporation, a corporation incorporated in the Republic of Liberia whose registered address is at 80 Broad Street, Monrovia, Liberia or any other person approved in writing by the Facility Agent acting with the authorisation of the Majority Lenders as the technical manager of the Ship.
“Approved Valuer” means Clarksons-Platou Security AS, Affinity Shipping LLP, Simpson Spence Young (SSY), Braemar-ACM Shipbroking Ltd., Fearnleys A.S., Arrow Shipbroking Group, Barry Rogliano Salles (BRS), Howe Robinson Partners, Maersk Shipbrokers, and (or any Affiliate of such person through which valuations are commonly issued) and any other firm or firms of independent sale and purchase shipbrokers approved in writing by the Facility Agent, acting with the authorisation of the Majority Lenders.
“Article 55 BRRD” means Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms.
“Assignable Charter” means any Charter in respect of the Ship which has, or is capable of having, a duration equal to or exceeding 36 months (excluding any extension options).
“Assignment Agreement” means an agreement substantially in the form set out in Schedule 5 (Form of Assignment Agreement) or any other form agreed between the relevant assignor and assignee.
“Authorisation” means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation, legalisation or registration.
“Availability Period” means the period from and including the date of this Agreement and six Months after the date of this Agreement or such later date as the Facility Agent may agree to (acting with the authorisation of all the Lenders).
“Available Commitment” means a Lender’s Commitment minus:
(a) |
the amount of its participation in the outstanding Loan; and |
(b) |
in relation to the proposed Utilisation, the amount of its participation in the Loan that is due to be made on or before the proposed Utilisation Date. |
“Available Facility” means the aggregate for the time being of each Lender’s Available Commitment.
“Bail-In Action” means the exercise of any Write-down and Conversion Powers.
“Bail-In Legislation” means:
(a) |
in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 BRRD, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time; |
(b) |
in relation to any state other than such an EEA Member Country and the United Kingdom, any analogous law or regulation from time to time which requires |
3
contractual recognition of any Write-down and Conversion Powers contained in that law or regulation; and
(c) |
in relation to the United Kingdom, the UK Bail-In Legislation. |
“Balloon Instalment” has the meaning given to it in Clause 6.1 (Repayment of Loan).
“Break Costs” means the amount (if any) by which:
(a) |
the interest (excluding the Margin) which a Lender should have received for the period from the date of receipt of all or any part of its participation in the Loan or an Unpaid Sum to the last day of the current Interest Period in relation to the Loan, the relevant part of the Loan or that Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period |
exceeds
(b) |
the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period. |
“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for general business in Athens, Hong Kong and London in respect of any day on which a payment needs to be made under a Finance Document from an Account, also in the Netherlands and, (in relation to the fixing of an interest rate) which is a US Government Securities Business Day.
“Central Bank Rate” means:
(a) |
the short-term interest rate target set by the US Federal Open Market Committee as published by the Federal Reserve Bank of New York from time to time; or |
(b) |
if that target is not a single figure, the arithmetic mean of: |
(i) |
the upper bound of the short-term interest rate target range set by the US Federal Open Market Committee and published by the Federal Reserve Bank of New York; and |
(ii) |
the lower bound of that target range. |
“Central Bank Rate Adjustment” means, in relation to the Central Bank Rate prevailing at close of business on any US Government Securities Business Day, the 20 per cent. trimmed arithmetic mean (calculated by the Facility Agent, or by any Finance Party which agrees to do so in place of the Facility Agent) of the Central Bank Rate Spreads for the five most immediately preceding US Government Securities Business Days for which three Month Term SOFR is available.
“Central Bank Rate Spreads” means, in relation to any US Government Securities Business Day, the difference (expressed as a percentage rate per annum) calculated by the Facility Agent (or by any Finance Party which agrees to do so in place of the Facility Agent) of:
(a) |
three Month Term SOFR for that US Government Securities Business Day; and |
4
(b) |
the Central Bank Rate prevailing at close of business on that US Government Securities Business Day. |
“Charter” means any charter relating to the Ship, or other contract for its employment, whether or not already in existence including, without limitation, any Assignable Charter.
“Charter Guarantee” means any guarantee, bond, letter of credit or other instrument (whether or not already issued) supporting a Charter.
“Charterparty Assignment” means, in relation to any Assignable Charter, the assignment of the rights of the Borrower under that Assignable Charter and under any Charter Guarantee relative thereto, in agreed form.
“Code” means the US Internal Revenue Code of 1986.
“Commercial Management Agreement” means the agreement entered into between the Borrower and the Approved Commercial Manager regarding the commercial management of the Ship.
“Commitment” means:
(a) |
in relation to an Original Lender, the amount set opposite its name under the heading “Commitment” in Part B of Schedule 1 (The Parties) and the amount of any other Commitment transferred to it under this Agreement; and |
(b) |
in relation to any other Lender, the amount of any Commitment transferred to it under this Agreement, |
to the extent not cancelled, reduced or transferred by it under this Agreement.
“Compliance Certificate” means a certificate in the form set out in Schedule 6 (Form of Compliance Certificate) or in any other form agreed between the Guarantor and the Facility Agent.
“Confidential Information” means all information relating to any Transaction Obligor, the Group, the Finance Documents or the Facility of which a Finance Party becomes aware in its capacity as, or for the purpose of becoming, a Finance Party or which is received by a Finance Party in relation to, or for the purpose of becoming a Finance Party under, the Finance Documents or the Facility from either:
(a) |
any member of the Group or any of its advisers; or |
(b) |
another Finance Party, if the information was obtained by that Finance Party directly or indirectly from any member of the Group or any of its advisers, |
in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information but excludes:
(i) |
information that: |
5
(A) |
is or becomes public information other than as a direct or indirect result of any breach by that Finance Party of Clause 43 (Confidential Information); or |
(B) |
is identified in writing at the time of delivery as non-confidential by any member of the Group or any of its advisers; or |
(C) |
is known by that Finance Party before the date the information is disclosed to it in accordance with paragraphs (a) or (b) above or is lawfully obtained by that Finance Party after that date, from a source which is, as far as that Finance Party is aware, unconnected with the Group and which, in either case, as far as that Finance Party is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality; and |
(ii) |
any Funding Rate. |
“Confidentiality Undertaking” means a confidentiality undertaking in substantially the appropriate form recommended by the LMA from time to time or in any other form agreed between the Borrower and the Facility Agent.
“Corresponding Debt” means any amount, other than any Parallel Debt, which an Obligor owes to a Secured Party under or in connection with the Finance Documents.
“Debt Service Reserve Account” means:
(a) |
an account in the name of the Borrower with the Account Bank designated “Omega One Marine Corp. Debt Service Reserve Account”; |
(b) |
any other account in the name of the Borrower with the Account Bank which may, with the prior written consent of the Facility Agent, be opened in the place of the account referred to in paragraph (a) above, irrespective of the number or designation of such replacement account; or |
(c) |
any sub-account of any account referred to in paragraphs (a) or (b) above. |
“Debt Service Reserve Amount” has the meaning given to it in Claus 21.23 (Debt Service Reserve Amount).
“Default” means an Event of Default or a Potential Event of Default.
“Delegate” means any delegate, agent, attorney or co-trustee appointed by the Security Agent.
“Disruption Event” means either or both of:
(a) |
a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Facility (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties or, if applicable, any Transaction Obligor; or |
6
(b) |
the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party or, if applicable, any Transaction Obligor preventing that, or any other, Party or, if applicable, any Transaction Obligor: |
(i) |
from performing its payment obligations under the Finance Documents; or |
(ii) |
from communicating with other Parties or, if applicable, any Transaction Obligor in accordance with the terms of the Finance Documents, |
and which (in either such case) is not caused by, and is beyond the control of, the Party or, if applicable, any Transaction Obligor whose operations are disrupted.
“Document of Compliance” has the meaning given to it in the ISM Code.
“dollars” and “$” mean the lawful currency, for the time being, of the United States of America.
“Earnings” means all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Borrower or the Security Agent and which arise out of or in connection with or relate to the use or operation of the Ship, including (but not limited to):
(a) |
the following, save to the extent that any of them is, with the prior written consent of the Facility Agent, pooled or shared with any other person: |
(i) |
all freight, hire and passage moneys including, without limitation, all moneys payable under, arising out of or in connection with a Charter or a Charter Guarantee; |
(ii) |
the proceeds of the exercise of any lien on sub-freights; |
(iii) |
compensation payable to the Borrower or the Security Agent in the event of requisition of the Ship for hire or use; |
(iv) |
remuneration for salvage and towage services; |
(v) |
demurrage and detention moneys; |
(vi) |
without prejudice to the generality of sub-paragraph (i) above, damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of the Ship; |
(vii) |
all moneys which are at any time payable under any Insurances in relation to loss of hire; |
(viii) |
all monies which are at any time payable to the Borrower in relation to general average contribution; and |
(b) |
if and whenever the Ship is employed on terms whereby any moneys falling within sub-paragraphs (i) to (viii) of paragraph (a) above are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to the Ship. |
“Earnings Account” means:
7
(a) |
an account in the name of the Borrower with the Account Bank designated “Omega One Marine Corp. Earnings Account”; |
(b) |
any other account in the name of the Borrower with the Account Bank which may, with the prior written consent of the Facility Agent, be opened in the place of the account referred to in paragraph (a) above, irrespective of the number or designation of such replacement account; or |
(c) |
any sub-account of any account referred to in paragraphs (a) or (b) above. |
“EEA Member Country” means any member state of the European Union, Iceland, Liechtenstein and Norway.
“Environmental Approval” means any present or future permit, ruling, variance or other Authorisation required under Environmental Law.
“Environmental Claim” means any claim by any governmental, judicial or regulatory authority or any other person which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law and, for this purpose, “claim” includes a claim for damages, compensation, contribution, injury, fines, losses and penalties or any other payment of any kind, including in relation to clean-up and removal, whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset.
“Environmental Incident” means:
(a) |
any release, emission, spill or discharge of Environmentally Sensitive Material whether within the Ship or from the Ship into any other vessel or into or upon the air, water, land or soils (including the seabed) or surface water; or |
(b) |
any incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, water, land or soils (including the seabed) or surface water from a vessel other than the Ship and which involves a collision between the Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which the Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or the Ship and/or any Transaction Obligor and/or any operator or manager of the Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or |
(c) |
any other incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, water, land or soils (including the seabed) or surface water otherwise than from the Ship and in connection with which the Ship is actually or potentially liable to be arrested and/or where any Transaction Obligor and/or any operator or manager of the Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action, other than in accordance with an Environmental Approval. |
“Environmental Law” means any present or future law relating to vessel disposal, energy efficiency, carbon reduction, emissions, emissions trading, pollution or protection of human health or the environment, to conditions in the workplace, to the carriage, generation, handling, storage, use, release or spillage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material.
8
“Environmentally Sensitive Material” means and includes all contaminants, oil, oil products, toxic substances and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous.
“EU Bail-In Legislation Schedule” means the document described as such and published by the LMA from time to time.
“EU Ship Recycling Regulation” means Regulation (EU) No. 1257/2013 of the European Parliament and of the Council of 20 November 2013 on ship recycling and amending Regulation (EC) No. 1013/2006 and Directive 2009/16/EC.
“Event of Default” means any event or circumstance specified as such in Clause 26 (Events of Default).
“Existing Agent” means BNP Paribas, acting through its office at CTM Transportation, Grands Moulins de Pantin, 9 Rue du Débarcadère, Immeuble Océanie 2ème étage, ACI: CPE02A1, 93500 PANTIN, France.
“Existing Indebtedness” means, at any date, the amount secured on the Ship in favour of the Existing Agent, which, on the date of this Agreement, is $34,700,000.
“Facility” means the term loan facility made available under this Agreement as described in Clause 2 (The Facility).
“Facility Office” means the office or offices notified by a Lender to the Facility Agent in writing on or before the date it becomes a Lender (or, following that date, by not less than 5 Business Days’ written notice) as the office or offices through which it will perform its obligations under this Agreement.
“FATCA” means:
(a) |
sections 1471 to 1474 of the Code or any associated regulations; |
(b) |
any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or |
(c) |
any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction. |
“FATCA Application Date” means:
(a) |
in relation to a “withholdable payment” described in section 1473(1)(A)(i) of the Code (which relates to payments of interest and certain other payments from sources within the US), 1 July 2014; or |
(b) |
in relation to a “passthru payment” described in section 1471(d)(7) of the Code not falling within paragraph (a) above, the first date from which such payment may become subject to a deduction or withholding required by FATCA. |
9
“FATCA Deduction” means a deduction or withholding from a payment under a Finance Document required by FATCA.
“FATCA Exempt Party” means a Party that is entitled to receive payments free from any FATCA Deduction.
“Fee Letter” means any letter or letters dated on or about the date of this Agreement between any of the Mandated Lead Arranger, the Facility Agent and the Security Agent and any Obligor setting out any of the fees referred to in Clause 11 (Fees).
“Finance Document” means:
(a) |
this Agreement; |
(b) |
any Fee Letter; |
(c) |
each Utilisation Request; |
(d) |
any Security Document; |
(e) |
any Manager’s Undertaking; |
(f) |
any Subordination Agreement; |
(g) |
the Nominated Family Side Letter; |
(h) |
any other document which is executed for the purpose of establishing any priority or subordination arrangement in relation to the Secured Liabilities; or |
(i) |
any other document designated as such by the Facility Agent and the Borrower. |
“Finance Party” means the Facility Agent, the Security Agent, the Mandated Lead Arranger or a Lender.
“Financial Indebtedness” means any indebtedness for or in relation to:
(a) |
moneys borrowed; |
(b) |
any amount raised by acceptance under any acceptance credit facility or dematerialised equivalent; |
(c) |
any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument; |
(d) |
the amount of any liability in relation to any lease or hire purchase contract which would, in accordance with GAAP, be treated as a balance sheet liability (other than any liability in respect of a lease or hire purchase contract which would, in accordance with GAAP in force prior to 1 January 2019 have been treated as an operating lease); |
(e) |
receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis); |
10
(f) |
any amount raised under any other transaction (including any forward sale or purchase agreement) of a type not referred to in any other paragraph of this definition having the commercial effect of a borrowing; |
(g) |
any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price (and, when calculating the value of any derivative transaction, only the marked to market value (or, if any actual amount is due as a result of the termination or close-out of that derivative transaction, that amount) shall be taken into account); |
(h) |
any counter-indemnity obligation in relation to a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution; and |
(i) |
the amount of any liability in relation to any guarantee or indemnity for any of the items referred to in paragraphs (a) to (h) above. |
“Funding Rate” means any individual rate notified by a Lender to the Facility Agent pursuant to sub-paragraph (ii) of paragraph (a) of Clause 10.3 (Cost of funds).
“GAAP” means generally accepted accounting principles including IFRS.
“General Assignment” means the general assignment creating Security over:
(a) |
the Earnings, the Insurances and any Requisition Compensation; and |
(b) |
any Charter and any Charter Guarantee, in agreed form. |
“Group” means the Guarantor and its Subsidiaries for the time being and any entity which owns a vessel for the time being managed by the Guarantor or its Subsidiaries (including, but not limited to, the Borrower).
“Historic Term SOFR” means, in relation to the Loan or any part of the Loan, the most recent applicable Term SOFR for a period equal in length to the Interest Period of the Loan or that part of the Loan and which is as of a day which is no more than ten US Government Securities Business Days before the Quotation Day.
“Holding Company” means, in relation to a person, any other person in relation to which it is a Subsidiary.
“IFRS” means international accounting standards within the meaning of the IAS Regulation 1606/2002 to the extent applicable to the relevant financial statements.
“Indemnified Person” has the meaning given to it in Clause 14.2 (Other indemnities).
“Initial Market Value” means the Market Value of the Ship as determined pursuant to the two or, as may be the case, three valuations provided under paragraph 2.4 of Part B of Schedule 2 (Conditions precedent).
“Insurances” means, in relation to the Ship:
11
(a) |
all policies and contracts of insurance, including entries of the Ship in any protection and indemnity or war risks association, effected in relation to the Ship, the Earnings or otherwise in relation to the Ship whether before, on or after the date of this Agreement; and |
(b) |
all rights and other assets relating to, or derived from, any of such policies, contracts or entries, including any rights to a return of premium and any rights in relation to any claim whether or not the relevant policy, contract of insurance or entry has expired on or before the date of this Agreement. |
“Interest Payment Date” has the meaning given to it in paragraph (a) of Clause 8.2 (Payment of interest).
“Interest Period” means, in relation to the Loan or any part of the Loan, each period determined in accordance with Clause 9 (Interest Periods) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 8.3 (Default interest).
“Interpolated Historic Term SOFR” means, in relation to the Loan or any part of the Loan, the rate (rounded to the same number of decimal places as Term SOFR) which results from interpolating on a linear basis between:
(a) |
either: |
(i) |
the most recent applicable Term SOFR (as of a day which is not more than three US Government Securities Business Days before the Quotation Day) for the longest period (for which Term SOFR is available) which is less than the Interest Period of the Loan or that part of the Loan; or |
(ii) |
if no such Term SOFR is available for a period which is less than the Interest Period of the Loan or that part of the Loan, the most recent SOFR for a day which is no more than five US Government Securities Business Days (and no less than two US Government Securities Business Days before the Quotation Day); and |
(b) |
the most recent applicable Term SOFR (as of a day which is not more than three US Government Securities Business Days before the Quotation Day) for the shortest period (for which Term SOFR is available) which exceeds the Interest Period of the Loan or that part of the Loan. |
“Interpolated Term SOFR” means, in relation to the Loan or any part of the Loan, the rate (rounded to the same number of decimal places as Term SOFR) which results from interpolating on a linear basis between:
(a) |
either: |
(i) |
the applicable Term SOFR (as of the Specified Time) for the longest period (for which Term SOFR is available) which is less than the Interest Period of the Loan or that part of the Loan; or |
(ii) |
if no such Term SOFR is available for a period which is less than the Interest Period of the Loan or that part of the Loan, SOFR for the day which is two US Government Securities Business Days before the Quotation Day; and |
12
(b) |
the applicable Term SOFR (as of the Specified Time) for the shortest period (for which Term SOFR is available) which exceeds the Interest Period of the Loan or that part of the Loan. |
“Inventory of Hazardous Materials” means an inventory certificate or statement of compliance (as applicable) issued by the relevant classification society or shipyard authority which is supplemented by a list of any and all materials known to be potentially hazardous utilised in the construction of, or otherwise installed on, the Ship, pursuant to the requirements of the EU Ship Recycling Regulation.
“ISM Code” means the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention (including the guidelines on its implementation), adopted by the International Maritime Organisation, as the same may be amended or supplemented from time to time.
“ISPS Code” means the International Ship and Port Facility Security (ISPS) Code as adopted by the International Maritime Organization’s (IMO) Diplomatic Conference of December 2002, as the same may be amended or supplemented from time to time.
“ISSC” means an International Ship Security Certificate issued under the ISPS Code.
“Legal Reservations” means:
(a) |
the principle that equitable remedies may be granted or refused at the discretion of a court and the limitation of enforcement by laws relating to insolvency, reorganisation and other laws generally affecting the rights of creditors; |
(b) |
the time barring of claims under the Limitation Acts, the possibility that an undertaking to assume liability for or indemnify a person against non-payment of UK stamp duty may be void and defences of set-off or counterclaim; |
(c) |
similar principles, rights and defences under the laws of any Relevant Jurisdiction; and |
(d) |
any other matters which are set out as qualifications or reservations as to matters of law of general application in any legal opinion delivered pursuant to Clause 4 (Conditions of Utilisation). |
“Lender” means:
(a) |
any Original Lender; and |
(b) |
any bank, financial institution, trust, fund or other entity which has become a Party in accordance with Clause 27 (Changes to the Lenders), which in each case has not ceased to be a Party in accordance with this Agreement. |
“Limitation Acts” means the Limitation Act 1980 and the Foreign Limitation Periods Act 1984.
“LMA” means the Loan Market Association or any successor organisation.
“Loan” means the loan to be made available under the Facility or the aggregate principal amount outstanding for the time being of the borrowings under the Facility and a “part of the Loan” means any part of the Loan as the context may require.
13
“Major Casualty” means any casualty to the Ship in relation to which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $3,000,000 or the equivalent in any other currency.
“Majority Lenders” means:
(a) |
if the Loan has not been yet made, a Lender or Lenders whose Commitments aggregate more than 66⅔ per cent. of the Total Commitments; or |
(b) |
at any other time, a Lender or Lenders whose participations in the Loan aggregate more than 66⅔ per cent. of the amount of the Loan then outstanding or, if the Loan has been repaid or prepaid in full, a Lender or Lenders whose participations in the Loan immediately before repayment or prepayment in full aggregate more than 66⅔ per cent. of the Loan immediately before such repayment. |
“Management Agreement” means the Technical Management Agreement or the Commercial Management Agreement.
“Manager’s Undertaking” means the letter of undertaking from the Approved Technical Manager and the letter of undertaking from the Approved Commercial Manager subordinating the rights of the Approved Technical Manager and the Approved Commercial Manager respectively against the Ship and the Borrower to the rights of the Finance Parties in agreed form.
“Margin” means 1.75 per cent. per annum.
“Market Disruption Rate” means the Reference Rate.
“Market Value” means, in relation to the Ship or any other vessel, at any date, an amount determined by the Facility Agent as being an amount equal to:
(a) |
the market value of the Ship or vessel shown by the average of two valuations of the Ship or that vessel each prepared: |
(i) |
as at a date not more than 14 days previously; |
(ii) |
by an Approved Valuer selected by the Borrower; |
(iii) |
with or without physical inspection of the Ship or vessel (as the Facility Agent may require); and |
(iv) |
on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, free of any Charter, |
Provided that if the difference between the two valuations obtained at any time is greater than 15 per cent. (with reference to the lower valuation) or otherwise the Facility Agent acting with the authorisation of the Majority Lenders cannot accept such valuations, the Facility Agent shall be entitled to obtain a third valuation in accordance with paragraph (a) above (save that the Approved Valuer for a third valuation shall be selected by the Facility Agent) and the Market Value of the Ship in such circumstances shall be the average of three valuations, being the initial two valuations and the valuation provided by the third Approved Valuer.
14
“Material Adverse Effect” means in the reasonable opinion of the Majority Lenders a material adverse effect on:
(a) |
the business, operations, property, condition (financial or otherwise) or prospects of any member of the Group or the Group as a whole; or |
(b) |
the ability of any Transaction Obligor to perform its obligations under any Finance Document; or |
(c) |
the validity or enforceability of, or the effectiveness or ranking of any Security granted or intended to be granted pursuant to any of, the Finance Documents or the rights or remedies of any Finance Party under any of the Finance Documents. |
“Month” means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that:
(a) |
(subject to paragraph (c) below) if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that calendar month in which that period is to end if there is one, or if there is not, on the immediately preceding Business Day; |
(b) |
if there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the last Business Day in that calendar month; and |
(c) |
if an Interest Period begins on the last Business Day of a calendar month, that Interest Period shall end on the last Business Day in the calendar month in which that Interest Period is to end. |
The above rules will only apply to the last Month of any period.
“Mortgage” means the first priority or, as the case may be, first preferred ship mortgage on the Ship under the laws of an Approved Flag (together with, if applicable, a deed of covenants collateral thereto), in agreed form.
“Nominated Family” means the family disclosed in writing to the Lenders prior to the date of this Agreement and “members of the Nominated Family” shall be construed accordingly.
“Nominated Family Side Letter” means a side letter in respect of the member of the Nominated Family, in agreed form.
“Obligor” means the Borrower or the Guarantor.
“Original Financial Statements” means:
(a) |
in relation to the Guarantor, the audited consolidated financial statements of the Group for its financial year ended 31 December 2022; and |
(b) |
in relation to the Borrower, its unaudited financial statements for its financial year ended 31 December 2022. |
“Original Jurisdiction” means, in relation to an Obligor, the jurisdiction under whose laws that Obligor is incorporated as at the date of this Agreement.
15
“Overseas Regulations” means the Overseas Companies Regulations 2009 (SI 2009/1801).
“Parallel Debt” has the meaning given to that term in Clause 30.2 (Parallel Debt (Covenant to pay the Security Agent)).
“Participating Member State” means any member state of the European Union that has the euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.
“Party” means a party to this Agreement.
“Permitted Charter” means a Charter:
(a) |
which is a time, voyage or consecutive voyage charter; |
(b) |
the duration of which does not exceed and is not capable of exceeding, by virtue of any optional extensions, 12 Months plus redelivery allowance of not more than 30 days; |
(c) |
which is entered into on bona fide arm’s length terms at the time at which the Ship is fixed; and |
(d) |
in relation to which not more than two Months’ hire is payable in advance, |
and any other Charter which is approved in writing by the Facility Agent acting with the authorisation of the Majority Lenders.
“Permitted Financial Indebtedness” means:
(a) |
any Financial Indebtedness incurred under the Finance Documents; |
(b) |
until the Utilisation Date, the Existing Indebtedness; and |
(c) |
any Financial Indebtedness that is subordinated to all Financial Indebtedness incurred under the Finance Documents pursuant to a Subordination Agreement or otherwise and which is, in the case of any such Financial Indebtedness of the Borrower, the subject of Subordinated Debt Security. |
“Permitted Security” means:
(d) |
Security created by the Finance Documents; |
(e) |
until the Utilisation Date, the Existing Security; |
(f) |
liens for unpaid master’s and crew’s wages in accordance with first class ship ownership and management practice and not being enforced through arrest; |
(g) |
liens for salvage; |
(h) |
liens for master’s disbursements incurred in the ordinary course of trading in accordance with first class ship ownership and management practice and not being enforced through arrest; and |
16
(i) |
any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of the Ship: |
(i) |
not as a result of any default or omission by the Borrower; |
(ii) |
not being enforced through arrest; and |
(iii) |
subject, in the case of liens for repair or maintenance, to Clause 23.18 (Restrictions on chartering, appointment of managers etc.), |
provided such lien does not secure amounts more than 60 days overdue (unless the overdue amount is being contested in good faith by appropriate steps and for the payment of which adequate reserves are held and provided further that such proceedings do not give rise to a material risk of the Ship or any interest in it being seized, sold, forfeited or lost).
“Potential Event of Default” means any event or circumstance specified in Clause 26 (Events of Default) which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.
“Prepayment Fee” has the meaning given to it in Clause 11.5 (Prepayment fee).
“Prohibited Person” means any person:
(a) |
listed on any list of designated or restricted persons or entities maintained by a Sanctions Authority; |
(b) |
located in, or organised under the laws of Sanctioned Country; |
(c) |
directly or indirectly owned or controlled, as defined by the relevant Sanctions Authority, by a person referred to in (a) or (b) above; or |
otherwise, is the target or subject of Sanctions, or will become with the expiry of any period of time, subject to Sanctions.
“Protected Party” has the meaning given to it in Clause 12.1 (Definitions).
“Published Rate” has the meaning given to it in Clause 42.4 (Changes to reference rates).
“Quotation Day” means in relation to any period for which an interest rate is to be determined, two US Government Securities Business Days before the first day of that period unless market practice differs in the relevant syndicated loan market in which case the Quotation Day will be determined by the Facility Agent in accordance with that market practice (and if quotations would normally be given on more than one day, the Quotation Day will be the last of those days).
“Receiver” means a receiver or receiver and manager or administrative receiver of the whole or any part of the Security Assets.
“Reference Rate” means, in relation to the Loan or any part of the Loan:
17
(a) |
the applicable Term SOFR as of the Specified Time and for a period equal in length to the Interest Period of the Loan or that part of the Loan; or |
(b) |
as otherwise determined pursuant to Clause 10.1 (Unavailability of Term SOFR), |
and if, in either case, that rate is less than zero, the Reference Rate shall be deemed to be zero.
“Related Fund” in relation to a fund (the “first fund”), means a fund which is managed or advised by the same investment manager or investment adviser as the first fund or, if it is managed by a different investment manager or investment adviser, a fund whose investment manager or investment adviser is an Affiliate of the investment manager or investment adviser of the first fund.
“Relevant Jurisdiction” means, in relation to a Transaction Obligor:
(a) |
its Original Jurisdiction; |
(b) |
any jurisdiction where any asset subject to, or intended to be subject to, any of the Transaction Security created, or intended to be created, by it is situated; |
(c) |
any jurisdiction where it conducts its business; and |
(d) |
the jurisdiction whose laws govern the perfection of any of the Security Documents entered into by it. |
“Relevant Market” means the market for overnight cash borrowing collateralised by US Government Securities.
“Repayment Date” means each date on which a Repayment Instalment is required to be paid under Clause 6.1 (Repayment of Loan).
“Repayment Instalment” has the meaning given to it in Clause 6.1 (Repayment of Loan).
“Repayment Schedule” means each repayment schedule set out in Schedule 8 (Repayment Schedules) as may be amended and replaced by the Facility Agent in accordance with the terms of this Agreement.
“Repeating Representation” means each of the representations set out in Clause 18 (Representations) except Clause 18.11 (No filing or stamp taxes) and Clause 18.12 (Deduction of Tax) and any representation of any Transaction Obligor made in any other Finance Document that is expressed to be a “Repeating Representation” or is otherwise expressed to be repeated.
“Reporting Day” means:
(a) |
subject to paragraph (b) below, the Quotation Day for the relevant Interest Period; or |
(b) |
if the Reference Rate is, or is based on the Central Bank Rate, the date falling one Business Day after the Quotation Day for the relevant Interest Period. |
“Reporting Period” means:
(a) |
in the case of the first anniversary of the Utilisation Date, the period from the Utilisation Date to the date falling one week prior to the first anniversary; |
18
(b) |
in the case of each subsequent anniversary of the Utilisation Date, the period of 12 Months ending on the date falling one week prior to the relevant anniversary; and |
(c) |
in the case of the attestation to be submitted on the date of payment of the final Repayment Instalment, the period from the date on which an attestation was last submitted under Clause 23.14 (Russian oil price cap) to and including such payment date. |
“Representative” means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian.
“Requisition” means:
(a) |
any expropriation, confiscation, requisition (excluding a requisition for hire or use which does not involve a requisition for title) or acquisition of the Ship, whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected (whether de jure or de facto) by any government or official authority or by any person or persons claiming to be or to represent a government or official authority; and |
(b) |
any arrest, capture or seizure of the Ship (including any hijacking or theft) by any person whatsoever. |
“Requisition Compensation” includes all compensation or other moneys payable to the Borrower by reason of any Requisition or any arrest or detention of the Ship in the exercise or purported exercise of any lien or claim.
“Resolution Authority” means any body which has authority to exercise any Write-down and Conversion Powers.
“Russian Oil Price Cap Measures” means the Russian oil price cap restrictions and requirements imposed by Sanctions law, rule or regulation of the United Kingdom, the Council of the European Union and the United States of America, Canada and any other similar restrictions on the supply or delivery or maritime transportation of Russian Oil Products, or the provision of services in support of such supply, delivery or maritime transportation of Russian Oil Products, applicable to any Obligor.
“Russian Oil Products” means oil, oil products and petroleum products falling within commodity codes 2709 or 2710 which originate in or are consigned or exported from Russia.
“Safety Management Certificate” has the meaning given to it in the ISM Code.
“Safety Management System” has the meaning given to it in the ISM Code.
“Sanctioned Country” means any country or territory which is the target of comprehensive country-wide or territory-wide Sanctions broadly prohibiting dealings with such country or territory (currently, Cuba, Iran, North Korea, Syria, the so-called Donetsk People’s Republic, the so-called Luhansk People’s Republic and the Crimea region of Ukraine).
“Sanctioned Ship” means a Ship which is subject to Sanctions.
19
“Sanctions” means any economic or financial sanctions, trade embargoes or similar measures enacted, administered or enforced by any Sanctions Authority (or by any agency of any such Sanctions Authority).
“Sanctions Authority” means any of:
(a)the United Nations;
(b)the United States of America;
(c)the European Union or any present or future member state thereof;
(d)the members of the European Economic Area;
(e)the United Kingdom;
(f)Hong Kong Special Administrative Region;
(g)The People’s Republic of China;
and each relevant governmental institution of any of the forgoing institutions.
“Secured Liabilities” means all present and future obligations and liabilities, (whether actual or contingent and whether owed jointly or severally or in any other capacity whatsoever) of each Transaction Obligor to any Secured Party under or in connection with each Finance Document.
“Secured Party” means each Finance Party from time to time party to this Agreement, a Receiver or any Delegate.
“Security” means a mortgage, pledge, lien, charge, assignment, hypothecation or security interest or any other agreement or arrangement having the effect of conferring security.
“Security Assets” means all of the assets of the Transaction Obligors which from time to time are, or are expressed to be, the subject of the Transaction Security.
“Security Document” means:
(a) |
any Shares Security; |
(b) |
any Mortgage; |
(c) |
any General Assignment; |
(d) |
any Account Security; |
(e) |
any Charterparty Assignment; |
(f) |
any Subordinated Debt Security; |
(g) |
any other document (whether or not it creates Security) which is executed as security for the Secured Liabilities; or |
(h) |
any other document designated as such by the Facility Agent and the Borrower. |
20
“Security Period” means the period starting on the date of this Agreement and ending on the date on which the Facility Agent is satisfied that there is no outstanding Commitment in force and that the Secured Liabilities have been irrevocably and unconditionally paid and discharged in full.
“Security Property” means:
(a) |
the Transaction Security expressed to be granted in favour of the Security Agent as trustee for the Secured Parties and all proceeds of that Transaction Security; |
(b) |
all obligations expressed to be undertaken by a Transaction Obligor to pay amounts in relation to the Secured Liabilities to the Security Agent as trustee for the Secured Parties and secured by the Transaction Security together with all representations and warranties expressed to be given by a Transaction Obligor or any other person in favour of the Security Agent as trustee for the Secured Parties; |
(c) |
the Security Agent’s interest in any turnover trust created under the Finance Documents; |
(d) |
any other amounts or property, whether rights, entitlements, choses in action or otherwise, actual or contingent, which the Security Agent is required by the terms of the Finance Documents to hold as trustee on trust for the Secured Parties, |
except:
(i) |
rights intended for the sole benefit of the Security Agent; and |
(ii) |
any moneys or other assets which the Security Agent has transferred to the Facility Agent or (being entitled to do so) has retained in accordance with the provisions of this Agreement. |
“Servicing Party” means the Facility Agent or the Security Agent.
“Shares Security” means a document creating Security over the share capital in the Borrower in agreed form.
“Ship” means the crude oil tanker “MILOS”, built in 2016 in South Korea, having approximately 157,525 dwt, registered in the name of the Borrower under an Approved Flag (which at the date of this Agreement is the Greek flag).
“SOFR” means the secured overnight financing rate (SOFR) administered by the Federal Reserve Bank of New York (or any other person which takes over the administration of that rate) published by the Federal Reserve Bank of New York (or any other person which takes over the publication of that rate).
“Specified Time” means a day or time determined in accordance with Schedule 7 (Timetables).
“Subordinated Creditor” means:
(a) |
a Transaction Obligor; or |
(b) |
any other person who becomes a Subordinated Creditor in accordance with this Agreement. |
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“Subordinated Debt Security” means a Security over Subordinated Liabilities entered into or to be entered into by a Subordinated Creditor in favour of the Security Agent in an agreed form.
“Subordinated Finance Document” means:
(a) |
a Subordinated Loan Agreement; and |
(b) |
any other document relating to or evidencing Subordinated Liabilities. |
“Subordinated Liabilities” means all indebtedness owed or expressed to be owed by the Borrower to a Subordinated Creditor whether under the Subordinated Finance Documents or otherwise.
“Subordinated Loan Agreement” means a loan agreement to be made between the Borrower and (ii) a Subordinated Creditor.
“Subordination Agreement” means a subordination agreement entered into or to be entered into by each Subordinated Creditor and the Security Agent in agreed form.
“Subsidiary” means a subsidiary within the meaning of section 1159 of the Companies Act 2006.
“Tax” means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).
“Tax Credit” has the meaning given to it in Clause 12.1 (Definitions).
“Tax Deduction” has the meaning given to it in Clause 12.1 (Definitions).
“Tax Payment” has the meaning given to it in Clause 12.1 (Definitions).
“Technical Management Agreement” means the agreement entered into between the Borrower and the Approved Technical Manager regarding the technical management of the Ship.
“Term SOFR” means the term SOFR reference rate administered by CME Group Benchmark Administration Limited (or any other person which takes over the administration of that rate) for the relevant period published (before any correction, recalculation or republication by the administrator) by CME Group Benchmark Administration Limited (or any other person which takes over the publication of that rate).
“Termination Date” means the date falling six years from the Utilisation Date.
“Third Parties Act” has the meaning given to it in Clause 1.5 (Third party rights).
“Total Commitments” means the aggregate of the Commitments, being $34,700,000 at the date of this Agreement.
“Total Loss” means:
(a) |
actual, constructive, compromised, agreed or arranged total loss of the Ship; or |
22
(b) |
any Requisition of the Ship unless the Ship is returned to the full control of the Borrower within 30 days of such Requisition. |
“Total Loss Date” means, in relation to the Total Loss of the Ship:
(a) |
in the case of an actual loss of the Ship, the date on which it occurred or, if that is unknown, the date when the Ship was last heard of; |
(b) |
in the case of a constructive, compromised, agreed or arranged total loss of the Ship, the earlier of: |
(i) |
the date on which a notice of abandonment is given (or deemed or agreed to be given) to the insurers; and |
(ii) |
the date of any compromise, arrangement or agreement made by or on behalf of the Borrower with the Ship’s insurers in which the insurers agree to treat the Ship as a total loss; and |
(c) |
in the case of a Requisition, the date on which that Requisition occurs; and |
(d) |
in the case of any other type of Total Loss, the date (or the most likely date) on which it appears to the Facility Agent that the event constituting the total loss occurred. |
“Transaction Document” means:
(a) |
a Finance Document; |
(b) |
a Subordinated Finance Document; |
(c) |
any Charter; or |
(d) |
any other document designated as such by the Facility Agent and the Borrower. |
“Transaction Obligor” means an Obligor, any Approved Manager or any other person who executes a Transaction Document.
“Transaction Security” means the Security created or evidenced or expressed to be created or evidenced under the Security Documents.
“Transfer Certificate” means a certificate substantially in the form set out in Schedule 4 (Form of Transfer Certificate) or any other form agreed between the Facility Agent and the Borrower.
“Transfer Date” means, in relation to an assignment or a transfer, the later of:
(a) |
the proposed Transfer Date specified in the relevant Assignment Agreement or Transfer Certificate; and |
(b) |
the date on which the Facility Agent executes the relevant Assignment Agreement or Transfer Certificate. |
“UK Bail-In Legislation” means Part 1 of the United Kingdom Banking Act 2009 and any other law or regulation applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutes or their affiliates (otherwise than through liquidation, administration or other insolvency proceedings).
23
“UK Establishment” means a UK establishment as defined in the Overseas Regulations.
“Unpaid Sum” means any sum due and payable but unpaid by a Transaction Obligor under the Finance Documents.
“US” means the United States of America.
“US Government Securities Business Day” means any day other than:
(a) |
a Saturday or a Sunday; and |
(b) |
a day on which the Securities Industry and Financial Markets Association (or any successor organisation) recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in US Government securities. |
“US Tax Obligor” means:
(a) |
a person which is resident for tax purposes in the US; or |
(b) |
a person some or all of whose payments under the Finance Documents are from sources within the US for US federal income tax purposes. |
“Utilisation” means a utilisation of the Facility.
“Utilisation Date” means the date on which the Loan is to be made.
“Utilisation Request” means a notice substantially in the form set out in Schedule 3 (Utilisation Request).
“VAT” means:
(a) |
any value added tax imposed by the Value Added Tax Act 1994; |
(b) |
any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112); and |
(c) |
any other tax of a similar nature, whether imposed in the United Kingdom or a member state of the European Union in substitution for, or levied in addition to, such tax referred to in paragraph (a) or (b) above, or imposed elsewhere. |
“Write-down and Conversion Powers” means:
(a) |
in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule; |
(b) |
in relation to the UK Bail-In Legislation, any powers under that UK Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been |
24
exercised under it or to suspend any obligation in respect of that liability or any of the powers under that UK Bail-In Legislation that are related to or ancillary to any of those powers; and
(c) |
in relation to any other applicable Bail-In Legislation: |
(i) |
any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers; and |
(ii) |
any similar or analogous powers under that Bail-In Legislation. |
1.2 |
Construction |
(a) |
Unless a contrary indication appears, a reference in this Agreement to: |
(i) |
the “Account Bank”, the “Mandated Lead Arranger”, the “Facility Agent”, any “Finance Party”, any “Lender”, any “Obligor”, any “Party”, any “Secured Party”, the “Security Agent”, any “Transaction Obligor” or any other person shall be construed so as to include its successors in title, permitted assigns and permitted transferees to, or of, its rights and/or obligations under the Finance Documents; |
(ii) |
“assets” includes present and future properties, revenues and rights of every description; |
(iii) |
a liability which is “contingent” means a liability which is not certain to arise and/or the amount of which remains unascertained; |
(iv) |
“document” includes a deed and also a letter, fax, email or telex; |
(v) |
“expense” means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable Tax including VAT; |
(vi) |
a Lender’s “cost of funds” in relation to its participation in the Loan or any part of the Loan is a reference to the average cost (determined either on an actual or a notional basis) which that Lender would incur if it were to fund, from whatever source(s) it may reasonably select, an amount equal to the amount of that participation in the Loan or that part of the Loan for a period equal in length to the Interest Period of the Loan or that part of the Loan. |
(vii) |
a “Finance Document”, a “Security Document” or “Transaction Document” or any other agreement or instrument is a reference to that Finance Document, Security Document or Transaction Document or other agreement or instrument as amended, novated, supplemented, extended or restated; |
(viii) |
a “group of Lenders” includes all the Lenders; |
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(ix) |
“indebtedness” includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent; |
(x) |
“law” includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council; |
(xi) |
“proceedings” means, in relation to any enforcement provision of a Finance Document, proceedings of any kind, including an application for a provisional or protective measure; |
(xii) |
a “person” includes any individual, firm, company, corporation, government, state or agency of a state or any association, trust, joint venture, consortium, partnership or other entity (whether or not having separate legal personality); |
(xiii) |
a “regulation” includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation; |
(xiv) |
a reference to the “Ship”, its name, its flag and, if applicable, its port of registry shall include any replacement name, flag and, if applicable, replacement port of registry, in each case, as may be approved in writing from time to time by the Facility Agent acting with the authorisation of the Majority Lenders; |
(xv) |
a provision of law is a reference to that provision as amended or re-enacted from time to time; |
(xvi) |
a time of day is a reference to London time; |
(xvii) |
any English legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall, in respect of a jurisdiction other than England, be deemed to include that which most nearly approximates in that jurisdiction to the English legal term; |
(xviii) |
words denoting the singular number shall include the plural and vice versa; and |
(xix) |
“including” and “in particular” (and other similar expressions) shall be construed as not limiting any general words or expressions in connection with which they are used. |
(b) |
The determination of the extent to which a rate is “for a period equal in length” to an Interest Period shall disregard any inconsistency arising from the last day of that Interest Period being determined pursuant to the terms of this Agreement. |
(c) |
Section, Clause and Schedule headings are for ease of reference only and are not to be used for the purposes of construction or interpretation of the Finance Documents. |
(d) |
Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under, or in connection with, any Finance Document has the same meaning in that Finance Document or notice as in this Agreement. |
(e) |
A reference in this Agreement to a Central Bank Rate shall include any successor rate to, or replacement rate for, that rate. |
26
(f) |
A Potential Event of Default is “continuing” if it has not been remedied or waived and an Event of Default is “continuing” if it has not been waived. |
(g) |
A reference in this Agreement to a Central Bank Rate shall include any successor rate to, or replacement for, that rate. |
1.3 |
Construction of insurance terms |
In this Agreement:
“approved” means, for the purposes of Clause 22 (Insurance Undertakings), approved in writing by the Facility Agent.
“excess risks” means the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of the Ship in consequence of its insured value being less than the value at which the Ship is assessed for the purpose of such claims.
“obligatory insurances” means all insurances effected, or which the Borrower is obliged to effect, under Clause 22 (Insurance Undertakings) or any other provision of this Agreement or of another Finance Document.
“policy” includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms.
“protection and indemnity risks” means the usual risks covered by a protection and indemnity association managed in London, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 6 of the International Hull Clauses (1/11/02) (1/11/03), clause 8 of the Institute Time Clauses (Hulls) (1/10/83) (1/11/95) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision.
“war risks” includes the risk of mines and all risks excluded by clauses 29, 30 or 31 of the International Hull Clauses (1/11/02), clauses 29 or 30 of the International Hull Clauses (1/11/03), clauses 24, 25 or 26 of the Institute Time Clauses (Hulls) (1/11/95) or clauses 23, 24 or 25 of the Institute Time Clauses (Hulls) (1/10/83) or any equivalent provisions.
1.4 |
Agreed forms of Finance Documents |
References in Clause 1.1 (Definitions) to any Finance Document being in “agreed form” are to that Finance Document:
(a) |
in a form attached to a certificate dated the same date as this Agreement (and signed by the Borrower and the Facility Agent); or |
(b) |
in any other form agreed in writing between the Borrower and the Facility Agent acting with the authorisation of the Majority Lenders or, where Clause 42.2 (All Lender matters) applies, all the Lenders. |
27
1.5 |
Third party rights |
(a) |
Unless expressly provided to the contrary in a Finance Document, a person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 (the “Third Parties Act”) to enforce or to enjoy the benefit of any term of this Agreement. |
(b) |
Notwithstanding any term of any Finance Document, the consent of any person who is not a Party is not required to rescind or vary this Agreement at any time. |
(c) |
Any Affiliate, Receiver, Delegate or any other person described in paragraph (d) of Clause 14.2 (Other indemnities), paragraph (b) of Clause 29.11 (Exclusion of liability), paragraph (b) of Clause 30.11 (Exclusion of liability) may, subject to this Clause 1.5 (Third party rights) and the Third Parties Act, rely on any Clause of this Agreement which expressly confers rights on it. |
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SECTION 2
THE FACILITY
2THE FACILITY
2.1The Facility
Subject to the terms of this Agreement the Lenders make available to the Borrower a dollar term loan facility in an amount of up to the lesser of (i) $34,700,000 and (ii) 170 per cent. of the Initial Market Value of the Ship.
