UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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, 2021

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: Not applicable

For the transition period from _______ to _______

Commission file number: 001-34848

SEANERGY MARITIME HOLDINGS 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)

154 Vouliagmenis Avenue, 166 74 Glyfada, Greece
(Address of principal executive offices)

Stamatios Tsantanis, Chairman & Chief Executive Officer
Seanergy Maritime Holdings Corp.
154 Vouliagmenis Avenue, 166 74 Glyfada, Greece
Telephone: +30 213 0181507, Fax: +30 210 9638404
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of class
Trading Symbol(s)
Name of exchange on which
Registered
Shares of common stock, par value $0.0001 per share
SHIP
Nasdaq Capital Market
Preferred Stock Purchase Rights

Nasdaq Capital Market
Class B Warrants
SHIPZ
Nasdaq Capital Market

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

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, 2021, there were 172,986,137 shares of the registrant’s common stock, $0.0001 par value, and 20,000 shares of the registrant’s Series B Preferred Stock, $0.0001 par value, 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

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 ☐
   
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.☒

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
  
 
TABLE OF CONTENTS

 
ITEM 1.
1
 
ITEM 2.
1
 
ITEM 3.
1
 
ITEM 4.
26
 
ITEM 4A.
42
 
ITEM 5.
42
 
ITEM 6.
58
 
ITEM 7.
61
 
ITEM 8.
62
 
ITEM 9.
62
 
ITEM 10.
63
 
ITEM 11.
71
 
ITEM 12.
71
       
 
ITEM 13.
72
 
ITEM 14.
72
 
ITEM 15.
72
 
ITEM 16.
73
 
ITEM 16A.
73
 
ITEM 16B.
73
 
ITEM 16C.
73
 
ITEM 16D.
73
 
ITEM 16E.
73
 
ITEM 16F.
74
 
ITEM 16G.
74
 
ITEM 16H.
74
 
ITEM 16I.
74
       
 
ITEM 17.
75
 
ITEM 18.
75
 
ITEM 19.
75
 
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
 
This annual report contains certain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements include, but are not limited to, statements regarding our or our management's expectations, hopes, beliefs, intentions or strategies regarding the future and other statements that are other than statements of historical fact.  In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements.  The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
 
The forward-looking statements in this 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 which 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.  As a result, you are cautioned not to rely on any forward-looking statements.
 
Many of these statements are based on our assumptions about factors that are beyond our ability to control or predict and are subject to risks and uncertainties that are described more fully in “Item 3. Key Information—D. Risk Factors.” Any of these factors or a combination of these factors could materially affect our future results of operations and the ultimate accuracy of the forward-looking statements. In addition to these important factors, important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include among other things:
 
 
•
changes in shipping industry trends, including charter rates, vessel values and factors affecting vessel supply and demand;

 
•
changes in seaborne and other transportation patterns;

 
•
changes in the supply of or demand for dry bulk commodities, including dry bulk commodities carried by sea, generally or in particular regions;

 
•
changes in the number of newbuildings under construction in the dry bulk shipping industry;

 
•
changes in the useful lives and the value of our vessels and the related impact on our compliance with loan covenants;

 
•
the aging of our fleet and increases in operating costs;

 
•
changes in our ability to complete future, pending or recent acquisitions or dispositions;

 
•
our ability to achieve successful utilization of our expanded fleet;

 
•
changes to our financial condition and liquidity, including our ability to pay amounts that we owe and obtain additional financing to fund capital expenditures, acquisitions and other general corporate activities;

 
•
risks related to our business strategy, areas of possible expansion or expected capital spending or operating expenses;

 
•
changes in our ability to leverage the relationships and reputation in the dry bulk shipping industry of V.Ships Limited, or V.Ships, and V.Ships Greece Ltd., or V.Ships Greece, our technical managers, and Fidelity Marine Inc., or Fidelity, our commercial manager;

 
•
changes in the availability of crew, number of off-hire days, classification survey requirements and insurance costs for the vessels in our fleet;

 
•
changes in our relationships with our contract counterparties, including the failure of any of our contract counterparties to comply with their agreements with us;

 
•
loss of our customers, charters or vessels;

 
•
damage to our vessels;

 
•
potential liability from future litigation and incidents involving our vessels;

 
•
our future operating or financial results;

 
•
acts of terrorism and other hostilities, pandemics or other calamities (including, without limitation, the worldwide novel coronavirus, or COVID-19, outbreak;

 
•
risks associated with the length and severity of the ongoing COVID-19 outbreak, including its effects on demand for dry bulk products, crew changes and the transportation thereof;

 
•
changes in global and regional economic and political conditions;

 
•
general domestic and international political conditions or events, including “trade wars” and the recent conflicts between Russia and Ukraine;

 
•
changes in governmental rules and regulations or actions taken by regulatory authorities, particularly with respect to the dry bulk shipping industry;

 
•
our ability to continue as a going concern; and

 
•
other factors discussed in “Item 3. Key Information—D. Risk Factors.”

Should one or more of the foregoing risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.  Consequently, there can be no assurance that actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects, on us. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements.
 
We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable laws.  If one or more forward-looking statements are updated, no inference should be drawn that additional updates will be made with respect to those or other forward-looking statements.
 
PART I
 
Unless the context otherwise requires, as used in this annual report, the terms “Company,” “Seanergy,” “we,” “us,” and “our” refer to Seanergy Maritime Holdings Corp. and any or all of its subsidiaries, and “Seanergy Maritime Holdings Corp.” refers only to Seanergy Maritime Holdings Corp. and not to its subsidiaries.
 
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 in this annual report to our common shares are adjusted to reflect the consolidation of our common shares through reverse stock splits, including the one-for-fifteen reverse stock split which became effective as of March 20, 2019, and the one-for-sixteen reverse stock split which became effective as of June 30, 2020.
 
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.  If any of the following risks occur, our business, financial condition, operating results and cash flows could be materially adversely affected and the trading price of our securities 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 Company” and “Risks Relating to Our Common Shares” and should be carefully considered, together with other information in this Annual Report on Form 20-F and our other filings with the Securities and Exchange Commission, before making an investment decision regarding our common stock.
 
 
Risks Relating to Our Industry
 
•
Charter hire rates for dry bulk vessels are cyclical and volatile and the dry bulk market remains significantly below its historic high. This may adversely affect our earnings, revenue and profitability and our ability to comply with our loan covenants or covenants in other financing agreements.
 
•
Outbreaks of epidemic and pandemic diseases, including COVID-19, and any relevant governmental responses thereto could adversely affect our business, results of operations or financial condition.
 
•
We are currently dependent on index-linked or fixed rate charters, while until the recent past a part of our fleet was employed on the spot market. Any decrease in spot charter rates or indexes in the future may adversely affect our earnings.
 
•
An over-supply of dry bulk vessel capacity may depress the current charter rates and, in turn, adversely affect our profitability.
 
•
If economic conditions throughout the world decline, it will negatively impact our results of operations, financial condition and cash flows, and could cause the market price of our common shares to decline.
 
•
Terrorist attacks and international hostilities could affect our business, results of operations, cash flows and financial condition.

1
 
•
Risks associated with operating ocean-going vessels could affect our business and reputation, which could adversely affect our revenues and expenses.
 
•
Rising fuel prices may adversely affect our profits.
 
•
Our revenues are subject to seasonal fluctuations, which could affect our operating results and ability to service our debt or pay dividends.
 
•
Climate change and greenhouse gas restrictions may be imposed.
 
•
Increased scrutiny of environmental, social and governance matters may impact our business and reputation.
 
•
Our vessels may call on ports located in or may operate in countries that are subject to restrictions or sanctions imposed by the United States, the European Union or other governments that could result in fines or other penalties imposed on us and may adversely affect our reputation and the market price of our common stock.
 
•
Sulfur regulations to reduce air pollution from ships have required retrofitting of vessels and may cause us to incur significant costs.
 
•
We are subject to regulation and liability under environmental laws that could require significant expenditures and affect our cash flows and net income.
 
•
Regulations relating to ballast water discharge may adversely affect our revenues and profitability.
 
•
Increased inspection procedures, tighter import and export controls and new security regulations could increase costs and disrupt our business.
 
•
Acts of piracy on ocean-going vessels have increased in frequency, which could adversely affect our business.
 
•
The operation of dry bulk vessels has particular operational risks.
 
•
If any of our vessels fails to maintain its class certification or fails any annual survey, intermediate survey, or special survey, or if any scheduled class survey takes longer or is more expensive than anticipated, this could have a material adverse impact on our financial condition and results of operations.
 