2.2Finance Parties’ rights and obligations
(a)The obligations of each Finance Party under the Finance Documents are several. Failure by a Finance Party to perform its obligations under the Finance Documents does not affect the obligations of any other Party under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.
(b)The rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Finance Party from a Transaction Obligor is a separate and independent debt in respect of which a Finance Party shall be entitled to enforce its rights in accordance with paragraph (c) below. The rights of each Finance Party include any debt owing to that Finance Party under the Finance Documents and, for the avoidance of doubt, any part of the Loan or any other amount owed by a Transaction Obligor which relates to a Finance Party’s participation in the Facility or its role under a Finance Document (including any such amount payable to the Facility Agent on its behalf) is a debt owing to that Finance Party by that Transaction Obligor.
(c)A Finance Party may, except as specifically provided in the Finance Documents, separately enforce its rights under or in connection with the Finance Documents.
2.3Borrower’s agent
(a)The Borrower by its execution of this Agreement irrevocably appoints the Guarantor to act on its behalf as its agent in relation to the Finance Documents and irrevocably authorises:
(i) |
the Guarantor on its behalf to supply all information concerning itself contemplated by this Agreement to the Finance Parties and to give all notices and instructions (including the Utilisation Request), to make such agreements and to effect the relevant amendments, supplements and variations capable of being given, made or effected by the Borrower notwithstanding that they may affect the Borrower, without further reference to or the consent of the Borrower; and |
(ii) |
each Finance Party to give any notice, demand or other communication to the Borrower pursuant to the Finance Documents to the Guarantor, |
and in each case the Borrower shall be bound as though the Borrower itself had given the notices and instructions (including, without limitation, the Utilisation Request) or executed or made the agreements or effected the amendments, supplements or variations, or received the relevant notice, demand or other communication.
29
(b)Every act, omission, agreement, undertaking, settlement, waiver, amendment, supplement, variation, notice or other communication given or made by the Guarantor or given to the Guarantor under any Finance Document on behalf of the Borrower or in connection with any Finance Document (whether or not known to the Borrower) shall be binding for all purposes on the Borrower as if the Borrower had expressly made, given or concurred with it. In the event of any conflict between any notices or other communications of the Guarantor and the Borrower, those of the Guarantor shall prevail.
3PURPOSE
3.1Purpose
The Borrower shall apply all amounts borrowed by it under the Facility only for the purpose stated in the preamble (Background) to this Agreement.
3.2Monitoring
No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.
4CONDITIONS OF UTILISATION
4.1Initial conditions precedent
The Borrower may not deliver a Utilisation Request unless the Facility Agent has received all of the documents and other evidence listed in Part A of Schedule 2 (Conditions Precedent) in form and substance satisfactory to the Facility Agent.
4.2Conditions precedent to prepositioning of funds
The Lenders will only be obliged to comply with Clause 5.6 (Payment to the Borrower and prepositioning of funds) if:
(a)on the date of the Utilisation Request and on the proposed Utilisation Date and before the Loan is made available:
(i)no Default has occurred or would result from the making of the Loan;
(ii)the Repeating Representations to be made by each Transaction Obligor are true in all material respects;
(iii)no event described in Clause 7.2 (Change of Borrower’s ownership) has occurred; and
(b)the Lenders have received, on or before the Utilisation Date, or are satisfied that it will receive when the Loan is made available, all of the documents and other evidence listed in Part B of Schedule 2 (Conditions precedent to prepositioning of funds) in form and substance satisfactory to the Facility Agent.
4.3Conditions precedent to release of prepositioned funds
The Lenders will only be obliged to comply with Clause 5.7 (Release of prepositioned funds) and release the Loan or any part of the Loan to the Existing Agent on the Release Date if:
(a)on the Release Date and before the Loan is released:
30
(i)no Default has occurred or would result from the making of the Loan;
(ii)the Repeating Representations to be made by each Transaction Obligor are true in all material respects; and
(iii)no event described in Clause 7.2 (Change of Borrower’s ownership) has occurred; and
(b)on the Release Date, the Facility Agent has received on or before the Utilisation Date, or is satisfied it will receive when the Loan is made available, all of the documents and other evidence listed in Part C of Schedule 2 (Conditions Precedent) in form and substance satisfactory to the Facility Agent.
4.4Notification of satisfaction of conditions precedent
The Facility Agent shall notify the Borrower and the Lenders promptly upon being satisfied as to the satisfaction of the conditions precedent referred to in Clause 4.1 (Initial conditions precedent), Clause 4.2 (Conditions precedent to prepositioning of funds) and Clause 4.3 (Conditions precedent to release of prepositioned funds).
4.5Waiver of conditions precedent
If the Majority Lenders, at their discretion, permit the Loan to be borrowed before any of the conditions precedent referred to in Clause 4.1 (Initial conditions precedent), Clause 4.2 (Conditions precedent to prepositioning of funds) and Clause 4.3 (Conditions precedent to release of prepositioned funds) has been satisfied, the Borrower shall ensure that that condition is satisfied within five Business Days after the Utilisation Date or such later date as the Facility Agent, acting with the authorisation of the Majority Lenders, may agree in writing with the Borrower.
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SECTION 3
UTILISATION
5UTILISATION
5.1Delivery of a Utilisation Request
The Borrower may make one Utilisation only under the Facility by delivery to the Facility Agent of a duly completed Utilisation Request not later than the Specified Time.
5.2Completion of a Utilisation Request
A Utilisation Request is irrevocable and will not be regarded as having been duly completed unless:
(a)the proposed Utilisation Date is a Business Day within the Availability Period;
(b)the currency and amount of the Loan comply with Clause 5.3 (Currency and amount); and
(c)the proposed Interest Period complies with Clause 9 (Interest Periods).
5.3Currency and amount
(a)The currency specified in a Utilisation Request must be dollars.
(b)The amount of the Loan must be an amount which is not more than (i) $34,700,000 and (ii) 170 per cent. of the Initial Market Value of the Ship.
5.4Lenders’ participation
(a)If the conditions set out in this Agreement have been met, each Lender shall make its participation in the Loan available by the Utilisation Date through its Facility Office.
(b)The amount of each Lender’s participation in the Loan will be equal to the proportion borne by its Available Commitment to the Available Facility immediately before making the Loan.
(c)The Facility Agent shall notify each Lender of the amount of the Loan and the amount of its participation in the Loan by the Specified Time.
5.5Cancellation of Commitments
The Commitments which are unutilised at the end of the Availability Period shall then be cancelled.
5.6Payment of the Borrower and prepositioning of funds
The Lenders shall, on the Utilisation Date, at the request of the Borrower, on terms acceptable to the Lenders in its absolute discretion and subject to the provisions of Clause 4.2 (Conditions precedent to prepositioning of funds), pay the Loan to the Earnings Account and further preposition the Loan or any part of the Loan by making payment of such amount:
32
(a)to such account of an international law firm acting as escrow agent (the “Prepositioning Institution”) as the Borrower may have agreed with the Lenders in advance of the Utilisation Date and as specified in the Utilisation Request;
(b)on terms that:
(i)such amounts shall be held to the order of the Lenders until such time as the Lenders confirm in writing to the Existing Agent or the Prepositioning Institution (as the case may be) that the Loan or any part of the Loan may be released to the Existing Agent in accordance with Clause 5.7 (Release of prepositioned funds);
(ii)such prepositioning shall constitute the making of the Loan and the Borrower shall at that time become indebted, as principal and direct obligors, to the Lenders in an amount equal to the Loan;
(iii)the date on which the Loan or any part of the Loan is prepositioned shall constitute the Utilisation Date of the Loan; and
(iv)the Borrower:
(A)agrees to pay interest on the amount of the funds so prepositioned at the rate described in Clause 8.1 (Calculation of interest) on the basis of successive interest periods of one day and so that interest shall be paid together with the first payment of interest on the Loan after the Utilisation Date or, if such Utilisation Date does not occur, within three Business Days of demand by the Lenders; and
(B)shall, without duplication, indemnify the Lender against any costs, loss or liability it may incur in connection with such arrangement.
5.7Release of prepositioned funds
The Lenders shall, on the Release Date:
(a)instruct the Prepositioning Institution to release the amount of the Loan or any part of the Loan, to that Existing Bank; and
(b)(if applicable) release any part of the Loan or any part of the Loan held in the Earnings Account to the Borrower,
as specified in the relevant Utilisation Request, subject to the provisions of Clause 4.3 (Conditions precedent to release of prepositioned funds) and Clause 4.5 (Waiver of conditions precedent).
33
SECTION 4
REPAYMENT, PREPAYMENT AND CANCELLATION
6REPAYMENT
6.1Repayment of Loan
(a)The Borrower shall repay the Loan by twenty-four (24) equal consecutive quarterly instalments, each in the amount of $725,000 (each a “Repayment Instalment”), the first of which shall be repaid on the date falling 3 Months after the Utilisation Date and the last on the Termination Date together with a balloon instalment in an amount of $17,300,000 (the “Balloon Instalment”) (and all other amounts outstanding at that time including without limitation all fees, principal and interest and any default interest) in accordance with the relevant Repayment Schedule set out in Schedule 8 (Repayment Schedules).
(b)The Repayment Schedule shall be fixed on the Utilisation Date based on the actual amount drawn down in accordance with paragraph (b) of Clause 5.3 (Currency and amount).
6.2Effect of cancellation and prepayment on scheduled repayments
(a)If the Borrower cancels the whole or any part of any Available Commitment in accordance with Clause 7.6 (Right of repayment and cancellation in relation to a single Lender) or if the Available Commitment of any Lender is cancelled under Clause 7.1 (Illegality and Sanctions affecting a Lender) then the Repayment Instalments falling after that cancellation will be reduce pro rata by the amount of the Available Commitments cancelled.
(b)If the whole or any part of any Available Commitment is cancelled in accordance with Clause 7.3 (Automatic cancellation) or if the whole or part of any Commitment is cancelled pursuant to Clause 5.5 (Cancellation of Commitments) then, the Repayment Instalments for each Repayment Date falling after that cancellation will be reduced pro rata by the amount of the Commitments so cancelled.
(c)If any part of the Loan is repaid or prepaid in accordance with Clause 7.6 (Right of repayment and cancellation in relation to a single Lender) or Clause 7.1 (Illegality and Sanctions affecting a Lender) then the Repayment Instalments for each Repayment Date falling after that repayment or prepayment will be reduced pro rata by the amount of the Loan repaid or prepaid.
(d)If any part of the Loan is prepaid in accordance with Clause 7.4 (Voluntary prepayment of Loan) then the amount of the Repayment Instalments for each Repayment Date falling after that repayment or prepayment will be reduced by the amount of the Loan repaid or prepaid in inverse order of maturity.
6.3Termination Date
On the Termination Date, the Borrower shall additionally pay to the Facility Agent for the account of the Finance Parties all other sums then accrued and owing under the Finance Documents.
6.4Reborrowing
The Borrower may not reborrow any part of the Facility which is repaid.
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7PREPAYMENT AND CANCELLATION
7.1Illegality and Sanctions affecting a Lender
If:
(a)it becomes unlawful or contrary to Sanctions in any applicable jurisdiction for a Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain its participation in the Loan or to determine or charge interest rates based upon Term SOFR, or it becomes unlawful for any Affiliate of a Lender for that Lender to do so:
(i)that Lender shall promptly notify the Facility Agent upon becoming aware of that event;
(ii)upon the Facility Agent notifying the Borrower, the Available Commitment of that Lender will be immediately cancelled;
(iii)the Borrower shall prepay that Lender’s participation in the Loan on the last day of the Interest Period for the Loan occurring after the Facility Agent has notified the Borrower or, if earlier, the date specified by the Lender in the notice delivered to the Facility Agent (being no earlier than the last day of any applicable grace period permitted by law) and that Lender’s corresponding Commitment shall be immediately cancelled in the amount of the participation prepaid; and
(iv)accrued interest and all other amounts accrued for that Lender under the Finance Documents shall be immediately due and payable.
7.2Change of Borrower’s ownership
If:
(a)it appears to the Lenders that, without their prior written consent, a change has occurred or probably has occurred after the date of this Agreement in the direct, intermediate or ultimate beneficial or legal ownership of any of the shares in the Borrower or in the ultimate control of the voting rights attaching to any of those shares; or
(b)the members of the Nominated Family cease to hold, either directly or indirectly, at least 35 per cent. of the ultimate legal and beneficial ownership of the Guarantor (and the voting rights attaching to those shares),
the Borrower shall within 10 Business Days of the occurrence of any of such event prepay the Loan and all Available Commitments shall be cancelled.
7.3Automatic cancellation
The unutilised Commitment (if any) of each Lender shall be automatically cancelled at close of business of the Utilisation Date.
7.4Voluntary prepayment of Loan
The Borrower may, if it gives the Facility Agent not less than 15 Additional Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice, prepay the whole or any part of the Loan (but, if in part, being an amount that reduces the amount of the Loan by a minimum amount of $500,000 or an integral multiple of that amount (or such other amount as the Lenders may agree to at their sole discretion)).
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7.5Mandatory prepayment on sale or Total Loss
If the Ship is sold (without prejudice to paragraph (a) of Clause 21.12 (Disposals)) or becomes a Total Loss, the Borrower shall repay the Loan together with accrued interest, and all other amounts accrued under the Finance Documents. Such repayment shall be made:
(a)In the case of a sale of the Ship, on or before the date on which the sale is completed by delivery of the Ship to the buyer; or
(b)In the case of a Total Loss, on the earlier of:
(i)the date falling 60 days after the Total Loss Date; and
(ii)the date of receipt by the Security Agent of the insurance proceeds relating to such Total Loss.
7.6Right of repayment and cancellation in relation to a single Lender
(a)If:
(i)any sum payable to any Lender by a Transaction Obligor is required to be increased under paragraph (c) of Clause 12.2 (Tax gross-up) or under that clause as incorporated by reference or in full in any other Finance Document; or
(ii)any Lender claims indemnification from the Borrower under Clause 12.3 (Tax indemnity) or Clause 13.1 (Increased costs),
the Borrower may whilst the circumstance giving rise to the requirement for that increase or indemnification continues give the Facility Agent notice of cancellation of the Commitment of that Lender and its intention to procure the repayment of that Lender’s participation in the Loan.
(b)On receipt of a notice of cancellation referred to in paragraph (a) above, the Commitment of that Lender shall immediately be reduced to zero.
(c)On the last day of each Interest Period which ends after the Borrower has given notice of cancellation under paragraph (a) above in relation to a Lender (or, if earlier, the date specified by the Borrower in that notice), the Borrower shall repay that Lender’s participation in the Loan.
7.7Restrictions
(a)Any notice of cancellation or prepayment given by any Party under this Clause 7 (Prepayment and Cancellation) shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to be made and the amount of that cancellation or prepayment.
(b)Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any Break Costs and (if applicable) any Prepayment Fee, without premium or penalty.
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(c)The Borrower may not reborrow any part of the Facility which is prepaid.
(d)The Borrower shall not repay or prepay all or any part of the Loan or cancel all or any part of the Commitments except at the times and in the manner expressly provided for in this Agreement.
(e)No amount of the Total Commitments cancelled under this Agreement may be subsequently reinstated.
(f)If the Facility Agent receives a notice under this Clause 7 (Prepayment and Cancellation) it shall promptly forward a copy of that notice to either the Borrower or the affected Lenders, as appropriate.
(g)If all or part of any Lender’s participation in the Loan is repaid or prepaid, an amount of that Lender’s Commitment (equal to the amount of the participation which is repaid or prepaid) will be deemed to be cancelled on the date of repayment or prepayment.
7.8Application of prepayments
In case of any prepayment of any part of the Loan other than a prepayment pursuant to Clause 7.1 (Illegality and Sanctions affecting a Lender) or Clause 7.6 (Right of repayment and cancellation in relation to a single Lender), shall be applied pro rata to each Lender’s participation in that part of the Loan.
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SECTION 5
COSTS OF UTILISATION
8INTEREST
8.1Calculation of interest
The rate of interest on the Loan or any part of the Loan for each Interest Period is the percentage rate per annum which is the aggregate of the applicable:
(a)Margin; and
(b)Reference Rate.
8.2Payment of interest
(a)The Borrower shall pay accrued interest on the Loan or any part of the Loan on the last day of each Interest Period (each an “Interest Payment Date”).
(b)If an Interest Period is longer than three Months, the Borrower shall also pay interest then accrued on the Loan or the relevant part of the Loan on the dates falling at three Monthly intervals after the first day of the Interest Period.
8.3Default interest
(a)If a Transaction Obligor fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the Unpaid Sum from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to paragraph (b) below, is 2 per cent. per annum higher than the rate which would have been payable if the Unpaid Sum had, during the period of non-payment, constituted part of the Loan in the currency of the Unpaid Sum for successive Interest Periods, each of a duration selected by the Facility Agent. Any interest accruing under this Clause 8.3 (Default interest) shall be immediately payable by the Obligor on demand by the Facility Agent.
(b)If an Unpaid Sum consists of all or part of the Loan which became due on a day which was not the last day of an Interest Period relating to the Loan or that part of the Loan:
(i)the first Interest Period for that Unpaid Sum shall have a duration equal to the unexpired portion of the current Interest Period relating to the Loan or that part of the Loan; and
(ii)the rate of interest applying to that Unpaid Sum during that first Interest Period shall be 2 per cent. per annum higher than the rate which would have applied if that Unpaid Sum had not become due.
(c)Default interest (if unpaid) arising on an Unpaid Sum will be compounded with the Unpaid Sum at the end of each Interest Period applicable to that Unpaid Sum but will remain immediately due and payable.
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8.4Notification of rates of interest
(a)The Facility Agent shall promptly notify the Lenders and the Borrower of the determination of a rate of interest under this Agreement.
(b)The Facility Agent shall promptly notify the Borrower of each Funding Rate relating to the Loan, any part of the Loan or any Unpaid Sum.
9INTEREST PERIODS
9.1Selection of Interest Periods
(a)Subject to this Clause 9 (Interest Periods), the Interest Period for the Loan shall be 3 months (or such other period as the Lenders may agree to (acting at their absolute discretion)).
(b)An Interest Period in respect of the Loan or any part of the Loan shall not extend beyond the Termination Date.
(c)The first Interest Period for the Loan shall start on the Utilisation Date and each subsequent Interest Period shall start on the last day of the preceding Interest Period.
9.2Changes to Interest Periods
(a)In respect of a Repayment Instalment, prior to determining the Interest Rate of the Loan, the Facility Agent may establish an Interest Period for a part of the Loan equal to such Repayment Instalment to end on the Repayment Date relating to it and the remaining part of the Loan shall have the Interest Period agreed to in accordance with paragraph (a) of Clause 9.1 (Selection of Interest Periods).
(b)If the Facility Agent makes any change to an Interest Period referred to in this Clause 9.2 (Changes to Interest Periods), it shall promptly notify the Borrower and the Lenders.
9.3Non-Business Days
If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).
10CHANGES TO THE CALCULATION OF INTEREST
10.1Unavailability of Term SOFR
(a)Interpolated Term SOFR: If no Term SOFR is available for the Interest Period of the Loan or any part of the Loan, the applicable Reference Rate shall be the Interpolated Term SOFR for a period equal in length to the Interest Period of the Loan or that part of the Loan.
(b)Historic Term SOFR: If no Term SOFR is available for the Interest Period of the Loan or any part of the Loan and it is not possible to calculate the Interpolated Term SOFR, the applicable Reference Rate shall be the Historic Term SOFR for the Loan or that part of the Loan.
(c)Interpolated Historic Term SOFR: If paragraph (b) above applies but no Historic Term SOFR is available for the Interest Period of the Loan or any part of the Loan, the applicable Reference
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Rate shall be the Interpolated Historic Term SOFR for a period equal in length to the Interest Period of the Loan or that part of the Loan.
(d)Cost of funds: If paragraph (c) above applies but it is not possible to calculate the Interpolated Historic Term SOFR, there shall be no Reference Rate for the Loan or that part of the Loan (as applicable) and Clause 10.3 (Cost of funds) shall apply to the Loan or that part of the Loan for that Interest Period.
10.2Market disruption
If before close of business in London on the Reporting Day for the relevant Interest Period, the Facility Agent receives notification from a Lender or Lenders (whose participations in the Loan or the relevant part of the Loan exceed 35 per cent. of the Loan or that part of the Loan as appropriate) that its cost of funds relating to its participation in the Loan or that part of the Loan would be in excess of the Market Disruption Rate then Clause 10.3 (Cost of funds) shall apply to the Loan or that part of the Loan (as applicable) for the relevant Interest Period.
10.3Cost of funds
(a)If this Clause 10.3 (Cost of funds) applies, the rate of interest on each Lender’s share of the Loan or the relevant part of the Loan for the relevant Interest Period shall be the percentage rate per annum which is the sum of:
(i)the Margin; and
(ii)the weighted average of the rates notified to the Facility Agent by each Lender as soon as practicable and in any event, within two Business Days after the Reporting Day of the Loan (or, if earlier, on the date falling three Business Days before the date on which interest is due to be paid in respect of that Interest Period),
to be that which expresses as a percentage rate per annum its cost of funds relating to its participation in the Loan or that part of the Loan.
(b)If this Clause 10.3 (Cost of funds) applies and the Facility Agent or the Borrower so requires, the Facility Agent and the Borrower shall enter into negotiations (for a period of not more than 30 days) with a view to agreeing a substitute basis for determining the rate of interest or (as the case may be) an alternative basis for funding.
(c)Subject to Clause 42.4 (Changes to reference rates), any substitute or alternative basis agreed pursuant to paragraph (ii) above shall, with the prior consent of all the Lenders and the Borrower, be binding on all Parties.
(d)If paragraph (e) below does not apply and any rate notified to the Facility Agent under sub-paragraph (ii) of paragraph (a) above is less than zero, the relevant rate shall be deemed to be zero.
(e)If this Clause 10.3 (Cost of funds) applies pursuant to Clause 10.2 (Market disruption) and:
(i)a Lender’s Funding Rate is less than the Market Disruption Rate, that Lender’s cost of funds relating to its participation in the Loan or the relevant part of the Loan for that Interest Period shall be deemed, for the purposes of paragraph (a) above, to be the Market Disruption Rate; or (f)If this Clause 10.3 (Cost of funds) applies but any Lender does not notify a rate to the Facility Agent by the time specified in sub-paragraph (ii) of paragraph (a) above, the rate of interest shall be calculated on the basis of the rates notified by the remaining Lenders.
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10.4Break Costs
(a)The Borrower shall, within three Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs (if any) attributable to all or any part of the Loan or Unpaid Sum being paid by the Borrower on a day prior to the last day of an Interest Period for the Loan, the relevant part of the Loan or that Unpaid Sum.
(b)Each Lender shall, as soon as reasonably practicable after a demand by the Facility Agent, provide a certificate confirming the amount of its Break Costs for any Interest Period in respect of which they become, or may become, payable.
11FEES
11.1Commitment fee
(a)The Borrower shall pay to the Facility Agent (for the account of each Lender) a fee computed at the rate of 0.60 per cent. per annum on that Lender’s Available Commitment from time to time for the Availability Period.
(b)The commitment fee shall accrue from the date of this Agreement and shall be payable on the last day of each successive period of three Months ending on the earlier of (i) the Utilisation Date, (ii) the last day of the Availability Period and, (iii) if cancelled, the time the cancellation is effective.
11.2Structuring fee
The Borrower shall, on the date of this Agreement, pay to the Mandated Lead Arranger a structuring fee in the amount and at the times agreed in a Fee Letter.
11.3Facility Agent fee
The Borrower shall pay to the Facility Agent (for its own account) an agency fee in the amount and at the times agreed in a Fee Letter.
11.4Upfront fee
The Borrower shall, on the date of this Agreement, pay to the Facility Agent (for the account of the Lenders) a non-refundable upfront flat fee in an amount equal to 0.60 per cent. of the Commitment.
11.5Prepayment fee
(a)If any prepayment is made:
(i)pursuant to Clause 7.4 (Voluntary prepayment of Loan); or
(ii)following a voluntary sale or other disposal of the Ship pursuant to Clause 7.5 (Mandatory prepayment on sale or Total Loss), the Borrower shall, subject to paragraph (b) below, pay to the Facility Agent (for the account of the Lenders) a fee equal to 0.50 per cent of the amount prepaid or, as the case may be, cancelled (the “Prepayment Fee”).
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(b)For the avoidance of doubt, no Prepayment Fee shall be payable under this Clause 11.5 (Prepayment fee) if a prepayment is made pursuant to:
(i)Clause 7.1 (Illegality and Sanctions affecting a Lender);
(ii)Clause 7.4 (Voluntary prepayment of Loan) on an Interest Payment Date;
(iii)Clause 7.5 (Mandatory prepayment on sale or Total Loss) following a Total Loss;
(iv)Clause 10.3 (Cost of funds);
(vi)Clause 26.17 (Acceleration).
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SECTION 6
ADDITIONAL PAYMENT OBLIGATIONS
12TAX GROSS UP AND INDEMNITIES
12.1Definitions
(a)In this Agreement:
(v)Clause 24.2 (Provision of additional security; prepayment); or “Protected Party” means a Finance Party which is or will be subject to any liability, or required to make any payment, for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document.
“Tax Credit” means a credit against, relief or remission for, or repayment of any Tax.
“Tax Deduction” means a deduction or withholding for or on account of Tax from a payment under a Finance Document, other than a FATCA Deduction.
“Tax Payment” means either the increase in a payment made by an Obligor to a Finance Party under Clause 12.2 (Tax gross-up) or a payment under Clause 12.3 (Tax indemnity).
(b)Unless a contrary indication appears, in this Clause 12 (Tax Gross Up and Indemnities) reference to “determines” or “determined” means a determination made in the absolute discretion of the person making the determination.
12.2Tax gross-up
(a)Each Obligor shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law.
(b)The Borrower shall promptly upon becoming aware that an Obligor must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Facility Agent accordingly. Similarly, a Lender shall notify the Facility Agent on becoming so aware in respect of a payment payable to that Lender. If the Facility Agent receives such notification from a Lender it shall notify the Borrower and that Obligor.
(c)If a Tax Deduction is required by law to be made by an Obligor, the amount of the payment due from that Obligor shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.
(d)If an Obligor is required to make a Tax Deduction, that Obligor shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law.
(e)Within 30 days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Obligor making that Tax Deduction shall deliver to the Facility Agent for the Finance Party entitled to the payment evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.
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12.3Tax indemnity
(a)The Obligors shall (within three Business Days of demand by the Facility Agent) pay to a Protected Party an amount equal to the loss, liability or cost which that Protected Party determines will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of a Finance Document.
(b)Paragraph (a) above shall not apply:
(i)with respect to any Tax assessed on a Finance Party:
(A)under the law of the jurisdiction in which that Finance Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Finance Party is treated as resident for tax purposes; or
(B)under the law of the jurisdiction in which that Finance Party’s Facility Office is located in respect of amounts received or receivable in that jurisdiction,
if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by that Finance Party; or
(ii)to the extent a loss, liability or cost:
(A)is compensated for by an increased payment under Clause 12.2 (Tax gross-up); or
(B)relates to a FATCA Deduction required to be made by a Party.
(c)A Protected Party making, or intending to make, a claim under paragraph (a) above shall promptly notify the Facility Agent of the event which will give, or has given, rise to the claim, following which the Facility Agent shall notify the Obligors.
(d)A Protected Party shall, on receiving a payment from an Obligor under this Clause 12.3 (Tax indemnity), notify the Facility Agent.
12.4Tax Credit
If an Obligor makes a Tax Payment and the relevant Finance Party determines that:
(a)a Tax Credit is attributable to an increased payment of which that Tax Payment forms part, to that Tax Payment or to a Tax Deduction in consequence of which that Tax Payment was received; and
(b)that Finance Party has obtained and utilised that Tax Credit,
the Finance Party shall advise the relevant Obligor of such Tax Credit and pay an amount to the Obligor which that Finance Party determines will leave it (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been required to be made by the Obligor.
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12.5Stamp taxes
The Obligors shall pay and, within three Business Days of demand, indemnify each Secured Party against any cost, loss or liability which that Secured Party incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document.
12.6VAT
(a)All amounts expressed to be payable under a Finance Document by any Party to a Finance Party which (in whole or in part) constitute the consideration for any supply for VAT purposes are deemed to be exclusive of any VAT which is chargeable on that supply, and accordingly, subject to paragraph (b) below, if VAT is or becomes chargeable on any supply made by any Finance Party to any Party under a Finance Document and such Finance Party is required to account to the relevant tax authority for the VAT, that Party must pay to such Finance Party (in addition to and at the same time as paying any other consideration for such supply) an amount equal to the amount of the VAT (and such Finance Party must promptly provide an appropriate VAT invoice to that Party).
(b)If VAT is or becomes chargeable on any supply made by any Finance Party (the “Supplier”) to any other Finance Party (the “Recipient”) under a Finance Document, and any Party other than the Recipient (the “Relevant Party”) is required by the terms of any Finance Document to pay an amount equal to the consideration for that supply to the Supplier (rather than being required to reimburse or indemnify the Recipient in respect of that consideration):
(i)(where the Supplier is the person required to account to the relevant tax authority for the VAT) the Relevant Party must also pay to the Supplier (at the same time as paying that amount) an additional amount equal to the amount of the VAT. The Recipient must (where this sub-paragraph (i) applies) promptly pay to the Relevant Party an amount equal to any credit or repayment the Recipient receives from the relevant tax authority which the Recipient reasonably determines relates to the VAT chargeable on that supply; and
(ii)(where the Recipient is the person required to account to the relevant tax authority for the VAT) the Relevant Party must promptly, following demand from the Recipient, pay to the Recipient an amount equal to the VAT chargeable on that supply but only to the extent that the Recipient reasonably determines that it is not entitled to credit or repayment from the relevant tax authority in respect of that VAT.
(c)Where a Finance Document requires any Party to reimburse or indemnify a Finance Party for any cost or expense, that Party shall reimburse or indemnify (as the case may be) such Finance Party for the full amount of such cost or expense, including such part of it as represents VAT, save to the extent that such Finance Party reasonably determines that it is entitled to credit or repayment in respect of such VAT from the relevant tax authority.
(d)Any reference in this Clause 12.6 (VAT) to any Party shall, at any time when that Party is treated as a member of a group or unity (or fiscal unity) for VAT purposes, include (where appropriate and unless the context otherwise requires) a reference to the person who is treated at that time as making the supply, or (as appropriate) receiving the supply, under the grouping rules (provided for in Article 11 of Council Directive 2006/112/EC (or as implemented by the relevant member state of the European Union or equivalent provisions imposed elsewhere)) so that a reference to a Party shall be construed as a reference to that Party or the relevant group or unity (or fiscal unity) of which that Party is a member for VAT purposes at the relevant time or the relevant representative member (or representative or head) of that group or unity at the relevant time (as the case may be).
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(e)In relation to any supply made by a Finance Party to any Party under a Finance Document, if reasonably requested by such Finance Party, that Party must promptly provide such Finance Party with details of that Party’s VAT registration and such other information as is reasonably requested in connection with such Finance Party’s VAT reporting requirements in relation to such supply.
12.7FATCA Information
(a)Subject to paragraph (c) below, each Party shall, within ten Business Days of a reasonable request by another Party:
(i)confirm to that other Party whether it is:
(A)a FATCA Exempt Party; or
(B)not a FATCA Exempt Party; and
(ii)supply to that other Party such forms, documentation and other information relating to its status under FATCA as that other Party reasonably requests for the purposes of that other Party’s compliance with FATCA; and
(iii)supply to that other Party such forms, documentation and other information relating to its status as that other Party reasonably requests for the purposes of that other Party’s compliance with any other law, regulation or exchange of information regime.
(b)If a Party confirms to another Party pursuant to sub-paragraph (i) of paragraph (a) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.
(c)Paragraph (a) above shall not oblige any Finance Party to do anything and sub-paragraph (iii) of paragraph (a) above shall not oblige any other Party to do anything which would or might in its reasonable opinion constitute a breach of:
(i)any law or regulation;
(ii)any fiduciary duty; or
(iii)any duty of confidentiality.
(d)If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with sub-paragraphs (i) or (ii) of paragraph (a) above (including, for the avoidance of doubt, where paragraph (c) above applies), then such Party shall be treated for the purposes of the Finance Documents (and payments under them) as if it is not a FATCA Exempt Party until such time as the Party in question provides the requested confirmation, forms, documentation or other information.
12.8FATCA Deduction
(a)Each Party may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.
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(b)Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction), notify the Party to whom it is making the payment and, in addition, shall notify each Obligor and the Facility Agent and the Facility Agent shall notify the other Finance Parties.
13INCREASED COSTS
13.1Increased costs
(a)Subject to Clause 13.3 (Exceptions), the Borrower shall, within three Business Days of a demand by the Facility Agent, pay for the account of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of:
(i)the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation; or
(ii)compliance with any law or regulation made,
in each case after the date of this Agreement; or
(iii)the implementation, application of or compliance with Basel III or CRD IV or any law or regulation that implements or applies Basel III or CRD IV.
(b)In this Agreement:
(i)“Basel III” means:
(A)the agreements on capital requirements, a leverage ratio and liquidity standards contained in “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated;
(B)the rules for global systemically important banks contained in “Global systemically important banks: assessment methodology and the additional loss absorbency requirement - Rules text” published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and
(C)any further guidance or standards published by the Basel Committee on Banking Supervision relating to “Basel III”.
(ii)“CRD IV” means:
(A)Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending regulation (EU) No.
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648/2012, as amended by Regulation (EU) 2019/876; (B)Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC, as amended by Directive (EU) 2019/878; and
(C)any other law or regulation which implements Basel III.
(iii)“Increased Costs” means:
(A)a reduction in the rate of return from the Facility or on a Finance Party’s (or its Affiliate’s) overall capital;
(B)an additional or increased cost; or
(C)a reduction of any amount due and payable under any Finance Document,
which is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to that Finance Party having entered into its Commitment or funding or performing its obligations under any Finance Document.
13.2Increased cost claims
(a)A Finance Party intending to make a claim pursuant to Clause 13.1 (Increased costs) shall notify the Facility Agent of the event giving rise to the claim, following which the Facility Agent shall promptly notify the Borrower.
(b)Each Finance Party shall, as soon as practicable after a demand by the Facility Agent, provide a certificate confirming the amount of its Increased Costs.
13.3Exceptions
Clause 13.1 (Increased costs) does not apply to the extent any Increased Cost is:
(a)attributable to a Tax Deduction required by law to be made by an Obligor;
(b)attributable to a FATCA Deduction required to be made by a Party;
(c)compensated for by Clause 12.3 (Tax indemnity) (or would have been compensated for under Clause 12.3 (Tax indemnity) but was not so compensated solely because any of the exclusions in paragraph (b) of Clause 12.3 (Tax indemnity) applied);
(d)compensated for by any payment made pursuant to Clause 14.3 (Mandatory Cost); or
(e)attributable to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation.
14OTHER INDEMNITIES
14.1Currency indemnity
(a)If any sum due from an Obligor under the Finance Documents (a “Sum”), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the “First Currency”) in which that Sum is payable into another currency (the “Second Currency”) for the purpose of:
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(i)making or filing a claim or proof against that Obligor; or
(ii)obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,
that Obligor shall, as an independent obligation, on demand, indemnify each Secured Party to which that Sum is due against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (B) the rate or rates of exchange available to that person at the time of its receipt of that Sum.
(b)Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.
14.2Other indemnities
(a)Each Obligor shall, on demand, indemnify each Secured Party against any cost, loss or liability incurred by it as a result of:
(i)the occurrence of any Event of Default;
(ii)a failure by a Transaction Obligor to pay any amount due under a Finance Document on its due date, including without limitation, any cost, loss or liability arising as a result of Clause 32 (Sharing among the Finance Parties);
(iii)funding, or making arrangements to fund, its participation in the Loan requested by the Borrower in a Utilisation Request but not made by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by that Secured Party alone); or
(iv)the Loan (or part of the Loan) not being prepaid in accordance with a notice of prepayment given by the Borrower.
(b)Each Obligor shall, on demand, indemnify each Finance Party, each Affiliate of a Finance Party and each officer or employee of a Finance Party or its Affiliate (each such person for the purposes of this Clause 14.2 (Other indemnities) an “Indemnified Person”), against any cost, loss or liability incurred by that Indemnified Person pursuant to or in connection with any litigation, arbitration or administrative proceedings or regulatory enquiry, in connection with or arising out of the entry into and the transactions contemplated by the Finance Documents, having the benefit of any Security constituted by the Finance Documents or which relates to the condition or operation of, or any incident occurring in relation to, the Ship unless such cost, loss or liability is caused by the gross negligence or wilful misconduct of that Indemnified Person.
(c)Without limiting, but subject to any limitations set out in paragraph (b) above, the indemnity in paragraph (b) above shall cover any cost, loss or liability incurred by each Indemnified Person in any jurisdiction:
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(i)arising or asserted under or in connection with any law relating to safety at sea, the ISM Code, any Environmental Law or any Sanctions; or
(ii)in connection with any Environmental Claim.
(d)Any Affiliate or any officer or employee of a Finance Party or of any of its Affiliates may rely on this Clause 14.2 (Other indemnities) subject to Clause 1.5 (Third party rights) and the provisions of the Third Parties Act.
14.3Mandatory Cost
The Borrower shall, on demand by the Facility Agent, pay to the Facility Agent for the account of the relevant Lender, such amount which any Lender certifies in a notice to the Facility Agent to be its good faith determination of the amount necessary to compensate it for complying with:
(a)in the case of a Lender lending from a Facility Office in a Participating Member State, the minimum reserve requirements (or other requirements having the same or similar purpose) of the European Central Bank (or any other authority or agency which replaces all or any of its functions) in respect of loans made from that Facility Office; and
(b)in the case of any Lender lending from a Facility Office in the United Kingdom, any reserve asset, special deposit or liquidity requirements (or other requirements having the same or similar purpose) of the Bank of England (or any other governmental authority or agency) and/or paying any fees to the Financial Conduct Authority and/or the Prudential Regulation Authority (or any other governmental authority or agency which replaces all or any of their functions),
which, in each case, is referable to that Lender’s participation in the Loan.
14.4Indemnity to the Facility Agent
Each Obligor shall, on demand, indemnify the Facility Agent against:
(a)any cost, loss or liability incurred by the Facility Agent (acting reasonably) as a result of:
(i)investigating any event which it reasonably believes is a Default; or
(ii)acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised; or
(iii)instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under the Finance Documents; and
(b)any cost, loss or liability incurred by the Facility Agent (otherwise than by reason of the Facility Agent’s gross negligence or wilful misconduct) or, in the case of any cost, loss or liability pursuant to Clause 33.11 (Disruption to Payment Systems etc.) notwithstanding the Facility Agent’s negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Facility Agent in acting as Facility Agent under the Finance Documents.
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14.5Indemnity to the Security Agent
(a)Each Obligor shall, on demand, indemnify the Security Agent and every Receiver and Delegate against any cost, loss or liability incurred by any of them:
(i)in relation to or as a result of:
(A)any failure by the Borrower to comply with its obligations under Clause 16 (Costs and Expenses);
(B)acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised;
(C)the taking, holding, protection or enforcement of the Finance Documents and the Transaction Security;
(D)the exercise of any of the rights, powers, discretions, authorities and remedies vested in the Security Agent and each Receiver and Delegate by the Finance Documents or by law;
(E)any default by any Transaction Obligor in the performance of any of the obligations expressed to be assumed by it in the Finance Documents;
(F)any action by any Transaction Obligor which vitiates, reduces the value of, or is otherwise prejudicial to, the Transaction Security; and
(G)instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under the Finance Documents.
(ii)acting as Security Agent, Receiver or Delegate under the Finance Documents or which otherwise relates to any of the Security Property or the performance of the terms of this Agreement or the other Finance Documents (otherwise, in each case, than by reason of the relevant Security Agent’s, Receiver’s or Delegate’s gross negligence or wilful misconduct).
(b)The Security Agent and every Receiver and Delegate may, in priority to any payment to the Secured Parties, indemnify itself out of the Security Assets in respect of, and pay and retain, all sums necessary to give effect to the indemnity in this Clause 14.5 (Indemnity to the Security Agent) and shall have a lien on the Transaction Security and the proceeds of the enforcement of the Transaction Security for all monies payable to it.
15MITIGATION BY THE FINANCE PARTIES
15.1Mitigation
(a)Each Finance Party shall, in consultation with the Borrower, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of Clause 7.1 (Illegality and Sanctions affecting a Lender), Clause 12 (Tax Gross Up and Indemnities), Clause 13 (Increased Costs) or paragraph (a) of Clause 14.3 (Mandatory Cost) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office.
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(b)Paragraph (a) above does not in any way limit the obligations of any Transaction Obligor under the Finance Documents.
15.2Limitation of liability
(a)Each Obligor shall, on demand, indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under Clause 15.1 (Mitigation).
(b)A Finance Party is not obliged to take any steps under Clause 15.1 (Mitigation) if either:
(i)a Default has occurred and is continuing; or
(ii)in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it.
16COSTS AND EXPENSES
16.1Transaction expenses
The Obligors shall, within 3 Business Days of demand, pay the Facility Agent, the Security Agent and the Mandated Lead Arranger the amount of all costs and expenses (including legal fees) reasonably incurred by any Secured Party in connection with the negotiation, preparation, printing, execution, syndication and perfection of:
(a)this Agreement and any other documents referred to in this Agreement or in a Security Document; and
(b)any other Finance Documents executed after the date of this Agreement.
16.2Amendment costs
If:
(a)a Transaction Obligor requests an amendment, waiver or consent; or
(b)an amendment is required either pursuant to Clause 33.9 (Change of currency) or as contemplated in Clause 42.4 (Changes to reference rates); or
(c)a Transaction Obligor requests, and the Security Agent agrees to, the release of all or any part of the Security Assets from the Transaction Security,
the Obligors shall, on demand, reimburse each of the Facility Agent and the Security Agent for the amount of all costs and expenses (including legal fees) reasonably incurred by each Secured Party in responding to, evaluating, negotiating or complying with that request or requirement.
16.3Enforcement and preservation costs
The Obligors shall, on demand, pay to each Secured Party the amount of all costs and expenses (including legal fees) incurred by that Secured Party in connection with the enforcement of, or the preservation of any rights under, any Finance Document or the Transaction Security and with any proceedings instituted by or against that Secured Party as a consequence of it entering into a Finance Document, taking or holding the Transaction Security, or enforcing those rights.
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SECTION 7
GUARANTEE
17GUARANTEE AND INDEMNITY
17.1Guarantee and indemnity
The Guarantor irrevocably and unconditionally:
(a)guarantees to each Finance Party punctual performance by each Transaction Obligor other than the Guarantor of all such other Transaction Obligor’s obligations under the Finance Documents;
(b)undertakes with each Finance Party that whenever a Transaction Obligor other than the Guarantor does not pay any amount when due under or in connection with any Finance Document, the Guarantor shall immediately on demand pay that amount as if it were the principal obligor; and
(c)agrees with each Finance Party that if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal, it will, as an independent and primary obligation, indemnify that Finance Party immediately on demand against any cost, loss or liability it incurs as a result of a Transaction Obligor other than the Guarantor not paying any amount which would, but for such unenforceability, invalidity or illegality, have been payable by it under any Finance Document on the date when it would have been due. The amount payable by the Guarantor under this indemnity will not exceed the amount it would have had to pay under this Clause 17 (Guarantee and Indemnity) if the amount claimed had been recoverable on the basis of a guarantee.
17.2Continuing guarantee
This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by any Transaction Obligor under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part.
17.3Reinstatement
If any discharge, release or arrangement (whether in respect of the obligations of any Transaction Obligor or any security for those obligations or otherwise) is made by a Secured Party in whole or in part on the basis of any payment, security or other disposition which is avoided or must be restored in insolvency, liquidation, administration or otherwise, without limitation, then the liability of the Guarantor under this Clause 17 (Guarantee and Indemnity) will continue or be reinstated as if the discharge, release or arrangement had not occurred.
17.4Waiver of defences
The obligations of the Guarantor under this Clause 17 (Guarantee and Indemnity) and in respect of any Transaction Security will not be affected or discharged by an act, omission, matter or thing which, but for this Clause 17.4 (Waiver of defences), would reduce, release or prejudice any of its obligations under this Clause 17 (Guarantee and Indemnity) or in respect of any Transaction Security (without limitation and whether or not known to it or any Secured Party) including:
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(a)any time, waiver or consent granted to, or composition with, any Transaction Obligor or other person;
(b)the release of any other Transaction Obligor or any other person under the terms of any composition or arrangement with any creditor of any member of the Group;
(c)the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect or delay in perfecting, or refusal or neglect to take up or enforce, or delay in taking or enforcing any rights against, or security over assets of, any Transaction Obligor or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;
(d)any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of a Transaction Obligor or any other person;
(e)any amendment, novation, supplement, extension, restatement (however fundamental and whether or not more onerous) or replacement of any Finance Document or any other document or security including, without limitation, any change in the purpose of, any extension of or any increase in any facility or the addition of any new facility under any Finance Document or other document or security;
(f)any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security; or
(g)any insolvency or similar proceedings.
17.5Immediate recourse
The Guarantor waives any right it may have of first requiring any Secured Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person (including without limitation to commence any proceedings under any Finance Document or to enforce any Transaction Security) before claiming or commencing proceedings under this Clause 17 (Guarantee and Indemnity). This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.
17.6Appropriations
Until all amounts which may be or become payable by the Transaction Obligors under or in connection with the Finance Documents have been irrevocably paid in full, each Secured Party (or any trustee or agent on its behalf) may:
(a)refrain from applying or enforcing any other moneys, security or rights held or received by that Secured Party (or any trustee or agent on its behalf) in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise) and the Guarantor shall not be entitled to the benefit of the same; and
(b)hold in an interest-bearing suspense account any moneys received from the Guarantor or on account of the Guarantor’s liability under this Clause 17 (Guarantee and Indemnity).
17.7Deferral of Guarantor’s rights
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All rights which the Guarantor at any time has (whether in respect of this guarantee, a mortgage or any other transaction) against the Borrower, any other Transaction Obligor or their respective assets shall be fully subordinated to the rights of the Secured Parties under the Finance Documents and until the end of the Security Period and unless the Facility Agent otherwise directs, the Guarantor will not exercise any rights which it may have (whether in respect of any Finance Document to which it is a Party or any other transaction) by reason of performance by it of its obligations under the Finance Documents or by reason of any amount being payable, or liability arising, under this Clause 17 (Guarantee and Indemnity):
(a)to be indemnified by a Transaction Obligor;
(b)to claim any contribution from any third party providing security for, or any other guarantor of, any Transaction Obligor’s obligations under the Finance Documents;
(c)to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Secured Parties under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents by any Secured Party;
(d)to bring legal or other proceedings for an order requiring any Transaction Obligor to make any payment, or perform any obligation, in respect of which the Guarantor has given a guarantee, undertaking or indemnity under Clause 17.1 (Guarantee and indemnity);
(e)to exercise any right of set-off against any Transaction Obligor; and/or
(f)to claim or prove as a creditor of any Transaction Obligor in competition with any Secured Party.
If the Guarantor receives any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to the extent necessary to enable all amounts which may be or become payable to the Secured Parties by the Transaction Obligors under or in connection with the Finance Documents to be repaid in full on trust for the Secured Parties and shall promptly pay or transfer the same to the Facility Agent or as the Facility Agent may direct for application in accordance with Clause 33 (Payment Mechanics).
17.8Additional security
This guarantee and any other Security given by the Guarantor is in addition to and is not in any way prejudiced by, and shall not prejudice, any other guarantee or Security or any other right of recourse now or subsequently held by any Secured Party or any right of set-off or netting or right to combine accounts in connection with the Finance Documents.
17.9Applicability of provisions of Guarantee to other Security
Clauses 17.2 (Continuing guarantee), 17.3 (Reinstatement), 17.4 (Waiver of defences), 17.5 (Immediate recourse), 17.6 (Appropriations), 17.7 (Deferral of Guarantor’s rights) and 17.8 (Additional security) shall apply, with any necessary modifications, to any Security which the Guarantor creates (whether at the time at which it signs this Agreement or at any later time) to secure the Secured Liabilities or any part of them.
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SECTION 8
REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT
18REPRESENTATIONS
18.1General
Each Obligor makes the representations and warranties set out in this Clause 18 (Representations) to each Finance Party on the date of this Agreement.
18.2Status
(a)It is a corporation duly incorporated and validly existing in good standing under the law of its Original Jurisdiction.
(b)It and each Transaction Obligor has the power to own its assets and carry on its business as it is being conducted.
18.3Share capital and ownership
(a)The Borrower has an authorised share capital divided into 500 registered and/or bearer shares of no-par value, all of which shares have been issued.
(b)The legal title to and beneficial interest in the shares in the Borrower is held by the Guarantor free of any Security (other than Permitted Security) or any other claim.
(c)None of the shares in the Borrower is subject to any option to purchase, pre-emption rights or similar rights.
18.4Binding obligations
Subject to the Legal Reservations, the obligations expressed to be assumed by it in each Transaction Document to which it is a party are legal, valid, binding and enforceable obligations.
18.5Validity, effectiveness and ranking of Security
(a)Each Finance Document to which it is a party does now or, as the case may be, will upon execution and delivery, subject to the Legal Reservations, create the Security it purports to create over any assets to which such Security, by its terms, relates, and such Security will, when created or intended to be created, be valid and effective.
(b)No third party has or will have any Security (except for Permitted Security) over any assets that are the subject of any Transaction Security granted by it.
(c)Subject to the Legal Reservations, the Transaction Security granted by it to the Security Agent or any other Secured Party has or will when created or intended to be created have such priority it is expressed to have in the Finance Documents and is not subject to any prior ranking or pari passu ranking Security.
(d)No concurrence, consent or authorisation of any person is required for the creation of or otherwise in connection with any Transaction Security.
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18.6Non-conflict with other obligations
The entry into and performance by it of, and the transactions contemplated by, each Transaction Document to which it is a party do not and will not conflict with:
(a)any law or regulation applicable to it;
(b)its constitutional documents; or
(c)any agreement or instrument binding upon it or any of its assets or constitute a default or termination event (however described) under any such agreement or instrument.
18.7Power and authority
(a)It has the power to enter into, perform and deliver, and has taken all necessary action to authorise:
(i)its entry into, performance and delivery of, each Transaction Document to which it is or will be a party and the transactions contemplated by those Transaction Documents; and
(ii)in the case of the Borrower, its registration of the Ship under its Approved Flag.
(b)No limit on its powers will be exceeded as a result of the borrowing, granting of security or giving of guarantees or indemnities contemplated by the Transaction Documents to which it is a party.
18.8Validity and admissibility in evidence
All Authorisations required or desirable:
(a)to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Transaction Documents to which it is a party; and
(b)to make the Transaction Documents to which it is a party admissible in evidence in its Relevant Jurisdictions,
have been obtained or effected and are in full force and effect.
18.9Governing law and enforcement
(a)Subject to the Legal Reservations, the choice of governing law of each Transaction Document to which it is a party will be recognised and enforced in its Relevant Jurisdictions.
(b)Subject to the Legal Reservations, any judgment obtained in relation to a Transaction Document to which it is a party in the jurisdiction of the governing law of that Transaction Document will be recognised and enforced in its Relevant Jurisdictions.
18.10Insolvency
No:
(a)corporate action, legal proceeding or other procedure or step described in paragraph (a) of Clause 26.8 (Insolvency proceedings); or has been taken or, to its knowledge, threatened in relation to a member of the Group; and none of the circumstances described in Clause 26.7 (Insolvency) applies to a member of the Group.
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(b) |
creditors’ process described in Clause 26.9 (Creditors’ process), |
18.11 |
No filing or stamp taxes |
Under the laws of its Relevant Jurisdictions it is not necessary that the Finance Documents to which it is a party be registered, filed, recorded, notarised or enrolled with any court or other authority in that jurisdiction or that any stamp, registration, notarial or similar Taxes or fees be paid on or in relation to the Finance Documents to which it is a party or the transactions contemplated by those Finance Documents except any filing, recording or enrolling or any tax or fee which is referred to in any legal opinion delivered pursuant to Clause 4 (Conditions of Utilisation) and which will be made or paid promptly after the date of the relevant Finance Document.
18.12 |
Deduction of Tax |
It is not required to make any Tax Deduction from any payment it may make under any Finance Document to which it is a party.
18.13 |
No default |
(a) |
No Event of Default and, on the date of this Agreement and on the Utilisation Date, no Default is continuing or might reasonably be expected to result from the making of any Utilisation or the entry into, the performance of, or any transaction contemplated by, any Transaction Document. |
(b) |
No other event or circumstance is outstanding which constitutes a default or a termination event (however described) under any other agreement or instrument which is binding on it or any of its Subsidiaries or to which its assets are subject which might have a Material Adverse Effect. |
18.14 |
No misleading information |
(a) |
Any factual information provided by any member of the Group for the purposes of this Agreement was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated. |
(b) |
The financial projections contained in any such information have been prepared on the basis of recent historical information and on the basis of reasonable assumptions. |
(c) |
Nothing has occurred or been omitted from any such information and no information has been given or withheld that results in any such information being untrue or misleading in any material respect. |
18.15 |
Financial Statements |
(a) |
The Original Financial Statements were prepared in accordance with GAAP consistently applied. |
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(b) |
The Original Financial Statements fairly present its financial condition as at the end of the relevant financial year and its results of operations during the relevant financial year (consolidated in the case of the Guarantor). |
(c) |
There has been no material adverse change in its assets, business or financial condition (or the assets, business or consolidated financial condition of the Group, in the case of the Guarantor) since 31 December 2022. |
(d) |
Its most recent financial statements delivered pursuant to Clause 19.2 (Financial statements): |
(i) |
have been prepared in accordance with Clause 19.4 (Requirements as to financial statements); and |
(ii) |
give a true and fair view of (if audited) or fairly represent (if unaudited) its financial condition as at the end of the relevant financial year and operations during the relevant financial year (consolidated in the case of the Guarantor). |
(e) |
Since the date of the most recent financial statements delivered pursuant to Clause 19.2 (Financial statements) there has been no material adverse change in its or any Transaction Obligor’s business, assets or financial condition (or the business or consolidated financial condition of the Group, in the case of the Guarantor). |
18.16 |
Pari passu ranking |
Its payment obligations under the Finance Documents to which it is a party rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.
18.17 |
No proceedings pending or threatened |
(a) |
No litigation, arbitration or administrative proceedings or investigations (including proceedings or investigations relating to any alleged or actual breach of the ISM Code or of the ISPS Code) of or before any court, arbitral body or agency which, if adversely determined, might reasonably be expected to have a Material Adverse Effect have (to the best of its knowledge and belief (having made due and careful enquiry)) been started or threatened against it or any other Transaction Obligor or any member of the Group. |
(b) |
No judgment or order of a court, arbitral tribunal or other tribunal or any order or sanction of any governmental or other regulatory body which might reasonably be expected to have a Material Adverse Effect has (to the best of its knowledge and belief (having made due and careful enquiry)) been made against it or any other Transaction Obligor or any member of the Group. |
18.18 |
Valuations |
(a) |
All information supplied by it or on its behalf to an Approved Valuer for the purposes of a valuation delivered to the Facility Agent in accordance with this Agreement was true and accurate as at the date it was supplied or (if appropriate) as at the date (if any) at which it is stated to be given. |
(b) |
It has not omitted to supply any information to an Approved Valuer which, if disclosed, would adversely affect any valuation prepared by such Approved Valuer. |
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(c) |
There has been no change to the factual information provided pursuant to paragraph (a) above in relation to any valuation between the date such information was provided and the date of that valuation which, in either case, renders that information untrue or misleading in any material respect. |
18.19 |
No breach of laws |
It has not (and no other member of the Group has) breached any law or regulation which breach has or is reasonably likely to have a Material Adverse Effect.
18.20 |
No Charter |
Except as disclosed by the Borrower to the Security Agent in writing on or before the date of this Agreement, the Ship is not subject to any Charter other than a Permitted Charter.
18.21 |
Compliance with Environmental Laws |
All Environmental Laws relating to the ownership, operation and management of the Ship and the business of each member of the Group (as now conducted and as reasonably anticipated to be conducted in the future) and the terms of all Environmental Approvals have been complied with.
18.22 |
No Environmental Claim |
No Environmental Claim has been made or threatened against any member of the Group or the Ship which might reasonably be expected to have a Material Adverse Effect.
18.23 |
No Environmental Incident |
No Environmental Incident has occurred and no person has claimed that an Environmental Incident has occurred.
18.24 |
ISM and ISPS Code compliance |
All requirements of the ISM Code and the ISPS Code as they relate to the Borrower, the Approved Technical Manager and the Ship have been complied with.
18.25 |
Taxes paid |
(a) |
It is not and no other member of the Group is materially overdue in the filing of any Tax returns and it is not (and no other member of the Group is) overdue in the payment of any amount in respect of Tax. |
(b) |
No claims or investigations are being, or are reasonably likely to be, made or conducted against it (or any other member of the Group) with respect to Taxes. |
18.26 |
Financial Indebtedness |
No Obligor has any Financial Indebtedness outstanding other than Permitted Financial Indebtedness.
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18.27 |
Overseas companies |
No Transaction Obligor has delivered particulars, whether in its name stated in the Finance Documents or any other name, of any UK Establishment to the Registrar of Companies as required under the Overseas Regulations or, if it has so registered, it has provided to the Facility Agent sufficient details to enable an accurate search against it to be undertaken by the Lenders at the Companies Registry.
18.28 |
Good title to assets |
It and each other member of the Group has good, valid and marketable title to, or valid leases or licences of, and all appropriate Authorisations to use, the assets necessary to carry on its business as presently conducted.
18.29 |
Ownership |
(a) |
With effect on and from the Utilisation Date, the Borrower will be the sole legal and beneficial owner of the Ship, its Earnings and its Insurances. |
(b) |
With effect on and from the date of its creation or intended creation, each Transaction Obligor will be the sole legal and beneficial owner of any asset that is the subject of any Transaction Security created or intended to be created by such Transaction Obligor. |
(c) |
The constitutional documents of each Transaction Obligor do not and could not restrict or inhibit any transfer of the shares of the Borrower on creation or enforcement of the security conferred by the Security Documents. |
18.30 |
Centre of main interests and establishments |
For the purposes of The Council of the European Union Regulation No. 2015/848 on Insolvency Proceedings (recast)(the “Regulation”), its centre of main interest (as that term is used in Article 3(1) of the Regulation) is situated in each case at the address for communication stated in Schedule 1 (The Parties), Part A and it has no “establishment” (as that term is used in Article 2(10) of the Regulation) in any other jurisdiction.
18.31 |
Place of business |
No Obligor has a place of business in any country other than the Hellenic Republic in each case at the address for communication stated in Schedule 1 (The Parties), Part A.
18.32 |
No employee or pension arrangements |
No Obligor has any employees or any liabilities under any pension scheme.
18.33 |
Sanctions |
(a) |
No Transaction Obligor: |
(i) |
is a Prohibited Person or is otherwise: |
(A) |
owns or controls a Prohibited Person; or |
(B) |
has a Prohibited Person serving as a director, officer or, to the best of its knowledge, employee. |
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(b) |
No Transaction Obligor shall use, transfer or make available, directly or indirectly, any part of the proceeds of the Loan to fund, finance or facilitate transactions or activities with, involving or for the benefit of any Prohibited Person or otherwise in any manner that would constitute or give rise to a violation of Sanctions by any party hereto. |
(c) |
The Ship is not a Sanctioned Ship. |
18.34 |
US Tax Obligor |
No Transaction Obligor is a US Tax Obligor.
18.35 |
Anti-Corruption Laws and Anti-Money Laundering Laws |
No Transaction Obligor nor any of its subsidiaries, directors or officers, or, to the best knowledge of such Transaction Obligor, any affiliate, agent or employee of it, has engaged in any activity or conduct which would violate any applicable Anti-Corruption Laws or Anti-Money Laundering Laws in any applicable jurisdiction and each Transaction Obligor has instituted and maintains policies and procedures designed to promote and achieve compliance with such applicable laws, regulations and rules.
18.36 |
Repetition |
The Repeating Representations are deemed to be made by each Obligor by reference to the facts and circumstances then existing on the date of the Utilisation Request and the first day of each Interest Period.
19 |
INFORMATION UNDERTAKINGS |
19.1 |
General |
The undertakings in this Clause 19 (Information Undertakings) remain in force throughout the Security Period unless the Facility Agent, acting with the authorisation of the Majority Lenders (or, where specified, all the Lenders), may otherwise permit.
19.2 |
Financial statements |
The Obligors shall supply to the Facility Agent in sufficient copies for all the Lenders:
(a) |
as soon as they become available, but in any event within 180 days after the end of each financial year of an Obligor: |
(i) |
the annual unaudited financial statements of the Borrower; and |
(ii) |
the annual audited financial statements of the Guarantor (consolidated to include the financial statement of the Group), |
commencing in each case with the financial year ended on 31 December 2023.
(b) |
as soon as they become available, but in any event within 120 days after the end of each financial half year of an Obligor: |
(i) |
the semi-annual unaudited (or, as the case may be, audited) financial statements of the Borrower; and |
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(ii) |
the semi-annual unaudited financial statements of the Guarantor (consolidated to include the financial statement of the Group), |
commencing in each case with the half-year ended on 30 June 2024.
19.3 |
Compliance Certificate |
(a) |
The Obligors shall supply to the Facility Agent, with each set of financial statements delivered pursuant to Clause 19.2 (Financial statements), a Compliance Certificate setting out (in reasonable detail) computations as to compliance with Clause 20 (Financial Covenants) as at the date as at which those financial statements were drawn up. |
(b) |
Each Compliance Certificate shall be signed by an officer of each Obligor. |
19.4 |
Requirements as to financial statements |
(a) |
Each set of financial statements delivered by an Obligor pursuant to Clause 19.2 (Financial statements) shall be certified by an officer of that Obligor as giving a true and fair view (if audited) or fairly presenting (if unaudited) its financial condition and operations as at the date as at which those financial statements were drawn up. |
(b) |
The Obligors shall procure that each set of financial statements delivered pursuant to Clause 19.2 (Financial statements) is prepared using GAAP. |
19.5 |
Information: miscellaneous |
Each Obligor shall and shall procure that each other Transaction Obligor and its Subsidiaries shall supply to the Facility Agent (in sufficient copies for all the Lenders, if the Facility Agent so requests):
(a) |
all documents dispatched by it to its shareholders (or any class of them) or its creditors generally at the same time as they are dispatched; |
(b) |
promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings or investigations (including proceedings or investigations relating to any alleged or actual breach of the ISM Code or of the ISPS Code) which are current, threatened or pending against any member of the Group, and which might, if adversely determined, have a Material Adverse Effect; |
(c) |
promptly upon becoming aware of them, the details of any judgment or order of a court, arbitral body or agency which is made against any member of the Group and which might have a Material Adverse Effect; |
(d) |
promptly, its constitutional documents where these have been amended or varied; |
(e) |
promptly, such further information and/or documents regarding: |
(i) |
the Ship, goods transported on the Ship, its Earnings and its Insurances; |
(ii) |
the Security Assets; |
(iii) |
compliance of the Transaction Obligors with the terms of the Finance Documents; |
(iv) |
the financial condition, business and operations of any member of the Group, |
63
as any Finance Party (through the Facility Agent) may request; and
(f) |
promptly, such further information and/or documents in respect of the Guarantor and any other member of the Group as any Finance Party (through the Facility Agent) may request. |
19.6 |
Notification of Default |
(a) |
Each Obligor shall, and shall procure that each other Transaction Obligor shall, notify the Facility Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence (unless that Obligor is aware that a notification has already been provided by another Obligor). |
(b) |
Promptly upon a request by the Facility Agent, the Borrower shall supply to the Facility Agent a certificate signed by two of its directors or senior one officer on its behalf certifying that no Default is continuing (or if a Default is continuing, specifying the Default and the steps, if any, being taken to remedy it). |
19.7 |
Use of websites |
(a) |
Each Obligor may satisfy its obligation under the Finance Documents to which it is a party to deliver any information in relation to those Lenders (the “Website Lenders”) which accept this method of communication by posting this information onto an electronic website designated by the Borrower and the Facility Agent (the “Designated Website”) if: |
(i) |
the Facility Agent expressly agrees (after consultation with each of the Lenders) that it will accept communication of the information by this method; |
(ii) |
both the relevant Obligor and the Facility Agent are aware of the address of and any relevant password specifications for the Designated Website; and |
(iii) |
the information is in a format previously agreed between the relevant Obligor and the Facility Agent. |
If any Lender (a “Paper Form Lender”) does not agree to the delivery of information electronically then the Facility Agent shall notify the Obligors accordingly and each Obligor shall supply the information to the Facility Agent (in sufficient copies for each Paper Form Lender) in paper form. In any event each Obligor shall supply the Facility Agent with at least one copy in paper form of any information required to be provided by it.
(b) |
The Facility Agent shall supply each Website Lender with the address of and any relevant password specifications for the Designated Website following designation of that website by the Obligors or any of them and the Facility Agent. |
(c) |
An Obligor shall promptly upon becoming aware of its occurrence notify the Facility Agent if: |
(i) |
the Designated Website cannot be accessed due to technical failure; |
(ii) |
the password specifications for the Designated Website change; |
(iii) |
any new information which is required to be provided under this Agreement is posted onto the Designated Website; |
64
(iv) |
any existing information which has been provided under this Agreement and posted onto the Designated Website is amended; or |
(v) |
if that Obligor becomes aware that the Designated Website or any information posted onto the Designated Website is or has been infected by any electronic virus or similar software. |
If an Obligor notifies the Facility Agent under sub-paragraph (i) or (v) of paragraph (c) above, all information to be provided by the Obligors under this Agreement after the date of that notice shall be supplied in paper form unless and until the Facility Agent and each Website Lender is satisfied that the circumstances giving rise to the notification are no longer continuing.
(d) |
Any Website Lender may request, through the Facility Agent, one paper copy of any information required to be provided under this Agreement which is posted onto the Designated Website. The Obligors shall comply with any such request within 10 Business Days. |
19.8 |
“Know your customer” checks |
(a) |
If: |
(i) |
the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement; |
(ii) |
any change in the status of a Transaction Obligor (or of a Holding Company of a Transaction Obligor) (including, without limitation, a change of ownership of a Transaction Obligor or of a Holding Company of a Transaction Obligor) after the date of this Agreement; or |
(iii) |
a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer, |
obliges a Finance Party (or, in the case of sub-paragraph (iii) above, any prospective new Lender) to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, each Obligor shall promptly upon the request of any Finance Party supply, or procure the supply of, such documentation and other evidence as is reasonably requested by a Servicing Party (for itself or on behalf of any other Finance Party) or any Lender (for itself or, in the case of the event described in sub-paragraph (iii) above, on behalf of any prospective new Lender) in order for such Finance Party or, in the case of the event described in sub-paragraph (iii) above, any prospective new Lender to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.
(b) |
Each Lender shall promptly upon the request of a Servicing Party supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Servicing Party (for itself) in order for that Servicing Party to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents. |
19.9 |
Accounts balance information |
The Borrower shall provide (or cause to be provided) to the Facility Agent:
65
(a) |
within the first 5 Business Days of each Repayment Date, a bank statement in respect of the balances standing to the credit of the Accounts and the records of withdrawal and transfer of moneys in and/or from the Accounts; and |
(b) |
promptly upon the Facility Agent’s request, any information relating to the Accounts, any other information which the Facility Agent may reasonably require. |
20 |
FINANCIAL COVENANTS |
(a) |
The Guarantor shall ensure that at all times throughout the Security Period: |
(i) |
the Market Adjusted Leverage shall not exceed 75 per cent.; |
(ii) |
it shall maintain Liquid Funds in an amount not be less than the higher of (i) $10,000,000 on an aggregate basis and (ii) $750,000 per Fleet Vessel; |
(iii) |
its Consolidated Net Worth shall not be less than $100,000,000. |
(b) |
In this Clause 20 (Financial covenants): |
“Applicable Accounts” means, as at the date of calculation or, as the case may be, in respect of an accounting period, the annual audited combined financial statements or, as the case may be, semi-annual combined management accounts of the Group which the Guarantor is obliged to deliver to the Facility Agent pursuant to Clause 19.2 (Financial statements).
“Consolidated Current Assets” means the aggregate of the cash and marketable securities, trade and other receivables from persons other than a member of the Group realisable 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, in each case in relation to the Group, as stated in the then most recent and relevant Applicable Accounts.
“Consolidated Market Value Adjusted Tangible Fixed Assets” means the Fleet Market Value plus the book value on a consolidated basis of all other tangible fixed assets of the Group (excluding the Fleet Vessels), as stated in the then most recent and relevant Applicable Accounts.
“Consolidated Market Value Adjusted Total Assets” means, at any relevant time, the aggregate of Consolidated Current Assets and Consolidated Market Value Adjusted Tangible Fixed Assets.
“Consolidated Net Worth” means the aggregate of the Consolidated Market Value Adjusted Total Assets less the Consolidated Total Liabilities.
“Consolidated Total Liabilities” means the aggregate (as of the date of calculation) of all obligations of the Guarantor then outstanding for the payment or repayment of money as stated under “Total Liabilities” in the financial statements or, as the case may be, management accounts, then most recently required to be delivered pursuant to Clause 19.2 (Financial statements) including, without limitation:
(a) |
any amounts payable by the Guarantor under leases or similar arrangements over their respective periods; |
66
(b) |
any credit to the Guarantor from a supplier of goods or under any instalment purchase or other similar arrangement; |
(c) |
the aggregate amount then outstanding of liabilities and obligations of third parties to the extent that they are guaranteed by the Guarantor; |
(d) |
any contingent liabilities (including any taxes or other payments under dispute or arbitration) which have been or should be recorded in the notes to the Guarantor’s financial statements or, as the case may be, management accounts; and |
(E) |
any deferred tax liabilities. |
“Fleet Market Value” means the aggregate Market Value of the Fleet Vessels, as determined pursuant to valuations dated within one Month of the relevant Testing Date.
“Fleet Vessel” means any ship (including, but not limited to the Ship) from time to time wholly owned, leased, managed or chartered in under capital leases by the Guarantor (directly or indirectly).
“Liquid Funds” means, as at the date of calculation or, as the case may be, for any accounting period, the aggregate of cash in hand held by the Guarantor and its subsidiaries with banks or other financial institutions of at least investment grade rating which is at the free and unrestricted disposal of the Guarantor and/or any of its subsidiaries, which is the holder thereof.
“Market Adjusted Leverage” means, at any relevant time, the ratio of:
(a) |
the Consolidated Total Liabilities; to |
(b) |
the Consolidated Market Value Adjusted Total Assets. |
“Testing Date” means the date on which the financial statements or, as the case may be, management accounts, referred to in Clause 19.2 (Financial statements) are supplied to the Facility Agent.
21 |
GENERAL UNDERTAKINGS |
21.1 |
General |
The undertakings in this Clause 21 (General Undertakings) remain in force throughout the Security Period except as the Facility Agent, acting with the authorisation of the Majority Lenders (or, where specified, all the Lenders) may otherwise permit.
21.2 |
Authorisations |
Each Obligor shall, and shall procure that each other Transaction Obligor will, promptly:
(a) |
obtain, comply with and do all that is necessary to maintain in full force and effect; and |
(b) |
supply certified copies to the Facility Agent of, |
any Authorisation required under any law or regulation of a Relevant Jurisdiction or the state of the Approved Flag at any time of the Ship to enable it to:
67
(i) |
perform its obligations under the Transaction Documents to which it is a party; |
(ii) |
ensure the legality, validity, enforceability or admissibility in evidence in any Relevant Jurisdiction or in the state of the Approved Flag at any time of the Ship, of any Transaction Document to which it is a party; and |
(iii) |
own and operate the Ship (in the case of the Borrower). |
21.3 |
Compliance with laws |
Each Obligor shall, and shall procure that each other Transaction Obligor will, comply in all respects with all laws and regulations to which it may be subject, if failure so to comply has or is reasonably likely to have a Material Adverse Effect.
21.4 |
Environmental compliance |
Each Obligor shall, and shall procure that each other Transaction Obligor will, and the Guarantor shall ensure that each other member of the Group will:
(a) |
comply with all Environmental Laws; |
(b) |
obtain, maintain and ensure compliance with all requisite Environmental Approvals; |
(c) |
implement procedures to monitor compliance with and to prevent liability under any Environmental Law, |
where failure to do so has or is reasonably likely to have a Material Adverse Effect.
21.5 |
Environmental Claims |
Each Obligor shall, and shall procure that each other Transaction Obligor will, (through the Guarantor) promptly upon becoming aware of the same, inform the Facility Agent in writing of:
(a) |
any Environmental Claim against any member of the Group which is current, pending or threatened; and |
(b) |
any facts or circumstances which are reasonably likely to result in any Environmental Claim being commenced or threatened against any member of the Group, |
where the claim, if determined against that member of the Group, has or is reasonably likely to have a Material Adverse Effect.
21.6 |
Taxation |
(a) |
Each Obligor shall, and shall procure that each other Transaction Obligor will, and the Guarantor shall ensure that each other member of the Group will pay and discharge all Taxes imposed upon it or its assets within the time period allowed without incurring penalties unless and only to the extent that: |
(i) |
such payment is being contested in good faith; |
68
(ii) |
adequate reserves are maintained for those Taxes and the costs required to contest them and both have been disclosed in its latest financial statements delivered to the Facility Agent under Clause 19.2 (Financial statements); and |
(iii) |
such payment can be lawfully withheld and failure to pay those Taxes does not have or is not reasonably likely to have a Material Adverse Effect. |
(b) |
No Obligor shall and the Obligors shall procure that no other Transaction Obligor will, change its residence for Tax purposes. |
21.7 |
Overseas companies |
Each Obligor shall, and shall procure that each other Transaction Obligor will, promptly inform the Facility Agent if it delivers to the Registrar particulars required under the Overseas Regulations of any UK Establishment and it shall comply with any directions given to it by the Facility Agent regarding the recording of any Transaction Security on the register which it is required to maintain under The Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009.
21.8 |
No change to centre of main interests |
No Obligor shall change the location of its centre of main interest (as that term is used in Article 3(1) of the Regulation) from that stated in relation to it in Clause 18.30 (Centre of main interests and establishments) and it will create no “establishment” (as that term is used in Article 2(10) of the Regulation) in any other jurisdiction.
21.9 |
Pari passu ranking |
Each Obligor shall, and shall procure that each other Transaction Obligor will, ensure that at all times any unsecured and unsubordinated claims of a Finance Party against it under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors except those creditors whose claims are mandatorily preferred by laws of general application to companies.
21.10 |
Title |
(a) |
The Borrower holds the legal title to, and own the entire beneficial interest in the Ship, its Earnings and its Insurances. |
(b) |
With effect on and from its creation or intended creation, each Obligor shall hold the legal title to, and own the entire beneficial interest in any other assets the subject of any Transaction Security created or intended to be created by such Obligor. |
21.11 |
Negative pledge |
(a) |
No Obligor shall, and the Obligors shall procure that no other Transaction Obligor will,(and the Guarantor shall ensure that no other member of the Group will) create or permit to subsist any Security over any of its assets which are, in the case of members of the Group other than the Borrower, the subject of the Security created or intended to be created by the Finance Documents. |
(b) |
The Borrower shall not: |
69
(i) |
sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased to or re-acquired by a Transaction Obligor or any other member of the Group; |
(ii) |
sell, transfer or otherwise dispose of any of its receivables on recourse terms; |
(iii) |
enter into any arrangement under which money or the benefit of a bank or other account may be applied, set-off or made subject to a combination of accounts; or |
(iv) |
enter into any other preferential arrangement having a similar effect, |
in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset.
(c) |
Paragraphs (a) and (b) above do not apply to any Permitted Security. |
21.12 |
Disposals |
(a) |
The Borrower shall not enter into a single transaction or a series of transactions (whether related or not) and whether voluntary or involuntary to sell, lease, transfer or otherwise dispose of any asset (including without limitation the Ship, its Earnings or its Insurances). |
(b) |
Paragraph (a) above does not apply to any Charter as all Charters are subject to Clause 23.18 (Restrictions on chartering, appointment of managers etc.). |
21.13 |
Merger |
No Obligor shall, and the Obligors shall procure that no member of the Group will, enter into any amalgamation, demerger, merger, consolidation or corporate reconstruction provided that the Guarantor may enter into a merger only if it shall be the surviving entity.
21.14 |
Change of business |
(a) |
The Guarantor shall procure that no substantial change is made to the general nature of the business of the Guarantor or the Group from that carried on at the date of this Agreement. |
(b) |
The Borrower shall not engage in any business other than the ownership and operation of the Ship. |
21.15 |
Financial Indebtedness |
No Obligor shall incur or permit to be outstanding any Financial Indebtedness except Permitted Financial Indebtedness.
21.16 |
Expenditure |
The Borrower shall not incur any expenditure, except for expenditure reasonably incurred in the ordinary course of owning, operating, maintaining and repairing the Ship.
21.17 |
Share capital |
The Borrower shall not:
(a) |
purchase, cancel or redeem any of its share capital; |
70
(b) |
increase or reduce its authorised share capital; |
(c) |
issue any further shares except to the Guarantor and provided such new shares are made subject to the terms of the Shares Security immediately upon the issue of such new shares in a manner satisfactory to the Security Agent and the terms of the Shares Security are complied with; |
(d) |
appoint any further director, officer or secretary of the Borrower (unless the provisions of the Shares Security are complied with). |
21.18 |
Dividends |
(a) |
The Borrower may: |
(b) |
declare, make or pay any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (whether in cash or in kind) on or in respect of its share capital (or any class of its share capital); |
(c) |
repay or distribute any dividend or share premium reserve; |
(d) |
pay any management, advisory or other fee to or to the order of any of its shareholders; or |
(e) |
redeem, repurchase, defease, retire or repay any of its share capital or resolve to do so, |
provided that:
(i) |
no Event of Default or Potential Event of Default has occurred and is continuing or would result from such action; |
(ii) |
the Obligors are in compliance with the financial covenants included in this Agreement; and |
(iii) |
the balance in the Debt Service Reserve Account is no less than $1,000,000. |
21.19 |
Other transactions |
(a) |
The Borrower shall not: |
(i) |
be the creditor in respect of any loan or any form of credit to any person other than another Transaction Obligor and where such loan or form of credit is Permitted Financial Indebtedness; |
(ii) |
give or allow to be outstanding any guarantee or indemnity to or for the benefit of any person in respect of any obligation of any other person or enter into any document under which the Borrower assumes any liability of any other person other than any guarantee or indemnity given under the Finance Documents. |
(iii) |
enter into any material agreement other than: |
(iv) |
the Transaction Documents; |
(v) |
any other agreement expressly allowed under any other term of this Agreement; and |
71
(vi) |
enter into any transaction on terms which are, in any respect, less favourable to the Borrower than those which it could obtain in a bargain made at arms’ length; or |
(vii) |
acquire any shares or other securities other than US or UK Treasury bills and certificates of deposit issued by major North American or European banks. |
(b) |
The Guarantor shall not: |
(i) |
provide any form of credit or financial assistance to: |
(A) |
a person who is directly or indirectly interested in the Guarantor’s share or loan capital; or |
(B) |
any company in or with which such a person is directly or indirectly interested or connected, |
other than any credit or financial assistance disclosed to the Facility Agent prior to the date of this Agreement which has no negative impact on the financing condition of the Guarantor; or
(ii) |
enter into any transaction with or involving such a person or company on terms which are, in any respect, less favourable to the Guarantor than those which it could obtain a bargain made at arms’ length. |
21.20 |
Unlawfulness, invalidity and ranking; Security imperilled |
No Obligor shall, and the Obligors shall procure that no other Transaction Obligor will, do (or fail to do) or cause or permit another person to do (or omit to do) anything which is likely to:
(a) |
make it unlawful for a Transaction Obligor to perform any of its obligations under the Transaction Documents; |
(b) |
cause any obligation of a Transaction Obligor under the Transaction Documents to cease to be legal, valid, binding or enforceable if that cessation individually or together with any other cessations materially or adversely affects the interests of the Secured Parties under the Finance Documents; |
(c) |
cause any Transaction Document to cease to be in full force and effect; |
(d) |
cause any Transaction Security to rank after, or lose its priority to, any other Security; and |
(e) |
imperil or jeopardise the Transaction Security. |
21.21 |
Sanctions undertakings |
(a) |
No Obligors shall (and shall procure that each other member of the Group will not) use, transfer or make available, directly or indirectly, any part of the proceeds of the Facility to fund, finance or facilitate transactions or activities with, involving or for the benefit of any person who is a Prohibited Person or in a Sanctioned Country. |
(b) |
Each Obligor shall, and shall procure that each other member of the Group will, ensure that it shall not use any revenue or benefit derived from any activity or dealing with a Prohibited Person in breach of applicable Sanctions or in a Sanctioned Country for the purpose of |
72
discharging amounts owing to any Finance Party in respect of the Facility. The Obligors will not (and shall procure that each other member of the Group will not) in breach of applicable Sanctions employ the Ship nor allow its employment, operation or management by or for the benefit of a Prohibited Person or in a Sanctioned Country or in any manner that would constitute or give rise to a breach of Sanctions by any party hereto.
(c) |
The Obligors shall, and shall procure that each other member of the Group will, implement and maintain appropriate policies and procedures designed to (i) promote and achieve compliance with applicable Sanctions and (ii) prevent any action that would be contrary to paragraphs (a) or (b). |
(d) |
Each Obligor shall, and shall procure that each other member of the Group will, promptly upon becoming aware of the same, supply to the Agent details of any claim, action, suit, proceedings or investigation against it with respect to applicable Sanctions. |
21.22 |
Further assurance |
(a) |
Each Obligor shall, and shall procure that each other Transaction Obligor will, (and the Guarantor shall procure that each member of the Group will) promptly, and in any event within the time period specified by the Security Agent do all such acts (including procuring or arranging any registration, notarisation or authentication or the giving of any notice) or execute or procure execution of all such documents (including assignments, transfers, mortgages, charges, notices, instructions, acknowledgments, proxies and powers of attorney), as the Security Agent may specify (and in such form as the Security Agent may require in favour of the Security Agent or its nominee(s)): |
(i) |
to create, perfect, vest in favour of the Security Agent or protect the priority of the Security or any right of any kind created or intended to be created under or evidenced by the Finance Documents (which may include the execution of a mortgage, charge, assignment or other Security over all or any of the assets which are, or are intended to be, the subject of the Transaction Security) or for the exercise of any rights, powers and remedies of any of the Secured Parties provided by or pursuant to the Finance Documents or by law; |
(ii) |
to confer on the Security Agent or confer on the Secured Parties Security over any property and assets of that Transaction Obligor located in any jurisdiction equivalent or similar to the Security intended to be conferred by or pursuant to the Finance Documents; |
(iii) |
to facilitate or expedite the realisation and/or sale of, the transfer of title to or the grant of, any interest in or right relating to the assets which are, or are intended to be, the subject of the Transaction Security or to exercise any power specified in any Finance Document in respect of which the Security has become enforceable; and/or |
(iv) |
to enable or assist the Security Agent to enter into any transaction to commence, defend or conduct any proceedings and/or to take any other action relating to any item of the Security Property. |
(b) |
Each Obligor shall, and shall procure that each other Transaction Obligor will, (and the Guarantor shall procure that each member of the Group will) take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Security conferred or intended to be |
73
conferred on the Security Agent or the Secured Parties by or pursuant to the Finance Documents.
(c) |
At the same time as an Obligor delivers to the Security Agent any document executed by itself or another Transaction Obligor pursuant to this Clause 21.22 (Further assurance), that Obligor shall deliver, or shall procure that such other Transaction Obligor will deliver, to the Security Agent a certificate signed by one of that Obligor’s or Transaction Obligor’s officers which shall: |
(i) |
set out the text of a resolution of that Obligor’s or Transaction Obligor’s directors specifically authorising the execution of the document specified by the Security Agent; and |
(ii) |
state that either the resolution was duly passed at a meeting of the directors validly convened and held, throughout which a quorum of directors entitled to vote on the resolution was present, or that the resolution has been signed by all the directors or officers and is valid under that Obligor’s or Transaction Obligor’s articles of association or other constitutional documents. |
21.23 |
Debt Service Reserve Amount |
The Borrower shall ensure that, from the Utilisation Date and at all times thereafter during the Security Period, there is standing to the credit of the Debt Service Reserve Account, an amount of not less than $1,000,000 (the “Debt Service Reserve Amount”) in respect of the Ship such amount to be maintained therein and not be available for withdrawal.
22 |
INSURANCE UNDERTAKINGS |
22.1 |
General |
The undertakings in this Clause 22 (Insurance Undertakings) remain in force from the Utilisation Date and throughout the rest of the Security Period except as the Facility Agent, acting with the authorisation of the Majority Lenders (or, where specified, all the Lenders) may otherwise permit.
22.2 |
Maintenance of obligatory insurances |
The Borrower shall keep the Ship insured at its expense against:
(a) |
fire and usual marine risks (including hull and machinery and excess risks and any loss of hire if applicable); |
(b) |
war risks; |
(c) |
protection and indemnity risks (including freight, demurrage and defence); and |
(d) |
any other risks against which the Facility Agent acting on the instructions of the Majority Lenders considers, having regard to practices and other circumstances prevailing at the relevant time, it would be reasonable for the Borrower to insure and which are specified by the Facility Agent by notice to the Borrower. |
22.3 |
Terms of obligatory insurances |
The Borrower shall effect such insurances:
74
(a) |
in dollars; |
(b) |
in the case of fire and usual marine risks and war risks, in an amount on an agreed value basis at least the greater of: |
(i) |
110 per cent. of the Loan; and |
(ii) |
the Market Value of the Ship (and for the avoidance of any doubt Hull and Machinery insurance cover shall cover at least 80 per cent. of the Market Value of the Ship); |
(c) |
in the case of oil pollution liability risks, for an aggregate amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry and in the international marine insurance market (currently at $1,000,000,000); |
(d) |
in the case of protection and indemnity risks, in respect of the full tonnage of the Ship; |
(e) |
on approved terms; and |
(f) |
through Approved Brokers and with approved insurance companies and/or underwriters or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations (being, in the case of protection and indemnity risks, IGA members). |
22.4 |
Further protections for the Finance Parties |
In addition to the terms set out in Clause 22.3 (Terms of obligatory insurances), the Borrower shall procure that the obligatory insurances shall:
(a) |
subject always to paragraph (b), name the Borrower as the sole named insured unless the interest of every other named insured is limited: |
(i) |
in respect of any obligatory insurances for hull and machinery and war risks; |
(A) |
to any provable out-of-pocket expenses that it has incurred and which form part of any recoverable claim on underwriters; and |
(B) |
to any third party liability claims where cover for such claims is provided by the policy (and then only in respect of discharge of any claims made against it); and |
(ii) |
in respect of any obligatory insurances for protection and indemnity risks, to any recoveries it is entitled to make by way of reimbursement following discharge of any third party liability claims made specifically against it; |
and every other named insured has undertaken in writing to the Security Agent (in such form as it requires) that any deductible shall be apportioned between the Borrower and every other named insured in proportion to the gross claims made or paid by each of them and that it shall do all things necessary and provide all documents, evidence and information to enable the Security Agent to collect or recover any moneys which at any time become payable in respect of the obligatory insurances;
(b) |
whenever the Facility Agent requires, name (or be amended to name) the Security Agent as additional named insured for its rights and interests, warranted no operational interest and |
75
with full waiver of rights of subrogation against the Security Agent, but without the Security Agent being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;
(c) |
name the Security Agent as loss payee with such directions for payment as the Facility Agent may specify; |
(d) |
provide that all payments by or on behalf of the insurers under the obligatory insurances to the Security Agent shall be made without set off, counterclaim or deductions or condition whatsoever; |
(e) |
provide that the obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Security Agent or any other Finance Party; and |
(f) |
provide that the Security Agent may make proof of loss if the Borrower fails to do so. |
22.5 |
Renewal of obligatory insurances |
The Borrower shall:
(a) |
at least 21 days before the expiry of any obligatory insurance: |
(i) |
notify the Facility Agent of the Approved Brokers (or other insurers) and any protection and indemnity or war risks association through or with which the Borrower proposes to renew that obligatory insurance and of the proposed terms of renewal; and |
(ii) |
obtain the Facility Agents’ approval to the matters referred to in sub-paragraph (i) above; |
(b) |
at least 14 days before the expiry of any obligatory insurance, renew that obligatory insurance in accordance with the Facility Agent’s approval pursuant to paragraph (a) above; and |
(c) |
procure that the Approved Brokers and/or the approved war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Facility Agent in writing of the terms and conditions of the renewal. |
22.6 |
Copies of policies; letters of undertaking |
The Borrower shall ensure that the Approved Brokers provide the Security Agent with:
(a) |
pro forma copies of all policies relating to the obligatory insurances which they are to effect or renew; and |
(b) |
a letter or letters of undertaking in a form required by the Facility Agent and including undertakings by the Approved Brokers that: |
(i) |
they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment complying with the provisions of Clause 22.4 (Further protections for the Finance Parties); |
(ii) |
they will hold such policies, and the benefit of such insurances, to the order of the Security Agent in accordance with such loss payable clause; |
76
(iii) |
they will advise the Security Agent immediately of any material change to the terms of the obligatory insurances; |
(iv) |
they will, if they have not received notice of renewal instructions from the Borrower or its agents, notify the Security Agent not less than 14 days before the expiry of the obligatory insurances; |
(v) |
if they receive instructions to renew the obligatory insurances, they will promptly notify the Facility Agent of the terms of the instructions; |
(vi) |
they will not set off against any sum recoverable in respect of a claim relating to the Ship under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of the Ship or otherwise, they waive any lien on the policies, or any sums received under them, which they might have in respect of such premiums or other amounts and they will not cancel such obligatory insurances by reason of non-payment of such premiums or other amounts; and |
(vii) |
they will arrange for a separate policy to be issued in respect of the Ship forthwith upon being so requested by the Facility Agent. |
22.7 |
Copies of certificates of entry |
The Borrower shall ensure that any protection and indemnity and/or war risks associations in which the Ship is entered provide the Security Agent with:
(a) |
a certified copy of the certificate of entry for the Ship; |
(b) |
a letter or letters of undertaking in such form as may be required by the Facility Agent acting on the instructions of Majority Lenders; and |
(c) |
a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to the Ship. |
22.8 |
Deposit of original policies |
The Borrower shall ensure that all policies relating to obligatory insurances effected by it are deposited with the Approved Brokers through which the insurances are effected or renewed.
22.9 |
Payment of premiums |
The Borrower shall punctually pay all premiums or other sums payable in respect of the obligatory insurances and produce all relevant receipts when so required by the Facility Agent or the Security Agent.
22.10 |
Guarantees |
The Borrower shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.