•
Because seafaring employees we employ are covered by industry-wide collective bargaining agreements, failure of industry groups to renew those agreements may disrupt our operations and adversely affect our earnings.
 
•
Maritime claimants could arrest or attach one or more of our vessels, which could interrupt our cash flows.
 
•
Governments could requisition our vessels during a period of war or emergency, which could negatively impact our business, financial condition, results of operations, and available cash.
 
•
The shipping industry has inherent operational risks that may not be adequately covered by our insurances.  Further, because we obtain some of our insurances through protection and indemnity associations, we have been and may in the future be retrospectively subject to calls or premiums in amounts based not only on our own claim records, but also on the claim records of all other members of the protection and indemnity associations.
 
Risks Relating to Our Company
 
•
The market values of our vessels may decrease, which could limit the amount of funds that we can borrow or trigger certain financial covenants under our loan agreements and other financing agreements, and we may incur an impairment or, if we sell vessels following a decline in their market value, a loss.
 
•
Newbuilding projects are subject to risks that could cause delays.
 
•
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.
 
•
Substantial debt levels could limit our flexibility to obtain additional financing and pursue other business opportunities.
 
•
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, which could limit our operational flexibility and have an adverse effect on our financial condition and results of operations. In addition, because of the presence of cross-default provisions in our loan agreements and financing arrangements, a default by us under one loan or financing agreement could lead to defaults under multiple loans and financing agreements.
 
•
If we fail to manage our planned growth properly, we may not be able to successfully expand our market share.
 
•
Purchasing and operating secondhand vessels, such as our current fleet, may result in increased operating costs and vessel off-hire, which could adversely affect our financial condition and results of operations.
 
•
Increased regulatory oversight and phasing out of LIBOR may adversely affect the amounts of interest we pay under our debt arrangements and our results of operations.
 
•
The failure of our counterparties to meet their obligations under our charter agreements could cause us to suffer losses or otherwise adversely affect our business.
 
•
Rising crew costs may adversely affect our profits.
 
•
We may not be able to attract and retain key management personnel and other employees in the shipping industry, which may negatively affect the effectiveness of our management and our results of operations.
 
•
Our vessels may suffer damage, and we may face unexpected repair costs, which could adversely affect our cash flow and financial condition.
 
•
We are exposed to U.S. dollar and foreign currency fluctuations and devaluations that could harm our reported revenue and results of operations.
 
•
We maintain cash with a limited number of financial institutions including financial institutions that may be located in Greece, which will subject us to credit risk.
 
•
We are a holding company and we depend on the ability of our subsidiaries to distribute funds to us in order to satisfy financial obligations or to pay dividends.

2
 
•
In the highly competitive international shipping industry, we may not be able to compete for charters with new entrants or established companies with greater resources, which may adversely affect our results of operations.
 
•
Due to our lack of fleet diversification, adverse developments in the maritime dry bulk shipping industry would adversely affect our business, financial condition, and operating results.
 
•
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.
 
•
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 depend significantly on third-party technical and commercial managers for crewing and certain aspects of technical and commercial management of some of our vessels. Our operations could be negatively affected if third-party managers fail to perform their services satisfactorily.
 
•
Management fees will be payable to our managers regardless of our profitability, which could have a material adverse effect on our business, financial condition and results of operations.
 
•
We may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. holders of our common stock.
 
•
We may have to pay tax on U.S. source income, which would reduce our earnings.
 
•
We may be subject to tax in the jurisdictions in which we or our vessel-owning subsidiaries are incorporated or operate.
 
•
We are a “foreign private issuer,” which could make our common stock less attractive to some investors or otherwise harm our stock price.
 
•
The Public Company Accounting Oversight Board inspection of our independent accounting firm could lead to adverse findings in our auditors’ reports and challenges to the accuracy of our published audited consolidated financial statements.
 
•
Changing laws and evolving reporting requirements could have an adverse effect on our business.
 
•
A cyber-attack could materially disrupt our business.
 
•
The smuggling of drugs or other contraband onto our vessels may lead to governmental claims against us.
 
Risks Relating to Our Common Shares
 
•
We may issue additional common shares or other equity securities without shareholder approval, which would dilute our existing shareholders’ ownership interests and may depress the market price of our common shares.
 
•
The market price of our common shares has been and may in the future be subject to significant fluctuations. Further, there is no guarantee of a continuing public market to resell our common shares.
 
•
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.
 
•
The declaration and payment of dividends will always be subject to the discretion of our board of directors and will depend on a number of factors. Our board of directors may not declare dividends in the future.
 
•
The superior voting rights of our Series B Preferred Shares may limit the ability of our common shareholders to control or influence corporate matters, and the interests of the holder of such shares could conflict with the interests of common shareholders
 
•
Anti-takeover provisions in our restated articles of incorporation, as amended, and third amended and restated bylaws could make it difficult for 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.
 
•
Issuance of preferred shares, such as our Series B Preferred Shares, may adversely affect the voting power of our common shareholders and have the effect of discouraging, delaying or preventing a merger or acquisition, which could adversely affect the market price of our common shares.
 
•
We are incorporated in the Republic of the Marshall Islands, which does not have a well-developed body of corporate law, which may negatively affect the ability of shareholders to protect their interests.
 
•
As a Marshall Islands corporation with principal executive offices in Greece, and also having subsidiaries in the Republic of the Marshall Islands and other offshore jurisdictions such as Liberia, Bermuda and the British Virgin Islands, our operations may be subject to economic substance requirements.
 
•
It may not be possible for investors to serve process on or enforce U.S. judgments against us.
 
Risks Relating to Our Industry
 
Charter hire rates for dry bulk vessels are cyclical and volatile and the dry bulk market remains significantly below its historic high. This may adversely affect our earnings, revenue and profitability and our ability to comply with our loan covenants or covenants in other financing agreements.
 
The volatility in the dry bulk charter market, from which we derive substantially all of our revenues, has affected the dry bulk shipping industry and has harmed our business. The Baltic Dry Index, or the BDI, a daily average of charter rates for key dry bulk routes published by the Baltic Exchange Limited, has long been viewed as the main benchmark to monitor the movements of the dry bulk vessel charter market and the performance of the entire dry bulk shipping market and has been very volatile in recent years. The BDI, declined from a high of 11,793 in May 2008 to a low of 290 on February 10, 2016, which represents a decline of 98%. In the following years volatility was also apparent, albeit less extreme. In 2021, the BDI ranged from a low of 1,303 on February 10, 2021 and a high of 5,650 on October 7, 2021. During 2022, the BDI has ranged from 1,296 to 2,727.
 
3
The decline from historic highs and volatility in charter rates in the period following 2008  has been due to various factors, including the over-supply of dry bulk vessels, the lack of trade financing for purchases of commodities carried by sea, which resulted in a significant decline in cargo shipments, and trade disruptions caused by natural or other disasters, such as those that resulted from the dam collapse in Brazil in 2019 and the outbreak of the coronavirus infection in China. More recently, following Russia’s invasion of Ukraine in February 2022, the U.S., the EU, the UK and other countries have announced sanctions against Russia. The sanctions announced by the U.S. and other countries against Russia include, among others, restrictions on selling or importing goods, services or technology in or from affected regions, travel bans and asset freezes impacting connected individuals and political, military, business and financial organizations in Russia, severing large Russian banks from U.S. and/or other financial systems, and barring some Russian enterprises from raising money in the U.S. market. The U.S., EU and other countries could impose wider sanctions and take other actions. This has resulted in higher freight market volatility and while the initial effect on the dry bulk freight market has been positive, the long-term effects may be harder to ascertain at the date of this filing. These circumstances have had adverse consequences from time to time for dry bulk shipping, including, among other developments:
 
 
•
decrease in available financing for vessels;

 
•
no active secondhand market for the sale of vessels;

 
•
charterers seeking to renegotiate the rates for existing time charters;

 
•
widespread loan covenant defaults in the dry bulk shipping industry due to the substantial decrease in vessel values; and

 
•
declaration of bankruptcy by some operators, charterers and vessel owners.

The degree of charter hire rate volatility among different types of dry bulk vessels has varied widely. If we enter into a charter when charter hire rates are low, our revenues and earnings will be adversely affected and we may not be able to successfully charter our vessels at rates sufficient to allow us to operate our business profitably or meet our obligations. Further, if low charter rates in the dry bulk market decline further for any significant period, this could have an adverse effect on our vessel values and ability to comply with the financial covenants in our loan agreements or other financing agreements. In such a situation, unless our lenders are willing to provide waivers of covenant compliance or modifications to our covenants, our lenders could accelerate our debt and we could face the loss of our vessels. We expect continued volatility in market rates for our vessels in the foreseeable future with a consequent effect on our short and medium-term liquidity.
 
Outbreaks of epidemic and pandemic diseases, including COVID-19, and any relevant governmental responses thereto could adversely affect our business, results of operations or financial condition.

Global public health threats, such as the novel coronavirus first identified in China in the end of 2019, or COVID-19, influenza and other highly communicable diseases or viruses, outbreaks of which have from time to time occurred in various parts of the world in which we operate, including China, could adversely impact our operations, as well as the operations of our customers. The ongoing COVID-19 pandemic has, among other things, caused factory closures and restrictions on travel, as well as labor shortages or lack of berths, delays and uncertainties relating to newbuildings, drydockings, vessel inspections, shortages or a lack of access to required spare parts and other functions of shipyards.

The ongoing outbreak of COVID-19 has already caused severe global disruptions and may continue to negatively impact the economic conditions regionally as well as globally and otherwise impact our operations and the operations of our customers and suppliers. Governments in affected countries continue to impose travel bans, quarantines and other emergency public health measures. Companies are also taking precautions, such as requiring employees to work remotely, imposing travel restrictions and temporarily closing businesses. These restrictions, and future prevention and mitigation measures, are likely to continue to have an adverse impact on global economic conditions, which could materially and adversely affect our future operations. Uncertainties regarding the economic impact of the COVID-19 outbreak is likely to result in sustained market turmoil, which could also negatively impact our business, financial condition and cash flows. As a result of these measures, our vessels may not be able to call on ports, or may be restricted from disembarking 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, amongst other potential consequences attendant to epidemic and pandemic diseases.

COVID-19 and measures to contain its spread have negatively impacted regional and global economies and trade patterns in markets in which we operate, the way we operate our business, and the businesses of our charterers and suppliers. These negative impacts could continue or worsen, even after the pandemic itself diminishes or ends. Companies, including us, have also taken precautions, such as requiring employees to work remotely and imposing travel restrictions, while some other businesses have been required to close entirely. Moreover, we face significant risks to our personnel and operations due to the COVID-19 pandemic. Our crews face risk of exposure to COVID-19 as a result of travel to ports in which cases of COVID-19 have been reported. Our shore-based personnel likewise face risk of such exposure, as we maintain offices in areas that have been impacted by the spread of COVID-19.

4
Measures against COVID-19 in a number of countries have restricted crew rotations on our vessels and other vessels we may acquire, which may continue or become more severe. As a result, in 2021, vessel operators experienced and may continue to experience disruptions to normal vessel operations caused by increased deviation time associated with positioning vessels to countries in which they can undertake a crew rotation in compliance with such measures. Our crews generally work on a rotation basis, relying exclusively on international air transport for crew changes plan fulfillment. Any such disruptions could impact the cost of rotating our crew further, and possibly impact our ability to maintain a full crew synthesis onboard our vessels and other vessels we may acquire at any given time. Delays in crew rotations have furthermore led to issues with crew fatigue and may continue to do so, which may result in delays or other operational issues. Additionally, we are particularly vulnerable to our crew members getting sick, as if even one of our crew members gets sick, local authorities could require us to detain and quarantine our vessels and their crew for an unspecified amount of time, disinfect and fumigate our vessels and cargo onboard, or take similar precautions, which would add costs, decrease our utilization, and substantially disrupt our cargo operations. We expect to incur increased expenses due to incremental fuel consumption and days in which our vessels and other vessels we may acquire are unable to earn revenue in order to deviate to certain ports on which we would ordinarily not call during a typical voyage. We may also incur additional expenses associated with testing, personal protective equipment, quarantines, and travel expenses such as airfare costs in order to perform crew rotations in the current environment.

COVID-19 and measures in place against the spread of the virus have led to a highly difficult environment with regards to the disposal of vessels given the difficulty to physically inspect vessels. The impact of COVID-19 has also resulted in reduced industrial activity in China with temporary closures of factories and other facilities, labor shortages and restrictions on travel. We believe these disruptions along with other seasonal factors, including lower demand for some of the cargoes we carry such as iron ore and coal, contributed to lower drybulk rates in 2021.

Epidemics may also affect personnel operating payment systems through which we receive revenues from the chartering of our vessels or pay for our expenses, resulting in delays in payments. Organizations across industries, including ours, are rightly focusing on their employees’ well-being, while making sure that their operations continue undisrupted and at the same time, adapting to the new ways of operating. As such employees are encouraged or even required to operate remotely which significantly increases the risk of cyber security attacks.

Effects of the current pandemic may also in the future result in reduced access to capital, including the ability to refinance any existing obligations, as a result of any credit tightening generally or due to continued declines in global financial markets, including to the prices of publicly-traded securities of us, our peers and of listed companies generally. We note that future impacts cannot be reasonably estimated at this time, may take some time to materialize and may not be fully reflected in the results for the year ended December 31, 2021

At present, it is not possible to ascertain the overall impact of COVID-19 on our business. However, the occurrence of any of the foregoing events or other epidemics or an increase in the severity or duration of the COVID-19 or other epidemics could have a material adverse effect on our business, results of operations, cash flows, financial condition, value of our vessels, and ability to pay dividends.

The extent of the COVID-19 outbreak’s effect on our operational and financial performance will depend on future developments, including the duration, spread and intensity of the outbreak, any resurgence or mutation of the virus, the continued availability of vaccines and their global deployment, the development of effective treatments, the imposition of effective public safety and other protective measures and the public’s response to such measures. There continues to be a high level of uncertainty relating to how the pandemic will evolve, how governments and consumers will react and progress on the approval and distribution of vaccines, all of which are uncertain and difficult to predict, considering the rapidly evolving landscape. As a result, the ultimate severity of the COVID-19 outbreak is uncertain at this time and therefore we cannot predict the impact it may have on our future operations, which impact could be material and adverse, particularly if the pandemic continues to evolve into a severe worldwide health crisis.

We are currently dependent on index-linked or fixed rate charters, while until the recent past a part of our fleet was additionally employed on the spot market. Any decrease in spot charter rates or indexes in the future may adversely affect our earnings.
 
We currently have 15 of our vessels employed on time charters whose daily rates are linked to the Baltic Capesize Index, or BCI. The other two are employed on time charters with fixed rates. Although none of our vessels are currently operating in the spot market, we may employ any additional vessels we may acquire in the spot market, or on index-linked or fixed rate time charters.
 
Although the number of vessels in our fleet that participate in the spot market or have index-linked or fixed rate charters will vary from time to time, we anticipate that a significant portion of our fleet will be affected by the spot market or the BCI. As a result, our financial performance will be significantly affected by conditions in the dry bulk spot market or the BCI and only our vessels that would operate under fixed-rate time charters would, during the period in which such vessels operate under such time charters, provide a fixed source of revenue to us.
 
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Historically, spot charter rates and dry bulk charter indexes have been volatile as a result of the many conditions and factors that can affect the price, supply of and demand for dry bulk capacity. The successful operation of our vessels in the competitive spot charter market depends upon, among other things, obtaining profitable spot charters and minimizing, to the extent possible, time spent waiting for charters and time spent traveling unladen to pick up cargo. The spot market is very volatile, and, in the past, there have been periods when spot rates have declined below the operating cost of vessels. If future spot charter rates or the BCI decline, then we may be unable to operate our vessels trading in the spot market or on BCI-linked charters profitably or to meet our other obligations, including payments on indebtedness. Furthermore, as charter rates for spot charters are fixed for a single voyage, which may last up to several weeks, during periods in which spot charter rates are rising, we will generally experience delays in realizing the benefits from such increases.
 
An over-supply of dry bulk vessel capacity may depress the current charter rates and, in turn, adversely affect our profitability.
 
The market supply of dry bulk vessels had increased due to the high level of new deliveries in recent years. Dry bulk newbuildings were delivered in significant numbers starting at the beginning of 2006 and continued to be delivered in significant numbers through 2017. In addition, the dry bulk newbuilding orderbook, which extends to 2023, was approximately 6.81% of the existing world dry bulk fleet as of January 31, 2022, according to Clarksons Research, and the orderbook may increase further in proportion to the existing fleet. Even though the overall level of the orderbook has declined over the past years, an over-supply of dry bulk vessel capacity could depress the current charter rates. Factors that influence the supply of vessel capacity include:
 
 
•
number of new vessels’ deliveries;

 
•
scrapping rate of older vessels;

 
•
vessel casualties;

 
•
price of steel;

 
•
number of vessels that are out of service;

 
•
vessels’ average speed;

 
•
changes in environmental and other regulations that may limit the useful life of vessels; and

 
•
port or canal congestion.