77
22.11 |
Compliance with terms of insurances |
(a) |
The Borrower shall not do nor omit to do (nor permit to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable under an obligatory insurance repayable in whole or in part. |
(b) |
Without limiting paragraph (a) above, the Borrower shall: |
(i) |
take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances, and (without limiting the obligation contained in sub-paragraph (iii) of paragraph (b) of Clause 22.6 (Copies of policies; letters of undertaking)) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Facility Agent has not given its prior approval; |
(ii) |
not make any changes relating to the classification or classification society or manager or operator of the Ship approved by the underwriters of the obligatory insurances; |
(iii) |
make (and promptly supply copies to the Facility Agent of) all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Ship is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation); and |
(iv) |
not employ the Ship, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify. |
22.12 |
Alteration to terms of insurances |
The Borrower shall not make or agree to any alteration to the terms of any obligatory insurance or waive any right relating to any obligatory insurance.
22.13 |
Settlement of claims |
The Borrower shall:
(a) |
not settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty; and |
(b) |
do all things necessary and provide all documents, evidence and information to enable the Security Agent to collect or recover any moneys which at any time become payable in respect of the obligatory insurances. |
22.14 |
Provision of copies of communications |
The Borrower shall provide the Security Agent, at the time of each such communication, with copies of all written communications between the Borrower and:
(a) |
the Approved Brokers; |
78
(b) |
the approved protection and indemnity and/or war risks associations; and |
(c) |
the approved insurance companies and/or underwriters, |
which relate directly or indirectly to:
(i) |
the Borrower’s obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and |
(ii) |
any credit arrangements made between the Borrower and any of the persons referred to in paragraphs (a) or (b) above relating wholly or partly to the effecting or maintenance of the obligatory insurances. |
22.15 |
Provision of information |
The Borrower shall promptly provide the Facility Agent (or any persons which it may designate) with any information which the Facility Agent (or any such designated person) requests for the purpose of:
(a) |
obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected provided that the Facility Agent shall obtain such report (at the Borrower’s expense) in respect of the Ship at least once per year and at all other times it considers necessary following the occurrence of an Event of Default which is continuing; and/or |
(b) |
effecting, maintaining or renewing any such insurances as are referred to in Clause 22.16 (Mortgagee’s interest and additional perils insurances) or dealing with or considering any matters relating to any such insurances, |
and the Borrower shall, forthwith upon demand, indemnify the Security Agent in respect of all fees and other expenses incurred by or for the account of the Security Agent in connection with any such report as is referred to in paragraph (a) above.
22.16 |
Mortgagee’s interest and, additional perils insurances |
(a) |
The Security Agent shall be entitled from time to time to effect, maintain and renew a mortgagee’s interest marine insurance and a mortgagee’s interest additional perils insurance in each case, in an amount which equals 110 per cent. of the Loan, on such terms, through such insurers and generally in such manner as the Security Agent acting on the instructions of the Majority Lenders may from time to time consider appropriate. |
(b) |
The Borrower shall upon demand fully indemnify the Security Agent in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any insurance referred to in paragraph (a) above or dealing with, or considering, any matter arising out of any such insurance. |
23 |
GENERAL SHIP UNDERTAKINGS |
23.1 |
General |
The undertakings in this Clause 23 (General Ship Undertakings) remain in force on and from the Utilisation Date and throughout the rest of the Security Period except as the Facility Agent, acting with the authorisation of the Majority Lenders (or, where specified, all the Lenders) may otherwise permit.
79
23.2 |
Ship’s name and registration |
The Borrower shall:
(a) |
keep the Ship registered in its name under the Approved Flag from time to time at its port of registration; |
(b) |
not do or allow to be done anything as a result of which such registration might be suspended, cancelled or imperilled; |
(c) |
not enter into any dual flagging arrangement in respect of the Ship; and |
(d) |
not change the name of the Ship, |
provided that any change of name or flag of the Ship shall be subject to:
(i) |
the Ship remaining subject to Security securing the Secured Liabilities created by a first priority or preferred ship mortgage on the Ship and, if appropriate, a first priority deed of covenant collateral to that mortgage (or equivalent first priority Security) on substantially the same terms as the Mortgage and on such other terms and in such other form as the Facility Agent, acting with the authorisation of the Majority Lenders, shall approve or require; and |
(ii) |
the execution of such other documentation amending and supplementing the Finance Documents as the Facility Agent, acting with the authorisation of the Majority Lenders, shall approve or require. |
23.3 |
Repair and classification |
The Borrower shall keep the Ship in a good and safe condition and state of repair:
(a) |
consistent with first class ship ownership and management practice; and |
(b) |
so as to maintain the Approved Classification free of overdue recommendations and conditions. |
23.4 |
Classification society undertaking |
The Borrower shall, in respect of the Ship instruct the Approved Classification Society (and procure that the Approved Classification Society undertakes with the Security Agent):
(a) |
to send to the Security Agent, following receipt of a written request from the Security Agent, certified true copies of all original class records held by the Approved Classification Society in relation to the Ship; |
(b) |
to allow the Security Agent (or its agents), at any time and from time to time, to inspect the original class and related records of the Borrower and the Ship at the offices of the Approved Classification Society and to take copies of them; |
(c) |
to notify the Security Agent immediately in writing if the Approved Classification Society: |
80
(i) |
receives notification from the Borrower or any person that the Ship’s Approved Classification Society is to be changed; or |
(ii) |
becomes aware of any facts or matters which may result in or have resulted in a change, suspension, discontinuance, withdrawal or expiry of the Ship’s class under the rules or terms and conditions of the Borrower or the Ship’s membership of the Approved Classification Society; |
(d) |
following receipt of a written request from the Security Agent: |
(i) |
to confirm that the Borrower is not in default of any of its contractual obligations or liabilities to the Approved Classification Society, including confirmation that it has paid in full all fees or other charges due and payable to the Approved Classification Society; or |
(ii) |
to confirm that the Borrower is in default of any of its contractual obligations or liabilities to the Approved Classification Society, to specify to the Security Agent in reasonable detail the facts and circumstances of such default, the consequences of such default, and any remedy period agreed or allowed by the Approved Classification Society. |
23.5 |
Modifications |
The Borrower shall not make any modification or repairs to, or replacement of, the Ship or equipment installed on it which would or might materially alter the structure, type or performance characteristics of the Ship or materially reduce its value.
23.6 |
Removal and installation of parts |
(a) |
Subject to paragraph (b) below, the Borrower shall not remove any material part of the Ship, or any item of equipment installed on the Ship unless: |
(i) |
the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed; |
(ii) |
the replacement part or item is free from any Security in favour of any person other than the Security Agent; and |
(iii) |
the replacement part or item becomes, on installation on the Ship, the property of the Borrower and subject to the security constituted by the Mortgage on the Ship. |
(b) |
The Borrower may install equipment owned by a third party if the equipment can be removed without any risk of damage to the Ship. |
23.7 |
Surveys |
The Borrower shall submit the Ship regularly to all periodic or other surveys which may be required for classification purposes and, if so required by the Facility Agent acting on the instructions of the Majority Lenders, provide the Facility Agent, with copies of all survey reports.
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23.8 |
Inspection |
The Borrower shall permit the Security Agent (acting through surveyors or other persons appointed by it for that purpose), at the expense of the Borrower, to board the Ship at all reasonable times without interfering the operation of the Ship to inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections.
23.9 |
Prevention of and release from arrest |
(a) |
The Borrower shall promptly discharge: |
(i) |
all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ship, its Earnings or its Insurances; |
(ii) |
all Taxes, dues and other amounts charged in respect of the Ship, its Earnings or its Insurances; and |
(iii) |
all other outgoings whatsoever in respect of the Ship, its Earnings or its Insurances. |
(b) |
The Borrower shall immediately upon receiving notice of the arrest of the Ship or of its detention in exercise or purported exercise of any lien or claim, take all steps necessary to procure its release by providing bail or otherwise as the circumstances may require. |
23.10 |
Compliance with laws etc. |
The Borrower shall:
(a) |
comply, or procure compliance with all laws or regulations: |
(i) |
relating to its business generally; and |
(ii) |
relating to the Ship, its ownership, employment, operation, management and registration, |
including, but not limited to:
(A) |
the ISM Code; |
(B) |
the ISPS Code; |
(C) |
all Environmental Laws; |
(D) |
all applicable Sanctions; and |
(E) |
the laws of the Approved Flag; |
(b) |
obtain, comply with and do all that is necessary to maintain in full force and effect any Environmental Approvals; and |
(c) |
without limiting paragraph (a) above, not employ the Ship nor allow its employment, operation or management in any manner contrary to any law or regulation including but not limited to the ISM Code, the ISPS Code, all Environmental Laws and applicable Sanctions. |
82
23.11 |
ANNEX VI |
The Borrower shall, upon the request of any Lender and at the cost of the Borrower, supply or procure the supply by the relevant classification society (as specified by the relevant Lender) to the Facility Agent (on behalf of that Lender) all ship fuel oil consumption data required to be collected and reported in accordance with Regulation 22A of Annex VI and any Statement of Compliance provided always that, for the avoidance of doubt, such information shall be “Confidential Information”.
For the purpose of this Clause 23.11 (ANNEX VI):
“Annex VI” means ANNEX VI of the Protocol of 1997 (as subsequently amended from time tom time) to amend the International Convention for the Prevention of Pollution from Ships 1973 (“MARPOL”), as modified by the Protocol of 1978 relating thereto; and
“Statement of Compliance” means a Statement of Compliance related to fuel oil consumption pursuant to regulations 6.6 and 6.7 of Annex VI.
23.12 |
ISPS Code |
Without limiting paragraph (a) of Clause 23.10 (Compliance with laws etc.), the Borrower shall:
(a) |
procure that the Ship and the company responsible for the Ship’s compliance with the ISPS Code comply with the ISPS Code; and |
(b) |
maintain an ISSC for the Ship; and |
(c) |
notify the Facility Agent immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC. |
23.13 |
Sanctions and Ship trading |
Without limiting Clause 23.10 (Compliance with laws etc.), the Borrower shall procure:
(a) |
that the Ship shall not be used by or for the benefit of a Prohibited Person or in trading to or from a Sanctioned Country; |
(b) |
that the Ship shall not be used in trading in any manner that would violate applicable Sanctions; |
(c) |
that the Ship shall not be traded in any manner which would trigger the operation of any Sanctions limitation or exclusion clause (or similar) in the Insurances; and |
(d) |
without prejudice to the above provisions of this Clause 23.13 (Sanctions and Ship trading), that each charterparty in respect of the Ship shall contain, for the benefit of the Borrower, language which gives effect to the provisions of paragraph (c) of Clause 23.10 (Compliance with laws etc.) as regards Sanctions and this Clause 23.13 (Sanctions and Ship trading) and which permits refusal of employment or voyage orders if compliance would constitute or give rise to a violation of Sanctions by the Borrower or any other party hereto. |
23.14 |
Russian oil price cap |
(a) |
The Borrower undertakes that it will, and the Guarantor shall ensure that the Borrower will, at all times comply, and require compliance by: |
83
(i) |
all charterers and sub charterers of the Ship (on commercially reasonable efforts basis in respect of the sub charterers); and |
(ii) |
all parties with whom the Borrower, a charterer or a sub charterer (on commercially reasonable efforts basis in respect of the sub charterers) enters into a contract of carriage in respect of the Ship, |
with the Russian Oil Price Cap Measures.
(b) |
Without prejudice to the generality of paragraph (a) above, the Borrower undertakes that it will, and the Guarantor shall ensure that the Borrower will, prior to the Ship commencing loading of Russian Oil Products: |
(i) |
obtain: |
(A) |
price information demonstrating that the Russian Oil Products were purchased at or below the applicable price cap; or |
(B) |
a signed attestation from its applicable counterparty that the Russian Oil Products were purchased at or below the applicable price cap; or |
(C) |
documentary evidence that the purchase of the Russian Oil Products was pursuant to a licence or an exception granted by the relevant authority in each applicable jurisdiction; and |
(ii) |
it will provide to the Facility Agent, as soon as practically feasible, the relevant information referred to in paragraph (i). |
(c) |
Without prejudice to the generality of paragraph (a) above, the Borrower undertakes to the Facility Agent that it will, and the Guarantor shall ensure that the Borrower will, ensure that each charterparty or contract of carriage in respect of the Ship will include for the benefit of the Borrower provisions requiring the charterer and will use commercially reasonable efforts to include provisions requiring the sub-charterer or any person with whom the Borrower has entered into a contract of carriage to comply with the Russian Oil Price Cap Measures and to provide such information and documentation at such times as is necessary for the Borrower and the Guarantor to comply with this Clause 23.14 (Russian oil price cap). |
(d) |
The Borrower undertakes that it will, and the Guarantor shall ensure that the Borrower will: |
(i) |
On the anniversary of the Utilisation Date in each year, or in the case of the payment of the final Repayment Instalment, on the date of such payment, and with reference to the Reporting Period, provide the Facility Agent (in English and in sufficient copies for all the Finance Parties) an attestation signed by an authorised signatory in such form as may be agreed by the Facility Agent confirming that it has complied in all respects with the Russian Oil Price Cap Measures arising from trading of the Ship; and |
(ii) |
without prejudice to paragraph (i) (x) provide the Facility Agent with such information, and at such times, as it may reasonably require for the purposes of the Facility Agent or any Finance Party satisfying any record keeping obligations applicable to it under the Russian Oil Price Cap Measures, (y) provide the Facility Agent with such other reasonably available information in relation to compliance with the Russian Oil Price Cap Measures as the Facility Agent may from time to time reasonably request and (z) comply with such further or additional requirements as the Facility Agent may from |
84
time to time require in writing, acting reasonably, and pursuant to implemented changes to any of the Russian Oil Price Cap Measures, or the introduction of similar measures relating to Russian Oil Products, or changes to any guidance, application, interpretation or market practice in respect of the Russian Oil Price Cap Measures.
The obligations in this paragraph (d) are continuing and, in particular, shall survive and remain binding on the Borrower and the Guarantor until all attestations and such other information as may be requested pursuant to paragraph (d) of this Clause 23.14 (Russian oil price cap) have been received by the Facility Agent.
(e) |
The Borrower shall, and the Guarantor shall ensure that the Borrower will, undertake appropriate due diligence on its counterparties to satisfy itself, based on the information available, of the reliability and accuracy of any information provided by such counterparties for the purposes of or relating to satisfying the requirements at sub-paragraph (i) of paragraph (b) above. |
(f) |
The Borrower agrees that each Finance Party may forward all attestations and other relevant documents which the Borrower may from time to time deliver to the Facility Agent or such Finance Party pursuant to paragraph (b) above, following prior notification to the Borrower, to any applicable regulators or to any other governmental, administrative or supervisory authority to which the Facility Agent or such Finance Party may be required to forward or disclose such attestations or other relevant documents in accordance with the Russian Oil Price Cap Measures, provided that the Facility Agent or such Finance Party shall if legally permitted and practicable, make reasonable efforts to give prompt written notice to the Borrower prior to such disclosure. |
23.15 |
Trading in war zones or excluded areas |
The Borrower shall not cause or permit the Ship to enter or trade to any zone which is declared a war zone by any government or by the Ship’s war risks insurers or which is otherwise excluded from the scope of coverage of the obligatory insurances unless:
(a) |
the prior written consent of the Security Agent acting on the instructions of the Majority Lenders has been given; and |
(b) |
the Borrower has (at its expense) effected any special, additional or modified insurance cover which the Security Agent acting on the instructions of the Majority Lenders may require. |
23.16 |
Provision of information |
Without prejudice to Clause 19.5 (Information: miscellaneous) the Borrower shall promptly provide the Facility Agent with any information which it requests regarding:
(a) |
the Ship, its employment, position and engagements; |
(b) |
the Earnings and payments and amounts due to its master and crew; |
(c) |
any expenditure incurred, or likely to be incurred, in connection with the operation, maintenance or repair of the Ship and any payments made by it in respect of the Ship; |
(d) |
any towages and salvages; and |
85
(e) |
its compliance, the Approved Manager’s compliance and the compliance of the Ship with the ISM Code and the ISPS Code, |
and, upon the Facility Agent’s request, promptly provide copies of any current Charter relating to the Ship, of any current guarantee of any such Charter, the Ship’s Safety Management Certificate and any relevant Document of Compliance.
23.17 |
Notification of certain events |
The Borrower shall immediately notify the Facility Agent by fax, confirmed forthwith by letter, of:
(a) |
any casualty to the Ship which is or is likely to be or to become a Major Casualty; |
(b) |
any occurrence as a result of which the Ship has become or is, by the passing of time or otherwise, likely to become a Total Loss; |
(c) |
any requisition of the Ship for hire; |
(d) |
any requirement or recommendation made in relation to the Ship by any insurer or classification society or by any competent authority which is not immediately complied with; |
(e) |
any arrest or detention of the Ship or any exercise or purported exercise of any lien on the Ship or the Earnings; |
(f) |
any intended dry docking of the Ship (which for the avoidance of any doubt, should take place at least once during the Security Period); |
(g) |
any Environmental Claim made against the Borrower or in connection with the Ship, or any Environmental Incident; |
(h) |
any claim for breach of the ISM Code or the ISPS Code being made against the Borrower, an Approved Manager or otherwise in connection with the Ship; or |
(i) |
any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code or the ISPS Code not being complied with, |
and the Borrower shall keep the Facility Agent advised in writing on a regular basis and in such detail as the Facility Agent shall require as to the Borrower’s, any such Approved Manager’s or any other person’s response to any of those events or matters.
23.18 |
Restrictions on chartering, appointment of managers etc. |
The Borrower shall not:
(a) |
let the Ship on demise charter for any period; |
(b) |
enter into any time, voyage or consecutive voyage charter in respect of the Ship other than a Permitted Charter; |
(c) |
materially amend or supplement a Management Agreement (and, for the avoidance of any doubt, any amendments relating to the appointment of an Approved Manager, the management fees to more than twenty per cent. (20%) of the management fee payable under |
86
the Management Agreement and/or the duration of a Management Agreement shall be considered material);
(d) |
terminate a Management Agreement; |
(e) |
appoint a manager of the Ship other than the Approved Commercial Manager and the Approved Technical Manager without the Facility Agent’s consent (such consent not to be unreasonably withheld or delayed) or agree to any alteration to the terms of an Approved Manager’s appointment; |
(f) |
de activate or lay up the Ship; or |
(g) |
put that Ship into the possession of any person for the purpose of work being done upon it in an amount exceeding or likely to exceed $2,000,000 (or the equivalent in any other currency) unless that person has first given to the Security Agent and in terms satisfactory to it a written undertaking not to exercise any lien on the Ship or its Earnings for the cost of such work or for any other reason. |
23.19 |
Notice of Mortgage |
The Borrower shall keep the Mortgage registered against the Ship as a valid first priority or (as applicable) first preferred mortgage, carry on board the Ship a certified copy of the Mortgage and place and maintain in a conspicuous place in the navigation room and the master’s cabin of the Ship a framed printed notice stating that the Ship is mortgaged by the Borrower to the Security Agent.
23.20 |
Sharing of Earnings |
The Borrower shall not enter into any agreement or arrangement for the sharing of any Earnings other than for the purposes of this Agreement.
23.21 |
Inventory of Hazardous Materials |
The Borrower shall maintain the Inventory of Hazardous Materials.
23.22 |
Notification of compliance |
The Borrower shall promptly provide the Facility Agent from time to time with evidence (in such form as the Facility Agent requires) that it is complying with this Clause 23 (General Ship Undertakings).
23.23 |
Charterparty Assignment |
If the Borrower enters into any Assignable Charter (subject to obtaining the prior consent of the Facility Agent in accordance with paragraph (b) of Clause 23.18 (Restrictions on chartering, appointment of managers etc.)), the Borrower shall execute in favour of the Security Agent a Charterparty Assignment in respect of that Assignable Charter and shall:
(a) |
serve a notice of that Charterparty Assignment on the relevant charterer and procure that the charterer acknowledges such notice in such form as the Facility Agent may approve or require; and |
87
(b) |
deliver to the Facility Agent such other documents in connection with that Charterparty Assignment as the Facility Agent may require (including, without limitation, documents equivalent to those referred to in Schedule 2 (Conditions Precedent) in relation to the Borrower and that Charter). |
24 |
SECURITY COVER |
24.1 |
Minimum required security cover |
Clause 24.2 (Provision of additional security; prepayment) applies if, on or after the Utilisation Date, the Facility Agent notifies the Borrower that:
(a) |
the Market Value of the Ship; plus |
(b) |
the net realisable value of additional Security previously provided under this Clause 24 (Security Cover), |
is below 170 per cent. of the Loan.
24.2 |
Provision of additional security; prepayment |
(a) |
If the Facility Agent serves a notice on the Borrower under Clause 24.1 (Minimum required security cover), the Borrower shall, on or before the date falling one Month after the date on which the Facility Agent’s notice is served (the “Prepayment Date”), prepay such part of the Loan as shall eliminate the shortfall. |
(b) |
The Borrower may, instead of making a prepayment as described in paragraph (a) above, transfer to the Debt Service Reserve Account within 30 days from the service of such notification, such amount outstanding under the Loan sufficient to restore the minimum required security cover ratio described under Clause 24.1 (Minimum required security cover) or provide, or ensure that a third party has provided, additional security which, in the opinion of the Facility Agent acting on the instructions of the Majority Lenders: |
(i) |
has a net realisable value at least equal to the shortfall; |
(ii) |
if additional Security is provided over any vessel, such additional Security shall be acceptable to the Lenders (at their sole discretion); and |
(iii) |
is documented in such terms as the Facility Agent may approve or require, |
before the Prepayment Date; and conditional upon such security being provided in such manner, it shall satisfy such prepayment obligation.
24.3 |
Value of additional vessel security |
The net realisable value of any additional security which is provided under Clause 24.2 (Provision of additional security; prepayment) which constitutes a first preferred or first priority mortgage over a vessel shall be the Market Value of the vessel concerned.
24.4 |
Valuations binding |
Any valuation under this Clause 24 (Security Cover) shall be binding and conclusive as regards the Borrower.
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24.5 |
Provision of information |
(a) |
The Borrower shall promptly provide the Facility Agent and any shipbroker acting under this Clause 24 (Security Cover) with any information which the Facility Agent or the shipbroker may request for the purposes of the valuation. |
(b) |
If the Borrower fails to provide the information referred to in paragraph (a) above by the date specified in the request, the valuation may be made on any basis and assumptions which the shipbroker or the Facility Agent considers prudent. |
24.6 |
Prepayment mechanism |
Any prepayment pursuant to Clause 24.2 (Provision of additional security; prepayment) shall be made in accordance with the relevant provisions of Clause 7 (Prepayment and Cancellation) and shall be treated as a voluntary prepayment pursuant to Clause 7.4 (Voluntary prepayment of Loan).
24.7 |
Provision of valuations |
(a) |
The Borrower shall provide the Facility Agent with valuations of the Ship and any other vessel over which additional Security has been created in accordance with Clause 24.3 (Value of additional vessel security), from an Approved Valuer, addressed to the Finance Parties, to enable the Facility Agent to determine the Market Value of the Ship (including for the avoidance of doubt, the Initial Market Value of the Ship). Such valuations shall be provided by the Borrower semi-annually throughout the Security Period and, at any other time required by the Facility Agent, following the occurrence of Potential Event of Default or an Event of Default which is continuing and the cost of such valuations shall be covered by the Borrower. |
(b) |
The Facility Agent shall be entitled to obtain additional valuations during any 12-month period at the Lenders’ expense. |
24.8 |
Release of additional security |
If at any time when the Security Agent holds additional security, the Facility Agent (acting on the instruction of the Majority Lenders) receives evidence to its satisfaction that the security cover ratio is at least the minimum percentage required under Clause 24.1 (Minimum required security cover) (without taking into account the market value of all or a portion of such additional security) for a continuous period of 180 days, the Security Agent shall release (at the request, cost and expense of the Borrower) all or a portion of such additional security in an amount equal to the excess over the minimum percentage required under Clause 24.1 (Minimum required security cover), Provided that any such release shall not give rise to a further shortfall under Clause 24.1 (Minimum required security cover) and that no Default has occurred and is continuing at the relevant time or would arise as a result of such release.
25 |
ACCOUNTS AND APPLICATION OF EARNINGS |
25.1 |
Accounts |
The Borrower may not, without the prior consent of the Facility Agent, maintain any bank account other than its Earnings Account and the Debt Service Reserve Account.
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25.2 |
Payment of Earnings |
The Borrower shall ensure that subject only to the provisions of the General Assignment to which it is a party, all the Earnings in respect of the Ship are paid in to its Earnings Account.
25.3 |
Application of Earnings |
All sums standing to the credit of the Earnings Account shall be applied in the following order:
(1) |
Firstly, in or towards payment to the Borrower for the purpose of payment of the operating costs of the Ship; and |
(2) |
Secondly, in or towards the transfers to the Debt Service Reserve Account required pursuant to Clause 25.4 (Monthly Retentions), |
Provided that if the Obligors are in compliance with the terms of this Agreement and no Event of Default or Potential Event of Default has occurred and is continuing or would occur from such withdrawal or transfer, the Borrower may only withdraw or transfer the credit balance remaining in the Earnings Accounts in order to make payments pursuant to Clause 21.18 (Dividends) (provided that the Borrower have complied with the required conditions under such Clause).
25.4 |
Monthly retentions |
The Borrower shall ensure that, in each calendar month following the Utilisation Date, on such dates as the Facility Agent may from time to time specify, there is transferred to its Debt Service Reserve Account out of the Earnings received in the Earnings Account during the preceding calendar month:
(a) |
one-third of the amount of the Repayment Instalment falling due under Clause 6.1 (Repayment of Loan) on the next Repayment Date; and |
(b) |
the relevant fraction of the aggregate amount of interest on the Loan which is payable under this Agreement in respect of any Interest Period then current. |
(c) |
The “relevant fraction” is a fraction of which: |
(i) |
the numerator is one; and |
(ii) |
the denominator is: |
(A) |
the number of months comprised in the relevant then current Interest Period; or |
(B) |
if the period is shorter, the number of months from the later of the commencement of the relevant current Interest Period or the last due date for payment of interest on the Loan or the relevant part of the Loan to the next due date for payment of interest on the Loan or the relevant part of the Loan under this Agreement. |
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25.5 |
Shortfall in Earnings |
(a) |
If the credit balance on the Earnings Account is insufficient in any calendar month for the required amount to be transferred to the Debt Service Reserve Account under Clause 25.3 (Monthly retentions), the Borrower shall make up the amount of the insufficiency on demand from the Facility Agent. |
(b) |
Without prejudicing the Facility Agent’s right to make such demand at any time, the Facility Agent may, if so authorised by the Majority Lenders, permit the Borrower to make up all or part of the insufficiency by increasing the amount of any transfer under Clause 25.3 (Monthly retentions) from the Earnings received in the next or subsequent calendar months. |
25.6 |
Application of retentions |
(a) |
The Security Agent has sole signing rights in relation to the Debt Service Reserve Account. |
(b) |
Until an Event of Default occurs and is continuing, the Facility Agent shall instruct the Security Agent to release to it, on each Repayment Date and on each Interest Payment Date, for distribution to the Finance Parties in accordance with Clause 33.2 (Distributions by the Facility Agent) so much of the then balance on the Debt Service Reserve Account as equals: |
(i) |
the Repayment Instalment due on that Repayment Date; and |
(ii) |
the amount of interest payable on that Interest Payment Date; |
in discharge of the Borrower’s liability for that Repayment Instalment or that interest, as the case may be.
25.7 |
Interest accrued on the Debt Service Reserve Account |
Any credit balance on the Debt Service Reserve Account shall bear interest at the rate from time to time offered by the Account Bank to its customers for dollar deposits of similar amounts and for periods similar to those for which such balances appear to the Account Bank likely to remain on the Debt Service Reserve Account.
25.8 |
Release of accrued interest |
Interest accruing under Clause 25.7 (Interest accrued on the Debt Service Reserve Account) shall be credited to the Debt Service Reserve Account and, to the extent not applied previously pursuant to Clause 25.6 (Application of retentions), shall be released to the Borrower at the end of the Security Period.
25.9 |
Location of Accounts |
The Borrower shall promptly:
(a) |
comply with any requirement of the Facility Agent as to the location or relocation of its Earnings Account and its Debt Service Reserve Account (or either of them); and |
(b) |
execute any documents which the Facility Agent specifies to create or maintain in favour of the Security Agent Security over (and/or rights of set-off, consolidation or other rights in relation to) the Earnings Account and the Debt Service Reserve Account. |
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26 |
EVENTS OF DEFAULT |
26.1 |
General |
Each of the events or circumstances set out in this Clause 26 (Events of Default) is an Event of Default except for Clause 26.17 (Acceleration) and Clause 26.18 (Enforcement of security).
26.2 |
Non-payment |
A Transaction Obligor does not pay on the due date any amount payable pursuant to a Finance Document at the place at and in the currency in which it is expressed to be payable unless:
(a) |
its failure to pay is caused by: |
(i) |
administrative or technical error; or |
(ii) |
a Disruption Event; and |
(b) |
payment is made within 3 Business Days of its due date. |
26.3 |
Specific obligations |
A breach occurs of Clause 4.5 (Waiver of conditions precedent), Clause 20 (Financial Covenants), Clause 21.10 (Title), Clause 21.11 (Negative pledge), Clause 21.20 (Unlawfulness, invalidity and ranking; Security imperilled), Clause 21.23 (Debt Service Reserve Amount), Clause 22.2 (Maintenance of obligatory insurances), Clause 22.3 (Terms of obligatory insurances), Clause 22.5 (Renewal of obligatory insurances) or, save to the extent such breach is a failure to pay and therefore subject to Clause 26.2 (Non-payment), Clause 24 (Security Cover).
26.4 |
Other obligations |
(a) |
A Transaction Obligor does not comply with any provision of the Finance Documents (other than those referred to in Clause 26.2 (Non-payment) and Clause 26.3 (Specific obligations)). |
(b) |
No Event of Default under paragraph (a) above will occur if the failure to comply is capable of remedy and is remedied within 15 Business Days of the Facility Agent giving notice to the Borrower or (if earlier) any Transaction Obligor becoming aware of the failure to comply. |
26.5 |
Misrepresentation |
(a) |
Any representation or statement made or deemed to be made by a Transaction Obligor in the Finance Documents or any other document delivered by or on behalf of any Transaction Obligor under or in connection with any Finance Document is or proves to have been incorrect or misleading when made or deemed to be made. |
(b) |
No Event of Default under paragraph (a) above will occur if the failure to comply is capable of remedy and is remedied within 10 Business Days of the Facility Agent giving notice to the Borrower or (if earlier) any Transaction Obligor becoming aware of the failure to comply. |
26.6 |
Cross default |
(a) |
Any Financial Indebtedness of any Transaction Obligor is not paid when due nor within any originally applicable grace period. |
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(b) |
Any Financial Indebtedness of any Transaction Obligor is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described). |
(c) |
Any commitment for any Financial Indebtedness of any Transaction Obligor is cancelled or suspended by a creditor of any Transaction Obligor as a result of an event of default (however described). |
(d) |
Any creditor of any Transaction Obligor becomes entitled to declare any Financial Indebtedness of any Transaction Obligor due and payable prior to its specified maturity as a result of an event of default (however described). |
(e) |
No Event of Default will occur under this Clause 26.6 (Cross default) in respect of the Guarantor if the aggregate amount of Financial indebtedness or commitment for Financial Indebtedness falling within paragraphs (a) to (d) above is less than $5,000,000 (or its equivalent in any other currency). |
26.7 |
Insolvency |
(a) |
A member of the Group or any Transaction Obligor: |
(i) |
is unable or admits inability to pay its debts as they fall due; |
(ii) |
is deemed to, or is declared to, be unable to pay its debts under applicable law; |
(iii) |
suspends or threatens to suspend making payments on any of its debts; or |
(iv) |
by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors (excluding any Finance Party in its capacity as such) with a view to rescheduling any of its indebtedness. |
(b) |
The value of the assets of any Transaction Obligor or any member of the Group is less than its liabilities (taking into account contingent and prospective liabilities). |
(c) |
A moratorium is declared in respect of any indebtedness of any Transaction Obligor or any member of the Group. If a moratorium occurs, the ending of the moratorium will not remedy any Event of Default caused by that moratorium. |
26.8 |
Insolvency proceedings |
(a) |
Any corporate action, legal proceedings or other procedure or step is taken in relation to: |
(i) |
the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of any Transaction Obligor or any member of the Group other than a solvent liquidation or reorganisation of any member of the Group which is not a Transaction Obligor; |
(ii) |
a composition, compromise, assignment or arrangement with any creditor of any Transaction Obligor or any member of the Group; |
(iii) |
the appointment of a liquidator (other than in respect of a solvent liquidation of a member of the Group which is not a Transaction Obligor), receiver, administrator, |
93
administrative receiver, compulsory manager or other similar officer in respect of any Transaction Obligor or any member of the Group or any of its assets; or
(iv) |
enforcement of any Security over any assets of any Transaction Obligor or any member of the Group, |
or any analogous procedure or step is taken in any jurisdiction.
(b) |
Paragraph (a) above shall not apply to any winding-up petition which is frivolous or vexatious and is discharged, stayed or dismissed within 14 days of commencement. |
26.9 |
Creditors’ process |
Any expropriation, attachment, sequestration, distress or execution (or any analogous process in any jurisdiction) affects any asset or assets of a Transaction Obligor or any a member of the Group.
26.10 |
Unlawfulness, invalidity and ranking |
(a) |
It is or becomes unlawful for a Transaction Obligor to perform any of its obligations under the Finance Documents. |
(b) |
Any obligation of a Transaction Obligor under the Finance Documents is not or ceases to be legal, valid, binding or enforceable if that cessation individually or together with any other cessations materially or adversely affects the interests of the Secured Parties under the Finance Documents. |
(c) |
Any Finance Document ceases to be in full force and effect or to be continuing or is or purports to be determined or any Transaction Security is alleged by a party to it (other than a Finance Party) to be ineffective. |
(d) |
Any Transaction Security proves to have ranked after, or loses its priority to, any other Security. |
26.11 |
Security imperilled; flag instability |
(a) |
Any Security created or intended to be created by a Finance Document is in any way imperilled or in jeopardy. |
(b) |
The state of the Approved Flag of the Ship is or becomes involved in hostilities or civil war or there is a seizure of power in such state by unconstitutional means, or any other event occurs in relation to the Ship, the Mortgage or the Approved Flag of the Ship and in the reasonable opinion of the Facility Agent (acting on the instructions of the Majority Lenders) such event is likely to have a Material Adverse Effect. |
26.12 |
Cessation of business |
Any Obligor suspends or ceases to carry on (or threatens to suspend or cease to carry on) all or a material part of its business unless within 30 days from the date on which it receives the Facility Agent’s written notification that Obligor rectifies such suspension.
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26.13 |
Expropriation |
The authority or ability of any member of the Group to conduct its business is limited or wholly or substantially curtailed by any seizure, expropriation, nationalisation, intervention, restriction or other action by or on behalf of any governmental, regulatory or other authority or other person in relation to any member of the Group or any of its assets other than:
(a) |
an arrest or detention of the Ship; or |
(b) |
any Requisition. |
26.14 |
Repudiation and rescission of agreements |
A Transaction Obligor (or any other relevant party) rescinds or purports to rescind or repudiates or purports to repudiate a Transaction Document or any of the Transaction Security or evidences an intention to rescind or repudiate a Transaction Document or any Transaction Security.
26.15 |
Litigation |
Any litigation, arbitration or administrative proceedings or investigations of, or before, any court, arbitral body or agency are started or threatened, or any judgment or order of a court, arbitral body or agency is made, in relation to any of the Transaction Documents or the transactions contemplated in any of the Transaction Documents or against any member of the Group or its assets which has or is reasonably likely to have a Material Adverse Effect.
26.16 |
Material adverse change |
Any event or circumstance occurs which has or is reasonably likely to have a Material Adverse Effect.
26.17 |
Acceleration |
On and at any time after the occurrence of an Event of Default which is continuing the Facility Agent may, and shall if so directed by the Majority Lenders:
(a) |
by notice to the Borrower: |
(i) |
cancel the Available Commitment of each Lender, whereupon they shall immediately be cancelled; |
(ii) |
declare that all or part of the Loan, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents be immediately due and payable, whereupon it shall become immediately due and payable; and/or |
(iii) |
declare that all or part of the Loan be payable on demand, whereupon it shall immediately become payable on demand by the Facility Agent acting on the instructions of the Majority Lenders; and/or |
(b) |
exercise or direct the Security Agent to exercise any or all of its rights, remedies, powers or discretions under the Finance Documents, |
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and the Facility Agent may serve notices under sub-paragraphs (i), (ii) or (iii) of paragraph (a) above simultaneously or on different dates and any Servicing Party may take any action referred to in paragraph (b) above or Clause 26.18 (Enforcement of security) if no such notice is served or simultaneously with or at any time after the service of any of such notice.
26.18 |
Enforcement of security |
On and at any time after the occurrence of an Event of Default which is continuing the Security Agent may, and shall if so directed by the Majority Lenders, take any action which, as a result of the Event of Default or any notice served under Clause 26.17 (Acceleration), the Security Agent is entitled to take under any Finance Document or any applicable law or regulation.
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SECTION 9
CHANGES TO PARTIES
27 |
CHANGES TO THE LENDERS |
27.1 |
Assignments and transfers by the Lenders |
Subject to this Clause 27 (Changes to the Lenders), a Lender (the “Existing Lender”) may:
(a) |
assign any of its rights; or |
(b) |
transfer by novation any of its rights and obligations, |
under the Finance Documents to another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (the “New Lender”).
27.2 |
Conditions of assignment or transfer |
(a) |
An assignment will only be effective on: |
(i) |
receipt by the Facility Agent (whether in the Assignment Agreement or otherwise) of written confirmation from the New Lender (in form and substance satisfactory to the Facility Agent) that the New Lender will assume the same obligations to the other Secured Parties as it would have been under if it were an Original Lender; and |
(ii) |
performance by the Facility Agent of all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to such assignment to a New Lender, the completion of which the Facility Agent shall promptly notify to the Existing Lender and the New Lender. |
(b) |
Each Obligor on behalf of itself and each Transaction Obligor agrees that all rights and interests (present, future or contingent) which the Existing Lender has under or by virtue of the Finance Documents are assigned to the New Lender absolutely, free of any defects in the Existing Lender’s title and of any rights or equities which the Borrower or any other Transaction Obligor had against the Existing Lender. |
(c) |
A transfer will only be effective if the procedure set out in Clause 27.5 (Procedure for transfer) is complied with. |
(d) |
If: |
(i) |
a Lender assigns or transfers any of its rights or obligations under the Finance Documents or changes its Facility Office; and |
(ii) |
as a result of circumstances existing at the date the assignment, transfer or change occurs, a Transaction Obligor would be obliged to make a payment to the New Lender or Lender acting through its new Facility Office under Clause 12 (Tax Gross Up and Indemnities) or under that clause as incorporated by reference or in full in any other Finance Document or Clause 13 (Increased Costs), |
97
then the New Lender or Lender acting through its new Facility Office is only entitled to receive payment under those Clauses to the same extent as the Existing Lender or Lender acting through its previous Facility Office would have been if the assignment, transfer or change had not occurred. This paragraph (d) shall not apply in respect of an assignment or transfer made in the ordinary course of the primary syndication of the Facility.
(e) |
Each New Lender, by executing the relevant Transfer Certificate or Assignment Agreement, confirms, for the avoidance of doubt, that the Facility Agent has authority to execute on its behalf any amendment or waiver that has been approved by or on behalf of the requisite Lender or Lenders in accordance with this Agreement on or prior to the date on which the transfer or assignment becomes effective in accordance with this Agreement and that it is bound by that decision to the same extent as the Existing Lender would have been had it remained a Lender. |
27.3 |
Assignment or transfer fee |
The New Lender shall, on the date upon which an assignment or transfer takes effect, pay to the Facility Agent (for its own account) a fee of $5,000.
27.4 |
Limitation of responsibility of Existing Lenders |
(a) |
Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for: |
(i) |
the legality, validity, effectiveness, adequacy or enforceability of the Transaction Documents, the Transaction Security or any other documents; |
(ii) |
the financial condition of any Transaction Obligor; |
(iii) |
the performance and observance by any Transaction Obligor of its obligations under the Transaction Documents or any other documents; or |
(iv) |
the accuracy of any statements (whether written or oral) made in or in connection with any Transaction Document or any other document, |
and any representations or warranties implied by law are excluded.
(b) |
Each New Lender confirms to the Existing Lender and the other Finance Parties and the Secured Parties that it: |
(i) |
has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of each Transaction Obligor and its related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Lender or any other Finance Party in connection with any Transaction Document or the Transaction Security; and |
(ii) |
will continue to make its own independent appraisal of the creditworthiness of each Transaction Obligor and its related entities throughout the Security Period. |
(c) |
Nothing in any Finance Document obliges an Existing Lender to: |
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(i) |
accept a re-transfer or re-assignment from a New Lender of any of the rights and obligations assigned or transferred under this Clause 27 (Changes to the Lenders); or |
(ii) |
support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by any Transaction Obligor of its obligations under the Transaction Documents or otherwise. |
27.5 |
Procedure for transfer |
(a) |
Subject to the conditions set out in Clause 27.2 (Conditions of assignment or transfer), a transfer is effected in accordance with paragraph (c) below when the Facility Agent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender. The Facility Agent shall, subject to paragraph (b) below as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with this Agreement and delivered in accordance with this Agreement, execute that Transfer Certificate. |
(b) |
The Facility Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Existing Lender and the New Lender once it is satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to the transfer to such New Lender. |
(c) |
On the Transfer Date: |
(i) |
to the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation its rights and obligations under the Finance Documents and in respect of the Transaction Security, each of the Transaction Obligors and the Existing Lender shall be released from further obligations towards one another under the Finance Documents and in respect of the Transaction Security and their respective rights against one another under the Finance Documents and in respect of the Transaction Security shall be cancelled (being the “Discharged Rights and Obligations”); |
(ii) |
each of the Transaction Obligors and the New Lender shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as that Transaction Obligor and the New Lender have assumed and/or acquired the same in place of that Transaction Obligor and the Existing Lender; |
(iii) |
the Facility Agent, the Security Agent, the Mandated Lead Arranger, the New Lender and other Lenders shall acquire the same rights and assume the same obligations between themselves and in respect of the Transaction Security as they would have acquired and assumed had the New Lender been an Original Lender with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent the Facility Agent, the Security Agent, the Mandated Lead Arranger and the Existing Lenders shall each be released from further obligations to each other under the Finance Documents; and |
(iv) |
the New Lender shall become a Party as a “Lender”. |
27.6 |
Procedure for assignment |
(a) |
Subject to the conditions set out in Clause 27.2 (Conditions of assignment or transfer) an assignment may be effected in accordance with paragraph (c) below when the Facility Agent |
99
executes an otherwise duly completed Assignment Agreement delivered to it by the Existing Lender and the New Lender. The Facility Agent shall, subject to paragraph (b) below, as soon as reasonably practicable after receipt by it of a duly completed Assignment Agreement appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Assignment Agreement.
(b) |
The Facility Agent shall only be obliged to execute an Assignment Agreement delivered to it by the Existing Lender and the New Lender once it is satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to the assignment to such New Lender. |
(c) |
On the Transfer Date: |
(i) |
the Existing Lender will assign absolutely to the New Lender its rights under the Finance Documents and in respect of the Transaction Security expressed to be the subject of the assignment in the Assignment Agreement; |
(ii) |
the Existing Lender will be released from the obligations (the “Relevant Obligations”) expressed to be the subject of the release in the Assignment Agreement (and any corresponding obligations by which it is bound in respect of the Transaction Security); and |
(iii) |
the New Lender shall become a Party as a “Lender” and will be bound by obligations equivalent to the Relevant Obligations. |
(d) |
Lenders may utilise procedures other than those set out in this Clause 27.6 (Procedure for assignment) to assign their rights under the Finance Documents (but not, without the consent of the relevant Transaction Obligor or unless in accordance with Clause 27.5 (Procedure for transfer), to obtain a release by that Transaction Obligor from the obligations owed to that Transaction Obligor by the Lenders nor the assumption of equivalent obligations by a New Lender) provided that they comply with the conditions set out in Clause 27.2 (Conditions of assignment or transfer). |
27.7 |
Copy of Transfer Certificate or Assignment Agreement to Borrower |
The Facility Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate or an Assignment Agreement, send to the Borrower a copy of that Transfer Certificate or Assignment Agreement.
27.8 |
Security over Lenders’ rights |
In addition to the other rights provided to Lenders under this Clause 27 (Changes to the Lenders), each Lender may without consulting with or obtaining consent from any Transaction Obligor, at any time charge, assign or otherwise create Security in or over (whether by way of collateral or otherwise) all or any of its rights under any Finance Document to secure obligations of that Lender including, without limitation:
(a) |
any charge, assignment or other Security to secure obligations to a federal reserve or central bank; and |
(b) |
any charge, assignment or other Security granted to any holders (or trustee or representatives of holders) of obligations owed, or securities issued, by that Lender as security for those obligations or securities, |
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except that no such charge, assignment or Security shall:
(i) |
release a Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, assignment or Security for the Lender as a party to any of the Finance Documents; or |
(ii) |
require any payments to be made by a Transaction Obligor other than or in excess of, or grant to any person any more extensive rights than, those required to be made or granted to the relevant Lender under the Finance Documents. |
28 |
CHANGES TO THE TRANSACTION OBLIGORS |
28.1 |
Assignment or transfer by Transaction Obligors |
No Transaction Obligor may assign any of its rights or transfer any of its rights or obligations under the Finance Documents.
28.2 |
Release of security |
(a) |
If a disposal of any asset subject to security created by a Security Document is made in the following circumstances: |
(i) |
the disposal is permitted by the terms of any Finance Document; |
(ii) |
all the Lenders agree to the disposal; |
(iii) |
the disposal is being made at the request of the Security Agent in circumstances where any security created by the Security Documents has become enforceable; or |
(iv) |
the disposal is being effected by enforcement of a Security Document, |
the Security Agent may release the asset(s) being disposed of from any security over those assets created by a Security Document. However, the proceeds of any disposal (or an amount corresponding to them) must be applied in accordance with the requirements of the Finance Documents (if any).
(b) |
If the Security Agent is satisfied that a release is allowed under this Clause 28.2 (Release of security) (at the request and expense of the Borrower) each Finance Party must enter into any document and do all such other things which are reasonably required to achieve that release. Each other Finance Party irrevocably authorises the Security Agent to enter into any such document. Any release will not affect the obligations of any other Transaction Obligor under the Finance Documents. |
28.3 |
Additional Subordinated Creditors |
(a) |
The Borrower may request that any person becomes a Subordinated Creditor, with the prior approval of the Facility Agent (acting on the authorisation of the Majority Lenders), by delivering to the Facility Agent: |
(i) |
a duly executed Subordination Agreement; |
(ii) |
a duly executed Subordinated Debt Security; and |
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(iii) |
such constitutional documents, corporate authorisations and other documents and matters as the Facility Agent may reasonably require, in form and substance satisfactory to the Facility Agent, to verify that the person’s obligations are legally binding, valid and enforceable and to satisfy any applicable legal and regulatory requirements. |
(b) |
A person referred to in paragraph (a) above will become a Subordinated Creditor on the date the Security Agent enters into the Subordination Agreement and the Subordinated Debt Security delivered under paragraph (a) above. |
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SECTION 10
THE FINANCE PARTIES
29 |
THE FACILITY AGENT AND THE MANDATED LEAD ARRANGER |
29.1 |
Appointment of the Facility Agent |
(a) |
Each of the Mandated Lead Arranger, the Lenders appoints the Facility Agent to act as its agent under and in connection with the Finance Documents. |
(b) |
Each of the Mandated Lead Arranger, the Lenders authorises the Facility Agent to perform the duties, obligations and responsibilities and to exercise the rights, powers, authorities and discretions specifically given to the Facility Agent under, or in connection with, the Finance Documents together with any other incidental rights, powers, authorities and discretions. |
29.2 |
Instructions |
(a) |
The Facility Agent shall: |
(i) |
unless a contrary indication appears in a Finance Document, exercise or refrain from exercising any right, power, authority or discretion vested in it as Facility Agent in accordance with any instructions given to it by: |
(A) |
all Lenders if the relevant Finance Document stipulates the matter is an all Lender decision; and |
(B) |
in all other cases, the Majority Lenders; and |
(ii) |
not be liable for any act (or omission) if it acts (or refrains from acting) in accordance with sub-paragraph (i) above (or, if this Agreement stipulates the matter is a decision for any other Finance Party or group of Finance Parties, in accordance with instructions given to it by that Finance Party or group of Finance Parties). |
(b) |
The Facility Agent shall be entitled to request instructions, or clarification of any instruction, from the Majority Lenders (or, if the relevant Finance Document stipulates the matter is a decision for any other Finance Party or group of Finance Parties, from that Finance Party or group of Finance Parties) as to whether, and in what manner, it should exercise or refrain from exercising any right, power, authority or discretion and the Facility Agent may refrain from acting unless and until it receives any such instructions or clarification that it has requested. |
(c) |
Save in the case of decisions stipulated to be a matter for any other Finance Party or group of Finance Parties under the relevant Finance Document and unless a contrary indication appears in a Finance Document, any instructions given to the Facility Agent by the Majority Lenders shall override any conflicting instructions given by any other Parties and will be binding on all Finance Parties. |
(d) |
Paragraph (a) above shall not apply: |
(i) |
where a contrary indication appears in a Finance Document; |
(ii) |
where a Finance Document requires the Facility Agent to act in a specified manner or to take a specified action; |
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(iii) |
in respect of any provision which protects the Facility Agent’s own position in its personal capacity as opposed to its role of Facility Agent for the relevant Finance Parties. |
(e) |
If giving effect to instructions given by the Majority Lenders would in the Facility Agent’s opinion have an effect equivalent to an amendment or waiver referred to in Clause 42 (Amendments and Waivers), the Facility Agent shall not act in accordance with those instructions unless consent to it so acting is obtained from each Party (other than the Facility Agent) whose consent would have been required in respect of that amendment or waiver. |
(f) |
In exercising any discretion to exercise a right, power or authority under the Finance Documents where it has not received any instructions as to the exercise of that discretion the Facility Agent shall do so having regard to the interests of all the Finance Parties. |
(g) |
The Facility Agent may refrain from acting in accordance with any instructions of any Finance Party or group of Finance Parties until it has received any indemnification and/or security that it may in its discretion require (which may be greater in extent than that contained in the Finance Documents and which may include payment in advance) for any cost, loss or liability (together with any applicable VAT) which it may incur in complying with those instructions. |
(h) |
Without prejudice to the remainder of this Clause 29.2 (Instructions), in the absence of instructions, the Facility Agent shall not be obliged to take any action (or refrain from taking action) even if it considers acting or not acting to be in the best interests of the Finance Parties. The Facility Agent may act (or refrain from acting) as it considers to be in the best interest of the Finance Parties. |
(i) |
The Facility Agent is not authorised to act on behalf of a Finance Party (without first obtaining that Finance Party’s consent) in any legal or arbitration proceedings relating to any Finance Document. This paragraph (i) shall not apply to any legal or arbitration proceeding relating to the perfection, preservation or protection of rights under the Security Documents or enforcement of the Transaction Security or Security Documents. |
29.3 |
Duties of the Facility Agent |
(a) |
The Facility Agent’s duties under the Finance Documents are solely mechanical and administrative in nature. |
(b) |
Subject to paragraph (c) below, the Facility Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Facility Agent for that Party by any other Party. |
(c) |
Without prejudice to Clause 27.7 (Copy of Transfer Certificate or Assignment Agreement to Borrower), paragraph (b) above shall not apply to any Transfer Certificate or any Assignment Agreement. |
(d) |
Except where a Finance Document specifically provides otherwise, the Facility Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party. |
(e) |
If the Facility Agent receives notice from a Party referring to any Finance Document, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the other Finance Parties. |
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(f) |
If the Facility Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Finance Party (other than the Facility Agent, the Mandated Lead Arranger or the Security Agent) under this Agreement, it shall promptly notify the other Finance Parties. |
(g) |
The Facility Agent shall provide to the Borrower, within 5 Business Days of a request by the Borrower (but no more frequently than once per calendar month), a list (which may be in electronic form) setting out the names of the Lenders as at the date of that request, their respective Commitments, the address and fax number (and the department or officer, if any, for whose attention any communication is to be made) of each Lender for any communication to be made or document to be delivered under or in connection with the Finance Documents, the electronic mail address and/or any other information required to enable the sending and receipt of information by electronic mail or other electronic means to and by each Lender to whom any communication under or in connection with the Finance Documents may be made by that means and the account details of each Lender for any payment to be distributed by the Facility Agent to that Lender under the Finance Documents. |
(h) |
The Facility Agent shall have only those duties, obligations and responsibilities expressly specified in the Finance Documents to which it is expressed to be a party (and no others shall be implied). |
29.4 |
Role of the Mandated Lead Arranger |
Except as specifically provided in the Finance Documents, the Mandated Lead Arranger has no obligations of any kind to any other Party under or in connection with any Finance Document.
29.5 |
No fiduciary duties |
(a) |
Nothing in any Finance Document constitutes the Facility Agent or the Mandated Lead Arranger as a trustee or fiduciary of any other person. |
(b) |
Neither the Facility Agent nor the Mandated Lead Arranger shall be bound to account to other Finance Party for any sum or the profit element of any sum received by it for its own account. |
29.6 |
Application of receipts |
Except as expressly stated to the contrary in any Finance Document, any moneys which the Facility Agent receives or recovers in its capacity as Facility Agent shall be applied by the Facility Agent in accordance with Clause 33.5 (Application of receipts; partial payments).
29.7 |
Business with the Group |
The Facility Agent and the Mandated Lead Arranger may accept deposits from, lend money to, and generally engage in any kind of banking or other business with, any member of the Group.
29.8 |
Rights and discretions |
(a) |
The Facility Agent may: |
(i) |
rely on any representation, communication, notice or document believed by it to be genuine, correct and appropriately authorised; |
(ii) |
assume that: |
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(A) |
any instructions received by it from the Majority Lenders, any Finance Parties or any group of Finance Parties are duly given in accordance with the terms of the Finance Documents; and |
(B) |
unless it has received notice of revocation, that those instructions have not been revoked; and |
(iii) |
rely on a certificate from any person: |
(A) |
as to any matter of fact or circumstance which might reasonably be expected to be within the knowledge of that person; or |
(B) |
to the effect that such person approves of any particular dealing, transaction, step, action or thing, |
as sufficient evidence that that is the case and, in the case of paragraph (A) above, may assume the truth and accuracy of that certificate.
(b) |
The Facility Agent may assume (unless it has received notice to the contrary in its capacity as agent for the Finance Parties) that: |
(i) |
no Default has occurred (unless it has actual knowledge of a Default arising under Clause 26.2 (Non-payment)); |
(ii) |
any right, power, authority or discretion vested in any Party or any group of Finance Parties has not been exercised; and |
(iii) |
any notice or request made by the Borrower (other than a Utilisation Request) is made on behalf of and with the consent and knowledge of all the Transaction Obligors. |
(c) |
The Facility Agent may engage and pay for the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts. |
(d) |
Without prejudice to the generality of paragraph (c) above or paragraph (e) below, the Facility Agent may at any time engage and pay for the services of any lawyers to act as independent counsel to the Facility Agent (and so separate from any lawyers instructed by the Lenders) if the Facility Agent in its reasonable opinion deems this to be desirable. |
(e) |
The Facility Agent may rely on the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts (whether obtained by the Facility Agent or by any other Party) and shall not be liable for any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of its so relying. |
(f) |
The Facility Agent may act in relation to the Finance Documents and the Security Property through its officers, employees and agents and shall not: |
(i) |
be liable for any error of judgment made by any such person; or |
(ii) |
be bound to supervise, or be in any way responsible for any loss incurred by reason of misconduct, omission or default on the part of any such person, |
unless such error or such loss was directly caused by the Facility Agent’s gross negligence or wilful misconduct.
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(g) |
Unless a Finance Document expressly provides otherwise the Facility Agent may disclose to any other Party any information it reasonably believes it has received as agent under the Finance Documents. |
(h) |
Notwithstanding any other provision of any Finance Document to the contrary, neither the Facility Agent nor the Mandated Lead Arranger is obliged to do or omit to do anything if it would or might, in its reasonable opinion, constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality. |
(i) |
Notwithstanding any provision of any Finance Document to the contrary, the Facility Agent is not obliged to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties, obligations or responsibilities or the exercise of any right, power, authority or discretion if it has grounds for believing the repayment of such funds or adequate indemnity against, or security for, such risk or liability is not reasonably assured to it. |
29.9 |
Responsibility for documentation |
Neither the Facility Agent nor the Mandated Lead Arranger is responsible or liable for:
(a) |
the adequacy, accuracy or completeness of any information (whether oral or written) supplied by the Facility Agent, the Security Agent, the Mandated Lead Arranger, a Transaction Obligor or any other person in, or in connection with, any Transaction Document or the transactions contemplated in the Transaction Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document; |
(b) |
the legality, validity, effectiveness, adequacy or enforceability of any Transaction Document or the Security Property or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with, any Transaction Document or the Security Property; or |
(c) |
any determination as to whether any information provided or to be provided to any Finance Party or Secured Party is non-public information the use of which may be regulated or prohibited by applicable law or regulation relating to insider dealing or otherwise. |
29.10 |
No duty to monitor |
The Facility Agent shall not be bound to enquire:
(a) |
whether or not any Default has occurred; |
(b) |
as to the performance, default or any breach by any Transaction Obligor of its obligations under any Transaction Document; or |
(c) |
whether any other event specified in any Transaction Document has occurred. |
29.11 |
Exclusion of liability |
(a) |
Without limiting paragraph (b) below (and without prejudice to paragraph (e) of Clause 33.11 (Disruption to Payment Systems etc.) or any other provision of any Finance Document excluding or limiting the liability of the Facility Agent), the Facility Agent will not be liable for: |
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(i) |
any damages, costs or losses to any person, any diminution in value, or any liability whatsoever arising as a result of taking or not taking any action under or in connection with any Transaction Document or the Security Property, unless directly caused by its gross negligence or wilful misconduct; |
(ii) |
exercising, or not exercising, any right, power, authority or discretion given to it by, or in connection with, any Transaction Document, the Security Property or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with, any Transaction Document or the Security Property; or |
(iii) |
any shortfall which arises on the enforcement or realisation of the Security Property; or |
(iv) |
without prejudice to the generality of paragraphs (i) to (iii) above, any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of: |
(A) |
any act, event or circumstance not reasonably within its control; or |
(B) |
the general risks of investment in, or the holding of assets in, any jurisdiction, |
including (in each case and without limitation) such damages, costs, losses, diminution in value or liability arising as a result of nationalisation, expropriation or other governmental actions; any regulation, currency restriction, devaluation or fluctuation; market conditions affecting the execution or settlement of transactions or the value of assets (including any Disruption Event); breakdown, failure or malfunction of any third party transport, telecommunications, computer services or systems; natural disasters or acts of God; war, terrorism, insurrection or revolution; or strikes or industrial action.
(b) |
No Party other than the Facility Agent may take any proceedings against any officer, employee or agent of the Facility Agent in respect of any claim it might have against the Facility Agent or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Transaction Document or any Security Property and any officer, employee or agent of the Facility Agent may rely on this paragraph (b) subject to Clause 1.5 (Third party rights) and the provisions of the Third Parties Act. |
(c) |
The Facility Agent will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by the Facility Agent if the Facility Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by the Facility Agent for that purpose. |
(d) |
Nothing in this Agreement shall oblige the Facility Agent or the Mandated Lead Arranger to carry out: |
(i) |
any “know your customer” or other checks in relation to any person; or |
(ii) |
any check on the extent to which any transaction contemplated by this Agreement might be unlawful for any Finance Party, |
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on behalf of any Finance Party and each Finance Party confirms to the Facility Agent and the Mandated Lead Arranger that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Facility Agent or the Mandated Lead Arranger.
(e) |
Without prejudice to any provision of any Finance Document excluding or limiting the Facility Agent’s liability, any liability of the Facility Agent arising under or in connection with any Transaction Document or the Security Property shall be limited to the amount of actual loss which has been finally judicially determined to have been suffered (as determined by reference to the date of default of the Facility Agent or, if later, the date on which the loss arises as a result of such default) but without reference to any special conditions or circumstances known to the Facility Agent at any time which increase the amount of that loss. In no event shall the Facility Agent be liable for any loss of profits, goodwill, reputation, business opportunity or anticipated saving, or for special, punitive, indirect or consequential damages, whether or not the Facility Agent has been advised of the possibility of such loss or damages. |
29.12 |
Lenders’ indemnity to the Facility Agent |
(a) |
Each Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediately prior to their reduction to zero) indemnify the Facility Agent, within three Business Days of demand, against any cost, loss or liability incurred by the Facility Agent (otherwise than by reason of the Facility Agent’s gross negligence or wilful misconduct) (or, in the case of any cost, loss or liability pursuant to Clause 33.11 (Disruption to Payment Systems etc.) notwithstanding the Facility Agent’s negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Facility Agent) in acting as Facility Agent under the Finance Documents (unless the Facility Agent has been reimbursed by a Transaction Obligor pursuant to a Finance Document). |
(b) |
Subject to paragraph (c) below, the Borrower shall immediately on demand reimburse any Lender for any payment that Lender makes to the Facility Agent pursuant to paragraph (a) above. |
(c) |
Paragraph (b) above shall not apply to the extent that the indemnity payment in respect of which the Lender claims reimbursement relates to a liability of the Facility Agent to an Obligor. |
29.13 |
Resignation of the Facility Agent |
(a) |
The Facility Agent may resign and appoint one of its Affiliates as successor by giving notice to the other Finance Parties and the Borrower. |
(b) |
Alternatively, the Facility Agent may resign by giving 30 days’ notice to the other Finance Parties and the Borrower, in which case the Majority Lenders may appoint a successor Facility Agent. |
(c) |
If the Majority Lenders have not appointed a successor Facility Agent in accordance with paragraph (b) above within 20 days after notice of resignation was given, the retiring Facility Agent may appoint a successor Facility Agent. |
(d) |
If the Facility Agent wishes to resign because (acting reasonably) it has concluded that it is no longer appropriate for it to remain as agent and the Facility Agent is entitled to appoint a successor Facility Agent under paragraph (c) above, the Facility Agent may (if it concludes (acting reasonably) that it is necessary to do so in order to persuade the proposed successor |
109
Facility Agent to become a party to this Agreement as Facility Agent) agree with the proposed successor Facility Agent amendments to this Clause 29 (The Facility Agent and the Mandated Lead Arranger) and any other term of this Agreement dealing with the rights or obligations of the Facility Agent consistent with then current market practice for the appointment and protection of corporate trustees together with any reasonable amendments to the agency fee payable under this Agreement which are consistent with the successor Facility Agent’s normal fee rates and those amendments will bind the Parties.
(e) |
The retiring Facility Agent shall, at its own cost, make available to the successor Facility Agent such documents and records and provide such assistance as the successor Facility Agent may reasonably request for the purposes of performing its functions as Facility Agent under the Finance Documents. The Borrower shall, within three Business Days of demand, reimburse the retiring Facility Agent for the amount of all costs and expenses (including legal fees) properly incurred by it in making available such documents and records and providing such assistance. |
(f) |
The Facility Agent’s resignation notice shall only take effect upon the appointment of a successor. |
(g) |
Upon the appointment of a successor, the retiring Facility Agent shall be discharged from any further obligation in respect of the Finance Documents (other than its obligations under paragraph (e) above) but shall remain entitled to the benefit of Clause 14.4 (Indemnity to the Facility Agent) and this Clause 29 (The Facility Agent and the Mandated Lead Arranger) and any other provisions of a Finance Document which are expressed to limit or exclude its liability (or to indemnify it) in acting as Facility Agent. Any fees for the account of the retiring Facility Agent shall cease to accrue from (and shall be payable on) that date. Any successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party. |
(h) |
The Majority Lenders may, by notice to the Facility Agent, require it to resign in accordance with paragraph (b) above. In this event, the Facility Agent shall resign in accordance with paragraph (b) above but the cost referred to in paragraph (e) above shall be for the account of the Borrower. |
(i) |
The consent of the Borrower (or any other Transaction Obligor) is not required for an assignment or transfer of rights and/or obligations by the Facility Agent. |
(j) |
The Facility Agent shall resign in accordance with paragraph (b) above (and, to the extent applicable, shall use reasonable endeavours to appoint a successor Facility Agent pursuant to paragraph (c) above) if on or after the date which is three months before the earliest FATCA Application Date relating to any payment to the Facility Agent under the Finance Documents, either: |
(i) |
the Facility Agent fails to respond to a request under Clause 12.7 (FATCA Information) and the Borrower or a Lender reasonably believes that the Facility Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date; |
(ii) |
the information supplied by the Facility Agent pursuant to Clause 12.7 (FATCA Information) indicates that the Facility Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date; or |
110
(iii) |
the Facility Agent notifies the Borrower and the Lenders that the Facility Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date; |
and (in each case) the Borrower or a Lender reasonably believes that a Party will be required to make a FATCA Deduction that would not be required if the Facility Agent were a FATCA Exempt Party, and the Borrower or that Lender, by notice to the Facility Agent, requires it to resign.
29.14 |
Confidentiality |
(a) |
In acting as Facility Agent for the Finance Parties, the Facility Agent shall be regarded as acting through its agency division which shall be treated as a separate entity from any other of its divisions or departments. |
(b) |
If information is received by a division or department of the Facility Agent other than the division or department responsible for complying with the obligations assumed by it under the Finance Documents, that information may be treated as confidential to that division or department, and the Facility Agent shall not be deemed to have notice of it nor shall it be obliged to disclose such information to any Party. |
(c) |
Notwithstanding any other provision of any Finance Document to the contrary, neither the Facility Agent nor the Mandated Lead Arranger is obliged to disclose to any other person (i) any confidential information or (ii) any other information if the disclosure would, or might in its reasonable opinion, constitute a breach of any law or regulation or a breach of a fiduciary duty. |
29.15 |
Relationship with the other Finance Parties |
(a) |
The Facility Agent may treat the person shown in its records as Lender at the opening of business (in the place of the Facility Agent’s principal office as notified to the Finance Parties from time to time) as the Lender acting through its Facility Office: |
(i) |
entitled to or liable for any payment due under any Finance Document on that day; and |
(ii) |
entitled to receive and act upon any notice, request, document or communication or make any decision or determination under any Finance Document made or delivered on that day, |
unless it has received not less than five Business Days’ prior notice from that Lender to the contrary in accordance with the terms of this Agreement.
(b) |
Each Finance Party shall supply the Facility Agent with any information that the Security Agent may reasonably specify (through the Facility Agent) as being necessary or desirable to enable the Security Agent to perform its functions as Security Agent. Each Finance Party shall deal with the Security Agent exclusively through the Facility Agent and shall not deal directly with the Security Agent and any reference to any instructions being given by or sought from any Finance Party or group of Finance Parties to or by the Security Agent in this Agreement must be given or sought through the Facility Agent. |
(c) |
Any Lender may by notice to the Facility Agent appoint a person to receive on its behalf all notices, communications, information and documents to be made or despatched to that |
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Lender under the Finance Documents. Such notice shall contain the address, fax number and (where communication by electronic mail or other electronic means is permitted under Clause 36.5 (Electronic communication)) electronic mail address and/or any other information required to enable the transmission of information by that means (and, in each case, the department or officer, if any, for whose attention communication is to be made) and be treated as a notification of a substitute address, fax number, electronic mail address (or such other information), department and officer by that Lender for the purposes of Clause 36.2 (Addresses) and sub-paragraph (ii) of paragraph (a) of Clause 36.5 (Electronic communication) and the Facility Agent shall be entitled to treat such person as the person entitled to receive all such notices, communications, information and documents as though that person were that Lender.
29.16 |
Credit appraisal by the Finance Parties |
Without affecting the responsibility of any Transaction Obligor for information supplied by it or on its behalf in connection with any Transaction Document, each Finance Party confirms to the Facility Agent and the Mandated Lead Arranger that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under, or in connection with, any Transaction Document including but not limited to:
(a) |
the financial condition, status and nature of each member of the Group; |
(b) |
the legality, validity, effectiveness, adequacy or enforceability of any Transaction Document, the Security Property and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document or the Security Property; |
(c) |
whether that Finance Party has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under, or in connection with, any Transaction Document, the Security Property, the transactions contemplated by the Transaction Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document or the Security Property; |
(d) |
the adequacy, accuracy or completeness of any information provided by the Facility Agent, any Party or by any other person under, or in connection with, any Transaction Document, the transactions contemplated by any Transaction Document or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document; and |
(e) |
the right or title of any person in or to or the value or sufficiency of any part of the Security Assets, the priority of any of the Transaction Security or the existence of any Security affecting the Security Assets. |
29.17 |
Facility Agent’s management time |
Any amount payable to the Facility Agent under Clause 14.4 (Indemnity to the Facility Agent), Clause 16 (Costs and Expenses) and Clause 29.12 (Lenders’ indemnity to the Facility Agent) shall include the cost of utilising the Facility Agent’s management time or other resources and will be calculated on the basis of such reasonable daily or hourly rates as the Facility Agent may notify to the Borrower and the other Finance Parties, and is in addition to any fee paid or payable to the Facility Agent under Clause 11 (Fees).
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29.18 |
Deduction from amounts payable by the Facility Agent |
If any Party owes an amount to the Facility Agent under the Finance Documents, the Facility Agent may, after giving notice to that Party, deduct an amount not exceeding that amount from any payment to that Party which the Facility Agent would otherwise be obliged to make under the Finance Documents and apply the amount deducted in or towards satisfaction of the amount owed. For the purposes of the Finance Documents that Party shall be regarded as having received any amount so deducted.
29.19 |
Reliance and engagement letters |
Each Secured Party confirms that each of the Mandated Lead Arranger and the Facility Agent has authority to accept on its behalf (and ratifies the acceptance on its behalf of any letters or reports already accepted by the Mandated Lead Arranger or the Facility Agent) the terms of any reliance letter or engagement letters or any reports or letters provided by accountants, auditors or providers of due diligence reports in connection with the Finance Documents or the transactions contemplated in the Finance Documents and to bind it in respect of those, reports or letters and to sign such letters on its behalf and further confirms that it accepts the terms and qualifications set out in such letters.
29.20 |
Full freedom to enter into transactions |
Without prejudice to Clause 29.7 (Business with the Group) or any other provision of a Finance Document and notwithstanding any rule of law or equity to the contrary, the Facility Agent shall be absolutely entitled:
(a) |
to enter into and arrange banking, derivative, investment and/or other transactions of every kind with or affecting any Transaction Obligor or any person who is party to, or referred to in, a Finance Document (including, but not limited to, any interest or currency swap or other transaction, whether related to this Agreement or not, and acting as syndicate agent and/or security agent for, and/or participating in, other facilities to such Transaction Obligor or any person who is party to, or referred to in, a Finance Document); |
(b) |
to deal in and enter into and arrange transactions relating to: |
(i) |
any securities issued or to be issued by any Transaction Obligor or any other person; or |
(ii) |
any options or other derivatives in connection with such securities; and |
(c) |
to provide advice or other services to the Borrower or any person who is a party to, or referred to in, a Finance Document, |
and, in particular, the Facility Agent shall be absolutely entitled, in proposing, evaluating, negotiating, entering into and arranging all such transactions and in connection with all other matters covered by paragraphs (a), (b) and (c) above, to use (subject only to insider dealing legislation) any information or opportunity, howsoever acquired by it, to pursue its own interests exclusively, to refrain from disclosing such dealings, transactions or other matters or any information acquired in connection with them and to retain for its sole benefit all profits and benefits derived from the dealings transactions or other matters.
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30 |
THE SECURITY AGENT |
30.1 |
Trust |
(a) |
The Security Agent declares that it holds the Security Property on trust for the Secured Parties on the terms contained in this Agreement and shall deal with the Security Property in accordance with this Clause 30 (The Security Agent) and the other provisions of the Finance Documents. |
(b) |
Each other Finance Party authorises the Security Agent to perform the duties, obligations and responsibilities and to exercise the rights, powers, authorities and discretions specifically given to the Security Agent under, or in connection with, the Finance Documents together with any other incidental rights, powers, authorities and discretions. |
30.2 |
Parallel Debt (Covenant to pay the Security Agent) |
(a) |
Each Obligor irrevocably and unconditionally undertakes to pay to the Security Agent amounts equal to, and in the currency or currencies of, the amounts payable by it to the Finance Parties in respect of the Corresponding Debt. |
(b) |
The Parallel Debt of an Obligor: |
(i) |
shall become due and payable at the same time as its Corresponding Debt; |
(ii) |
is independent and separate from, and without prejudice to, its Corresponding Debt. |
(c) |
For purposes of this Clause 30.2 (Parallel Debt (Covenant to pay the Security Agent)), the Security Agent: |
(i) |
is the independent and separate creditor of each Parallel Debt; |
(ii) |
acts in its own name and not as agent, representative or trustee of the Finance Parties and its claims in respect of each Parallel Debt shall not be held on trust; and |
(iii) |
shall have the independent and separate right to demand payment of each Parallel Debt in its own name (including, without limitation, through any suit, execution, enforcement of security, recovery of guarantees and applications for and voting in any kind of insolvency proceeding). |
(d) |
The Parallel Debt of an Obligor shall be: |
(i) |
decreased to the extent that its Corresponding Debt has been irrevocably and unconditionally paid or discharged; and |
(ii) |
increased to the extent that its Corresponding Debt has increased, |
and the Corresponding Debt of an Obligor shall be decreased to the extent that its Parallel Debt has been irrevocably and unconditionally paid or discharged,
in each case provided that the Parallel Debt of an Obligor shall never exceed its Corresponding Debt.
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(e) |
All amounts received or recovered by the Security Agent in connection with this Clause 30.2 (Parallel Debt (Covenant to pay the Security Agent)) to the extent permitted by applicable law, shall be applied in accordance with Clause 33.5 (Application of receipts; partial payments). |
(f) |
This Clause 30.2 (Parallel Debt (Covenant to pay the Security Agent)) shall apply, with any necessary modifications, to each Finance Document. |
30.3 |
Enforcement through Security Agent only |
The Secured Parties shall not have any independent power to enforce, or have recourse to, any of the Transaction Security or to exercise any right, power, authority or discretion arising under the Security Documents except through the Security Agent.
30.4 |
Instructions |
(a) |
The Security Agent shall: |
(i) |
unless a contrary indication appears in a Finance Document, exercise or refrain from exercising any right, power, authority or discretion vested in it as Security Agent in accordance with any instructions given to it by: |
(A) |
all Lenders (or the Facility Agent on their behalf) if the relevant Finance Document stipulates the matter is an all Lender decision; and |
(B) |
in all other cases, the Majority Lenders (or the Facility Agent on their behalf); and |
(ii) |
not be liable for any act (or omission) if it acts (or refrains from acting) in accordance with sub-paragraph (i) above (or if this Agreement stipulates the matter is a decision for any other Finance Party or group of Finance Parties, in accordance with instructions given to it by that Finance Party or group of Finance Parties). |
(b) |
The Security Agent shall be entitled to request instructions, or clarification of any instruction, from the Majority Lenders (or the Facility Agent on their behalf) (or, if the relevant Finance Document stipulates the matter is a decision for any other Finance Party or group of Finance Parties, from that Finance Party or group of Finance Parties) as to whether, and in what manner, it should exercise or refrain from exercising any right, power, authority or discretion and the Security Agent may refrain from acting unless and until it receives any such instructions or clarification that it has requested. |
(c) |
Save in the case of decisions stipulated to be a matter for any other Finance Party or group of Finance Parties under the relevant Finance Document and unless a contrary indication appears in a Finance Document, any instructions given to the Security Agent by the Majority Lenders shall override any conflicting instructions given by any other Parties and will be binding on all Finance Parties. |
(d) |
Paragraph (a) above shall not apply: |
(i) |
where a contrary indication appears in a Finance Document; |
(ii) |
where a Finance Document requires the Security Agent to act in a specified manner or to take a specified action; |
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(iii) |
in respect of any provision which protects the Security Agent’s own position in its personal capacity as opposed to its role of Security Agent for the relevant Secured Parties. |
(iv) |
in respect of the exercise of the Security Agent’s discretion to exercise a right, power or authority under any of: |
(A) |
Clause 30.28 (Application of receipts); |
(B) |
Clause 30.29 (Permitted Deductions); and |
(C) |
Clause 30.30 (Prospective liabilities). |
(e) |
If giving effect to instructions given by the Majority Lenders would in the Security Agent’s opinion have an effect equivalent to an amendment or waiver referred to in Clause 42 (Amendments and Waivers), the Security Agent shall not act in accordance with those instructions unless consent to it so acting is obtained from each Party (other than the Security Agent) whose consent would have been required in respect of that amendment or waiver. |
(f) |
In exercising any discretion to exercise a right, power or authority under the Finance Documents where either: |
(i) |
it has not received any instructions as to the exercise of that discretion; or |
(ii) |
the exercise of that discretion is subject to sub-paragraph (iv) of paragraph (d) above, |
the Security Agent shall do so having regard to the interests of all the Secured Parties.
(g) |
The Security Agent may refrain from acting in accordance with any instructions of any Finance Party or group of Finance Parties until it has received any indemnification and/or security that it may in its discretion require (which may be greater in extent than that contained in the Finance Documents and which may include payment in advance) for any cost, loss or liability (together with any applicable VAT) which it may incur in complying with those instructions. |
(h) |
Without prejudice to the remainder of this Clause 30.4 (Instructions), in the absence of instructions, the Security Agent may (but shall not be obliged to) take such action in the exercise of its powers and duties under the Finance Documents as it considers in its discretion to be appropriate. |
(i) |
The Security Agent is not authorised to act on behalf of a Finance Party (without first obtaining that Finance Party’s consent) in any legal or arbitration proceedings relating to any Finance Document. This paragraph (i) shall not apply to any legal or arbitration proceeding relating to the perfection, preservation or protection of rights under the Security Documents or enforcement of the Transaction Security or Security Documents. |
30.5 |
Duties of the Security Agent |
(a) |
The Security Agent’s duties under the Finance Documents are solely mechanical and administrative in nature. |
(b) |
The Security Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Security Agent for that Party by any other Party. |
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(c) |
Except where a Finance Document specifically provides otherwise, the Security Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party. |
(d) |
If the Security Agent receives notice from a Party referring to any Finance Document, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the other Finance Parties. |
(e) |
The Security Agent shall have only those duties, obligations and responsibilities expressly specified in the Finance Documents to which it is expressed to be a party (and no others shall be implied). |
30.6 |
No fiduciary duties |
(a) |
Nothing in any Finance Document constitutes the Security Agent as an agent, trustee or fiduciary of any Transaction Obligor. |
(b) |
The Security Agent shall not be bound to account to any other Secured Party for any sum or the profit element of any sum received by it for its own account. |
30.7 |
Business with the Group |
The Security Agent may accept deposits from, lend money to, and generally engage in any kind of banking or other business with, any member of the Group.
30.8 |
Rights and discretions |
(a) |
The Security Agent may: |
(i) |
rely on any representation, communication, notice or document believed by it to be genuine, correct and appropriately authorised; |
(ii) |
assume that: |
(A) |
any instructions received by it from the Majority Lenders, any Finance Parties or any group of Finance Parties are duly given in accordance with the terms of the Finance Documents; |
(B) |
unless it has received notice of revocation, that those instructions have not been revoked; |
(C) |
if it receives any instructions to act in relation to the Transaction Security, that all applicable conditions under the Finance Documents for so acting have been satisfied; and |
(iii) |
rely on a certificate from any person: |
(A) |
as to any matter of fact or circumstance which might reasonably be expected to be within the knowledge of that person; or |
(B) |
to the effect that such person approves of any particular dealing, transaction, step, action or thing, |
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as sufficient evidence that that is the case and, in the case of paragraph (A) above, may assume the truth and accuracy of that certificate.
(b) |
The Security Agent shall be entitled to carry out all dealings with the other Finance Parties through the Facility Agent and may give to the Facility Agent any notice or other communication required to be given by the Security Agent to any Finance Party. |
(c) |
The Security Agent may assume (unless it has received notice to the contrary in its capacity as security agent for the Secured Parties) that: |
(i) |
no Default has occurred; |
(ii) |
any right, power, authority or discretion vested in any Party or any group of Finance Parties has not been exercised; and |
(iii) |
any notice or request made by the Borrower (other than a Utilisation Request) is made on behalf of and with the consent and knowledge of all the Transaction Obligors. |
(d) |
The Security Agent may engage and pay for the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts. |
(e) |
Without prejudice to the generality of paragraph (c) above or paragraph (f) below, the Security Agent may at any time engage and pay for the services of any lawyers to act as independent counsel to the Security Agent (and so separate from any lawyers instructed by the Facility Agent or the Lenders) if the Security Agent in its reasonable opinion deems this to be desirable. |
(f) |
The Security Agent may rely on the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts (whether obtained by the Security Agent or by any other Party) and shall not be liable for any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of its so relying. |
(g) |
The Security Agent may act in relation to the Finance Documents and the Security Property through its officers, employees and agents and shall not: |
(i) |
be liable for any error of judgment made by any such person; or |
(ii) |
be bound to supervise, or be in any way responsible for any loss incurred by reason of misconduct, omission or default on the part of any such person, |
unless such error or such loss was directly caused by the Security Agent’s gross negligence or wilful misconduct.
(h) |
Unless a Finance Document expressly provides otherwise the Security Agent may disclose to any other Party any information it reasonably believes it has received as security agent under the Finance Documents. |
(i) |
Notwithstanding any other provision of any Finance Document to the contrary, the Security Agent is not obliged to do or omit to do anything if it would or might, in its reasonable opinion, constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality. |
(j) |
Notwithstanding any provision of any Finance Document to the contrary, the Security Agent is not obliged to expend or risk its own funds or otherwise incur any financial liability in the |
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performance of its duties, obligations or responsibilities or the exercise of any right, power, authority or discretion if it has grounds for believing the repayment of such funds or adequate indemnity against, or security for, such risk or liability is not reasonably assured to it.
30.9 |
Responsibility for documentation |
None of the Security Agent, any Receiver or Delegate is responsible or liable for:
(a) |
the adequacy, accuracy or completeness of any information (whether oral or written) supplied by the Facility Agent, the Security Agent, the Mandated Lead Arranger, a Transaction Obligor or any other person in, or in connection with, any Transaction Document or the transactions contemplated in the Transaction Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document; |
(b) |
the legality, validity, effectiveness, adequacy or enforceability of any Transaction Document or the Security Property or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with, any Transaction Document or the Security Property; or |
(c) |
any determination as to whether any information provided or to be provided to any Secured Party is non-public information the use of which may be regulated or prohibited by applicable law or regulation relating to insider dealing or otherwise. |
30.10 |
No duty to monitor |
The Security Agent shall not be bound to enquire:
(a) |
whether or not any Default has occurred; |
(b) |
as to the performance, default or any breach by any Transaction Obligor of its obligations under any Transaction Document; or |
(c) |
whether any other event specified in any Transaction Document has occurred. |
30.11 |
Exclusion of liability |
(a) |
Without limiting paragraph (b) below (and without prejudice to any other provision of any Finance Document excluding or limiting the liability of the Security Agent or any Receiver or Delegate), none of the Security Agent nor any Receiver or Delegate will be liable for: |
(i) |
any damages, costs or losses to any person, any diminution in value, or any liability whatsoever arising as a result of taking or not taking any action under or in connection with any Transaction Document or the Security Property, unless directly caused by its gross negligence or wilful misconduct; |
(ii) |
exercising, or not exercising, any right, power, authority or discretion given to it by, or in connection with, any Transaction Document, the Security Property or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with, any Transaction Document or the Security Property; or |
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(iii) |
any shortfall which arises on the enforcement or realisation of the Security Property; or |
(iv) |
without prejudice to the generality of paragraphs (i) to (iii) above, any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of: |
(A) |
any act, event or circumstance not reasonably within its control; or |
(B) |
the general risks of investment in, or the holding of assets in, any jurisdiction, |
including (in each case and without limitation) such damages, costs, losses, diminution in value or liability arising as a result of nationalisation, expropriation or other governmental actions; any regulation, currency restriction, devaluation or fluctuation; market conditions affecting the execution or settlement of transactions or the value of assets (including any Disruption Event); breakdown, failure or malfunction of any third party transport, telecommunications, computer services or systems; natural disasters or acts of God; war, terrorism, insurrection or revolution; or strikes or industrial action.
(b) |
No Party other than the Security Agent, that Receiver or that Delegate (as applicable) may take any proceedings against any officer, employee or agent of the Security Agent, a Receiver or a Delegate in respect of any claim it might have against the Security Agent, a Receiver or a Delegate or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Transaction Document or any Security Property and any officer, employee or agent of the Security Agent, a Receiver or a Delegate may rely on this paragraph (b) subject to Clause 1.5 (Third party rights) and the provisions of the Third Parties Act. |
(c) |
The Security Agent will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by the Security Agent if the Security Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by the Security Agent for that purpose. |
(d) |
Nothing in this Agreement shall oblige the Security Agent to carry out: |
(i) |
any “know your customer” or other checks in relation to any person; or |
(ii) |
any check on the extent to which any transaction contemplated by this Agreement might be unlawful for any Finance Party, |
on behalf of any Finance Party and each Finance Party confirms to the Security Agent that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Security Agent.
(e) |
Without prejudice to any provision of any Finance Document excluding or limiting the liability of the Security Agent or any Receiver or Delegate, any liability of the Security Agent or any Receiver or Delegate arising under or in connection with any Transaction Document or the Security Property shall be limited to the amount of actual loss which has been finally judicially determined to have been suffered (as determined by reference to the date of default of the Security Agent, Receiver or Delegate or, if later, the date on which the loss arises as a result of such default) but without reference to any special conditions or circumstances known to the Security Agent, any Receiver or Delegate at any time which increase the amount of that loss. |
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In no event shall the Security Agent, any Receiver or Delegate be liable for any loss of profits, goodwill, reputation, business opportunity or anticipated saving, or for special, punitive, indirect or consequential damages, whether or not the Security Agent, the Receiver or Delegate has been advised of the possibility of such loss or damages.
30.12 |
Lenders’ indemnity to the Security Agent |
(a) |
Each Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediately prior to their reduction to zero) indemnify the Security Agent and every Receiver, within three Business Days of demand, against any cost, loss or liability incurred by any of them (otherwise than by reason of the Security Agent’s or Receiver’s gross negligence or wilful misconduct) in acting as Security Agent or Receiver under the Finance Documents (unless the Security Agent or Receiver has been reimbursed by a Transaction Obligor pursuant to a Finance Document). |
(b) |
Subject to paragraph (c) below, the Borrower shall immediately on demand reimburse any Lender for any payment that Lender makes to the Security Agent pursuant to paragraph (a) above. |
(c) |
Paragraph (b) above shall not apply to the extent that the indemnity payment in respect of which the Lender claims reimbursement relates to a liability of the Security Agent to an Obligor. |
30.13 |
Resignation of the Security Agent |
(a) |
The Security Agent may resign and appoint one of its Affiliates as successor by giving notice to the other Finance Parties and the Borrower. |
(b) |
Alternatively, the Security Agent may resign by giving 30 days’ notice to the other Finance Parties and the Borrower, in which case the Majority Lenders may appoint a successor Security Agent. |
(c) |
If the Majority Lenders have not appointed a successor Security Agent in accordance with paragraph (b) above within 20 days after notice of resignation was given, the retiring Security Agent may appoint a successor Security Agent. |
(d) |
The retiring Security Agent shall make available to the successor Security Agent such documents and records and provide such assistance as the successor Security Agent may reasonably request for the purposes of performing its functions as Security Agent under the Finance Documents. The Borrower shall, within three Business Days of demand, reimburse the retiring Security Agent for the amount of all costs and expenses (including legal fees) properly incurred by it in making available such documents and records and providing such assistance. |
(e) |
The Security Agent’s resignation notice shall only take effect upon: |
(i) |
the appointment of a successor; and |
(ii) |
the transfer, by way of a document expressed as a deed, of all the Security Property to that successor. |
(f) |
Upon the appointment of a successor, the retiring Security Agent shall be discharged, by way of a document executed as a deed, from any further obligation in respect of the Finance Documents (other than its obligations under paragraph (b) of Clause 30.25 (Winding up of |
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trust) and paragraph (d) above) but shall remain entitled to the benefit of Clause 14.5 (Indemnity to the Security Agent) and this Clause 30 (The Security Agent) and any other provisions of a Finance Document which are expressed to limit or exclude its liability (or to indemnify it) in acting as Security Agent. Any fees for the account of the retiring Security Agent shall cease to accrue from (and shall be payable on) that date. Any successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.
(g) |
The Majority Lenders may, by notice to the Security Agent, require it to resign in accordance with paragraph (b) above. In this event, the Security Agent shall resign in accordance with paragraph (b) above but the cost referred to in paragraph (d) above shall be for the account of the Borrower. |
(h) |
The consent of the Borrower (or any other Transaction Obligor) is not required for an assignment or transfer of rights and/or obligations by the Security Agent. |
30.14 |
Confidentiality |
(a) |
In acting as Security Agent for the Finance Parties, the Security Agent shall be regarded as acting through its trustee division which shall be treated as a separate entity from any other of its divisions or departments. |
(b) |
If information is received by a division or department of the Security Agent other than the division or department responsible for complying with the obligations assumed by it under the Finance Documents, that information may be treated as confidential to that division or department, and the Security Agent shall not be deemed to have notice of it nor shall it be obliged to disclose such information to any Party. |
(c) |
Notwithstanding any other provision of any Finance Document to the contrary, the Security Agent is not obliged to disclose to any other person (i) any confidential information or (ii) any other information if the disclosure would, or might in its reasonable opinion, constitute a breach of any law or regulation or a breach of a fiduciary duty. |
30.15 |
Credit appraisal by the Finance Parties |
Without affecting the responsibility of any Transaction Obligor for information supplied by it or on its behalf in connection with any Transaction Document, each Finance Party confirms to the Security Agent that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under, or in connection with, any Transaction Document including but not limited to:
(a) |
the financial condition, status and nature of each member of the Group; |
(b) |
the legality, validity, effectiveness, adequacy or enforceability of any Transaction Document, the Security Property and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document or the Security Property; |
(c) |
whether that Finance Party has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under, or in connection with, any Transaction Document, the Security Property, the transactions contemplated by the Transaction Documents or any other agreement, arrangement or document entered into, made or |
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executed in anticipation of, under or in connection with any Transaction Document or the Security Property;
(d) |
the adequacy, accuracy or completeness of any information provided by the Security Agent, any Party or by any other person under, or in connection with, any Transaction Document, the transactions contemplated by any Transaction Document or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document; and |
(e) |
the right or title of any person in or to or the value or sufficiency of any part of the Security Assets, the priority of any of the Transaction Security or the existence of any Security affecting the Security Assets. |
30.16 |
Security Agent’s management time |
(a) |
Any amount payable to the Security Agent under Clause 14.5 (Indemnity to the Security Agent), Clause 16 (Costs and Expenses) and Clause 30.12 (Lenders’ indemnity to the Security Agent) shall include the cost of utilising the Security Agent’s management time or other resources and will be calculated on the basis of such reasonable daily or hourly rates as the Security Agent may notify to the Borrower and the other Finance Parties, and is in addition to any fee paid or payable to the Security Agent under Clause 11 (Fees). |
(b) |
Without prejudice to paragraph (a) above, in the event of: |
(i) |
a Default; |
(ii) |
the Security Agent being requested by a Transaction Obligor or the Majority Lenders to undertake duties which the Security Agent and the Borrower agree to be of an exceptional nature or outside the scope of the normal duties of the Security Agent under the Finance Documents; or |
(iii) |
the Security Agent and the Borrower agreeing that it is otherwise appropriate in the circumstances, |
the Borrower shall pay to the Security Agent any additional remuneration (together with any applicable VAT) that may be agreed between them or determined pursuant to paragraph (c) below.