If dry bulk vessel capacity increases but the demand for vessel capacity does not increase or increases at a slower rate, charter rates could materially decline, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
 
If economic conditions throughout the world decline, it will negatively impact our results of operations, financial condition and cash flows, and could cause the market price of our common shares to decline.
 
The world economy is facing a number of actual and potential challenges, including the conflict between Ukraine and Russia, current trade tension between the United States and China, political instability in the Middle East and the South China Sea region and other geographic countries and areas, geopolitical events such as the withdrawal of the U.K. from the European Union, or Brexit, terrorist or other attacks, war (or threatened war) or international hostilities, such as those between the United States and North Korea or Iran, and epidemics or pandemics, such as COVID-19. For example, due in part to fears associated with the spread of COVID-19 (as more fully described above), global financial markets experienced volatility and a steep and abrupt downturn followed by a recovery, which volatility may continue as the pandemic or a new wave or mutations continue. In addition, the recent developments 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 prices following the sanctions imposed on Russia. Such events may contribute to economic instability in global financial markets or cause a decrease in worldwide demand for certain goods and, thus, shipping. We cannot predict how long current market conditions will last.
 
The European Union, or EU, and other parts of the world were recently in a recession and uncertainty surrounds the potential for continued economic growth. Moreover, there is uncertainty related to certain European member countries' ability to refinance their sovereign debt, including Greece, despite the country's return to the sovereign debt markets in 2019. As a result, the credit markets in the United States and Europe have recently experienced significant contraction, deleveraging and reduced liquidity, and the U.S. federal and state governments and European authorities have implemented a broad variety of governmental action and new regulation of the financial markets and may implement additional regulations in the future. As a result, global economic conditions and global financial markets have been, and continue to be, volatile. Further, credit markets and the debt and equity capital markets have been distressed and the uncertainty surrounding the future of the global credit markets has resulted in reduced access to credit worldwide.
 
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In Europe, large sovereign debts and fiscal deficits, low growth prospects and high unemployment rates in a number of countries have contributed to the rise of Euroskeptic parties, which would like their countries to leave the Euro. Brexit further increases the risk of additional trade protectionism. Brexit, or similar events in other jurisdictions, could continue to 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, cash flows and operations.
 
In addition, the recent economic slowdown in the Asia Pacific region, particularly in China, may exacerbate the effect of the weak economic trends in the rest of the world. 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. The quarterly year-over-year growth rate of China's GDP was approximately 8.1% for the year ended December 31, 2021, 2.3% for the year ended December 31, 2020 and 6.0% for the year ended December 31, 2019. It is possible that China and other countries in the Asia Pacific region will continue to experience volatile, slowed or even negative economic growth in the near future. Changes in the economic conditions of China, and changes in laws or policies adopted by its government or the implementation of these laws and policies by local authorities, including with regards to tax matters and environmental concerns (such as achieving carbon neutrality), could affect our vessels that are either chartered to Chinese customers or that call to Chinese ports, our vessels that undergo dry docking at Chinese shipyards and the financial institutions with whom we have entered into financing agreements, and could have a material adverse effect on our business, results of operations and financial condition.
 
Furthermore, governments may turn to trade barriers to protect their domestic industries against foreign imports, thereby depressing shipping demand. In particular, as indicated, the United States has sought 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 (i) the cost of goods exported from regions globally, particularly from the Asia-Pacific region, (ii) the length of time required to transport goods and (iii) the risks associated with exporting goods. Such increases may further reduce the quantity of goods to be shipped, shipping time schedules, voyage costs and other associated costs, which 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. This could have a material adverse effect on our business, results of operations, financial condition and cash flows.
 
We face risks attendant to the trends in the global economy, such as changes in interest rates, instability in the banking and securities markets around the world, the risk of sovereign defaults, reduced levels of growth, and trade protectionism, among other factors. Major market disruptions and the current adverse changes in market conditions and regulatory climate worldwide may adversely affect our business or impair our ability to borrow under our loan agreements or any future financial arrangements. We cannot predict how long the current market conditions will last. However, these recent and developing economic and governmental factors, together with depressed charter rates and vessel values, may have a material adverse effect on our results of operations, financial condition or cash flows and the trading price of our common stock. In the absence of available financing, we may also be unable to complete vessel acquisitions, take advantage of business opportunities or respond to competitive pressures.
 
Terrorist attacks and international hostilities could affect our business, results of operations, cash flows and financial condition.
 
Continuing conflicts and recent developments in Ukraine, the Middle East, including tensions between the U.S. and Iran, as well as other geographic countries and areas, terrorist or other attacks, and war (or threatened war) or international hostilities, such as the ones currently in progress between Russia and Ukraine, China and Taiwan, or the U.S. and North Korea, have recently and may in the future lead to armed conflict or acts of terrorism around the world, which may contribute to further economic instability in the global financial markets and international commerce.
 
The recent escalation of conflict between Russia and Ukraine may lead to further regional and international conflicts or armed action at an international level. This conflict has disrupted supply chains and cause instability in the energy markets and the global economy, with effects on shipping freight rates, which have experienced volatility. The United States and the European Union, among other countries, have announced various economic sanctions against Russia. The ongoing conflict could result in the imposition of further economic sanctions by the United States and the European Union or other countries against Russia, trade tariffs or embargoes with uncertain impacts on the markets in which we operate. While much uncertainty remains regarding the global impact of the conflict in Ukraine, it is possible that such tensions could adversely affect our business, financial condition, results of operation and cash flows. Since we employ Ukrainian and Russian seafarers, we may face problems in relation to their employment, repatriation, salary payments and be subject to claims to this respect. 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. Furthermore, it is possible that third parties with whom we have charter contracts may be impacted by events in Russia and Ukraine, which could adversely affect our operations.
 
These uncertainties could also adversely affect our ability to obtain additional financing on terms acceptable to us or at all. In the past, 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 conflict in Ukraine has recently resulted in missile attacks on commercial vessels in the Black Sea. Acts of terrorism and piracy have also affected vessels trading in regions such as the South China Sea, the Gulf of Aden off the coast of Somalia, and in particular, the Gulf of Guinea region off Nigeria, which experienced increased incidents of piracy in recent years. Any of these occurrences could have a material adverse impact on our operating results.
 
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Risks associated with operating ocean-going vessels could affect our business and reputation, which could adversely affect our revenues and expenses.
 
The operation of an ocean-going vessel carries inherent risks.  These risks include the possibility of:
 
 
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crew strikes and/or boycotts;

 
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the damage or destruction of vessels due to marine disaster;

 
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piracy or other detentions;

 
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environmental accidents;

 
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cargo and property losses or damage; and

 
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business interruptions caused by mechanical failure, human error, war, terrorism, political action in various countries, labor strikes or adverse weather conditions.

Any of these circumstances or events could increase our costs or lower our revenues. Such circumstances could result in death or injury to persons, loss of property or environmental damage, delays in the delivery of cargo, loss of revenues from or termination of charter contracts, governmental fines, penalties or restrictions on conducting business, litigation with our employees, customers or third parties, higher insurance rates, and damage to our reputation and customer relationships generally. Although we maintain hull and machinery and war risks insurance, as well as protection and indemnity insurance, which may cover certain risks of loss resulting from such occurrences, our insurance coverage may be subject to deductibles, caps or not cover such losses and any of these circumstances or events could increase our costs or lower our revenues. The involvement of our vessels in an environmental disaster may harm our reputation as a safe and reliable vessel owner and operator. Any of these results could have a material adverse effect on business, results of operations and financial condition, as well as our cash flows.
 
Rising fuel prices may adversely affect our profits.
 
The cost of fuel is a significant factor in negotiating charter rates. 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 developments, supply and demand for oil and gas, actions by members of the Organization of the Petroleum Exporting Countries and other oil and gas producers, war and unrest in oil producing countries and regions, regional production patterns and environmental concerns and regulations. Furthermore, fuel has and may become much more expensive in the future, including as a result of the recent developments in Ukraine and the sanctions against Russia, the imposition of recent sulfur oxide emissions limits in January 2020 and reductions of carbon emissions from January 2023 under new regulations adopted by the International Maritime Organization, or the IMO, which may reduce the profitability and competitiveness of our business versus other forms of transportation, such as truck or rail.
 
Upon redelivery of vessels at the end of a period of time or voyage time charter, we may be obligated to repurchase bunkers on board at prevailing market prices, which could be materially higher than fuel prices at the inception of the charter period. In addition, fuel is a significant, if not the largest, expense that we would incur with respect to vessels operating on voyage charter.
 