(c) |
If the Security Agent and the Borrower fail to agree upon the nature of the duties, or upon the additional remuneration referred to in paragraph (b) above or whether additional remuneration is appropriate in the circumstances, any dispute shall be determined by an investment bank (acting as an expert and not as an arbitrator) selected by the Security Agent and approved by the Borrower or, failing approval, nominated (on the application of the Security Agent) by the President for the time being of the Law Society of England and Wales (the costs of the nomination and of the investment bank being payable by the Borrower) and the determination of any investment bank shall be final and binding upon the Parties. |
30.17 |
Reliance and engagement letters |
Each Secured Party confirms that the Security Agent has authority to accept on its behalf (and ratifies the acceptance on its behalf of any letters or reports already accepted by the Security Agent) the terms of any reliance letter or engagement letters or any reports or letters provided by accountants, auditors or providers of due diligence reports in connection with the Finance Documents or the transactions contemplated in the Finance Documents and to bind it in respect of those, reports or letters and to sign such letters on its behalf and further confirms that it accepts the terms and qualifications set out in such letters.
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30.18 |
No responsibility to perfect Transaction Security |
The Security Agent shall not be liable for any failure to:
(a) |
require the deposit with it of any deed or document certifying, representing or constituting the title of any Transaction Obligor to any of the Security Assets; |
(b) |
obtain any licence, consent or other authority for the execution, delivery, legality, validity, enforceability or admissibility in evidence of any Finance Document or the Transaction Security; |
(c) |
register, file or record or otherwise protect any of the Transaction Security (or the priority of any of the Transaction Security) under any law or regulation or to give notice to any person of the execution of any Finance Document or of the Transaction Security; |
(d) |
take, or to require any Transaction Obligor to take, any step to perfect its title to any of the Security Assets or to render the Transaction Security effective or to secure the creation of any ancillary Security under any law or regulation; or |
(e) |
require any further assurance in relation to any Finance Document. |
30.19 |
Insurance by Security Agent |
(a) |
The Security Agent shall not be obliged: |
(i) |
to insure any of the Security Assets; |
(ii) |
to require any other person to maintain any insurance; or |
(iii) |
to verify any obligation to arrange or maintain insurance contained in any Finance Document, |
(iv) |
and the Security Agent shall not be liable for any damages, costs or losses to any person as a result of the lack of, or inadequacy of, any such insurance. |
(b) |
Where the Security Agent is named on any insurance policy as an insured party, it shall not be liable for any damages, costs or losses to any person as a result of its failure to notify the insurers of any material fact relating to the risk assumed by such insurers or any other information of any kind, unless the Majority Lenders request it to do so in writing and the Security Agent fails to do so within 14 days after receipt of that request. |
30.20 |
Custodians and nominees |
The Security Agent may appoint and pay any person to act as a custodian or nominee on any terms in relation to any asset of the trust as the Security Agent may determine, including for the purpose of depositing with a custodian this Agreement or any document relating to the trust created under this Agreement and the Security Agent shall not be responsible for any loss, liability, expense, demand, cost, claim or proceedings incurred by reason of the misconduct, omission or default on the part of any person appointed by it under this Agreement or be bound to supervise the proceedings or acts of any person.
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30.21 |
Delegation by the Security Agent |
(a) |
Each of the Security Agent, any Receiver and any Delegate may, at any time, delegate by power of attorney or otherwise to any person for any period, all or any right, power, authority or discretion vested in it in its capacity as such. |
(b) |
That delegation may be made upon any terms and conditions (including the power to sub delegate) and subject to any restrictions that the Security Agent, that Receiver or that Delegate (as the case may be) may, in its discretion, think fit in the interests of the Secured Parties. |
(c) |
No Security Agent, Receiver or Delegate shall be bound to supervise, or be in any way responsible for any damages, costs or losses incurred by reason of any misconduct, omission or default on the part of any such delegate or sub delegate. |
30.22 |
Additional Security Agents |
(a) |
The Security Agent may at any time appoint (and subsequently remove) any person to act as a separate trustee or as a co-trustee jointly with it: |
(i) |
if it considers that appointment to be in the interests of the Secured Parties; or |
(ii) |
for the purposes of conforming to any legal requirement, restriction or condition which the Security Agent deems to be relevant; or |
(iii) |
for obtaining or enforcing any judgment in any jurisdiction, |
and the Security Agent shall give prior notice to the Borrower and the Finance Parties of that appointment.
(b) |
Any person so appointed shall have the rights, powers, authorities and discretions (not exceeding those given to the Security Agent under or in connection with the Finance Documents) and the duties, obligations and responsibilities that are given or imposed by the instrument of appointment. |
(c) |
The remuneration that the Security Agent may pay to that person, and any costs and expenses (together with any applicable VAT) incurred by that person in performing its functions pursuant to that appointment shall, for the purposes of this Agreement, be treated as costs and expenses incurred by the Security Agent. |
30.23 |
Acceptance of title |
The Security Agent shall be entitled to accept without enquiry, and shall not be obliged to investigate, any right and title that any Transaction Obligor may have to any of the Security Assets and shall not be liable for or bound to require any Transaction Obligor to remedy any defect in its right or title.
30.24 |
Releases |
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Upon a disposal of any of the Security Assets pursuant to the enforcement of the Transaction Security by a Receiver, a Delegate or the Security Agent, the Security Agent is irrevocably authorised (at the cost of the Obligors and without any consent, sanction, authority or further confirmation from any other Secured Party) to release, without recourse or warranty, that property from the Transaction Security and to execute any release of the Transaction Security or other claim over that asset and to issue any certificates of non-crystallisation of floating charges that may be required or desirable.
30.25 |
Winding up of trust |
If the Security Agent, with the approval of the Facility Agent determines that:
(a) |
all of the Secured Liabilities and all other obligations secured by the Security Documents have been fully and finally discharged; and |
(b) |
no Secured Party is under any commitment, obligation or liability (actual or contingent) to make advances or provide other financial accommodation to any Transaction Obligor pursuant to the Finance Documents, |
then
(i) |
the trusts set out in this Agreement shall be wound up and the Security Agent shall release, without recourse or warranty, all of the Transaction Security and the rights of the Security Agent under each of the Security Documents; and |
(ii) |
any Security Agent which has resigned pursuant to Clause 30.13 (Resignation of the Security Agent) shall release, without recourse or warranty, all of its rights under each Security Document. |
30.26 |
Powers supplemental to Trustee Acts |
The rights, powers, authorities and discretions given to the Security Agent under or in connection with the Finance Documents shall be supplemental to the Trustee Act 1925 and the Trustee Act 2000 and in addition to any which may be vested in the Security Agent by law or regulation or otherwise.
30.27 |
Disapplication of Trustee Acts |
Section 1 of the Trustee Act 2000 shall not apply to the duties of the Security Agent in relation to the trusts constituted by this Agreement and the other Finance Documents. Where there are any inconsistencies between (i) the Trustee Acts 1925 and 2000 and (ii) the provisions of this Agreement and any other Finance Document, the provisions of this Agreement and any other Finance Document shall, to the extent permitted by law and regulation, prevail and, in the case of any inconsistency with the Trustee Act 2000, the provisions of this Agreement and any other Finance Document shall constitute a restriction or exclusion for the purposes of the Trustee Act 2000.
30.28 |
Application of receipts |
All amounts from time to time received or recovered by the Security Agent pursuant to the terms of any Finance Document, under Clause 30.2 (Parallel Debt (Covenant to pay the Security Agent)) or in connection with the realisation or enforcement of all or any part of the Security Property (for the purposes of this Clause 30 (The Security Agent), the “Recoveries”) shall be held by the Security Agent on trust to apply them at any time as the Security Agent (in its discretion) sees fit, to the extent permitted by applicable law and subject to the remaining provisions of this Clause 30 (The Security Agent), in the following order of priority:
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(a) |
in discharging any sums owing to the Security Agent (in its capacity as such) (other than pursuant to Clause 30.2 (Parallel Debt (Covenant to pay the Security Agent))) or any Receiver or Delegate; |
(b) |
in payment or distribution to the Facility Agent, on its behalf and on behalf of the other Secured Parties, for application towards the discharge of all sums due and payable by any Transaction Obligor under any of the Finance Documents in accordance with Clause 33.5 (Application of receipts; partial payments); |
(c) |
if none of the Transaction Obligors is under any further actual or contingent liability under any Finance Document, in payment or distribution to any person to whom the Security Agent is obliged to pay or distribute in priority to any Transaction Obligor; and |
(d) |
the balance, if any, in payment or distribution to the relevant Transaction Obligor. |
30.29 |
Permitted Deductions |
The Security Agent may, in its discretion:
(a) |
set aside by way of reserve amounts required to meet, and to make and pay, any deductions and withholdings (on account of Taxes or otherwise) which it is or may be required by any applicable law to make from any distribution or payment made by it under this Agreement; and |
(b) |
pay all Taxes which may be assessed against it in respect of any of the Security Property, or as a consequence of performing its duties, or by virtue of its capacity as Security Agent under any of the Finance Documents or otherwise (other than in connection with its remuneration for performing its duties under this Agreement). |
30.30 |
Prospective liabilities |
Following enforcement of any of the Transaction Security, the Security Agent may, in its discretion, or at the request of the Facility Agent, hold any Recoveries in an interest bearing suspense or impersonal account(s) in the name of the Security Agent with such financial institution (including itself) and for so long as the Security Agent shall think fit (the interest being credited to the relevant account) for later payment to the Facility Agent for application in accordance with Clause 30.28 (Application of receipts) in respect of:
(a) |
any sum to the Security Agent, any Receiver or any Delegate; and |
(b) |
any part of the Secured Liabilities, |
that the Security Agent or, in the case of paragraph (b) only, the Facility Agent, reasonably considers, in each case, might become due or owing at any time in the future.
30.31 |
Investment of proceeds |
Prior to the payment of the proceeds of the Recoveries to the Facility Agent for application in accordance with Clause 30.28 (Application of receipts) the Security Agent may, in its discretion, hold all or part of those proceeds in an interest bearing suspense or impersonal account(s) in the name of the Security Agent with such financial institution (including itself) and for so long as the Security Agent shall think fit (the interest being credited to the relevant account) pending the payment from time to time of those moneys in the Security Agent’s discretion in accordance with the provisions of Clause 30.28 (Application of receipts).
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30.32 |
Currency conversion |
(a) |
For the purpose of, or pending the discharge of, any of the Secured Liabilities the Security Agent may convert any moneys received or recovered by the Security Agent from one currency to another, at a market rate of exchange. |
(b) |
The obligations of any Transaction Obligor to pay in the due currency shall only be satisfied to the extent of the amount of the due currency purchased after deducting the costs of conversion. |
30.33 |
Good discharge |
(a) |
Any payment to be made in respect of the Secured Liabilities by the Security Agent may be made to the Facility Agent on behalf of the Secured Parties and any payment made in that way shall be a good discharge, to the extent of that payment, by the Security Agent. |
(b) |
The Security Agent is under no obligation to make the payments to the Facility Agent under paragraph (a) above in the same currency as that in which the obligations and liabilities owing to the relevant Finance Party are denominated. |
30.34 |
Amounts received by Obligors |
If any of the Obligors receives or recovers any amount which, under the terms of any of the Finance Documents, should have been paid to the Security Agent, that Obligor will hold the amount received or recovered on trust for the Security Agent and promptly pay that amount to the Security Agent for application in accordance with the terms of this Agreement.
30.35 |
Application and consideration |
In consideration for the covenants given to the Security Agent by each Obligor in relation to Clause 30.2 (Parallel Debt (Covenant to pay the Security Agent)), the Security Agent agrees with each Obligor to apply all moneys from time to time paid by such Obligor to the Security Agent in accordance with the foregoing provisions of this Clause 30 (The Security Agent).
30.36 |
Full freedom to enter into transactions |
Without prejudice to Clause 30.7 (Business with the Group) or any other provision of a Finance Document and notwithstanding any rule of law or equity to the contrary, the Security Agent shall be absolutely entitled:
(a) |
to enter into and arrange banking, derivative, investment and/or other transactions of every kind with or affecting any Transaction Obligor or any person who is party to, or referred to in, a Finance Document (including, but not limited to, any interest or currency swap or other transaction, whether related to this Agreement or not, and acting as syndicate agent and/or security agent for, and/or participating in, other facilities to such Transaction Obligor or any person who is party to, or referred to in, a Finance Document); |
(b) |
to deal in and enter into and arrange transactions relating to: |
128
(i) |
any securities issued or to be issued by any Transaction Obligor or any other person; or |
(ii) |
any options or other derivatives in connection with such securities; and |
(c) |
to provide advice or other services to the Borrower or any person who is a party to, or referred to in, a Finance Document, |
and, in particular, the Security Agent shall be absolutely entitled, in proposing, evaluating, negotiating, entering into and arranging all such transactions and in connection with all other matters covered by paragraphs (a), (b) and (c) above, to use (subject only to insider dealing legislation) any information or opportunity, howsoever acquired by it, to pursue its own interests exclusively, to refrain from disclosing such dealings, transactions or other matters or any information acquired in connection with them and to retain for its sole benefit all profits and benefits derived from the dealings transactions or other matters.
31 |
CONDUCT OF BUSINESS BY THE FINANCE PARTIES |
No provision of this Agreement will:
(a) |
interfere with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit; |
(b) |
oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or |
(c) |
oblige any Finance Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax. |
32 |
SHARING AMONG THE FINANCE PARTIES |
32.1 |
Payments to Finance Parties |
If a Finance Party (a “Recovering Finance Party”) receives or recovers any amount from a Transaction Obligor other than in accordance with Clause 33 (Payment Mechanics) (a “Recovered Amount”) and applies that amount to a payment due to it under the Finance Documents then:
(a) |
the Recovering Finance Party shall, within three Business Days, notify details of the receipt or recovery, to the Facility Agent; |
(b) |
the Facility Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering Finance Party would have been paid had the receipt or recovery been received or made by the Facility Agent and distributed in accordance with Clause 33 (Payment Mechanics), without taking account of any Tax which would be imposed on the Facility Agent in relation to the receipt, recovery or distribution; and |
(c) |
the Recovering Finance Party shall, within three Business Days of demand by the Facility Agent, pay to the Facility Agent an amount (the “Sharing Payment”) equal to such receipt or recovery less any amount which the Facility Agent determines may be retained by the Recovering Finance Party as its share of any payment to be made, in accordance with Clause 33.5 (Application of receipts; partial payments). |
129
32.2 |
Redistribution of payments |
The Facility Agent shall treat the Sharing Payment as if it had been paid by the relevant Transaction Obligor and distribute it among the Finance Parties (other than the Recovering Finance Party) (the “Sharing Finance Parties”) in accordance with Clause 33.5 (Application of receipts; partial payments) towards the obligations of that Transaction Obligor to the Sharing Finance Parties.
32.3 |
Recovering Finance Party’s rights |
On a distribution by the Facility Agent under Clause 32.2 (Redistribution of payments) of a payment received by a Recovering Finance Party from a Transaction Obligor, as between the relevant Transaction Obligor and the Recovering Finance Party, an amount of the Recovered Amount equal to the Sharing Payment will be treated as not having been paid by that Transaction Obligor.
32.4 |
Reversal of redistribution |
If any part of the Sharing Payment received or recovered by a Recovering Finance Party becomes repayable and is repaid by that Recovering Finance Party, then:
(a) |
each Sharing Finance Party shall, upon request of the Facility Agent, pay to the Facility Agent for the account of that Recovering Finance Party an amount equal to the appropriate part of its share of the Sharing Payment (together with an amount as is necessary to reimburse that Recovering Finance Party for its proportion of any interest on the Sharing Payment which that Recovering Finance Party is required to pay) (the “Redistributed Amount”); and |
(b) |
as between the relevant Transaction Obligor and each relevant Sharing Finance Party, an amount equal to the relevant Redistributed Amount will be treated as not having been paid by that Transaction Obligor. |
32.5 |
Exceptions |
(a) |
This Clause 32 (Sharing among the Finance Parties) shall not apply to the extent that the Recovering Finance Party would not, after making any payment pursuant to this Clause, have a valid and enforceable claim against the relevant Transaction Obligor. |
(b) |
A Recovering Finance Party is not obliged to share with any other Finance Party any amount which the Recovering Finance Party has received or recovered as a result of taking legal or arbitration proceedings, if: |
(i) |
it notified that other Finance Party of the legal or arbitration proceedings; and |
(ii) |
that other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as reasonably practicable having received notice and did not take separate legal or arbitration proceedings. |
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SECTION 11
ADMINISTRATION
33 |
PAYMENT MECHANICS |
33.1 |
Payments to the Facility Agent |
(a) |
On each date on which a Transaction Obligor or a Lender is required to make a payment under a Finance Document, that Transaction Obligor or Lender shall make an amount equal to such payment available to the Facility Agent (unless a contrary indication appears in a Finance Document) for value on the due date at the time and in such funds specified by the Facility Agent as being customary at the time for settlement of transactions in the relevant currency in the place of payment. |
(b) |
Payment shall be made to such account in the principal financial centre of the country of that currency (or, in relation to euro, in a principal financial centre in such Participating Member State or London, as specified by the Facility Agent) and with such bank as the Facility Agent, in each case, specifies. |
33.2 |
Distributions by the Facility Agent |
Each payment received by the Facility Agent under the Finance Documents for another Party shall, subject to Clause 33.3 (Distributions to a Transaction Obligor) and Clause 33.4 (Clawback and pre-funding) be made available by the Facility Agent as soon as practicable after receipt to the Party entitled to receive payment in accordance with this Agreement (in the case of a Lender, for the account of its Facility Office), to such account as that Party may notify to the Facility Agent by not less than five Business Days’ notice with a bank specified by that Party in the principal financial centre of the country of that currency (or, in relation to euro, in the principal financial centre of a Participating Member State or London), as specified by that Party or, in the case of the Loan, to such account of such person as may be specified by the Borrower in a Utilisation Request.
33.3 |
Distributions to a Transaction Obligor |
The Facility Agent may (with the consent of the Transaction Obligor or in accordance with Clause 34 (Set-Off)) apply any amount received by it for that Transaction Obligor in or towards payment (on the date and in the currency and funds of receipt) of any amount due from that Transaction Obligor under the Finance Documents or in or towards purchase of any amount of any currency to be so applied.
33.4 |
Clawback and pre-funding |
(a) |
Where a sum is to be paid to the Facility Agent under the Finance Documents for another Party, the Facility Agent is not obliged to pay that sum to that other Party (or to enter into or perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received that sum. |
(b) |
Unless paragraph (c) below applies, if the Facility Agent pays an amount to another Party and it proves to be the case that the Facility Agent had not actually received that amount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by the Facility Agent shall on demand refund the same to the Facility Agent together with interest |
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on that amount from the date of payment to the date of receipt by the Facility Agent, calculated by the Facility Agent to reflect its cost of funds.
(c) |
If the Facility Agent has notified the Lenders that it is willing to make available amounts for the account of the Borrower before receiving funds from the Lenders then if and to the extent that the Facility Agent does so but it proves to be the case that it does not then receive funds from a Lender in respect of a sum which it paid to the Borrower: |
(i) |
the Facility Agent shall notify the Borrower of that Lender’s identity and the Borrower shall on demand refund it to the Facility Agent; and |
(ii) |
the Lender by whom those funds should have been made available or, if the Lender fails to do so, the Borrower shall on demand pay to the Facility Agent the amount (as certified by the Facility Agent) which will indemnify the Facility Agent against any funding cost incurred by it as a result of paying out that sum before receiving those funds from that Lender. |
33.5 |
Application of receipts; partial payments |
(a) |
If the Facility Agent receives a payment that is insufficient to discharge all the amounts then due and payable by a Transaction Obligor under the Finance Documents, the Facility Agent shall apply that payment towards the obligations of that Transaction Obligor under the Finance Documents in the following order: |
(i) |
first, in or towards payment pro rata of any unpaid fees, costs and expenses of, and any other amounts owing to, the Facility Agent, the Security Agent, any Receiver or any Delegate under the Finance Documents; |
(ii) |
secondly, in or towards payment pro rata of any accrued interest and fees due but unpaid to the Lenders under this Agreement; and |
(iii) |
thirdly, in or towards payment pro rata of any principal due but unpaid to the Lenders under this Agreement; and |
(iv) |
fourthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents. |
(b) |
The Facility Agent shall, if so directed by the Majority Lenders, vary, or instruct the Security Agent to vary (as applicable), the order set out in sub-paragraphs (ii) to (iv) of paragraph (a) above. |
(c) |
Paragraphs (a) and (b) above will override any appropriation made by a Transaction Obligor. |
33.6 |
No set-off by Transaction Obligors |
All payments to be made by a Transaction Obligor under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.
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33.7 |
Business Days |
(a) |
Any payment under the Finance Documents which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not). |
(b) |
During any extension of the due date for payment of any principal or an Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the original due date. |
33.8 |
Currency of account |
(a) |
Subject to paragraphs (b) and (c) below, dollars is the currency of account and payment for any sum due from a Transaction Obligor under any Finance Document. |
(b) |
Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred. |
(c) |
Any amount expressed to be payable in a currency other than dollars shall be paid in that other currency. |
33.9 |
Change of currency |
(a) |
Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised by the central bank of any country as the lawful currency of that country, then: |
(i) |
any reference in the Finance Documents to, and any obligations arising under the Finance Documents in, the currency of that country shall be translated into, or paid in, the currency or currency unit of that country designated by the Facility Agent (after consultation with the Borrower); and |
(ii) |
any translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Facility Agent (acting reasonably). |
(b) |
If a change in any currency of a country occurs, this Agreement will, to the extent the Facility Agent (acting reasonably and after consultation with the Borrower) specifies to be necessary, be amended to comply with any generally accepted conventions and market practice in the Relevant Market and otherwise to reflect the change in currency. |
33.10 |
Currency Conversion |
(a) |
For the purpose of, or pending any payment to be made by any Servicing Party under any Finance Document, such Servicing Party may convert any moneys received or recovered by it from one currency to another, at a market rate of exchange. |
(b) |
The obligations of any Transaction Obligor to pay in the due currency shall only be satisfied to the extent of the amount of the due currency purchased after deducting the costs of conversion. |
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33.11 |
Disruption to Payment Systems etc. |
If either the Facility Agent determines (in its discretion) that a Disruption Event has occurred or the Facility Agent is notified by the Borrower that a Disruption Event has occurred:
(a) |
the Facility Agent may, and shall if requested to do so by the Borrower, consult with the Borrower with a view to agreeing with the Borrower such changes to the operation or administration of the Facility as the Facility Agent may deem necessary in the circumstances; |
(b) |
the Facility Agent shall not be obliged to consult with the Borrower in relation to any changes mentioned in paragraph (a) above if, in its opinion, it is not practicable to do so in the circumstances and, in any event, shall have no obligation to agree to such changes; |
(c) |
the Facility Agent may consult with the Finance Parties in relation to any changes mentioned in paragraph (a) above but shall not be obliged to do so if, in its opinion, it is not practicable to do so in the circumstances; |
(d) |
any such changes agreed upon by the Facility Agent and the Borrower shall (whether or not it is finally determined that a Disruption Event has occurred) be binding upon the Parties and any Transaction Obligors as an amendment to (or, as the case may be, waiver of) the terms of the Finance Documents notwithstanding the provisions of Clause 42 (Amendments and Waivers); |
(e) |
the Facility Agent shall not be liable for any damages, costs or losses to any person, any diminution in value or any liability whatsoever (including, without limitation for negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Facility Agent) arising as a result of its taking, or failing to take, any actions pursuant to or in connection with this Clause 33.11 (Disruption to Payment Systems etc.); and |
(f) |
the Facility Agent shall notify the Finance Parties of all changes agreed pursuant to paragraph (d) above. |
34 |
SET-OFF |
A Finance Party may set off any matured obligation due from a Transaction Obligor under the Finance Documents (to the extent beneficially owned by that Finance Party) against any matured obligation owed by that Finance Party to that Transaction Obligor, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.
35 |
BAIL-IN |
Notwithstanding any other term of any Finance Document or any other agreement, arrangement or understanding between the parties to a Finance Document, each Party acknowledges and accepts that any liability of any party to a Finance Document under or in connection with the Finance Documents may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:
(a) |
any Bail-In Action in relation to any such liability, including (without limitation): |
(i) |
a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability; |
134
(ii) |
a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and |
(iii) |
a cancellation of any such liability; and |
(b) |
a variation of any term of any Finance Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability. |
36 |
NOTICES |
36.1 |
Communications in writing |
Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by fax or letter.
36.2 |
Addresses |
The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to be made or delivered under or in connection with the Finance Documents are:
(a) |
in the case of the Borrower, that specified in Schedule 1 (The Parties); |
(b) |
in the case of each Lender or any other Obligor, that specified in Schedule 1 (The Parties) or, if it becomes a Party after the date of this Agreement, that notified in writing to the Facility Agent on or before the date on which it becomes a Party; |
(c) |
in the case of the Facility Agent, that specified in Schedule 1 (The Parties); and |
(d) |
in the case of the Security Agent, that specified in Schedule 1 (The Parties), |
or any substitute address, fax number or department or officer as the Party may notify to the Facility Agent (or the Facility Agent may notify to the other Parties, if a change is made by the Facility Agent) by not less than five Business Days’ notice.
36.3 |
Delivery |
(a) |
Any communication or document made or delivered by one person to another under or in connection with the Finance Documents will only be effective: |
(i) |
if by way of fax, when received in legible form; or |
(ii) |
if by way of letter, when it has been left at the relevant address or five Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address, |
and, if a particular department or officer is specified as part of its address details provided under Clause 36.2 (Addresses), if addressed to that department or officer.
(b) |
Any communication or document to be made or delivered to a Servicing Party will be effective only when actually received by that Servicing Party and then only if it is expressly marked for the attention of the department or officer of that Servicing Party specified in Schedule 1 (The Parties) (or any substitute department or officer as that Servicing Party shall specify for this purpose). |
135
(c) |
All notices from or to a Transaction Obligor shall be sent through the Facility Agent unless otherwise specified in any Finance Document. |
(d) |
Any communication or document made or delivered to the Borrower in accordance with this Clause will be deemed to have been made or delivered to each of the Transaction Obligors. |
(e) |
Any communication or document which becomes effective, in accordance with paragraphs (a) to (d) above, after 5.00 p.m. in the place of receipt shall be deemed only to become effective on the following day. |
36.4 |
Notification of address and fax number |
Promptly upon receipt of notification of an address and fax number or change of address or fax number pursuant to Clause 36.2 (Addresses) or changing its own address or fax number, the Facility Agent shall notify the other Parties.
36.5 |
Electronic communication |
(a) |
Any communication to be made or document to be delivered by one Party to another under or in connection with the Finance Documents may be made or delivered by electronic mail or other electronic means (including, without limitation, by way of posting to a secure website) if those two Parties: |
(i) |
notify each other in writing of their electronic mail address and/or any other information required to enable the transmission of information by that means; and |
(ii) |
notify each other of any change to their address or any other such information supplied by them by not less than five Business Days’ notice. |
(b) |
Any such electronic communication or delivery as specified in paragraph (a) above to be made between an Obligor and a Finance Party may only be made in that way to the extent that those two Parties agree that, unless and until notified to the contrary, this is to be an accepted form of communication or delivery. |
(c) |
Any such electronic communication or document as specified in paragraph (a) above made or delivered by one Party to another will be effective only when actually received (or made available) in readable form and in the case of any electronic communication made or document delivered by a Party to the Facility Agent or the Security Agent only if it is addressed in such a manner as the Facility Agent or the Security Agent shall specify for this purpose. |
(d) |
Any electronic communication or delivery which becomes effective, in accordance with paragraph (c) above, after 5.00 p.m. in the place in which the Party to whom the relevant communication or document is sent or made available has its address for the purpose of this Agreement shall be deemed only to become effective on the following day. |
(e) |
Any reference in a Finance Document to a communication being sent or received or a document being delivered shall be construed to include that communication or document being made available in accordance with this Clause 36.5 (Electronic communication). |
36.6 |
English language |
(a) |
Any notice given under or in connection with any Finance Document must be in English. |
136
(b) |
All other documents provided under or in connection with any Finance Document must be: |
(i) |
in English; or |
(ii) |
if not in English, and if so required by the Facility Agent, accompanied by a certified English translation prepared by a translator approved by the Facility Agent and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document. |
37 |
CALCULATIONS AND CERTIFICATES |
37.1 |
Accounts |
In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by a Finance Party are prima facie evidence of the matters to which they relate.
37.2 |
Certificates and determinations |
Any certification or determination by a Finance Party of a rate or amount under any Finance Document is, in the absence of manifest error, conclusive evidence of the matters to which it relates.
37.3 |
Day count convention and interest calculation |
(a) |
Any interest, commission or fee accruing under a Finance Document will accrue from day to day and the amount of any such interest, commission or fee is calculated |
(i) |
on the basis of the actual number of days elapsed and a year of 360 days or, in any case where the practice in the Relevant Market differs, in accordance with that market practice; and |
(ii) |
subject to paragraph (b) below, without rounding. |
(b) |
The aggregate amount of any accrued interest, commission or fee which is, or becomes, payable by a Transaction Obligor under a Finance Document shall be rounded to 2 decimal places. |
38 |
PARTIAL INVALIDITY |
If, at any time, any provision of a Finance Document is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions under the law of that jurisdiction nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.
39 |
REMEDIES AND WAIVERS |
No failure to exercise, nor any delay in exercising, on the part of any Secured Party, any right or remedy under a Finance Document shall operate as a waiver of any such right or remedy or constitute an election to affirm any Finance Document. No election to affirm any Finance Document on the part of a Secured Party shall be effective unless it is in writing. No single or partial exercise of any right or remedy shall prevent any further or other exercise or the exercise of any other right or remedy.
137
The rights and remedies provided in each Finance Document are cumulative and not exclusive of any rights or remedies provided by law.
40 |
SETTLEMENT OR DISCHARGE CONDITIONAL |
Any settlement or discharge under any Finance Document between any Finance Party and any Transaction Obligor shall be conditional upon no security or payment to any Finance Party by any Transaction Obligor or any other person being set aside, adjusted or ordered to be repaid, whether under any insolvency law or otherwise.
41 |
IRREVOCABLE PAYMENT |
If the Facility Agent considers that an amount paid or discharged by, or on behalf of, a Transaction Obligor or by any other person in purported payment or discharge of an obligation of that Transaction Obligor to a Secured Party under the Finance Documents is capable of being avoided or otherwise set aside on the liquidation or administration of that Transaction Obligor or otherwise, then that amount shall not be considered to have been unconditionally and irrevocably paid or discharged for the purposes of the Finance Documents.
42 |
AMENDMENTS AND WAIVERS |
42.1 |
Required consents |
(a) |
Subject to Clause 42.2 (All Lender matters) and Clause 42.3 (Other exceptions) any term of the Finance Documents may be amended or waived only with the consent of the Majority Lenders and, in the case of an amendment, the Obligors and any such amendment or waiver will be binding on all Parties. |
(b) |
The Facility Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this Clause 42 (Amendments and Waivers). |
(c) |
Without prejudice to the generality of Clause 29.8 (Rights and discretions), the Facility Agent may engage, pay for and rely on the services of lawyers in determining the consent level required for and effecting any amendment, waiver or consent under this Agreement. |
42.2 |
All Lender matters |
Subject to Clause 42.4 (Changes to reference rates), an amendment of or waiver or consent in relation to any term of any Finance Document that has the effect of changing or which relates to:
(a) |
the definition of “Majority Lenders” in Clause 1.1 (Definitions); |
(b) |
a postponement to or extension of the date of payment of any amount under the Finance Documents; |
(c) |
a reduction in the Margin or the amount of any payment of principal, interest, fees or commission payable; |
(d) |
a change in currency of payment of any amount under the Finance Documents; |
138
(e) |
an increase in any Commitment or the Total Commitments, an extension of any Availability Period or any requirement that a cancellation of Commitments reduces the Commitments rateably under the Facility; |
(f) |
a change to any Transaction Obligor other than in accordance with Clause 28 (Changes to the Transaction Obligors); |
(g) |
any provision which expressly requires the consent of all the Lenders; |
(h) |
this Clause 42 (Amendments and Waivers); |
(i) |
any change to the preamble (Background), Clause 2 (The Facility), Clause 3 (Purpose), Clause 5 (Utilisation), Clause 6.2(a) (Effect of cancellation and prepayment on scheduled repayments), Clause 7.5 (Mandatory prepayment on sale or Total Loss), Clause 8 (Interest), Clause 23.10 (Compliance with laws etc.), Clause 23.13 (Sanctions and Ship trading), Clause 25 (Accounts and application of Earnings), Clause 27 (Changes to the Lenders), Clause 32 (Sharing among the Finance Parties), Clause 46 (Governing Law) or Clause 47 (Enforcement); |
(j) |
any release of, or material variation to, any Transaction Security, guarantee, indemnity or subordination arrangement set out in a Finance Document (except in the case of a release of Transaction Security as it relates to the disposal of an asset which is the subject of the Transaction Security and where such disposal is expressly permitted by the Majority Lenders or otherwise under a Finance Document); |
(k) |
(other than as expressly permitted by the provisions of any Finance Document), the nature or scope of: |
(i) |
the guarantee and indemnity granted under Clause 17 (Guarantee and Indemnity) or any other guarantee and indemnity forming part of the Finance Documents; |
(ii) |
the Security Assets; or |
(iii) |
the manner in which the proceeds of enforcement of the Transaction Security are distributed, |
(except in the case of sub-paragraphs (ii) and (iii) above, insofar as it relates to a sale or disposal of an asset which is the subject of the Transaction Security where such sale or disposal is expressly permitted under this Agreement or any other Finance Document); or
(l) |
the release of the guarantee and indemnity granted under Clause 17 (Guarantee and Indemnity) or of any Transaction Security or any guarantee, indemnity or subordination agreement set out in a Finance Document unless permitted under this Agreement or any other Finance Document or relating to a sale or disposal of an asset which is the subject of the Transaction Security where such sale or disposal is expressly permitted under this Agreement or any other Finance Document, |
shall not be made, or given, without the prior consent of all the Lenders.
139
42.3 |
Other exceptions |
(a) |
An amendment or waiver which relates to the rights or obligations of a Servicing Party or the Mandated Lead Arranger (each in their capacity as such) may not be effected without the consent of that Servicing Party or the Mandated Lead Arranger, as the case may be. |
(b) |
The Borrower and the Facility Agent, the Mandated Lead Arranger or the Security Agent, as applicable, may amend or waive a term of a Fee Letter to which they are party. |
42.4 |
Changes to reference rates |
(a)Subject to Clause 42.3 (Other exceptions) any amendment or waiver which relates to:
(i)providing for the use of a Replacement Reference Rate in place of that Published Rate; and
(ii)
(A) |
aligning any provision of any Finance Document to the use of that Replacement Reference Rate; |
(B) |
enabling that Replacement Reference Rate to be used for the calculation of interest under this Agreement (including, without limitation, any consequential changes required to enable that Replacement Reference Rate to be used for the purposes of this Agreement); |
(C) |
implementing market conventions applicable to that Replacement Reference Rate; |
(D) |
providing for appropriate fallback (and market disruption) provisions for that Replacement Reference Rate; or |
(E)adjusting the pricing to reduce or eliminate, to the extent reasonably practicable, any transfer of economic value from one Party to another as a result of the application of that Replacement Reference Rate (and if any adjustment or method for calculating any adjustment has been formally designated, nominated or recommended by the Relevant Nominating Body, the adjustment shall be determined on the basis of that designation, nomination or recommendation),
may be made with the consent of the Facility Agent (acting on the instructions of the Majority Lenders) and the Borrower.
(b) |
If a Lender fails to respond to a request for an amendment or waiver described in paragraph (a) above within 10 Business Days (or such longer time period in relation to any request which the Borrower and the Facility Agent may agree) of that request being made: |
(i) |
its Commitment or its participation in the Loan (as the case may be) shall not be included for the purpose of calculating the Total Commitments or the amount of the Loan (as applicable) when ascertaining whether any relevant percentage of Total Commitments or the aggregate of participations in the Loan (as applicable) has been obtained to approve that request; and |
140
(ii) |
its status as a Lender shall be disregarded for the purpose of ascertaining whether the agreement of any specified group of Lenders has been obtained to approve that request. |
(c) |
In this Clause 42.4 (Changes to reference rates): |
“Published Rate” means:
(a) |
SOFR; or |
(b) |
Term SOFR for any Quoted Tenor. |
“Replacement Event” means, in relation to a Published Rate:
(a) |
the methodology, formula or other means of determining that Published Rate has, in the opinion of the Majority Lenders, materially changes; |
(b)
(i)
(A) |
the administration of that Published Rate or its supervisor publicly announces that such administrator is insolvent; or |
(B) |
information is published in any order, decree, notice, petition or filing, however described, of or filed with a court, tribunal, exchange, regulatory authority or similar administrative, regulatory or judicial body which reasonably confirms that the administrator of that Published Rate is insolvent, |
provided that, in each case, at that time, there is no successor administrator to continue to provide that Published Rate;
(ii) |
the administrator of that Published Rate publicly announces that it has ceased or will cease to provide that Published Rate permanently or indefinitely and, at that time, there is no successor administrator to continue to provide that Published Rate; |
(iii) |
the supervisor of the administrator of that Published Rate publicly announces that such Published Rate has been or will be permanently or indefinitely discontinued; or |
(iv) |
the administrator of that Published Rate or its supervisor announces that the Published Rate may no longer be used. |
“Quoted Tenor” means, in relation to Term SOFR, any period for which that rate is customarily displayed on the relevant page or screen of an information service.
“Relevant Nominating Body” means any applicable central bank, regulator or other supervisory authority or a group of them, or any working group or committee sponsored or chaired by, or constituted at the request of, any of them or the Financial Stability Board.
“Replacement Reference Rate” means a reference rate which is:
141
(a) |
formally designated, nominated or recommended as the replacement for a Published Rate by: |
(i) |
the administrator of that Published Rate (provided that the market or economic reality that such reference rate measures is the same as that measured by that Published Rate); or |
(ii) |
any Relevant Nominating Body, |
and if replacements have, at the relevant time, been formally designated, nominated or recommended under both paragraphs, the “Replacement Reference Rate” will be the replacement under paragraph (ii) above;
(b) |
in the opinion of the Majority Lenders and the Borrower, generally accepted in the international or any relevant domestic syndicated loan markets as the appropriate successor or alternative to a Published Rate; or |
(c) |
in the opinion of the Majority Lenders and the Borrower, an appropriate successor or alternative to a Published Rate. |
42.5 |
Obligor Intent |
Without prejudice to the generality of Clauses 1.2 (Construction) and 17.4 (Waiver of defences), each Obligor expressly confirms that it intends that any guarantee contained in this Agreement or any other Finance Document and any Security created by any Finance Document shall extend from time to time to any (however fundamental) variation, increase, extension or addition of or to any of the Finance Documents and/or any facility or amount made available under any of the Finance Documents for the purposes of or in connection with any of the following: business acquisitions of any nature; increasing working capital; enabling investor distributions to be made; carrying out restructurings; refinancing existing facilities; refinancing any other indebtedness; making facilities available to new borrowers; any other variation or extension of the purposes for which any such facility or amount might be made available from time to time; and any fees, costs and/or expenses associated with any of the foregoing.
43 |
CONFIDENTIAL INFORMATION |
43.1 |
Confidentiality |
Each Finance Party agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by Clause 43.2 (Disclosure of Confidential Information) and Clause 43.3 (Disclosure to numbering service providers) and to ensure that all Confidential Information is protected with security measures and a degree of care that would apply to its own confidential information.
43.2 |
Disclosure of Confidential Information |
Any Finance Party may disclose:
(a) |
to any of its Affiliates and Related Funds and any of its or their officers, directors, employees, professional advisers, auditors, insurers, insurance advisors, insurance brokers, partners and Representatives such Confidential Information as that Finance Party shall consider appropriate if any person to whom the Confidential Information is to be given pursuant to this paragraph (a) is informed in writing of its confidential nature and that some or all of such Confidential |
142
Information may be price-sensitive information except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of the information or is otherwise bound by requirements of confidentiality in relation to the Confidential Information;
(b) |
to any person: |
(i) |
to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Finance Documents or which succeeds (or which may potentially succeed) it as Facility Agent or Security Agent and, in each case, to any of that person’s Affiliates, Related Funds, Representatives and professional advisers; |
(ii) |
with (or through) whom it enters into (or may potentially enter into), whether directly or indirectly, any sub-participation in relation to, or any other transaction under which payments are to be made or may be made by reference to, one or more Finance Documents and/or one or more Transaction Obligors and to any of that person’s Affiliates, Related Funds, Representatives and professional advisers; |
(iii) |
appointed by any Finance Party or by a person to whom sub-paragraph (i) or (ii) of paragraph (b) above applies to receive communications, notices, information or documents delivered pursuant to the Finance Documents on its behalf (including, without limitation, any person appointed under paragraph (c) of Clause 29.15 (Relationship with the other Finance Parties)); |
(iv) |
who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly or indirectly, any transaction referred to in sub-paragraph (i) or (ii) of paragraph (b) above; |
(v) |
to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation; |
(vi) |
to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitrations, administrative or other investigations, proceedings or disputes; |
(vii) |
to whom or for whose benefit that Finance Party charges, assigns or otherwise creates Security (or may do so) pursuant to Clause 27.8 (Security over Lenders’ rights); |
(viii) |
which is a classification society or other entity which a Lender has engaged to make the calculations necessary to enable that Lender to comply with its reporting obligations under the Poseidon Principles; |
(ix) |
who is a Party, a member of the Group or any related entity of a Transaction Obligor; |
(x) |
as a result of the registration of any Finance Document as contemplated by any Finance Document or any legal opinion obtained in connection with any Finance Document; or |
(xi) |
with the consent of the Guarantor; |
in each case, such Confidential Information as that Finance Party shall consider appropriate if:
143
(A) |
in relation to sub-paragraphs (i), (ii) and (iii) of paragraph (b) above, the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking except that there shall be no requirement for a Confidentiality Undertaking if the recipient is a professional adviser and is subject to professional obligations to maintain the confidentiality of the Confidential Information; |
(B) |
in relation to sub-paragraphs (iv) and (viii) of paragraph (b) above, the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking or is otherwise bound by requirements of confidentiality in relation to the Confidential Information they receive and is informed that some or all of such Confidential Information may be price-sensitive information; |
(C) |
in relation to sub-paragraphs (v), (vi) and (vii) of paragraph (b) above, the person to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of that Finance Party, it is not practicable so to do in the circumstances; |
(c) |
to any person appointed by that Finance Party or by a person to whom sub-paragraph (i) or (ii) of paragraph (b) above applies to provide administration or settlement services in respect of one or more of the Finance Documents including without limitation, in relation to the trading of participations in respect of the Finance Documents, such Confidential Information as may be required to be disclosed to enable such service provider to provide any of the services referred to in this paragraph (c) if the service provider to whom the Confidential Information is to be given has entered in to a confidentiality agreement substantially in the form of the LMA Master Confidentiality Undertaking for Use With Administration/Settlement Service Providers or such other form of confidentiality undertaking agreed between the Borrower and the relevant Finance Party; |
(d) |
to any rating agency (including its professional advisers) such Confidential Information as may be required to be disclosed to enable such rating agency to carry out its normal rating activities in relation to the Finance Documents and/or the Transaction Obligors if the rating agency to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information. |
43.3 |
Disclosure to numbering service providers |
(a) |
Any Finance Party may disclose to any national or international numbering service provider appointed by that Finance Party to provide identification numbering services in respect of this Agreement, the Facility and/or one or more Transaction Obligors the following information: |
(i) |
names of Transaction Obligors; |
(ii) |
country of domicile of Transaction Obligors; |
(iii) |
place of incorporation of Transaction Obligors; |
(iv) |
date of this Agreement; |
(v) |
Clause 46 (Governing Law); |
144
(vi) |
the names of the Facility Agent and the Mandated Lead Arranger; |
(vii) |
date of each amendment and restatement of this Agreement; |
(viii) |
amount of Total Commitments; |
(ix) |
currency of the Facility; |
(x) |
type of Facility; |
(xi) |
ranking of Facility; |
(xii) |
Termination Date for the Facility; |
(xiii) |
changes to any of the information previously supplied pursuant to sub-paragraphs (i) to (xiii) above; and |
(xiv) |
such other information agreed between such Finance Party and the Borrower, |
to enable such numbering service provider to provide its usual syndicated loan numbering identification services.
(b) |
The Parties acknowledge and agree that each identification number assigned to this Agreement, the Facility and/or one or more Transaction Obligors by a numbering service provider and the information associated with each such number may be disclosed to users of its services in accordance with the standard terms and conditions of that numbering service provider. |
(c) |
Each Obligor represents, on behalf of itself and the other Transaction Obligors, that none of the information set out in sub-paragraphs (i) to (xiv) of paragraph (a) above is, nor will at any time be, unpublished price-sensitive information. |
(d) |
The Facility Agent shall notify the Guarantor and the other Finance Parties of: |
(i) |
the name of any numbering service provider appointed by the Facility Agent in respect of this Agreement, the Facility and/or one or more Transaction Obligors; and |
(ii) |
the number or, as the case may be, numbers assigned to this Agreement, the Facility and/or one or more Transaction Obligors by such numbering service provider. |
43.4 |
Entire agreement |
This Clause 43 (Confidential Information) constitutes the entire agreement between the Parties in relation to the obligations of the Finance Parties under the Finance Documents regarding Confidential Information and supersedes any previous agreement, whether express or implied, regarding Confidential Information.
43.5 |
Inside information |
Each of the Finance Parties acknowledges that some or all of the Confidential Information is or may be price-sensitive information and that the use of such information may be regulated or prohibited by applicable legislation including securities law relating to insider dealing and market abuse and each of the Finance Parties undertakes not to use any Confidential Information for any unlawful purpose.
145
43.6 |
Notification of disclosure |
Each of the Finance Parties agrees (to the extent permitted by law and regulation) to inform the Borrower:
(a) |
of the circumstances of any disclosure of Confidential Information made pursuant to sub-paragraph (v) of paragraph (b) of Clause 43.2 (Disclosure of Confidential Information) except where such disclosure is made to any of the persons referred to in that paragraph during the ordinary course of its supervisory or regulatory function; and |
(b) |
upon becoming aware that Confidential Information has been disclosed in breach of this Clause 43 (Confidential Information). |
43.7 |
Continuing obligations |
The obligations in this Clause 43 (Confidential Information) are continuing and, in particular, shall survive and remain binding on each Finance Party for a period of 12 months from the earlier of:
(a) |
the date on which all amounts payable by the Obligors under or in connection with this Agreement have been paid in full and all Commitments have been cancelled or otherwise cease to be available; and |
(b) |
the date on which such Finance Party otherwise ceases to be a Finance Party. |
44 |
CONFIDENTIALITY OF FUNDING RATES |
44.1 |
Confidentiality and disclosure |
(a) |
The Facility Agent and each Obligor agree to keep each Funding Rate confidential and not to disclose it to anyone, save to the extent permitted by paragraphs (b) and (c) below. |
(b) |
The Facility Agent may disclose: |
(i) |
any Funding Rate to the Borrower pursuant to Clause 8.4 (Notification of rate of interest); and |
(ii) |
any Funding Rate to any person appointed by it to provide administration services in respect of one or more of the Finance Documents to the extent necessary to enable such service provider to provide those services if the service provider to whom that information is to be given has entered into a confidentiality agreement substantially in the form of the LMA Master Confidentiality Undertaking for Use With Administration/Settlement Service Providers or such other form of confidentiality undertaking agreed between the Facility Agent and the relevant Lender, as the case may be. |
(c) |
The Facility Agent and each Obligor may disclose any Funding Rate, to: |
(i) |
any of its Affiliates and any of its or their officers, directors, employees, professional advisers, auditors, partners and Representatives, if any person to whom that Funding Rate is to be given pursuant to this sub-paragraph (i) is informed in writing of its confidential nature and that it may be price sensitive information except that there shall be no such requirement to so inform if the recipient is subject to professional |
146
obligations to maintain the confidentiality of that Funding Rate or is otherwise bound by requirements of confidentiality in relation to it;
(ii) |
any person to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation if the person to whom that Funding Rate is to be given is informed in writing of its confidential nature and that it may be price sensitive information except that there shall be no requirement to so inform if, in the opinion of the Facility Agent or the relevant Obligor, as the case may be, it is not practicable to do so in the circumstances; |
(iii) |
any person to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitration, administrative or other investigations, proceedings or disputes if the person to whom that Funding Rate is to be given is informed in writing of its confidential nature and that it may be price sensitive information except that there shall be no requirement to so inform if, in the opinion of the Facility Agent or the relevant Obligor, as the case may be, it is not practicable to do so in the circumstances; and |
(iv) |
any person with the consent of the relevant Lender, as the case may be. |
44.2 |
Related obligations |
(a) |
The Facility Agent and each Obligor acknowledge that each Funding Rate is or may be price sensitive information and that its use may be regulated or prohibited by applicable legislation including securities law relating to insider dealing and market abuse and the Facility Agent and each Obligor undertake not to use any Funding Rate for any unlawful purpose. |
(b) |
The Facility Agent and each Obligor agree (to the extent permitted by law and regulation) to inform the relevant Lender, as the case may be: |
(i) |
of the circumstances of any disclosure made pursuant to sub-paragraph (ii) of paragraph (c) of Clause 44.1 (Confidentiality and disclosure) except where such disclosure is made to any of the persons referred to in that paragraph during the ordinary course of its supervisory or regulatory function; and |
(ii) |
upon becoming aware that any information has been disclosed in breach of this Clause 44 (Confidentiality of Funding Rates). |
44.3 |
No Event of Default |
No Event of Default will occur under Clause 26.4 (Other obligations) by reason only of an Obligor’s failure to comply with this Clause 44 (Confidentiality of Funding Rates).
45 |
COUNTERPARTS |
Each Finance Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document.
147
SECTION 12
GOVERNING LAW AND ENFORCEMENT
46 |
GOVERNING LAW |
This Agreement and any non-contractual obligations arising out of or in connection with it are governed by English law.
47 |
ENFORCEMENT |
47.1 |
Jurisdiction |
(a) |
Unless specifically provided in another Finance Document in relation to that Finance Document, the courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with any Finance Document (including a dispute regarding the existence, validity or termination of any Finance Document or any non-contractual obligation arising out of or in connection with any Finance Document) (a “Dispute”). |
(b) |
The Obligors accept that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Obligor will argue to the contrary. |
(c) |
This Clause 47.1 (Jurisdiction) is for the benefit of the Secured Parties only. As a result, no Secured Party shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Secured Parties may take concurrent proceedings in any number of jurisdictions. |
47.2 |
Service of process |
(a) |
Without prejudice to any other mode of service allowed under any relevant law, each Obligor (other than an Obligor incorporated in England and Wales): |
(i) |
irrevocably appoints Saville Notaries LLP, of London, One Carey Lane, EC2V 8AE as its agent for service of process in relation to any proceedings before the English courts in connection with any Finance Document; and |
(ii) |
agrees that failure by a process agent to notify the relevant Obligor of the process will not invalidate the proceedings concerned. |
(b) |
If any person appointed as an agent for service of process is unable for any reason to act as agent for service of process, the Borrower (on behalf of all the Obligors) must immediately (and in any event within 5 days of such event taking place) appoint another agent on terms acceptable to the Facility Agent. Failing this, the Facility Agent may appoint another agent for this purpose. |
This Agreement has been entered into on the date stated at the beginning of this Agreement.
148
SCHEDULE 1
THE PARTIES
149
SCHEDULE 2
CONDITIONS PRECEDENT
150
SCHEDULE 3
UTILISATION REQUEST
151
SCHEDULE 4
FORM OF TRANSFER CERTIFICATE
152
SCHEDULE 5
FORM OF ASSIGNMENT AGREEMENT
153
SCHEDULE 6
FORM OF COMPLIANCE CERTIFICATE
154
SCHEDULE 7
TIMETABLES
155
SCHEDULE 8
REPAYMENT SCHEDULES
Repayment Schedule of KEXIM ASIA LIMITED
(UNIT: US$)
DATE |
REPAYMENT INSTALMENT |
OUTSTANDING PRINCIPAL AMOUNT |
|
- |
20,000,000.00 |
1ST REPAYMENT DATE |
417,867.44 |
19,582,132.56 |
2ND REPAYMENT DATE |
417,867.44 |
19,164,265.12 |
3RD REPAYMENT DATE |
417,867.44 |
18,746,397.68 |
4TH REPAYMENT DATE |
417,867.44 |
18,328,530.24 |
5TH REPAYMENT DATE |
417,867.44 |
17,910,662.80 |
6TH REPAYMENT DATE |
417,867.44 |
17,492,795.36 |
7TH REPAYMENT DATE |
417,867.44 |
17,074,927.92 |
8TH REPAYMENT DATE |
417,867.44 |
16,657,060.48 |
9TH REPAYMENT DATE |
417,867.44 |
16,239,193.04 |
10TH REPAYMENT DATE |
417,867.44 |
15,821,325.60 |
11TH REPAYMENT DATE |
417,867.44 |
15,403,458.16 |
12TH REPAYMENT DATE |
417,867.44 |
14,985,590.72 |
13TH REPAYMENT DATE |
417,867.44 |
14,567,723.28 |
14TH REPAYMENT DATE |
417,867.44 |
14,149,855.84 |
15TH REPAYMENT DATE |
417,867.44 |
13,731,988.40 |
16TH REPAYMENT DATE |
417,867.44 |
13,314,120.96 |
17TH REPAYMENT DATE |
417,867.44 |
12,896,253.52 |
18TH REPAYMENT DATE |
417,867.44 |
12,478,386.08 |
19TH REPAYMENT DATE |
417,867.44 |
12,060,518.64 |
20TH REPAYMENT DATE |
417,867.44 |
11,642,651.20 |
21ST REPAYMENT DATE |
417,867.44 |
11,224,783.76 |
22ND REPAYMENT DATE |
417,867.44 |
10,806,916.32 |
23RD REPAYMENT DATE |
417,867.44 |
10,389,048.88 |
24TH REPAYMENT DATE |
417,867.44 PLUS BALLOON |
|
Repayment Schedule of KEXIM BANK (UK) LIMITED
(UNIT: US$)
DATE |
REPAYMENT INSTALMENT |
OUTSTANDING PRINCIPAL AMOUNT |
|
- |
14,700,000.00 |
1ST REPAYMENT DATE |
307,132.56 |
14,392,867.44 |
2ND REPAYMENT DATE |
307,132.56 |
14,085,734.88 |
3RD REPAYMENT DATE |
307,132.56 |
13,778,602.32 |
4TH REPAYMENT DATE |
307,132.56 |
13,471,469.76 |
5TH REPAYMENT DATE |
307,132.56 |
13,164,337.20 |
6TH REPAYMENT DATE |
307,132.56 |
12,857,204.64 |
7TH REPAYMENT DATE |
307,132.56 |
12,550,072.08 |
8TH REPAYMENT DATE |
307,132.56 |
12,242,939.52 |
9TH REPAYMENT DATE |
307,132.56 |
11,935,806.96 |
10TH REPAYMENT DATE |
307,132.56 |
11,628,674.40 |
11TH REPAYMENT DATE |
307,132.56 |
11,321,541.84 |
12TH REPAYMENT DATE |
307,132.56 |
11,014,409.28 |
13TH REPAYMENT DATE |
307,132.56 |
10,707,276.72 |
14TH REPAYMENT DATE |
307,132.56 |
10,400,144.16 |
156
15TH REPAYMENT DATE |
307,132.56 |
10,093,011.60 |
16TH REPAYMENT DATE |
307,132.56 |
9,785,879.04 |
17TH REPAYMENT DATE |
307,132.56 |
9,478,746.48 |
18TH REPAYMENT DATE |
307,132.56 |
9,171,613.92 |
19TH REPAYMENT DATE |
307,132.56 |
8,864,481.36 |
20TH REPAYMENT DATE |
307,132.56 |
8,557,348.80 |
21ST REPAYMENT DATE |
307,132.56 |
8,250,216.24 |
22ND REPAYMENT DATE |
307,132.56 |
7,943,083.68 |
23RD REPAYMENT DATE |
307,132.56 |
7,635,951.12 |
24TH REPAYMENT DATE |
307,132.56 PLUS BALLOON INSTALMENT OF |
|
157
EXECUTION PAGES
BORROWER
SIGNED by Thaleia Kalafati |
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/s/ Thaleia Kalafati |
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duly authorised |
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for and on behalf of |
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OMEGA ONE MARINE CORP. |
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in the presence of: |
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Witness’ signature: /s/ Eliza-Elisavet Makri |
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Witness’ name:Eliza-Elisavet Makri |
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Witness’ address: Attorney-at-law |
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Watson Farley & Williams Greece |
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348 Syngrou Avenue |
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17674 Kallithea |
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Athens - Greece |
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GUARANTOR |
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SIGNED by Thaleia Kalafati |
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/s/ Thaleia Kalafati |
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duly authorised |
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for and on behalf of |
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OKEANIS ECO TANKERS CORP. |
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in the presence of: |
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Witness’ signature: /s/ Eliza-Elisavet Makri |
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Witness’ name:Eliza-Elisavet Makri |
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Witness’ address: Attorney-at-law |
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Watson Farley & Williams Greece |
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348 Syngrou Avenue |
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17674 Kallithea |
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Athens - Greece |
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ORIGINAL LENDERS |
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SIGNED by Kelina Kantzou |
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/s/ Kelina Kantzou |
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FACILITY AGENT |
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SECURITY AGENT |
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160
Exhibit 4.14
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of December 6, 2023 between Okeanis Eco Tankers Corp., a Marshall Islands corporation (the “Company”), Hospitality Assets Corp., a Marshall Islands corporation, and Glafki Marine Corp., a Marshall Islands corporation (collectively, with Hospitality Assets Corp., the “Shareholders” and each a “Shareholder”).
WHEREAS, the Shareholders are currently the holders, in the aggregate, of the majority of the currently issued and outstanding Common Stock;
WHEREAS, the Company desires to list the Common Stock on a U.S. securities exchange and desire to ensure that the Shareholders and their Affiliates are able to sell Common Stock through a U.S. securities exchange; and
WHEREAS, the Company and the Shareholders desire to enter into an agreement to establish and confirm their rights.
In consideration of the mutual covenants and agreements herein contained and other good and valid consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:
1.Certain Definitions.
In addition to the terms defined elsewhere in this Agreement, the following terms shall have the following meanings:
“Affiliate” of any Person means any other Person which directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person.
“Common Stock” means shares of common stock, par value $0.001 per share, of the Company, including common stock issuable upon conversion of any preferred stock or other convertible securities or convertible instrument, and any other shares issued or issuable in exchange for or with respect to the common stock, par value $0.001 per share, of the Company by way of a stock dividend, stock split or combination of shares or in connection with a reclassification, recapitalization, exchange, merger, consolidation or other reorganization.
“Control,” including the terms “controlling,” “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting shares, by contract or otherwise. A person who is the owner of 20% or more of the outstanding voting shares of any corporation, partnership, unincorporated association or other entity shall be presumed, for purposes of this Agreement, to have control of such entity, in the absence of proof by a preponderance of the evidence to the contrary. Notwithstanding the foregoing, a presumption of control shall not apply where such person holds voting shares, in good faith and not for the purpose of circumventing this provision, as an agent, bank, broker, nominee, custodian or trustee for one or more owners who do not individually or as a group have control of such entity.
“Demand Registration” has the meaning set forth in Section 2(a) hereof.
“Dissolution” has the meaning set forth in Section 7 hereof.
“Effectiveness Period” has the meaning set forth in Section 2(g) hereof.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Governmental Entity” means any national, federal, state, municipal, local, territorial, foreign or other government or any department, commission, board, bureau, agency, regulatory authority or instrumentality thereof, or any court, judicial, administrative or arbitral body or public or private tribunal.
“Holder” means any Person that owns Registrable Shares, including each Shareholder, its Affiliates and such successors and permitted assigns as acquire Registrable Shares, directly or indirectly, from such Person. For purposes of this Agreement, the Company may deem and treat the registered holder of Registrable Shares as the Holder and absolute owner thereof, and the Company shall not be affected by any notice to the contrary.
“Initiating Holders” has the meaning set forth in Section 2(a) hereof.
“Losses” has the meaning set forth in Section 8(a) hereof.
“Person” means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, incorporated or unincorporated organization, association, corporation, institution, public benefit corporation, Governmental Entity or any other entity.
“Piggyback Registration” has the meaning set forth in Section 4(a) hereof.
“Prospectus” means the prospectus or prospectuses included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Shares covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus or prospectuses.
“Registrable Shares” means shares of Common Stock, whether held on the date hereof or acquired after the date hereof, held by each Shareholder or any Affiliate of such Shareholder, shares of Common Stock receivable upon the conversion of preferred stock or other convertible securities or convertible instrument in each case held by each Shareholder or any Affiliate of such Shareholder or any shares of any successor or acquiror of the Company issued in exchange or substitution for any of the foregoing in connection with any acquisition, merger, combination or similar transaction involving the Company or any successor of the Company; provided, however, that Registrable Shares shall not include any securities sold by a Person to the public either pursuant to a Registration Statement, Regulation S or Rule 144 or any securities that may be sold pursuant to Rule 144 without restriction or limitation on volume or manner of sale.
“Registration Expenses” has the meaning set forth in Section 6(a) hereof.
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“Registration Statement” means any registration statement of the Company which covers any of the Registrable Shares pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all materials incorporated by reference in such Registration Statement.
“SEC” means the U.S. Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“Shelf Registration” has the meaning set forth in Section 3(a) hereof.
“Suspension Notice” has the meaning set forth in Section 5(f) hereof.
“Underwritten Offering” means a registration in which securities of the Company are sold to underwriters for reoffering to the public.
“Withdrawn Demand Registration” has the meaning set forth in Section 2(g) hereof.
2.Demand Registration.
(a)Right to Request Registration. Subject to Section 2(d) hereof, any Holder or Holders (“Initiating Holders”) shall have the right to require the Company to register under the Securities Act (“Demand Registration”) all or any part of the Registrable Shares; provided, however, that each Demand Registration be for Registrable Shares.
Within ten (10) days after receipt of any such request for Demand Registration, the Company shall give written notice of such request to all other Holders of Registrable Shares and shall, subject to the provisions of Section 2(d) hereof, include in such registration all such Registrable Shares with respect to which the Company has received written requests for inclusion therein within fifteen (15) days after the receipt of the Company’s notice.
(b)Number of Demand Registrations. Subject to the provisions of Section 2(a), the Initiating Holders of Registrable Shares shall collectively be entitled to request an aggregate of two (2) Demand Registrations in any one twelve (12) month period and a maximum of three (3) Demand Registrations in total. A registration shall not count as one of the permitted Demand Registrations (i) until it has become effective, (ii) if the Initiating Holders requesting such registration are not able to have registered and sold at least 50% of the Registrable Shares requested by such Initiating Holders to be included in such registration or (iii) in the case of a Demand Registration that would be the last permitted Demand Registration requested hereunder, if the Initiating Holders requesting such registration are not able to have registered and sold all of the Registrable Shares requested to be included by such Initiating Holders in such registration.
(c)Allocation of Securities Included in Registration Statement. If any requested registration made pursuant to Section 2(a) involves an Underwritten Offering and the managing underwriters of the requested Demand Registration advise the Company in writing that in their opinion the number of Registrable Shares proposed to be included in any such registration exceeds the number of securities which can be sold in such offering without having an adverse effect on such offering, including the price at which such Registrable Shares can be sold, the Company shall include in such registration only the number of Registrable Shares which in the reasonable opinion of such managing underwriters can be sold without having the adverse effect referred to above.
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If the number of shares which can be sold without having the adverse effect referred to above is less than the number of Registrable Shares proposed to be registered, the amount of Registrable Shares to be so sold shall be allocated pro rata among the Holders of Registrable Shares desiring to participate in such registration on the basis of the amount of such Registrable Shares initially proposed to be registered by such Holders. If the number of shares which can be sold exceeds the number of Registrable Shares proposed to be sold, such excess shall be allocated pro rata among the other holders of securities, if any, desiring to participate in such registration based on the amount of such securities initially requested to be registered by such holders or as such holders may otherwise agree.
(d)Restrictions on Demand Registrations. The Company shall not be obligated to effect any Demand Registration within three (3) months after the termination of an offering under a previous Demand Registration (assuming it is not a continuous offering, and if it were a continuous offering, then within six (6) months after the effectiveness of a previous Demand Registration) or within three (3) months after the effectiveness of a previous registration under which the Initiating Holder had piggyback rights pursuant to Section 4 hereof where the Initiating Holder was permitted to register and sell 50% or more of the Registrable Shares requested to be included therein. The Company may postpone for up to ninety (90) days the filing or the effectiveness of a Registration Statement for a Demand Registration if (i) the Company’s board of directors reasonably determines that a Demand Registration would reasonably be expected to materially and adversely affect an offering of securities of the Company, the preparation of which had then been commenced, (ii) the Company is in possession of material non-public information the disclosure of which during the period specified in such notice the Company’s board of directors reasonably believes would not be in the best interests of the Company, (iii) the Company, in its good faith judgment, determines that any registration of Registrable Shares should not be made or continued because it would materially interfere with any material financing, acquisition, corporate reorganization or merger or other transactions or events involving the Company or any of its subsidiaries or (iv) such Demand Registration would render the Company unable to comply with the requirements of applicable securities laws; provided, however, that in the event described above, the Initiating Holders requesting such Demand Registration shall be entitled to withdraw such request prior to its effective date and, if such request is withdrawn, such Demand Registration shall not count as one of the permitted Demand Registrations. The Company shall provide written notice to the Initiating Holders requesting such Demand Registration of (i) any postponement or withdrawal of the filing or effectiveness of a Registration Statement pursuant to this Section 2(d), (ii) the Company’s decision to file or seek effectiveness of such Registration Statement following such withdrawal or postponement and (iii) the effectiveness of such Registration Statement. The Company may defer the filing of a particular Registration Statement pursuant to this Section 2(d) only once during any twelve (12) month period.
(e)Withdrawal by Holders. Any Holder requesting a Demand Registration will be permitted to withdraw in good faith all or part of the Registrable Shares from such Demand Registration at any time prior to the date the Commission declares effective the Registration Statement relating to such Demand Registration, in which event the Company will promptly amend or, if applicable, terminate or withdraw the related Registration Statement; provided, however, that if the Holder requesting a Demand Registration pursuant to this Section 2(e) withdraws from such registration, such registration shall count as a Demand Registration unless a Holder pays all of the out-of-pocket expenses of the Company in connection with such registration.
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(f)Selection of Underwriters. If any of the Registrable Shares covered by a Demand Registration are to be sold in an Underwritten Offering, the Initiating Holders shall have the right, but not the obligation, to select the managing underwriter(s) to administer the offering subject to the approval of the Company, which approval shall not be unreasonably withheld or delayed.
(g)Effective Period of Demand Registrations. The Company will use its reasonable best efforts to comply with all necessary provisions of the federal securities laws in order to keep each Registration Statement relating to a Demand Registration effective for a period of (i) in the case of an Underwritten Offering, three (3) months from its effectiveness date, or (ii) in any other case, the lesser of three (3) months or such shorter period as will terminate when all Registrable Shares covered by such Registration Statement have been sold pursuant to such Registration Statement (the “Effectiveness Period”). If the Company shall withdraw any Demand Registration pursuant to Section 2(d) (a “Withdrawn Demand Registration”), the Initiating Holders of the Registrable Shares remaining unsold and originally covered by such Withdrawn Demand Registration shall be entitled to a replacement Demand Registration which (subject to the provisions of this Section 2) the Company shall use its reasonable best efforts to keep effective for a period commencing on the effective date of such Demand Registration and ending on the earlier to occur of the date (i) in the case of an Underwritten Offering, three (3) months from its effectiveness date, or (ii) in any other case, the lesser of three (3) months or such shorter period as will terminate when all Registrable Shares covered by such Registration Statement have been sold pursuant to such Registration Statement.
3. Shelf Registration.
(a)At such time as the Company is able to use Form F-3 or Form S-3 under the Securities Act (or any successor or similar form) for sales of Registrable Shares by a Holder, at the request of one or more Holders, the Company shall use its reasonable best efforts to effect, as expeditiously as possible, the registration under the Securities Act of any number of Registrable Shares for which it receives requests in accordance with Section 2(a) (the “Shelf Registration”). The Company shall use its reasonable best efforts to cause such Registration Statement to become effective as promptly as practicable and maintain the effectiveness of such Registration Statement (subject to the terms and conditions herein) for a period ending on the earlier of (i) three (3) years following the date on which such Registration Statement first becomes effective (but one (1) year if the Company is not able to continue to use Form F-3 or Form S-3 under the Securities Act (or any successor or similar form)), (ii) the date on which all Registrable Shares covered by such Registration Statement have been sold, and the distribution contemplated thereby has been completed, (iii) the date on which all Registrable Shares covered by such Registration Statement have become freely saleable pursuant to Rule 144 without restriction or limitation on volume or manner of sale.
(b)The Registration Statement pursuant to this Section 3 shall, to the extent possible under applicable law, be effected to permit sales on a continuous basis pursuant to Rule 415 under the Securities Act. Any sale pursuant to the Shelf Registration pursuant to this Section 3 may or may not be underwritten; provided, however, that (i) Holders may request any underwritten takedown only to be effected as a Demand Registration (in which event, unless such Demand Registration would not require representatives of the Company to meet with prospective purchasers of the Company’s securities, a Demand Registration must be available thereunder and the number of Demand Registrations available shall be reduced by one subject to Section 2(b)) or (ii) Holders may request an unlimited number of underwritten takedowns to be effected in accordance with the terms of Section 4.
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(c)In the event of a request for a Shelf Registration pursuant to Section 3(a), the Company shall give written notice of the proposed filing of the Registration Statement in connection therewith to all Holders of Registrable Shares offering to each such Holder the opportunity to have any or all of the Registrable Shares held by such Holder included in such registration statement. Each Holder of Registrable Shares desiring to have its Registrable Shares registered under this Section 3(c) shall so advise the Company in writing within fifteen (15) days after the date of such notice from the Company (which request shall set forth the amount of Registrable Shares for which registration is requested), and the Company shall include in such Registration Statement all such Registrable Shares so requested to be included therein.
(d)The number, percentage, fraction or kind of shares referred to in this Section 3 shall be appropriately adjusted for any stock dividend, stock split, reverse stock split, combination, recapitalization, reclassification, merger or consolidation, exchange or distribution in respect of the shares of Common Stock.
(e)The Company, and any other holder of the Company’s securities who has registration rights, may include its securities in any Shelf Registration effected pursuant to this Section 3.
4. Piggyback Registration.
(a)Right to Piggyback. If at any time the Company proposes to register any of its common equity securities under the Securities Act (other than a registration statement on Form S-8 or on Form F-4 or Form S-4 or any similar successor forms thereto or a registration statement covering an offering of convertible securities), whether for its own account or for the account of one or more shareholders of the Company, and the registration form to be used may be used for any registration of Registrable Shares (a “Piggyback Registration”), the Company shall give prompt written notice to each Holder of Registrable Shares of its intention to effect such a registration and, subject to Sections 4(b) and 4(c), shall include in such registration all Registrable Shares with respect to which the Company has received written requests for inclusion therein within fifteen (15) days after the effectiveness of the Company’s notice, provided, however, that the Company shall not be required to register any Registrable Shares pursuant to this Section 4(a) that are eligible for sale pursuant to Rule 144 without restriction or limitation on volume or manner of sale. The Company may postpone or withdraw the filing or the effectiveness of a Piggyback Registration at any time in its sole discretion.
(b)Priority on Primary Registrations. If a Piggyback Registration is an underwritten primary registration on behalf of the Company, and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without having an adverse effect on such offering, the Company shall include in such registration (i) first, the securities the Company proposes to sell, (ii) second, the Registrable Shares requested to be included therein by the Holders, pro rata among the Holders of such Registrable Shares on the basis of the number of shares requested to be registered by such Holders, and (iii) third, other securities requested to be included in such registration pro rata among the holders of such securities on the basis of the number of shares requested to be registered by such holders or as such holders may otherwise agree.
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(c)Priority on Secondary Registrations. If a Piggyback Registration is an underwritten secondary registration on behalf of a holder of the Company’s securities other than Registrable Shares, and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without having an adverse effect on such offering, the Company shall include in such registration (i) first, the securities requested to be included therein by the holders requesting such registration and the Registrable Shares requested to be included in such registration, pro rata among the holders of such securities on the basis of the number of shares requested to be registered by such holders, and (ii) second, other securities requested to be included in such registration pro rata among the holders of such securities on the basis of the number of shares requested to be registered by such holders or as such holders may otherwise agree.
(d)Selection of Underwriters. If any Piggyback Registration is an underwritten primary offering, the Company shall have the right, but not the obligation, to select the managing underwriter or underwriters to administer any such offering. If the Piggyback Registration is an underwritten secondary offering, the holders of a majority (in value) of the securities to be included in such offering shall have the right, but not the obligation, to select the managing underwriter or underwriters to administer any such offering subject to the approval of the Company, which approval shall not be unreasonably withheld or delayed, provided that, if holders of a majority (in value) do not select such managing underwriter or underwriters within (15) days after the effectiveness of the Company’s notice contemplated by Section 4(a), the Company shall have the right, but not the obligation, to select such managing underwriter or underwriters.
5. Registration Procedures.
(a)Whenever the Holders request that any Registrable Shares be registered pursuant to this Agreement, the Company shall use its reasonable best efforts to effect the registration and the sale of such Registrable Shares in accordance with the intended methods of disposition thereof, and pursuant thereto the Company shall:
(i)prepare and file with the SEC a Registration Statement with respect to such Registrable Shares and use its reasonable best efforts to cause such Registration Statement to become effective as soon as practicable thereafter; and before filing a Registration Statement or Prospectus or any amendments or supplements thereto, furnish to the Holders of Registrable Shares covered by such Registration Statement and the underwriter or underwriters, if any, copies of all such documents proposed to be filed, including documents incorporated by reference in the Prospectus and, if requested by such Holders, the exhibits incorporated by reference, and such Holders shall have the opportunity to object to any information pertaining to such Holders that is contained therein and the Company will make the corrections reasonably requested by such Holders with respect to such information prior to filing any Registration Statement or amendment thereto or any Prospectus or any supplement thereto;
(ii)prepare and file with the SEC such amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement effective for a period of not less than three (3) months (or any longer period set forth in this Agreement), in the case of a Demand Registration or such shorter period as is necessary to complete the distribution of the securities covered by such Registration Statement and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement;
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(iii)furnish to each seller of Registrable Shares such number of copies of such Registration Statement, each amendment and supplement thereto, the Prospectus included in such Registration Statement (including each preliminary Prospectus), each free-writing prospectus and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Shares owned by such seller;
(iv)use its reasonable best efforts to register or qualify such Registrable Shares under such other securities or “blue sky” laws of such jurisdictions as any seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Shares owned by such seller; provided, however, that the Company will not be required to (A) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph 5(a)(iv), (B) subject itself to taxation in any such jurisdiction, or (C) consent to general service of process in any such jurisdiction;
(v)promptly notify each seller of such Registrable Shares, at any time when a Prospectus relating thereto is required to be delivered under the Securities Act, of the occurrence of any event as a result of which the Prospectus included in such Registration Statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading, and, at the request of any such seller, the Company shall prepare a supplement or amendment to such Prospectus so that, as thereafter delivered to the purchasers of such Registrable Shares, such Prospectus shall not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading;
(vi)in the case of an Underwritten Offering, enter into such customary agreements (including underwriting agreements in customary form with customary indemnification provisions reasonably acceptable to the Company) and take all such other actions as the Holders of a majority of the Registrable Shares being sold or the underwriters reasonably request in order to expedite or facilitate the disposition of such Registrable Shares and cause to be delivered to the underwriters and the sellers, if any, opinions of counsel to the Company in customary form, covering such matters as are customarily covered by opinions for an underwritten public offering as the underwriters may request and addressed to the underwriters and the sellers (including, without limitation, participating in “road shows,” investor presentations, marketing events and other selling efforts and effecting a stock or unit split or combination, recapitalization or reorganization);
(vii)make available for reasonable inspection during normal business hours by any seller of Registrable Shares, any underwriter participating in any disposition pursuant to such Registration Statement, and any attorney, accountant or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors, employees and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such Registration Statement, subject to any confidentiality and other restrictions which the Company reasonably deems necessary;
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(viii)use its reasonable best efforts to cause all such Registrable Shares to be listed on the principal U.S. securities exchange on which securities of the same class issued by the Company are then listed and to cause such Registrable Shares to be registered with or approved by such other Governmental Entities as may be necessary to enable the sellers thereof to consummate the disposition of such Registrable Shares;
(ix)if requested, cause to be delivered, immediately prior to the effectiveness of the Registration Statement (and, in the case of an Underwritten Offering, at the time of delivery of any Registrable Shares sold to the underwriters pursuant thereto), letters from the Company’s independent certified public accountants addressed to each underwriter, if any, stating that such accountants are independent public accountants within the meaning of the Securities Act and the applicable rules and regulations adopted by the SEC thereunder, and otherwise in customary form and covering such financial and accounting matters as are customarily covered by letters of the independent certified public accountants delivered in connection with primary or secondary underwritten public offerings, as the case may be;
(x)make generally available to its stockholders a consolidated earnings statement (which need not be audited) for the twelve (12) months beginning after the effective date of a Registration Statement as soon as reasonably practicable after the end of such period, which earnings statement shall satisfy the requirements of an earning statement under Section 11(a) of the Securities Act;
(xi) to the extent that any Holder, in its sole and exclusive judgment, might be deemed to be an underwriter of any Registrable Shares or a controlling person of the Company, permit such Holder to participate in the preparation of such registration or comparable statement and to allow such Holder to provide language for insertion therein, in form and substance satisfactory to the Company, which in the reasonable judgment of such Holder and its counsel should be included;
(xii)in the event of the issuance of any stop order suspending the effectiveness of a Registration Statement, or the issuance of any order suspending or preventing the use of any related Prospectus or suspending the qualification of any Common Stock included in such Registration Statement for sale in any jurisdiction, use reasonable best efforts to promptly obtain the withdrawal of such order;
(xiii)cooperate with the Holders covered by the registration statement and the managing underwriter or agent, if any, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing securities to be sold under the Registration Statement, or the removal of any restrictive legends associated with any account at which such securities are held, and enable such securities to be in such denominations and registered in such names as the managing underwriter, or agent, if any, or such Holders may request and
(xiv)promptly notify each seller of Registrable Shares and the underwriter or underwriters, if any:
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(A)when the Registration Statement, the Prospectus or any Prospectus supplement or post-effective amendment to the Registration Statement has been filed and, with respect to the Registration Statement or any post-effective amendment, when the same has become effective;
(B)of any written comments of the SEC or of any written request by the SEC for amendments or supplements to the Registration Statement or Prospectus;
(C)of the notification to the Company by the SEC of its initiation of any proceeding with respect to the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement; and
(D)of the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Shares for sale under the applicable securities or “blue sky” laws of any jurisdiction.
(b)The Company shall use its reasonable best efforts to ensure that no Registration Statement (including any amendments or supplements thereto and Prospectuses contained therein) shall contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein not misleading (except, with respect to any Holder, for an untrue statement or alleged untrue statement of a material fact or omission or alleged omission of a material fact made in reliance on and in conformity with written information furnished to the Company by or on behalf of such Holder specifically for use therein).
(c)The Company shall make available to each Holder whose Registrable Shares are included in a Registration Statement (i) promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company, one copy of each Registration Statement and any amendment thereto, each preliminary Prospectus and Prospectus and each amendment or supplement thereto, each letter written by or on behalf of the Company to the SEC or the staff of the SEC (or other governmental agency or self-regulatory body or other body having jurisdiction, including any domestic or foreign securities exchange), and each item of correspondence from the SEC or the staff of the SEC (or other governmental agency or self-regulatory body or other body having jurisdiction, including any domestic or foreign securities exchange), in each case relating to such Registration Statement (other than any portion thereof which contains information for which the Company has sought confidential treatment), and (ii) such number of copies of a Prospectus, including a preliminary Prospectus, and all amendments and supplements thereto, and all related free-writing prospectuses and such other documents as such Holder may reasonably request in order to facilitate the disposition of the Registrable Shares owned by such Holder. The Company will promptly notify each Holder of the effectiveness of each Registration Statement or any post-effective amendment. The Company will promptly respond to any and all comments received from the SEC, with a view towards causing each Registration Statement or any amendment thereto to be declared effective by the SEC as soon as reasonably practicable and shall file an acceleration request as soon as reasonably practicable following the resolution or clearance of all SEC comments or, if applicable, following notification by the SEC that any such Registration Statement or any amendment thereto will not be subject to review.
(d)At all times after the Company has filed a registration statement with the SEC pursuant to the requirements of either the Securities Act or the Exchange Act, the Company shall file all reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder, and take such further action as any Holders may reasonably request, to the extent required to enable such Holders to be eligible to sell Registrable Shares pursuant to Rule 144 (or any similar rule then in effect).
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(e)The Company may require each seller of Registrable Shares as to which any registration is being effected to furnish in writing to the Company any other information regarding such seller and the distribution of such securities as the Company may from time to time reasonably request in writing, including, but not limited to, a shareholder questionnaire that may include a certified statement as to the number of shares of Common Stock beneficially owned by each Holder and the natural persons thereof that have voting and dispositive control over the Registrable Shares.
(f)Each seller of Registrable Shares agrees by having its shares treated as Registrable Shares hereunder that, upon notice that the Prospectus included in such Registration Statement (or any document incorporated therein) contains an untrue statement of a material fact or omits any material fact necessary to make the statements therein not misleading or that such Prospectus or Registration Statement (or any document incorporated therein) must be amended or supplemented for any other reason (a “Suspension Notice”), such seller will forthwith immediately discontinue disposition of Registrable Shares for a reasonable length of time not to exceed sixty (60) days until such seller is advised in writing by the Company that the use of the Prospectus may be resumed and is furnished with a supplemented or amended Prospectus as contemplated by Section 5(a)(v) hereof, and, if so directed by the Company, such seller will deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such seller’s possession, of the Prospectus covering such Registrable Shares current at the time of receipt of such notice; provided, however, that such postponement of sales of Registrable Shares by the Holders shall not exceed ninety (90) days in the aggregate in any one (1) year. If the Company shall give any notice to suspend the disposition of Registrable Shares pursuant to a Prospectus, the Company shall extend the period of time during which the Company is required to maintain the Registration Statement effective pursuant to this Agreement by the number of days during the period from and including the date of the giving of such notice to and including the date such seller either is advised by the Company that the use of the Prospectus may be resumed or receives the copies of the supplemented or amended Prospectus contemplated by Section 5(a)(v). In any event, the Company shall not be entitled to deliver more than three (3) Suspension Notices in any one (1) year.
6. Registration Expenses.
(a)All expenses incident to the Company’s performance of or compliance with this Agreement, including, without limitation, all registration and filing fees, fees and expenses of compliance with securities or “blue sky” laws, listing application fees, printing expenses, transfer agent’s and registrar’s fees, cost of distributing Prospectuses in preliminary and final form as well as any supplements thereto, and fees and disbursements of counsel for the Company and all independent certified public accountants and other Persons retained by the Company (all such expenses being herein called “Registration Expenses”) (but not including any underwriting discounts or commissions attributable to the sale of Registrable Shares, any taxes of any kind (including, without limitation, transfer taxes) with respect to any disposition, sale or transfer of Registrable Shares, or fees and expenses of more than one counsel representing the Holders of Registrable Shares), shall be borne by the Company. In addition, the Company shall pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance which the Company may elect to obtain and the expenses and fees for listing the securities to be registered on each securities exchange on which they are to be listed.
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(b)In connection with each registration initiated hereunder (whether a Demand Registration or a Piggyback Registration), the Company shall reimburse the Holders covered by such registration or sale for the reasonable fees and reasonable disbursements of one law firm, plus local counsel as necessary, chosen by the Holders of a majority of the Registrable Shares included in such registration or sale.
(c)The obligation of the Company to bear the expenses described in Section 6(a) and to reimburse the Holders for the expenses described in Section 6(b) shall apply irrespective of whether a registration, once properly demanded, if applicable, becomes effective, is withdrawn or suspended, is converted to another form of registration and irrespective of when any of the foregoing shall occur; provided, however, that Registration Expenses for any supplements or amendments to a Registration Statement or Prospectus resulting from a misstatement furnished to the Company by a Holder shall be borne by such Holder. If any Registration Statement for a Demand Registration is withdrawn solely at the request of a Holder of Registrable Shares (unless withdrawn following postponement of filing by the Company in accordance with Sections 2(d)(i) or (ii)), then at the election of the requesting Holder, either such Holder shall bear the Registration Expenses for such Registration Statement, or the number of Demand Registrations available to such Holder shall be reduced by one.
7. Distribution of Rights upon Dissolution of the Shareholder.
If at any time after the execution date of this Agreement, a Shareholder ceases to exist for any reason as a legal entity (a “Dissolution”) and prior to such Dissolution a Shareholder distributed its shares in the Company to its members or if a Shareholder has otherwise distributed such shares to its members, then such members shall have the same rights and obligations under this Agreement as granted to such Shareholder as if such Dissolution had not occurred.
8. Indemnification.
(a)The Company shall indemnify, to the fullest extent permitted by law, each Holder, each underwriter for such Holder, their respective officers, directors and Affiliates and each Person who controls such Holder or underwriter (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and expenses (collectively, “Losses”), arising out of or based upon any untrue or alleged untrue statement of material fact contained in any Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading or any violation or alleged violation by the Company of the Securities Act, the Exchange Act or applicable “blue sky” laws, except insofar as the same are made in reliance and in conformity with information relating to such Holder furnished in writing to the Company by such Holder expressly for use therein or caused by such Holder’s failure to deliver to such Holder’s immediate purchaser a copy of the Registration Statement or Prospectus or any amendments or supplements thereto (if the same was required by applicable law to be so delivered).
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(b)In connection with any Registration Statement in which a Holder of Registrable Shares is participating, each such Holder shall furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus and, shall indemnify, to the fullest extent permitted by law, the Company, its officers, directors Affiliates, and each Person who controls the Company (within the meaning of the Securities Act) against all Losses arising out of or based upon any untrue or alleged untrue statement of material fact contained in the Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that the same are made in reliance and in conformity with information relating to such Holder furnished in writing to the Company by such Holder expressly for use therein or caused by such Holder’s failure to deliver to such Holder’s immediate purchaser a copy of the Registration Statement or Prospectus or any amendments or supplements thereto (if the same was required by applicable law to be so delivered) after the Company has furnished such Holder with a sufficient number of copies of the same; provided, however, that the obligation to indemnify shall be several, not joint and several, among such Holders and the liability of each such Holder shall be in proportion to and limited to the net amount received by such Holder from the sale of Registrable Shares pursuant to such Registration Statement.
(c)Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification; provided, however, that the failure to notify the indemnifying party shall not relieve the indemnifying party from any liability that it may have under this Section 8 except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided, further, that the failure to notify the indemnifying party shall not relieve the indemnifying party from any liability that it may have to an indemnified party otherwise than under this Section 8 and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent will not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party there may be one or more legal or equitable defenses available to such indemnified party which are in addition to or may conflict with those available to another indemnified party with respect to such claim. Failure to give prompt written notice shall not release the indemnifying party from its obligations hereunder.
(d)The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and shall survive the transfer of securities.
(e)If the indemnification provided for in or pursuant to this Section 8 is due in accordance with the terms hereof, but is held by a court to be unavailable or unenforceable in respect of any Losses referred to herein, then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified Person as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions which result in such Losses as well as any other relevant equitable considerations. The relative fault of the indemnifying party on the one hand and of the indemnified Person on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party, and by such party’s relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
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In no event shall the liability of any selling Holder be greater in amount than the amount of net proceeds received by such Holder upon such sale or the amount for which such indemnifying party would have been obligated to pay by way of indemnification if the indemnification provided for under Section 8(a) or 8(b) hereof had been available under the circumstances.
9. Participation in Underwritten Offerings.
No Person may participate in any registration hereunder which is underwritten unless such Person (a) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.
10.Rule 144.
The Company covenants that it will use reasonable best efforts to file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder, and it will take such further action as any Holder may reasonably request to make available adequate current public information with respect to the Company meeting the current public information requirements of Rule 144 under the Securities Act, to the extent required to enable such Holder to sell Registrable Shares without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such Rule may be amended from time to time or (ii) any similar rule or regulation hereafter adopted by the SEC. Upon the request of any Holder, the Company will deliver to such Holder a written statement as to whether it has complied with such information and requirements.
11. Miscellaneous.
(a)Notices. All notices, requests, consents and other communications required or permitted hereunder shall be in writing and shall be hand delivered or mailed postage prepaid by registered or certified mail or by email transmission:
if to the Company: |
Okeanis Eco Tankers Corp. Ethnarchou Makariou av, & 2 D. Falireos str. 185 47 N. Faliro, Greece Attention: Email: |
with copies (which shall not constitute notice) to: |
Watson Farley & Williams LLP 250 West 55th Street New York, New York 10019 Attention: Email: |
if to a Shareholder: |
Glafki Marine Corp. |
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Ethnarchou Makariou av, & 2 D. Falireos str. 185 47 N. Faliro, Greece Attention: Email: and Hospitality Assets Corp. Ethnarchou Makariou av, & 2 D. Falireos str. 185 47 N. Faliro, Greece Attention: Email: |
with copies (which shall not constitute notice) to: |
Attention: Email: and Attention: Email: |
If to a transferee Holder, to the address of such Holder set forth in the transfer documentation provided to the Company or at such other address as such party each may specify by written notice to the others, and each such notice, request, consent and other communication shall for all purposes of the Agreement be treated as being effective or having been given when delivered personally or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of incoming mail, addressed and postage prepaid as aforesaid.
(b)No Waivers. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.
(c)Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, it being understood that subsequent Holders of the Registrable Shares are intended third party beneficiaries of this Agreement. Any purported assignment of rights under this Agreement to a Person other than a Shareholder, a successor of a Shareholder or Affiliate of a Shareholder shall be void unless made in a duly executed writing signed by the assignor.
(d)Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
(e)Jurisdiction. Each of the parties hereto hereby irrevocably and unconditionally consents to submit to the exclusive jurisdiction and venue of the United States District Court for the Southern District of New York and in the courts hearing appeals therefrom unless no basis for federal jurisdiction exists, in which event each party hereto irrevocably consents to the exclusive jurisdiction and venue of the Supreme Court of the State of New York, New York County, and the courts hearing appeals therefrom, for any action, suit or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby (but if the Supreme Court of the State of New York, New York County, and the courts hearing appeals therefrom, do not accept this jurisdiction, then each party hereto agrees that any suit relating to this Agreement may be brought in any court).
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Each of the parties hereto irrevocably and unconditionally waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any such action, suit or proceeding, any claim that such party is not personally subject to the jurisdiction of the aforesaid courts for any reason, other than the failure to serve process in accordance with this Section 11(e), that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise), and to the fullest extent permitted by applicable law, that the action, suit or proceeding in any such court is brought in an inconvenient forum, that the venue of such action, suit or proceeding is improper, or that this Agreement, or the subject matter hereof, may not be enforced in or by such courts and further irrevocably waives, to the fullest extent permitted by applicable law, the benefit of any defense that would hinder, fetter or delay the levy, execution or collection of any amount to which the party is entitled pursuant to the final judgment of any court having jurisdiction. Each of the parties hereto expressly acknowledges that the foregoing waivers are intended to be irrevocable under the laws of the State of New York and of the United States of America; provided, that consent by the parties hereto to jurisdiction and service contained in this Section 11(e) is solely for the purpose referred to in this Section 11(e) and shall not be deemed to be a general submission to said courts or in the State of New York other than for such purpose.