Voyage charter contracts generally provide that the vessel owner bears the cost of fuel in the form of bunkers, which is a material operating expense. We currently cannot guarantee that we will hedge our fuel costs, and, therefore, an increase in the price of fuel may affect in a negative way our profitability and our cash flows, in case we consider voyage charter contracts in the future.
 
Our revenues are subject to seasonal fluctuations, which could affect our operating results and ability to service our debt or pay dividends.
 
We operate our vessels in markets that have historically exhibited seasonal variations in demand and, as a result, in charter hire rates. This seasonality may result in quarter-to-quarter volatility in our operating results. The dry bulk shipping market is typically stronger in the fall and winter months in anticipation of increased consumption of coal and other raw materials in the northern hemisphere during the winter months. In addition, unpredictable weather patterns in these months tend to disrupt vessel schedules and supplies of certain commodities. As a result, our revenues may be weaker during the fiscal quarters ending March 31 and June 30, and, conversely, our revenues may be stronger in fiscal quarters ending September 30 and December 31. This seasonality should not affect our operating results if our vessels are employed on fixed rate period time charters, but because our vessels or the vessels we may acquire may be employed in the spot market or on index-linked or fixed rate charters, seasonality may materially affect our operating results and our ability to pay dividends in the future.
 
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Climate change and greenhouse gas restrictions may be imposed.
 
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, the adoption of cap and trade regimes, carbon taxes, increased efficiency standards and incentives or mandates for renewable energy. For instance, the International Maritime Organization imposed a global 0.5% sulfur cap on marine fuels which came into force on January 1, 2020. In addition, the International Maritime Organization has adopted an initial strategy which identifies “levels of ambition” toward reducing greenhouse gas emissions, including (1) decreasing the carbon intensity from ships; (2) reducing carbon dioxide emissions per transport work, as an average across international shipping, by at least 40% by 2030, pursuing efforts towards 70% by 2050, compared to 2008 emission levels; and (3) reducing the total annual greenhouse emissions by at least 50% by 2050 compared to 2008 while pursuing efforts towards phasing them out entirely. These regulations and any additional regulations addressing similar goals could cause us to incur additional substantial expenses. See “Business Overview—Environmental and Other Regulations” for a discussion of these and other environmental regulations applicable to our operations.
 
In addition, although the emissions of greenhouse gases from international shipping currently are not subject to the Kyoto Protocol to the United Nations Framework Convention on Climate Change (this task was delegated under the Kyoto Protocol to the IMO for action), which required adopting countries to implement national programs to reduce emissions of certain gases, 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 could increase our costs related to operating and maintaining our 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.
 
Adverse consequences of 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 coal in the future, one of the primary cargoes carried by our vessels. 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 economic consequences of climate change could have a significant financial and operational adverse impact on our business that we cannot predict with certainty at this time.
 
Increased scrutiny of environmental, social and governance matters may impact our business and reputation.
 
In addition to the importance of their financial performance, companies are increasingly being judged by their performance on a variety of environmental, social and governance matters, or ESG, which are considered to contribute to the long-term sustainability of companies' performance.
 
A variety of organizations measure the performance of companies on such ESG topics, and the results of these assessments are widely publicized. In addition, investment in funds that specialize in companies that perform well in such assessments are increasingly popular, and major institutional investors have publicly emphasized the importance of such ESG measures to their investment decisions. Topics taken into account in such assessments include, among others, the company's efforts and impacts on climate change and human rights, ethics and compliance with law, and the role of the company's board of directors in supervising various sustainability issues.
 
We actively manage a broad range of such ESG matters, taking into consideration their expected impact on the sustainability of our business over time, and the potential impact of our business on society and the environment. As far as the environmental aspect is concerned, since 2018 we   have commenced implementing technical and operational measures aiming to improve the energy efficiency of our vessels and in extension reduce the CO2 emissions of the fleet. In 2021 we have completed an EEXI evaluation in accordance with IMO’s MEPC 75 and in cooperation with DNV, in preparation for the upcoming regulations. In addition, we have commenced biofuel trials in cooperation with leading charterers and operators. Scrubber and ballast water treatment system installations, Existing Vessel Design Index, or EVDI, upgrades, and Energy Saving Device and electronic performance monitoring system installations constitute examples of the environmental practices we have adopted and aim to continue adopting on most of our vessels. We participate in various environmental initiatives in our industry and technical committees on ESG matters and have also managed to secured sustainability-linked financing for one of our vessels. However, in light of investors' increased focus on ESG matters, there can be no certainty that we will manage such issues successfully, or that we will successfully meet society's expectations as to our proper role. Any failure or perceived failure by us in this regard could have a material adverse effect on our reputation and on our business, share price, financial condition, or results of operations, including the sustainability of our business over time.
 
Our vessels may call on ports located in or may operate in countries that are subject to restrictions or sanctions imposed by the United States, the European Union or other governments that could result in fines or other penalties imposed on us and may adversely affect our reputation and the market price of our common stock.
 
During the year ended December 31, 2021, none of our vessels called on ports located in countries subject to comprehensive sanctions and embargoes imposed by the U.S. government or countries identified by the U.S. government or other authorities as state sponsors of terrorism; however, our vessels may call on ports in these countries from time to time in the future on our charterers' instructions. 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 strengthened over time.
 
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We believe that we are currently in compliance with all applicable sanctions and embargo laws and regulations.  In order to maintain compliance, we monitor and review the movement of our vessels on a daily basis.
 
We endeavor to provide that all or most of our future charters include provisions and trade exclusion clauses prohibiting the vessels from calling on ports where there is an existing U.S. embargo. Furthermore, as of the date hereof, neither the Company nor its subsidiaries have entered into or have any plans to enter into, directly or indirectly, any contracts, agreements or other arrangements with the governments of Iran, Syria, North Korea, Cuba or any entities controlled by the governments of these countries.
 
Due to the nature of our business and the evolving nature of the foregoing sanctions and embargo laws and regulations, there can be no assurance that we will be in compliance at all times in the future, particularly as the scope of certain laws may be unclear and may be subject to changing interpretations.  Any such violation could result in fines, penalties or other sanctions that could severely impact our ability to access U.S. capital markets and conduct our business, and could result in some investors deciding, or being required, to divest their interest, or refrain from investing, 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 stock may adversely affect the price at which our common stock trades.  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.  In addition, our reputation and the market for our securities may be adversely affected if we engage in certain other activities, such as entering into charters with individuals or entities in countries subject to U.S. sanctions and embargo laws that are not controlled by the governments of those countries, or engaging in operations associated with those countries pursuant to contracts with third parties that are unrelated to those countries or entities controlled by their governments.
 
Sulfur regulations to reduce air pollution from ships have required retrofitting of vessels and may cause us to incur significant costs.
 
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%. The interpretation of “fuel oil used on board” includes use in main engine, auxiliary engines and boilers. Compliance with this regulation is achieved by (i) using 0.5% sulfur fuels on board, which are available at a higher cost; (ii) installing “scrubbers” for cleaning of the exhaust gas; or (iii) retrofitting vessels to be powered by liquefied natural gas (LNG), which may not yet be an economically viable option due to the lack of supply network and high costs involved in this process. We have installed scrubbers on six vessels of our current fleet in cooperation with first-class charterers who currently employ the vessels on time charters. As part of these agreements, the charterers covered the installation costs. Furthermore, two vessels with scrubbers were purchased during 2021. The remaining nine vessels in our fleet comply by burning low sulfur fuel (0.5% or 0.1%). All engineering officers, engineering crew and deck officers employed on our vessels since January 1, 2020 have been required to undergo training and complete a certain e-module regarding the use of low sulfur fuels. We have further developed ship specific implementation plans for safeguarding the smooth transition with the usage of compliant fuels for such vessels that will not be equipped with scrubbers. Costs of ongoing compliance may have a material adverse effect on our future performance, results of operations, cash flows and financial position. See Item 4. “Information on the Company—B. Business Overview— Environmental and Other Regulations—The International Maritime Organization.”
 
We are subject to regulation and liability under environmental laws that could require significant expenditures and affect our cash flows and net income.
 