(f)Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.
(g)Counterparts. This Agreement may be executed in any number of counterparts, and may be signed electronically or by PDF, with the same effect as if all signatory parties hereto had signed the same document. All counterparts shall be construed together and shall constitute one and the same instrument.
(h)Captions. The headings and other captions in this Agreement are for convenience and reference only; they are not part of this Agreement and shall not be used in interpreting, construing or enforcing any provision of this Agreement.
(i)Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such a determination, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties hereto as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.
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(j)Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given without the prior written consent of the Holders of a majority of the Registrable Shares; provided, however, that without a Holder’s written consent no such amendment, modification, supplement or waiver shall affect adversely such Holder’s rights hereunder in a discriminatory manner inconsistent with its adverse effects on rights of other Holders hereunder (other than as reflected by the different number of shares held by such Holder); and provided, further, that the consent or agreement of the Company shall be required with regard to any termination, amendment, modification or supplement of, or waivers or consents to departures from, the terms hereof, which affect the Company’s obligations hereunder.
(k)Aggregation of Shares. All Registrable Shares held by or acquired by any Affiliated Persons will be aggregated together for the purpose of determining the availability of any rights under this Agreement.
(l)Specific Performance. In the event of a breach by a party hereto of its obligations under this Agreement, each other party hereto, in addition to being entitled to exercise all rights granted by law, including recovery of damages, may be entitled to specific performance of its rights under this Agreement. Each party hereto agrees that monetary damages may not be adequate compensation for any loss incurred by reason of a breach by it of any provision of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it will waive the defense that a remedy at law would be adequate.
(m)Entire Agreement. This Agreement constitutes the entire agreement of the parties hereto relating to the matters contained herein, superseding all prior contracts or agreements, whether oral or written, relating to the matters contained herein.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first indicated above.
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OKEANIS ECO TANKERS CORP. |
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By: |
/s/ Iraklis Sbarounis |
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Name: Iraklis Sbarounis |
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Title: Authorized Person |
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GLAFKI MARINE CORP. |
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By: |
/s/ Dimitra Kontogogou |
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Name: Dimitra Kontogogou |
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Title: Secretary |
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HOSPITALITY ASSETS CORP. |
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By: |
/s/ Antonis Kyrou |
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Name: Antonis Kyrou |
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Title: Secretary |
Signature Page to Registration Rights Agreement
Exhibit 4.15
Dated: 1st March 2024
[●]
- and –
KYKLADES MARITIME CORPORATION
ETS SERVICES AGREEMENT
1
THIS ETS Services Agreement (the “Agreement”) is made on 1st March 2024
BETWEEN:
(1) |
[●] whose registered office is at [●] (the “Owners” or “Registered Owners" ); and |
(2) |
KYKLADES MARITIME CORPORATION whose registered office is at 80 Broad street, Monrovia, Liberia (the “Managers”); |
WHEREAS
A. |
The Owners and the Managers have entered into a ship management agreement originally dated [●] as amended and restated on 1st November 2023 for the technical management of m.t. “[●]” (the “Management Agreement”). |
B. |
Following the EU Commission’s Implementing Regulation 2023/2599 of 22 November 2023 laying down rules for the application of Directive 2003/87/EC, applicable to the maritime industry from 1 January 2024, the Parties aim to allocate responsibility for obtaining, transferring and surrendering emission allowances under EU Emission Trading System (“EU ETS”) and any other similar systems imposed from time to time by applicable lawful authorities that regulate the issuance, allocation, trading or surrendering of emission allowances. |
C. |
The Parties have agreed to enter into this Agreement for the purpose of the Owners mandating and the Managers accepting such mandate for obtaining, transferring and surrendering emission allowances under the EU ETS and any other similar systems imposed by applicable lawful authorities. |
D. |
For the purposes of this Agreement it is acknowledged that: |
The organization mandated by the Owners |
Name |
KYKLADES MARITIME CORPORATION |
The IMO unique company and registered owner identification number |
1153018 |
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The country of registration, as recorded under the IMO |
Greece |
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The Address of principle place of business |
Ethnarchou Makariou Av. & 2 D. Falireos Str. 185 47 Piraeus, |
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The Owner |
Name |
[●] |
The IMO unique company and registered owner identification number |
[●] |
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The designated contact person of the Owner |
First Name |
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Last Name |
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Title |
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Business Address |
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Business Telephone Number |
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Business E-mail Address |
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E. |
The Managers are registered under Thetis MRV in Greece and function as an ISM Company, responsible for implementing the Safety Management System (SMS) that is required under the ISM Code and have duly appointed a designated person ashore (DPA) who is responsible for overseeing the implementation of the ISM Code |
1. |
DEFINITIONS |
1.1 |
In this Agreement: |
“Emission Allowances” means an allowance, credit, quota, permit or equivalent, representing a right of a vessel to emit a specified quantity of greenhouse gas emissions recognised by the Emission Scheme(s).
“Emission Data” means data and records of the Vessel’s emissions in the form and manner necessary to calculate its Emission Allowances.
“Emission Scheme(s)” means a greenhouse gas emissions trading scheme which for the purposes of this Agreement shall include the European Union Emissions Trading System and any other similar systems imposed by applicable lawful authorities that regulate the issuance, allocation, trading or surrendering of Emission Allowances.
“European Union Emissions Trading System” or “EU ETS”, means the system for greenhouse gas emission allowance trading within the European Union established by the Directive 2003/87/EC of the European Parliament and of the Council, as amended by Directive (EU) 2023/959 of the European Parliament and of the Council, which provides for the inclusion of maritime transport emissions within that system.
“MRV” means the Monitoring, Reporting and Verification of CO2 Emissions from Ships Regulation (EU) 2015/757, as amended or supplemented from time to time.
“Party” means a party to this Agreement.
“Responsible Entity” means the party responsible for compliance under any Emission Scheme(s) and MRV obligations applicable to the Vessel by law and/or regulation.
“Vessel” means m.t. [●] with IMO identification number [●].
1.2 |
Defined expressions in the Management Agreement shall have the same meanings when used in this Agreement unless the context otherwise requires or unless otherwise defined in this Agreement. |
1.3 |
Unless a contrary indication appears, a reference in this Agreement to: |
(a) |
any agreement or instrument is a reference to this Agreement or instrument as amended, novated, supplemented, extended or restated; |
(b) |
“day” means a calendar day; |
(c) |
“law” includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European |
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Commission, the United Nations or its Security Council, and any provision of law is a reference to that provision as amended or re-enacted;
(d) |
a “regulation” includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation; |
(e) |
words denoting the singular number shall include the plural and vice versa; |
(f) |
clause headings are for ease of reference only and are not to be used for the purposes of construction or interpretation. |
2. |
SERVICES |
It is hereby agreed that, on the terms and conditions of this Agreement, the Managers are made the Responsible Entity under any Emission Scheme(s) applicable to the Vessel and the following shall apply:
(i) |
The Managers shall provide the Owners with Emission Data in accordance with sub-clause (ii) below together with the calculation of the Emission Allowances required. |
(ii) |
The Managers shall provide the Owners with Emission Data in a timely manner to enable compliance with any Emission Scheme(s) applicable to the Vessel throughout the period of this Agreement, at their expense, and/or at regular intervals to be agreed between the Parties. Such Emission Data shall be verified by an accredited verifier, where applicable, and, if required by the Owners, audited by an independent party approved by them, at the Owners’ expense. |
(iii) |
The Managers shall monitor and report Emission Data to the administering authority in accordance with the Emission Scheme(s) applicable to the Vessel. |
(iv) |
The Managers shall each month prepare and present to the Owners, in writing, their estimates of the Emission Allowances for the Vessel for the ensuing month, including the reconciliation of the Vessel’s actual emissions under each Emission Scheme(s) applicable to the Vessel for the previous months and adjustment for any previous shortfall or excess. |
(v) |
The Managers shall purchase each month the Emission Allowances according to their estimates of Emission Allowances as per sub-clause (iv) and include in the report the actual cost of acquiring the respective Emission Allowances. |
(vi) |
The Owners shall, within 14 days after receipt by the Managers of the estimates of the Emission Allowances and their acquisition costs, transfer to the Managers the respective funds and the Managers shall notionally allocate them to the Owners. |
(vii) |
No later than fourteen (14) days prior to termination of this Agreement in accordance with Clause 4, the Managers shall prepare and present to the Owners, in writing, their estimates of the Emission Allowances due for the Vessel for the final month or part thereof, except that where the Agreement is terminated in circumstances which do not allow the Managers fourteen (14) days’ time the Managers shall notify the Owners of said Emission Allowances as soon as possible. Within 14 days of such notification, but not later than the termination of the Management Agreement, the Emission Allowances notified by the Managers shall be paid by the Owners to the Managers in accordance with sub-clause (vi). |
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(viii) |
Any difference between the Emission Allowances estimated according to sub-clause (vii) above and the Emission Allowances actually due according to the Emission Scheme(s) applicable to the Vessel as at the time and date of termination of this Agreement, shall be reconciled and settled between the Parties within 14 days. |
(ix) |
The Managers shall surrender the Emission Allowances in accordance with the Emission Scheme(s) applicable to the Vessel. |
(x) |
The Manager shall be responsible for meeting the requirements of MRV for the Vessel in accordance with all applicable laws and regulations. The Manager shall collect and submit all required data to the relevant authorities, and shall ensure that the Vessel complies with all applicable MRV regulations. The Manager shall collect the following data for the Vessel in accordance with MRV; Fuel oil consumption, Emissions of CO2, and Voyage information. The Manager shall submit the collected data to the relevant authorities in accordance with MRV. The Manager has developed and implemented an MRV Monitoring Plan verified by an independent accredited verifier in accordance with the EU MRV regulation. |
3. |
FEE |
Payment for the Services provided under this Agreement shall be deemed to be covered by the Annual Management Fee payable by the Owners to the Managers as set forth in the Management Agreement and, therefore, no additional payment shall be required for such Services hereunder. For the avoidance of doubt, the Parties agree that the Owners shall pay no additional fee to the Managers for each port call in an area subject to any Emission Scheme(s) applicable to the Vessel.
4. |
TERMINATION |
4.1 |
The provision of the Services shall continue unless earlier terminated (a) by a two-month written notice given by either Party or (b) in accordance with Clause 4.2. |
4.2 |
A Party may terminate this Agreement with immediate effect by sending a written notice to the other Party if the other Party: |
(a) |
commits a material breach of its obligations under this Agreement and, in the case of a breach capable of remedy such breach is not remedied within 14 days of being notified in writing specifically required to do so; |
(b) |
is unable or admits inability to pay its debts as they fall due; |
(c) |
disposes of the whole or any substantial part of its undertaking or assets; or |
(d) |
ceases to carry on all or any substantial part of its business. |
4.3 |
The Parties acknowledge and agree that, on the date of termination of the Management Agreement (the “Termination Date”) pursuant to Clause 21 (Duration of the Agreement) and Clause 22 (Termination) of the Management Agreement, this Agreement shall automatically terminate without further action on the part of any of the Parties and the provisions of this Agreement shall have no further force or effect following such Termination Date. |
5. |
MISCELLANEOUS |
5.1 |
This Agreement shall be effective as of 1st January 2024. |
5
5.2 |
Any provision of this Agreement may be modified or amended or waived only in writing. |
5.3 |
If any of the provisions of this Agreement is or becomes invalid, illegal or unenforceable, the validity, legality or enforceability, of the remaining provisions shall not in any way be affected or impaired. If any provision of this Agreement, or the application thereof to any person or entity or any circumstance, is invalid or unenforceable, the parties shall make suitable and equitable provision therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision. |
5.4 |
This Agreement may be executed in any number of counterparts. |
6. |
GOVERNING LAW AND JURISDICTION |
6.1 |
This Agreement and any dispute or claim arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by and construed in accordance with English law |
6.2 |
The Parties hereby submit for all purposes connected herewith to the exclusive jurisdiction of the courts of England in relation to any matter arising out of this Agreement. |
In Witness whereof the Parties have caused this Agreement to be duly executed as a deed by on the day and year first above written.
EXECUTED AS A DEED |
) |
by [●] |
) |
acting by |
) |
duly authorised |
) |
|
|
in the presence of: |
) |
EXECUTED AS A DEED |
) |
by KYKLADES MARITIME CORPORATION |
) |
acting by |
) |
duly authorised |
) |
|
|
in the presence of: |
) |
6
Exhibit 8.1
List of Subsidiaries
Name of Subsidiary (and Name |
Place of Incorporation |
Interest held by Okeanis Eco |
|
|
|
Therassia Marine Corp. |
Liberia |
100% |
|
|
|
Milos Marine Corp. |
Liberia |
100% |
|
|
|
Ios Maritime Corp. |
Liberia |
100% |
|
|
|
Omega One Marine Corp. |
Marshall Islands |
100% |
|
|
|
Omega Two Marine Corp. |
Marshall Islands |
100% |
|
|
|
Omega Three Marine Corp. |
Marshall Islands |
100% |
|
|
|
Omega Four Marine Corp. |
Marshall Islands |
100% |
|
|
|
Omega Five Marine Corp. |
Marshall Islands |
100% |
|
|
|
Omega Six Marine Corp. |
Marshall Islands |
100% |
|
|
|
Omega Seven Marine Corp. |
Marshall Islands |
100% |
|
|
|
Omega Nine Marine Corp. |
Marshall Islands |
100% |
|
|
|
Omega Ten Marine Corp. |
Marshall Islands |
100% |
|
|
|
Omega Eleven Marine Corp. |
Marshall Islands |
100% |
|
|
|
Nellmare Marine Ltd |
Marshall Islands |
100% |
|
|
|
Anassa Navigation S.A. |
Marshall Islands |
100% |
|
|
|
Arethusa Shipping Ltd |
Marshall Islands |
100% |
|
|
|
Moonsprite Shipping Corp. |
Marshall Islands |
100% |
|
|
|
Theta Navigation Ltd |
Marshall Islands |
100% |
|
|
|
Ark Marine S.A. |
Marshall Islands |
100% |
|
|
|
OET Chartering Inc. |
Marshall Islands |
100% |
Exhibit 11.1
OKEANIS ECO TANKERS CORP.
INSIDER TRADING POLICY
Effective: December 6, 2023
All directors, officers and employees (each a “Covered Individual”) of Okeanis Eco Tankers Corp. (collectively with its subsidiaries, the “Company”), as well as their Related Parties, (as defined herein) are subject to the provisions of this Insider Trading Policy (this “Policy”). In addition, certain aspects of this Policy shall only apply to persons that have been designated as primary insiders by the Company1 (in such context, each shall be referred to as a “Primary Insider”), as well as their Closely Associated Persons (as defined herein). The Chief Financial Officer or the Legal Counsel shall notify all persons defined as Primary Insiders in the form of the notification included in Annex A hereto. This Policy supersedes and amends and restates all previous insider trading policies of the Company.
1.Trading on Inside Information Prohibited
It is a serious violation of Regulation (EU) No 596/2014 (the “EU Market Abuse Regulation” or “MAR”), U.S. federal and U.S. state securities laws, and of Company policy, for any Covered Individual or any Related Party to buy or sell common shares and other equity securities or similar financial instruments of the Company (collectively, “Equity Securities”) or any other securities or financial instruments of the Company2 (together with the Equity Securities, the “Company Securities”) while in possession of material non-public information/inside information relating directly or indirectly to the Company, any Company Securities or to engage in any other action to take advantage of such information or to pass it on to others, including cancellation or amendment or an order concerning Company Securities where such order was placed before the person possessed material non-public information/inside information. This prohibition also applies to financial instruments to which the inside information relates and information relating to any other company, including customers, vendors, charterers, managers, partners or investments obtained in the course of employment. It is the policy of the Company that no Covered Individual who, in the course of working for or on behalf of the Company, learns of material nonpublic information/inside information about a company with which the Company does business, including a customer or supplier of the Company, may trade in that company’s securities until the information becomes public or is no longer material.
Transactions that may be necessary or justifiable for independent reasons (such as the need to raise money for a personal emergency expenditure) are no exception to this Policy. Even the appearance of any improper transactions should be avoided to preserve the Company’s reputation for adhering to the highest standards of ethical conduct.
2.Material Information
1 List of primary insiders are available here: https://live.euronext.com/en/product/equities/MHY641771016-XOSL/primary-insiders
2 Including derivatives or other financial instruments (as defined in point (15) of Article 4(1) of Directive 2014/65/EU (MiFID II)) linked to the Company’s shares or debt instruments.
Material information is any information that a reasonable investor would likely consider important in a decision to buy, hold or sell Company Securities – in short, any information which could reasonably affect the price, either favorably or unfavorably, of Company Securities.
While it is not possible to provide an exhaustive list, the following are some of the types of information that would ordinarily be considered material: (i) news of a pending or proposed corporate acquisition, disposition, or other significant business combination, (ii) financial results, especially quarterly and year-end earnings (and projections of future earnings or losses), and significant changes in financial results or liquidity, (iii) significant changes in corporate strategy, dividend policy or objectives, (iv) take-over bids or bids to buy back common shares of the Company, (v) changes in ownership that may affect control of the Company, (vi) significant changes in management, (vii) significant changes in reserve levels or practices, (viii) public or private issues of additional equity or debt securities, (ix) significant changes in capital structure, (x) events of default under financings or other agreements, (xi) actual or threatened major litigation, or the resolution of such litigation, (xii) significant changes in operating or financial circumstances, such as significant changes in material contracts (such as charters and management agreements), cash-flow changes, liquidity changes, or investment asset impairments, (xiii) the declaration of dividends other than in the ordinary course or a change in dividend policy, (xiv) financial projections, (xv) significant charter hire developments (such as the amount of additional hire earned by the Company in a quarter) and (xvi) significant new ventures.
3.Non-public Information
Non-public information is any information that has not already been disclosed generally to the public. Information about the Company that is not yet in general circulation should be considered nonpublic. All information that a Covered Individual learns about the Company or its business plans in connection with his/her employment is potentially “insider” information until publicly disclosed.
If you are aware of material nonpublic information, you may not trade until the information has been disclosed broadly to the marketplace (such as by press release or a U.S. Securities and Exchange filing) and the investing public has had time to absorb the information fully. To avoid the appearance of impropriety, as a general rule, information should not be considered fully absorbed by the marketplace until the second full trading day after the information is released. If, for example, the Company were to make an announcement on a Monday before the market opens, you should not trade in the Company’s securities until Wednesday. If an announcement were made on a Friday during the market day, Wednesday generally would be the first eligible trading day.
4.Inside Information
Inside information under MAR is information of a precise nature, which has not been made public, relating, directly or indirectly, to the Company or to one or more financial instruments of the Company, and which, if it were made public, would be likely to have a significant effect on the prices of those financial instruments or on the price of related derivative financial instruments.
A. Precise Nature
Information is of a “precise nature” if it indicates circumstances which exist or are expected to come into existence, or an event that has occurred or is expected to occur, where a conclusion can be drawn about the possible effect of those circumstances or events on the prices of the Company’s financial instruments.
B. Protracted Process
In the case of a protracted process that is intended to bring about, or that results in a particular circumstances or event (e.g., an M&A transaction), the intermediate steps of that process may be deemed to be inside information if they satisfy the criteria described above.
C. Likely to have a significant effect
Information which, if it were made public, would be likely to have a significant effect on the prices of financial instruments, shall mean information a reasonable investor would be likely to use as part of the basis of his or her investment decisions.
5.Twenty-Twenty Hindsight
If a Covered Individual’s securities transactions become the subject of scrutiny, they will be viewed after-the-fact with the benefit of hindsight. As a result, before engaging in any transaction, Covered Individuals should carefully consider how regulators and others might view such transaction in hindsight.
5.Transactions by Related Parties
The restrictions set forth in this Policy apply equally to family members of Covered Individuals and to any entity over which the Covered Individual or such other family members exercise or share investment control such as a partnership or family trust, or are directed by a Covered Individual or are subject to a Covered Individual’s influence or control (such as parents or children who consult with a Covered Individual before they trade in securities). Such parties are herein collectively referred to as “Related Parties”. For purposes of this Policy, family members include, if such person shares your household, a person’s (including through adoptive relationship) spouse, parents, grandparents, children, siblings, mothers-in-law and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law and anyone, whether or not related, who shares such person’s home (other than domestic employees). Covered Individuals are responsible for the compliance of Related Parties.
Furthermore, under MAR, the term “Closely Associated Person” as used herein includes (a) a spouse or a partner considered to be equivalent to a spouse, (b) a dependent child, (c) a relative who has shared same household for at least one year on the date of the transaction concerned and (d) a legal person, trust or partnership, the managerial responsibilities of which are discharged by a Primary Insider or by a person referred to in (a), (b) or (c), which is directly or indirectly controlled by such a person, which is set up for the benefit of such person, or the economic interests of which are substantially equivalent to those of such person.
Each Primary Insider shall, upon election or appointment, provide the Chief Financial Officer and the Legal Counsel with the necessary details about her/him and its Closely Associate Persons for registration in the primary insider register of Oslo Børs.
Each Primary Insider shall, as soon as practicable after being notified pursuant to the introduction of this Policy, forward to the Chief Financial Officer and the Legal Counsel a list of persons who qualify as its Closely Associated Persons, unless this has already been provided.. The Primary Insider shall notify the Chief Financial Officer and the Legal Counsel of any later amendments or updates to such list as and when relevant. Each Primary Insider shall inform its Closely Associated Persons in writing about their mandatory obligations and keep a copy of such notification. The Chief Financial Officer or the Legal Counsel shall assist each Primary Insider with the notification and the notifications shall be made in the form included in Annex B hereto.
6.Tipping Information to Others
Whether the information is proprietary information about the Company or non-public information that could have an impact on the price of Company Securities, Covered Individuals must not pass such information on to others, including, without limitatation, family members and friends (either explicitly or by way of generally advising others to buy or sell Company Securities).
7.Blackout Periods
It is also a violation of this Policy for any Covered Individual and any Related Party of said Covered Individual to purchase or sell Company Securities:
A. Quarterly and Annual Results
For a period beginning on the earlier of (i) 10 days after the last day of the Company’s quarter and (ii) 30 days prior anticipated release of the relevant financial results for such quarter or year end, and ending at the beginning of the second full business day after the release of the Company’s quarterly or annual results to the public. Thus, if the Company’s results are released on a Monday before the market opens, Wednesday generally would be the first day on which Covered Individuals and Related Parties should trade. If the Company’s results are released on a Friday while the market is open, Wednesday generally would be the first day on which Covered Individuals and Related Parties should trade.
Under MAR, a Primary Insider and its Closely Associated Persons are strictly prohibited from conducting any transactions on its own account or for the account of a third party, directly or indirectly, relating to the shares or debt instruments of the Company or to derivatives or other financial instruments linked to them during a closed period of 30 calendar days prior to the anticipated release of the relevant financial results (the “MAR Blackout Period”).
B. Public Announcements of Material Information
Immediately after the Company has made a public announcement of material information. The Company’s shareholders and the investing public should be afforded the time to receive the information and act upon it. As a general rule, Covered Individuals and Related Parties should not engage in any transactions until the beginning of the second full business day after the information has been released.
C. Anticipated Material Events
If the Company issues a suspension on trading because a material event is anticipated (e.g., financial development, a merger, acquisition or any other significant corporate action). In any such case, adequate notice shall be provided to Covered Individuals to whom such suspension applies. As a general rule, Covered Individuals and Related Parties should not engage in any transactions until the beginning of the second full business day after the material event has been disclosed or abandoned. In addition, no Covered Individual or Related Party may disclose to any outside third party that a special blackout period has been designated.
8.Additional Prohibited Transactions
Because the Company believes it is potentially improper and inappropriate for Covered Individuals to engage in short-term or speculative transactions involving Company Securities, it is the Company’s policy that:
A. Trading in Equity Securities on a Short-Term Basis
Covered Individuals and Related Parties who purchase Equity Securities in the open market are encouraged not to purchase and sell such Equity Securities on a short-term basis, although this Policy does not require any minimum holding period. This suggestion may not apply to certain types of transactions such as stock option exercises, the receipt of performance shares and the receipt of restricted shares; however, any such transactions should be discussed with the Company to avoid potential problems.
B. Short Sales
Selling Company Securities short by Covered Individuals is not permitted. Selling short is the practice of selling more securities than one owns, a technique used to speculate on a decline in the price.
C. Buying or Selling Puts, Calls or Derivatives
The purchase or sale of options of any kind, whether puts, calls or other derivative securities, related to Company Securities by Covered Individuals is not permitted. The speculative nature of the market for these financial instruments imposes timing considerations that are inconsistent with careful avoidance of the use, or even the appearance of use, of inside information. A put is a right to sell at a specified price a specific number of shares by a certain date and is utilized in anticipation of a decline in the share price.
A call is a right to buy at a specified price a specified number of shares by a certain date and is utilized in anticipation of a rise in the share price. A derivative is an option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege at a price related to an equity security, or similar securities with a value derived from the value of an equity security. This prohibition does not apply to securities issued by the Company.
9.Certain Exceptions
The following transactions are exempted from this Policy, however, under no circumstances can a Primary Insider or it Closely Associated Persons conduct any of the below transactions during a MAR Blackout Period:
A. Rule 10b5-1 Plans
A purchase or sale of Company Securities in accordance with a trading plan (a “Rule 10b5-1 Plan”) adopted in accordance with the SEC’s Rule 10b5-l(c) shall not be deemed to be a violation of this Policy-even though such trade takes place during a blackout period or while the Covered Individual making such trade was aware of material, non-public information. However, the trading plan must be adopted outside of a blackout period and at a time when such Covered Individual is not aware of material, non-public information. A trading plan is a contract, instruction or a written plan regarding the purchase or sale of securities, as more fully described in Rule 10b5-l(c). Each trading plan must be reviewed and approved by the Company prior to establishment to confirm compliance with this Policy and applicable securities laws.
In order to receive such approval, a Covered Individual must certify in writing that (i) such Covered Individual was not in possession of material nonpublic information about the Company at the time the Rule 10b5-1 Plan was adopted, (ii) that all trades made under the Rule 10b5-1 Plan will comply with Rule 10b5-1 Plan and applicable securities laws, and (iii) the Rule 10b5-1 Plan complies with the requirements of Rule 10b5-1. No such approval by the Company shall be considered the Company’s determination that the Rule 10b5-1 Plan satisfies the requirements of Rule 10b5-1. It shall be the sole responsibility of the person establishing the Rule 10b5-1 Plan to ensure that such plan complies with the requirements of Rule 10b5-1.
In order to be afforded the defense of using a trading plan, Covered Individual and other persons have a mandatory cooling-off period between Rule 10b5-1 Plan adoption and execution of a trade, as noted below:
- |
Directors and officers (as defined in § 240.16a-1(f) (Rule 16a-1(f) of the Securites Exchange Act of 1934, as amended) of the Company – The mandatory cooling-off period is the later of (i) 90 days following plan adoption or (ii) two business days following disclosure of the Company’s financial results for the fiscal quarter in which the plan was adopted (maximum of 120 days). |
- |
Key Employees and All Other Persons – 30 days following plan adoption. |
B. Stock Option Exercise
The exercise of stock options issued by the Company (but not the sale of any shares issued upon such exercise or purchase) is exempt from this Policy. This Policy does apply, however, to any sale of stock as part of a broker-assisted cashless exercise of an option, or any other market sale for the purpose of generating the cash needed to pay the exercise price of an option.
C. Issuance by the Company
If the Company directly issues securities to purchasers, then such issuance is exempt from this Policy. In addition, Covered Individuals are not prohibited from purchasing such Company issued securities from other holders. The exercise of warrants or conversion of convertible securities issued by the Company (but not the sale of any shares issued upon such exercise or purchase or conversion) is exempt from this Policy.
D. Gifts
Bona fide gifts of Company Securities are exempt from this Policy.
10.Confidentiality
The unauthorized disclosure of non-public information about the Company, whether or not for the purpose of facilitating improper trading in Company Securities, could cause serious harm for the Company. Covered Individuals should treat all such information as confidential and proprietary to the Company. All employees of the Company should refrain from discussing non-public information about the Company or developments within the Company with anyone outside the Company, except as required in the performance of their regular corporate duties and for legitimate business reasons.
This provision applies specifically (but not exclusively) to inquiries about the Company that may be made by the financial press, investment analysts or others in the financial community. Only certain designated officers may make communications on behalf of the Company. Unless an employee is expressly authorized to do so, any inquiries of this nature should be referred to the Company’s Chief Financial Officer.
11.Assistance
The ultimate responsibility for adhering to this Policy and avoiding improper transactions rests with the Covered Individual. It is imperative that Covered Individuals use their best judgment. Any person who has any questions about specific transactions may obtain additional guidance from the Chief Financial Officer.
12.Post-Termination Transactions
This Policy will continue to apply to Covered Individual’s and Related Party’s transactions in Company securities even after a Covered Individual has terminated his or her employment with or position as a director of the Company.
If a Covered Individual or Related Party is in possession of material nonpublic information when the Covered Individual’s employment or directorship terminates, the Covered Individual and his or her Related Parties may not trade in Company securities until that information has become public or is no longer material.
13.Informing the Company of Trading
Covered Individuals and their Related Parties must promptly inform the Company of any trading of, or other transactions with respect to, Company Securities. If a Covered Individual and/or its Related Parties carry out transactions in Company Securities, such Covered Individual and its Related Parties shall give prompt notice to the Chief Financial Officer and the Legal Counsel of the transaction in the form and with the information set out in Annex C hereto. The notification requirement applies to all transactions, including purchase/sale, share loans and transfers made or received in the form of gifts and inheritance (transfer of title) of Company Securities.
14.Public Disclosure of Trading
By notifying the Chief Financial Officer and the Legal Counsel of a transaction in accordance with section 13, the relevant Primary Insider or its Closely Associated Persons, as applicable, authorizes the Chief Financial Officer and the Legal Counsel to make the required filing of the transaction with the Norwegian Financial Supervisory Authority on its behalf. The Company will arrange for disclosure of the transaction notified pursuant to section 13 to the market. Any disclosure of transactions and related filings to the Norwegian Financial Supervisory Authority by the Chief Financial Officer and the Legal Counsel on behalf of a Primary Insider or its Closely Associated Persons is made at the sole responsibility of the Primary Insider or its Closely Associated Persons (as applicable). The Primary Insider or its Closely Associated Persons (as applicable) warrant that all information contained in a notification pursuant to section 13 is correct and accurate.
15.Other Reporting Obligations
Each Primary Insider shall, upon election or appointment, inform the Chief Financial Officer and the Legal Counsel of the size of that person’s direct and indirect holding(s) of Company Securities. Each Primary Insider shall ensure that its holding(s) of Company Securities is registered in the relevant securities register in such a manner that the legal name of the holder and the name of the relevant person – to the extent possible – appears.
16.Violations
Covered Individuals who violate this Policy will be subject to disciplinary action by the Company, which may include cash penalties, ineligibility for future participation in the Company’s incentive plans, and/or termination of employment.
Covered Individuals may also be subject to criminal and civil fines and penalties as well as imprisonment for engaging in transactions in the Company’s securities at a time when they have knowledge of material non-public information regarding the Company. In addition, Covered Individuals may be liable for improper transactions by any person to whom they have disclosed material non-public information regarding the Company, or to whom such person has made recommendations or expressed opinions on the basis of such information as to trading in the Company’s securities.
Any known or suspected violations of this policy must be immediately reported to the Company’s secretary at corp.sec@okeanisecotankers.com, or through the Whistleblower section of the Company’s website at www.okeanisecotankers.com/whistleblower.
A. MAR and Norwegian Law
Negligent or wilful violation of the prohibition on unlawful disclosure of inside information is punishable by (i) fines or imprisonment for up to four to six years or administrative sanction by the Norwegian Financial Supervisory Authority in the form of violation fee. Negligent or wilful violation of the notification and disclosure requirements by Primary Insiders or Closely Associated Persons is punishable by fines or imprisonment for up to one year or administrative sanction by Norwegian Financial Supervisory Authority in the form of violation fee.
In addition, any violation of the restrictions in these rules may be subject to administrative sanctions such as substantial administrative fines, administrative and criminal sanctions in other jurisdictions than Norway and liability in damages towards third parties affected by the proscribed behaviour.
A violation of the provisions in this Policy may, in addition to administrative and criminal sanctions, have disciplinary consequences in the form of a warning and, in aggravated cases, dismissal without notice. The Company may report a violation to the relevant authorities in Norway.
Annex A
Form of Notice to Primary Insiders
Annex B
Form of Notice to Closely Associated Persons
Annex C
Notification Form for Primary Insiders and their Closely Associated Persons
Exhibit 12.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Aristidis Alafouzos, certify that:
1.I have reviewed this annual report on Form 20-F of Okeanis Eco Tankers Corp.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a mate- rial fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4.The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)[Intentionally omitted in accordance with Exchange Act Rule 13a-14(a)];
(c)Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
5.The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
Date: April 30, 2024 |
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/s/ Aristidis Alafouzos |
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Aristidis Alafouzos |
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Chief Executive Officer (Principal Executive Officer) |
|
Exhibit 12.2
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Iraklis Sbarounis, certify that:
1.I have reviewed this annual report on Form 20-F of Okeanis Eco Tankers Corp.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a mate- rial fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4.The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)[Intentionally omitted in accordance with Exchange Act Rule 13a-14(a)];
(c)Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
5.The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
Date: April 30, 2024 |
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|
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/s/ Iraklis Sbarounis |
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Iraklis Sbarounis |
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Chief Financial Officer (Principal Financial Officer) |
|
Exhibit 13.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE U.S. SARBANES-OXLEY ACT OF 2002
In connection with the annual report of Okeanis Eco Tankers Corp. (the “Company”) on Form 20-F for the year ended December 31, 2023, as filed with the Securities and Exchange Commission (the “SEC”) on or about the date hereof (the “Report”), I, Aristidis Alafouzos, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) |
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.
Date: April 30, 2024 |
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/s/ Aristidis Alafouzos |
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Aristidis Alafouzos |
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Chief Executive Officer (Principal Executive Officer) |
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Exhibit 13.2
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE U.S. SARBANES-OXLEY ACT OF 2002
In connection with the annual report of Okeanis Eco Tankers Corp. (the “Company”) on Form 20-F for the year ended December 31, 2023, as filed with the Securities and Exchange Commission (the “SEC”) on or about the date hereof (the “Report”), I, Iraklis Sbarounis, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) |
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.
Date: April 30, 2024 |
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/s/ Iraklis Sbarounis |
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Iraklis Sbarounis |
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Chief Financial Officer (Principal Financial Officer) |
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Exhibit 97.1
OKEANIS ECO TANKERS CORP.
Policy for the Recovery of Erroneously Awarded Compensation
Effective: December 6, 2023
1. |
Introduction |
The Board of Directors (the “Board”) of Okeanis Eco Tankers Corp. (the “Company”) has adopted this policy, which provides for the recovery of certain executive compensation in the event of certain accounting restatements (the “Policy”).
This Policy is designed to comply with Section 10D, as implemented by Rule 10D-1, of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and is made in accordance with the applicable rules of the New York Stock Exchange (“NYSE”) Listed Company Manual (the “NYSE Rules”).
2. |
Covered Executives |
This Policy applies to the Company’s current and former executive officers, as determined by the Committee (as defined below) in accordance with Section 10D of the Exchange Act and the NYSE Rules, who, for the avoidance of doubt, will include, at a minimum, executive officers identified pursuant to 17 C.F.R. 229.401(b), as well as the principal financial officer and principal accounting officer (or, if there is no principal accounting officer, the controller), and such other senior executives/employees who may from time to time be deemed subject to the Policy by the Committee (“Covered Executives”).
This Policy shall be binding and enforceable against all Covered Executives, as described herein, and, to the extent required by applicable law or guidance from the United States Securities and Exchange Commission (the “SEC”) or the NYSE, Covered Executives’ beneficiaries, heirs, executors, administrators or other legal representatives.
3. |
Recovery of Erroneously Awarded Compensation |
In the event the Company is required to prepare an Accounting Restatement of its financial statements, the Remuneration Committee (if composed entirely of independent directors, or in the absence of such a committee, a majority of independent directors serving on the Board) (the “Committee”) will determine the amount of Erroneously Awarded Incentive Compensation (defined below) and the Company will promptly notify each Covered Executive who received Erroneously Awarded Incentive Compensation of the amount of Erroneously Awarded Incentive Compensation received by such Covered Executive and will require reimbursement or forfeiture of not less than the full amount of any Erroneously Awarded Incentive Compensation received or deemed received by any Covered Executive, except to the extent determined impracticable in Section 7 below.
Any such recovery shall apply to Incentive Compensation Eligible for Recovery paid during the three (3) completed fiscal years immediately preceding the Restatement Date and, if the Company changes its fiscal year, any transition period of less than nine months within or immediately following those three completed fiscal years (the “Recovery Period”).
Incentive Compensation shall be deemed received in the Company’s fiscal period during which the Financial Reporting Measure specified in the Incentive Compensation award is attained, even if the payment or grant of the Incentive Compensation to the Covered Executive occurs after the end of that period.
Any recovery under this Policy shall be made reasonably promptly and in accordance with the Exchange Act and NYSE Rules.
4. |
Incentive Compensation and Financial Reporting Measures |
For purposes of this Policy:
“Accounting Restatement” means an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements (a “Big R” restatement), or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period (a “little r” restatement).
“Financial Reporting Measures” includes measures that are determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and all other measures that are derived wholly or in part from such measures. Share price and total shareholder return (and any measures that are derived wholly or in part from share price or total shareholder return) shall, for purposes of this Policy, be considered Financial Reporting Measures. For the avoidance of doubt, a Financial Reporting Measure need not be presented in the Company’s financial statements or included in a filing with the SEC.
“Incentive Compensation” means any compensation that is granted, earned, or vested based wholly or in part on the attainment of a Financial Reporting Measure, including, but not limited to, the following:
(a)Annual bonuses and other short- and long-term cash incentives;1
(b)Stock options;
(c)Restricted stock;
(d)Restricted stock units; and
(e)Performance shares.
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To the extent that a Covered Executive receives a salary increase earned wholly or in part based on the attainment of a Financial Reporting Measure performance goal, such a salary increase is subject to recovery as a non-equity incentive plan award for purposes of Rule 10D-1. |
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“Incentive Compensation Eligible for Recovery” means Incentive Compensation received by a Covered Executive:
(f)after beginning service as a Covered Executive;
(g)who served as a Covered Executive at any time during the performance period for the applicable Incentive Compensation (regardless of whether such individual is serving as a Covered Executive at the time the Erroneously Awarded Incentive Compensation is required to be repaid);
(h)while the Company had a class of securities listed on a national securities exchange or a national securities association;
(i)during the applicable Recovery Period; and
(j)on or after the effective date of the applicable NYSE Rules (i.e., October 2, 2023).
“Restatement Date” means the earlier to occur of (i) the date the Board, a committee of the Board or the officers of the Company authorized to take such action if Board action is not required, concludes, or reasonably should have concluded, that the Company is required to prepare an Accounting Restatement, or (ii) the date a court, regulator or other legally authorized body directs the Company to prepare an Accounting Restatement.
5. |
Erroneously Awarded Incentive Compensation – Amount Subject to Recovery |
The amount to be recovered will be the excess of the Incentive Compensation Eligible for Recovery paid to the Covered Executive based on the erroneous data over the Incentive Compensation Eligible for Recovery that would have been paid to the Covered Executive had it been based on the restated results (calculated without regard to any taxes paid), as determined by the Committee (the “Erroneously Awarded Incentive Compensation”).
If the Committee cannot determine the amount of Erroneously Awarded Incentive Compensation received by the Covered Executive directly from the information in the Accounting Restatement (i.e., the Erroneously Awarded Incentive Compensation is not subject to mathematical recalculation directly from the information in the applicable Accounting Restatement), then it will make its determination based on a reasonable estimate of the effect of the Accounting Restatement. The Company shall maintain documentation of the determination of such reasonable estimate and, if required by applicable law, regulation or NYSE Rule, provide the relevant documentation to the NYSE.
The Company shall promptly notify each Covered Executive with a written notice containing the amount of any Erroneously Awarded Incentive Compensation and a demand for repayment or return of such compensation, as applicable.
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6. |
Method of Recovery |
The Committee will determine, in its sole discretion, the method for recouping Erroneously Awarded Incentive Compensation hereunder which may include, without limitation, any of the following or combination thereof:
(a)requiring reimbursement of cash Incentive Compensation Eligible for Recovery previously paid;
(b)seeking recovery of any gain realized on the vesting, exercise, settlement, sale, transfer, or other disposition of any equity-based awards;
(c)offsetting the recouped amount from any compensation otherwise owed by the Company to the Covered Executive;
(d)cancelling outstanding vested or unvested equity awards; and/or
(e)taking any other remedial and recovery action permitted by law, as determined by the Committee.
Except as set forth in Section 7 below, in no event may the Company accept an amount that is less than the amount of Erroneously Awarded Incentive Compensation in satisfaction of a Covered Executive’s obligations hereunder. To the extent that a Covered Executive fails to repay all Erroneously Awarded Incentive Compensation to the Company when due, the Company shall take all actions reasonable and appropriate to recover such Erroneously Awarded Incentive Compensation from the applicable Covered Executive. The applicable Covered Executive shall be required to reimburse the Company for any and all expenses reasonably incurred (including legal fees) by the Company in recovering such Erroneously Awarded Incentive Compensation in accordance with the immediately preceding sentence.
To the extent that the Covered Executive has already reimbursed the Company for any Erroneously Awarded Incentive Compensation received under any duplicative recovery obligations established by the Company or applicable law, it shall be appropriate for any such reimbursed amount to be credited to the amount of Erroneously Awarded Incentive Compensation that is subject to recovery under this Policy.
7. |
Impracticality |
The Company shall recover any Erroneously Awarded Incentive Compensation in accordance with this Policy, unless such recovery would be duplicative of compensation recovered by the Company from the Covered Executive pursuant to Section 304 of the Sarbanes-Oxley Act or would be impracticable, as determined by the Committee in accordance with Rule 10D-1 of the Exchange Act and the NYSE Rules, and any of the following conditions are satisfied:
(a)The Committee has determined that the direct expenses paid to a third party to assist in enforcing the Policy would exceed the amount to be recovered. Before making this determination, the Company must make a reasonable attempt to recover the Erroneously Awarded Incentive Compensation, documented such attempt(s) and, if required by applicable law, regulation or NYSE Rule, provide such documentation to the NYSE, where required; or
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(b)Recovery would violate home country law where that law was adopted prior to November 28, 2022, provided that, before determining that it would be impracticable to recover any amount of Erroneously Awarded Incentive Compensation based on violation of home country law, the Company has obtained an opinion of home country counsel, acceptable to the NYSE, that recovery would result in such a violation and, if required by applicable law, regulation or NYSE Rule, a copy of the opinion is provided to the NYSE; or
(c)Recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Company, to fail to meet the requirements of Section 401(a)(13) or Section 411(a) of the Internal Revenue Code of 1986, as amended, and regulations thereunder.
8. |
No Indemnification |
The Company shall not insure or indemnify any Covered Executive against the loss of any Erroneously Awarded Incentive Compensation that is repaid, returned or recovered in accordance with the terms of this Policy, or for any claims relating to the Company’s enforcement of any of its rights under this Policy.
The Company shall not enter into any agreement or arrangement that exempts any Incentive Compensation that is granted, paid or awarded to any Covered Executive from the application of this Policy or that waives the Company’s right to recover any Incentive Compensation Eligible for Recovery, and this Policy shall supersede any such agreement (whether entered into before, on or after the Effective Date of this Policy).
9. |
Other Recovery Rights |
The Committee intends that this Policy will be applied to the fullest extent required by applicable law. Any employment agreement, equity award agreement, compensatory plan or any other agreement or arrangement with a Covered Executive shall be deemed to include, as a condition to the grant of any benefit thereunder, an agreement by the Covered Executive to abide by the terms of this Policy.
The Committee may require that any employment agreement, equity award agreement, or similar agreement entered into on or after the Effective Date shall, as a condition to the grant of any benefit thereunder, require a Covered Executive to agree to abide by the terms of this Policy.
Any right of recovery under this Policy is in addition to, and not in lieu of, any other remedies or rights of recovery that may be available to the Company under applicable law, regulation or rule or pursuant to the terms of any similar policy in any employment agreement, equity award agreement, or similar agreement and any other legal remedies available to the Company.
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10. |
Disclosure Requirements |
The Company shall file all disclosures with respect to this Policy required by applicable SEC filings and rules.
11. |
Interpretation |
The Committee is authorized to interpret and construe this Policy and to make all determinations necessary, appropriate, or advisable for the administration of this Policy, and for the Company’s compliance with NYSE Rules, Section 10D, Rule 10D-1 and any other applicable law, regulation, rule or interpretation of the SEC or NYSE promulgated or issued in connection therewith. It is intended that this Policy be interpreted in a manner that is consistent with the requirements of Section 10D of the Exchange Act and any applicable rules or standards adopted by the SEC or the NYSE.
12. |
Amendment and Termination |
The Committee may amend or terminate this Policy from time to time in its discretion; provided, that, no amendment or termination of this Policy shall be effective if such amendment or termination would cause the Company to violate any applicable federal securities laws, SEC rule or NYSE Rule.
13. |
Effective Date |
This Policy shall be effective as of December 6, 2023 (the “Effective Date”) and shall apply to Incentive Compensation that is approved, awarded or granted to Covered Executives on or after October 2, 2023.
14. |
Policy Administration |
This Policy shall be administered by the Committee, and any determinations made by the Committee shall be final and binding on all affected individuals.
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ANNEX A
Okeanis Eco Tankers Corp.
Policy for the Recovery of Erroneously Awarded Compensation
Acknowledgement Form
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