Our business and the operation of our vessels are materially affected by government regulation in the form of international conventions, national, state and local laws and regulations in force in the jurisdictions in which the vessels operate, as well as in the country or countries of their registration, including those governing oil spills, discharges to air and water, ballast water management, and the handling and disposal of hazardous substances and wastes.  These requirements include, but are not limited to, EU regulations, the U.S. Oil Pollution Act of 1990, or OPA, the U.S. Comprehensive Environmental Response, Compensation and Liability Act of 1980, or CERCLA, the U.S. Clean Air Act, including its amendments of 1977 and 1990, or the CAA, the U.S. Clean Water Act, or the CWA, the U.S. Maritime Transportation Security Act of 2002, or the MTSA, and regulations of the IMO, including, but not limited to, the International Convention on Civil Liability for Oil Pollution Damage of 1969, as from time to time amended and generally referred to as CLC, the IMO International Convention for the Prevention of Pollution from Ships of 1973, as from time to time amended and generally referred to as MARPOL, including the designation of emission control areas, or ECAs, thereunder, the IMO International Convention for the Safety of Life at Sea of 1974, as from time to time amended and generally referred to as SOLAS, the IMO International Convention on Load Lines of 1966, as from time to time amended and generally referred to as the LL Convention, the International Convention on Civil Liability for Bunker Oil Pollution Damage, generally referred to as the Bunker Convention, the IMO's International Management Code for the Safe Operation of Ships and for Pollution Prevention, generally referred to as the ISM Code, the International Convention for the Control and Management of Ships' Ballast Water and Sediments, generally referred to as the BWM Convention, and the International Ship and Port Facility Security Code, or ISPS.
 
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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 the 0.5% sulfur cap on marine fuels, air emissions including greenhouse gases, the management of ballast water, 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 and our available cash.  Because such conventions, laws and regulations are often revised, we cannot predict the ultimate cost of complying with such conventions, laws and regulations or the impact thereof on the resale price or useful life of vessels we may acquire in the future.  Additional conventions, laws and regulations may be adopted which could limit our ability to do business or increase the cost of our doing business and which may materially adversely affect our operations.
 
Regulations relating to ballast water discharge may adversely affect our revenues and profitability.
 
The IMO has imposed updated guidelines for ballast water management systems specifying the maximum amount of viable organisms allowed to be discharged from a vessel's ballast water.  Depending on the date of the IOPP renewal survey, existing vessels constructed before September 8, 2017 must comply with the updated D-2 standard on or after September 8, 2019.  For most vessels, compliance with the D-2 standard will involve installing on-board systems to treat ballast water and eliminate unwanted organisms.  Ships constructed on or after September 8, 2017 are to comply with the D-2 standards on or after September 8, 2017. Vessels are required to meet the discharge standard D-2 by installing an approved Ballast Water Management System (or BWMS). Pursuant to the BWM Convention amendments that entered into force in October 2019, BWMSs installed on or after October 28, 2020 shall be approved in accordance with BWMS Code, while BWMSs installed before October 23, 2020 must be approved taking into account guidelines developed by the IMO or the BWMS Code. Ships sailing in U.S. waters are required to employ a type-approved BWMS which is compliant with USCG regulations. The USCG has approved a number of BWMS.  Amendments to the BWM Convention will enter into force in June 2022 concerning commissioning testing of BWMS and the form of the International Ballast Water Management Certificate. Currently fourteen of our vessels comply with the updated guidelines and we have made arrangements for the installation of ballast water treatment systems in our remaining vessels, prior to the respective compliance deadlines.  The costs of compliance may be substantial and affect our profitability.
 
Furthermore, United States regulations are currently changing.  Although the 2013 Vessel General Permit, or VGP, program and U.S. National Invasive Species Act, or NISA, are currently in effect to regulate ballast discharge, exchange and installation, the Vessel Incidental Discharge Act, or VIDA, which was signed into law on December 4, 2018, requires that the U.S. Coast Guard 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. The new regulations could require the installation of new equipment, which may cause us to incur substantial costs. Under VIDA, all provisions of the 2013 VGP and USCG ballast water regulations remain in force and effect as currently written until the EPA publishes standards and the corresponding Coast Guard regulations are published.
 
Increased inspection procedures, tighter import and export controls and new security regulations could increase costs and disrupt our business.
 
International shipping is subject to security and customs inspection and related procedures in countries of origin, destination and trans-shipment points. Since the events of September 11, 2001, there have been a variety of initiatives intended to enhance vessel security, such as the MTSA. These security procedures can result in delays in the loading, discharging or trans-shipment and the levying of customs duties, fines or other penalties against exporters or importers and, in some cases, vessels. Future changes to the existing security procedures may be implemented that could affect the dry bulk sector. These changes have the potential to impose additional financial and legal obligations on vessels and, in certain cases, to render the shipment of certain types of goods uneconomical or impractical. These additional costs could reduce the volume of goods shipped, resulting in a decreased demand for vessels and have a negative impact on our business, revenues and customer relations.
 
Acts of piracy on ocean-going vessels have increased in frequency, which could adversely affect our business.
 
Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the South China Sea, Strait of Malacca, Arabian Sea, Red Sea, Gulf of Aden off the coast of Somalia, Indian Ocean and Gulf of Guinea. Sea piracy incidents continue to occur , particularly in the South China Sea, the Indian Ocean, in the Gulf of Guinea and the Strait of Malacca, with dry bulk vessels particularly vulnerable to such attacks.  Although the frequency of sea piracy worldwide has generally decreased since 2013, sea piracy incidents continue to occur.  Acts of piracy could result in harm or danger to the crews that man our vessels.  Additionally, if piracy attacks result in regions in which our vessels are deployed being characterized as “war risk” zones by insurers or if our vessels 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. In addition, crew and security equipment costs, including costs which may be incurred to employ onboard security 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 an increase in cost, or unavailability, of insurance for our vessels could have a material adverse impact on our business, financial condition and results of operations.
 
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The operation of dry bulk vessels has particular operational risks.
 
The operation of dry bulk vessels has certain unique risks. With a dry bulk vessel, the cargo itself and its interaction with the vessel can be an operational risk. By their nature, dry bulk cargoes are often heavy, dense, easily shifted, and react badly to water exposure. In addition, dry bulk vessels are often subjected to battering treatment during discharging operations with grabs, jackhammers (to pry encrusted cargoes out of the hold) and small bulldozers. This treatment may cause damage to the vessel. Vessels damaged due to treatment during discharging procedures may affect a vessel’s seaworthiness while at sea. Hull fractures in dry bulk vessels may lead to the flooding of the vessels’ holds. If a dry bulk vessel suffers flooding in its forward holds, the bulk cargo may become so dense and waterlogged that its pressure may buckle the vessel’s bulkheads, leading to the loss of a vessel. If we are unable to adequately maintain our vessels, we may be unable to prevent these events. Any of these circumstances or events could negatively impact our business, financial condition, and results of operations.
 
If any of our vessels fails to maintain its class certification or fails any annual survey, intermediate survey, or special survey, or if any scheduled class survey takes longer or is more expensive than anticipated, this could have a material adverse impact on our financial condition and results of operations.
 
The hull and machinery of every commercial vessel must be certified 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 SOLAS.
 
A vessel must undergo annual, intermediate and special surveys. The vessel’s machinery may be on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. At the beginning, in between and in the end of this cycle, every vessel is required to undergo inspection of her underwater parts that usually includes dry-docking. These surveys and dry-dockings can be costly and can result in delays in returning a vessel to operation.
 
If any vessel does not maintain its class, the vessel will not be allowed to carry cargo between ports and cannot be employed or insured. Any such inability to carry cargo or be employed, or any related violation of the covenants under our loans or other financing agreements, could have a material adverse impact on our financial condition and results of operations.
 
Because seafaring employees we employ are covered by industry-wide collective bargaining agreements, failure of industry groups to renew those agreements may disrupt our operations and adversely affect our earnings.
 
We employ a large number of seafarers. All the seafarers employed on the vessels in our fleet are covered by industry-wide collective bargaining agreements that set minimum standards in wages and labor conditions. We cannot assure you that these agreements will be renewed as necessary or will prevent labor interruptions. Any labor interruptions could disrupt our operations and harm our financial performance.
 
Maritime claimants could arrest or attach one or more of our vessels, which could interrupt our cash flows.
 
Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against a vessel for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lien holder may enforce its lien by arresting a vessel through foreclosure proceedings. The arrest or attachment of one or more of our vessels could interrupt our cash flow and require us to pay large sums of funds to have the arrest lifted, which would have a material adverse effect on our financial condition and results of operations.
 
In addition, in some jurisdictions, such as South Africa, under the “sister ship” theory of liability, a claimant may arrest both 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. Claimants could try to assert “sister ship” liability against one of our vessels for claims relating to another of our vessels.
 
Governments could requisition our vessels during a period of war or emergency, which could negatively impact our business, financial condition, results of operations, and available cash.
 
A government could requisition for title or hire one or more of our vessels. Requisition for title occurs when a government takes control of a vessel and becomes the owner. Also, a government could requisition a vessel for hire. 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. Government requisition of one or more of our vessels could have a material adverse effect on our financial condition and results of operations.
 
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Risks Relating to Our Company
 
The market values of our vessels may decrease, which could limit the amount of funds that we can borrow or trigger certain financial covenants under our loan agreements and other financing agreements, and we may incur an impairment or, if we sell vessels following a decline in their market value, a loss.
 
The fair market values of our vessels are related to prevailing freight charter rates. While the fair market value of vessels and the freight charter market have a very close relationship as the charter market moves from trough to peak, the time lag between the effect of charter rates on market values of ships can vary. A decrease in the market value of our vessels could require us to raise additional capital in order to remain compliant with our loan covenants or the covenants in the other financing agreements and could result in the loss of our vessels (including, through foreclosure by our lenders and lessors) and adversely affect our earnings and financial condition.
 
 
•
The fair market value of our vessels is dependent on other factors as well, including: general economic and market conditions affecting the shipping industry, including changes in global dry cargo commodity supply;

 
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types and sizes of vessels;

 
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number of newbuilding deliveries;

 
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number of vessels scrapped or otherwise removed from the world fleet;

 
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changes in environmental and other regulations that may limit the useful life of vessels;

 
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decreased costs and increases in use of other modes of transportation;

 
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cost of newbuildings or secondhand vessel acquisitions;

 
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governmental and other regulations;

 
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technological advances; and

 
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the cost of retrofitting or modifying existing ships to respond to technological advances in vessel design or equipment, changes in applicable environmental or other regulations or standards, or otherwise.

In addition, as vessels grow older, they generally decline in value. If the fair market value of our vessels declines, we may not be in compliance with certain covenants in our loan agreements and other financing agreements, and our lenders or lessors could accelerate our indebtedness or require us to pay down our indebtedness to a level where we are again in compliance with the covenants under our loans and other financing agreements. If any of our loans and other financing agreements are accelerated, we may not be able to refinance our debt or obtain additional funding. We expect that we will enter into more loan agreements and other financing agreements in connection with our vessels or with future acquisitions of vessels.  For more information regarding our current loan facilities and other financing agreements, please see “Item 5. Operating and Financial Review and Prospects – B. Liquidity and Capital Resources – Loan Arrangements – Credit Facilities.”
 
In addition, if vessel values decline, we may have to record an impairment adjustment in our financial statements, which could adversely affect our financial results. Furthermore, if we sell one or more of our vessels at a time when vessel prices have fallen, the sale price may be less than the vessel’s carrying value on our consolidated financial statements, resulting in a loss on sale or an impairment loss being recognized, leading to a reduction in earnings.
 
Newbuilding projects are subject to risks that could cause delays.
 
We may enter into newbuilding contracts in connection with our vessel acquisition strategy. Newbuilding construction projects are subject to risks of delay inherent in any large construction project from numerous factors, including shortages 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, design or engineering changes and work stoppages and other labor disputes, adverse weather conditions or any other events of force majeure. A shipyard’s failure to deliver a vessel on time may result in the delay of revenue from the vessel. Any such failure or delay could have a material adverse effect on our operating results.
 
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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 have recently expanded our fleet significantly and 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.
 
Substantial debt levels could limit our flexibility to obtain additional financing and pursue other business opportunities.
 
As of December 31, 2021, we had $218.6 million of outstanding debt excluding the convertible note issued to a former principal shareholder of the Company, Jelco Delta Holding Corp., or JDH. Moreover, we anticipate that we will incur future indebtedness in connection with the acquisition of additional vessels, although there can be no assurance that we will be successful in identifying further vessels or securing such debt financing. Significant levels of debt could have important consequences to us, including the following:
 
 
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our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired, or such financing may be unavailable on favorable terms, or at all;

 
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we may need to use a substantial portion of our cash from operations to make principal and interest payments on our bank debt and financing liabilities, reducing the funds that would otherwise be available for operations, future business opportunities and any future dividends to our shareholders;

 
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our debt level could make us more vulnerable to competitive pressures or a downturn in our business or the economy generally than our competitors with less debt; and

 
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our debt level may limit our flexibility in responding to changing business and economic conditions.

Our ability to service our indebtedness will depend upon, among other things, our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, some of which are beyond our control, as well as the interest rates applicable to our outstanding indebtedness. If our operating income is not sufficient to service our indebtedness, we will be forced to take actions, such as reducing or delaying our business activities, acquisitions, investments or capital expenditures, selling assets, restructuring or refinancing our debt or seeking additional equity capital. We may not be able to effect any of these remedies on satisfactory terms, or at all. In addition, a lack of liquidity in the debt and equity markets could hinder our ability to refinance our debt or obtain additional financing on favorable terms in the future. For more information regarding our current loan arrangements, please see “Item 5. Operating and Financial Review and Prospects – B. Liquidity and Capital Resources – Loan Arrangements.”
 
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, which could limit our operational flexibility and have an adverse effect on our financial condition and results of operations. In addition, because of the presence of cross-default provisions in our loan agreements and financing arrangements, a default by us under one loan or financing agreement could lead to defaults under multiple loans and financing agreements.
 
Our loan agreements and other financial arrangements contain, and we expect that other future loan agreements and financing arrangements will contain, customary covenants and event of default clauses, financial covenants, restrictive covenants 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 be different 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 dry bulk 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 vessels in our fleet. The loss of any of our vessels could have a material adverse effect on our business, results of operations and financial condition.
 
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Because of the presence of cross-default provisions in our loan agreements and financing agreements, a default by us under a loan or financing agreement and the refusal of any lender or financing counterparty to grant or extend a waiver could result in the acceleration of our indebtedness under our other loans and financing agreements. A cross-default provision means that if we default on one loan, we would then default on our other loans containing a cross-default provision.
 
In the recent past, we have obtained waivers, deferrals and amendments of certain financial covenants, payment obligations and events of default under our loan facilities with our lenders. However, there can be no assurance that we will obtain similar waivers and deferrals from our lenders in the future, if needed, as we have obtained in the past.

For more information regarding our current loan facilities, see please see “Item 5. Operating and Financial Review and Prospects – B. Liquidity and Capital Resources – Loan Arrangements.”
 
If we fail to manage our planned growth properly, we may not be able to successfully expand our market share.
 
Our fleet currently consists of 17 Capesize vessels, and we may acquire additional vessels in the future. Our ability to manage our growth will primarily depend on our ability to:
 
 
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generate excess cash flow so that we can invest without jeopardizing our ability to cover current and foreseeable working capital needs, including debt service;

 
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finance our operations;

 
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locate and acquire suitable vessels;

 
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identify and consummate acquisitions or joint ventures;

 
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integrate any acquired businesses or vessels successfully with our existing operations;

 
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hire, train and retain qualified personnel and crew to manage and operate our growing business and fleet; and

 
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expand our customer base.

Growing any business by acquisitions presents numerous risks such as obtaining acquisition financing on acceptable terms or at all, 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.
 
Purchasing and operating secondhand vessels, such as our current fleet, may result in increased operating costs and vessel off-hire, which could adversely affect our financial condition and results of operations.
 
All 17 of the vessels in our fleet are secondhand vessels. Our inspection of these or other secondhand vessels prior to purchase does not provide us with the same knowledge about their condition and the cost of any required or anticipated repairs that we would have had if these vessels had been built for and operated exclusively by us. We have not received in the past, and do not expect to receive in the future, the benefit of warranties on any secondhand vessels we acquire.
 
As the vessels in our fleet or other secondhand vessels we may acquire age, they may become less fuel efficient and costlier to maintain and will not be as advanced as recently constructed vessels due to improvements in design, technology and engineering, including improvements required to comply with government regulations. Rates for cargo insurance, paid by charterers, also increase with the age of a vessel, making older vessels less desirable to charterers.
 
In addition, charterers actively discriminate against hiring older vessels. Rightship, the ship vetting service founded by Rio Tinto and BHP-Billiton, has become a major vetting service in the dry bulk shipping industry, which ranks the suitability of vessels based on a scale of one to five stars. There are carriers that may not charter a vessel that Rightship has vetted with fewer than three stars. Therefore, a potentially deteriorated star rating for our vessels may affect their commercial operation and profitability and vessels in our fleet with lower ratings may experience challenges in securing charters. Effective as of January 1, 2018, Rightship's age trigger for a dry cargo inspection for vessels over 8,000 dwt changed from 18 years to 14 years, after which an annual acceptable Rightship inspection will be required. Rightship may downgrade any vessel over 18 years of age that has not completed a satisfactory inspection by Rightship, in the same manner as any other vessel over 14 years of age, to two stars, which significantly decreases its chances of entering into a charter. Nine, seven and one vessels in our fleet have five, four and three-star risk ratings from Rightship, respectively.
 
Governmental regulations, safety or other equipment standards related to the age or condition of vessels may require expenditures for alterations, or the addition of new equipment, to our vessels and may restrict the type of activities in which the vessels may engage. As our vessels age, market conditions may not justify those expenditures or enable us to operate our vessels profitably during the remainder of their useful lives.
 
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In addition, unless we maintain cash reserves for vessel replacement, we may be unable to replace the vessels in our fleet upon the expiration of their useful lives. We estimate the useful life of our vessels to be 25 years from the date of initial delivery from the shipyard. Our cash flows and income are dependent on the revenues we earn by chartering our vessels to customers. If we are unable to replace the vessels in our fleet upon the expiration of their useful lives, our business, financial condition and results of operations will be materially adversely affected. Any reserves set aside for vessel replacement would not be available for other cash needs or dividends.
 
Increased regulatory oversight, uncertainty relating to the LIBOR calculation process and phasing out of LIBOR may adversely affect the amounts of interest we pay under our debt arrangements and our results of operations.
 
The calculation of interest in most financing agreements in our industry has been based on published LIBOR rates. LIBOR has historically been volatile, with the spread between LIBOR and the prime lending rate widening significantly at times. These conditions are the result of the disruptions in the international credit markets. Because the interest rates borne by our outstanding indebtedness primarily fluctuate with changes in LIBOR, and if such volatility were to occur in the future, or if LIBOR is replaced as the reference rate under our debt obligations, it could affect the amount of interest payable on our debt which, in turn, could have an adverse effect on our profitability, earnings and cash flow.
 
On July 27, 2017, the UK Financial Conduct Authority (“FCA”) announced that it would phase-out LIBOR by the end of 2021. On November 30, 2020, ICE Benchmark Administration (“IBA”), the administrator of LIBOR, with the support of the United States Federal Reserve and the United Kingdom’s Financial Conduct Authority, announced plans to consult on ceasing publication of U.S. Dollar LIBOR on December 31, 2021 for only the one-week and two-month U.S. Dollar LIBOR tenors, and on June 30, 2023 for all other U.S. Dollar LIBOR tenors. This announcement coincided with an announcement by the International Swaps and Derivatives Association (“ISDA”) that the IBA announcement was not a triggering event which would set the spread to be used in its derivative contracts as part of the risk-free rate determination process. As a result, lenders have insisted on fallback provisions that entitle the lenders, in their discretion, to replace published LIBOR as the basis for the interest calculation with successor benchmark rates, such as their cost-of-funds rate. Various alternative reference rates are being considered in the financial community. The Secured Overnight Financing Rate (“SOFR”) has been proposed by the Alternative Reference Rate Committee (“ARRC”), a committee convened by the U.S. Federal Reserve that includes major market participants and on which regulators participate, as an alternative rate to replace U.S. dollar LIBOR. SOFR is a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities in the repurchase agreement (repo) market. The daily transaction volumes underlying SOFR are approximately $1 trillion, giving the ARRC confidence that SOFR will be reliable through a wide range of market conditions. SOFR is being adopted by most lenders in our industry as replacement benchmark rate and one of our loan facilities has adopted SOFR as a benchmark rate. However, it is not possible at this time to know the ultimate impact a phase-out of LIBOR and its potential replacement with SOFR may have, or how any such changes or alternative methods for calculating benchmark interest rates would be applied to any particular agreement containing terms based on LIBOR, which generally have alternative calculation provisions. All our floating rate financing agreements, currently in place, are linked to the 1-month and 3-months tenors of the U.S. dollar LIBOR which will continue to be published until June 30, 2023; additionally they contain benchmark replacement provisions that protect the lender from a mismatch between the cost of funding for the respective loan and a potential replacement benchmark rate. If, however, these are implicated, the interest payable on these particular agreements could be subject to volatility and the underlying lending costs could increase, which would have an adverse effect on the borrowers’ profitability, earnings and cash flow.
 
The failure of our counterparties to meet their obligations under our charter agreements could cause us to suffer losses or otherwise adversely affect our business.
 
The ability and willingness of each of our counterparties to perform its obligations under charter agreements 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 dry bulk shipping industry and the industries in which our counterparties operate and the overall financial condition of the counterparties. From time to time, those counterparties may account for a significant amount of our chartering activity and revenues. In addition, in challenging market conditions, there have been reports of charterers renegotiating their charters or defaulting on their obligations under charter agreements, and so our customers may fail to pay charter hire or attempt to renegotiate charter rates. Should a counterparty fail to honor its obligations under agreements with us, it may be difficult to secure substitute employment for such vessel, and any new charter arrangements we secure in the spot market or on time charters could be at lower rates. If our charterers fail to meet their obligations to us or attempt to renegotiate our charter agreements, we could suffer significant losses, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
 
Rising crew costs may adversely affect our profits.
 
Crew costs are expected to be a significant expense for us. Recently, the limited supply of and increased demand for highly skilled and qualified crew, due to the increase in the size of the global shipping fleet, has created upward pressure on crewing costs. Increases in crew costs may adversely affect our profitability if we are not able to increase our rates.
 
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We may not be able to attract and retain key management personnel and other employees in the shipping industry, which may negatively affect the effectiveness of our management and our results of operations.
 
Our success will depend to a significant extent upon the abilities and efforts of our management team, including our ability to retain key members of our management team and the ability of our management to recruit and hire suitable employees. The loss of any of these individuals could adversely affect our business prospects and financial condition. Difficulty in hiring and retaining personnel could adversely affect our results of operations.
 
Our vessels may suffer damage, and we may face unexpected repair costs, which could adversely affect our cash flow and financial condition.
 
If our vessels suffer damage, they may need to be repaired at a shipyard facility. The costs of repairs are unpredictable and can be substantial. The loss of earnings while our vessels are being repaired and repositioned, as well as the actual cost of these repairs, would decrease our earnings and reduce the amount of any dividends in the future. We may not have insurance that is sufficient to cover all or any of these costs or losses and may have to pay repair costs not covered by our insurance.
 
We are exposed to U.S. dollar and foreign currency fluctuations and devaluations that could harm our reported revenue and results of operations.
 
We generate all of our revenues and incur the majority of our operating expenses in U.S. dollars, but we currently incur many of our general and administration expenses in currencies other than the U.S. dollar, primarily the euro. Because such portion of our expenses is incurred in currencies other than the U.S. dollar, our expenses may from time to time increase relative to our revenues as a result of fluctuations in exchange rates, particularly between the U.S. dollar and the euro, which could affect the amount of net income that we report in future periods. We may use financial derivatives to operationally hedge some of our currency exposure. Our use of financial derivatives involves certain risks, including the risk that losses on a hedged position could exceed the nominal amount invested in the instrument and the risk that the counterparty to the derivative transaction may be unable or unwilling to satisfy its contractual obligations, which could have an adverse effect on our results.
 
We maintain cash with a limited number of financial institutions including financial institutions that may be located in Greece, which will subject us to credit risk.
 
We maintain all of our cash with a limited number of financial institutions, including institutions that are located in Greece. These financial institutions located in Greece may be subsidiaries of international banks or Greek financial institutions. Economic conditions in Greece have been, and continue to be, uncertain as a result of recent sovereign weakness. Although Moody's Investor Services Inc. upgraded the bank financial strength ratings, as well as the deposit and debt ratings, of several Greek banks in September 2021 to reflect improving prospects, the stand-alone financial strength of the banks and the anticipated additional pressures stemming from the legacy of the country's multi-year debt crisis and the COVID-19 pandemic continue to create challenging economic prospects.
 
We are a holding company and we depend on the ability of our subsidiaries to distribute funds to us in order to satisfy financial obligations or to pay dividends.
 
We are a holding company and our subsidiaries, which are all wholly-owned by us either directly or indirectly, conduct all of our operations and own all of our operating assets. We have no significant assets other than the equity interests in our wholly-owned subsidiaries. As a result, our ability to make dividend payments depends on our subsidiaries and their ability to distribute funds to us. The ability of a subsidiary to make these distributions could be affected by the covenants in our loan agreements, a claim or other action by a third party, including a creditor, and the laws of Bermuda, the British Virgin Islands, Hong Kong, Liberia, Malta and the Republic of the Marshall Islands, where our vessel-owning subsidiaries are incorporated, which regulate the payment of dividends by companies. If we are unable to obtain funds from our subsidiaries, we may not be able to satisfy our financial obligations.
 
In the highly competitive international shipping industry, we may not be able to compete for charters with new entrants or established companies with greater resources, which may adversely affect our results of operations.
 
We employ our vessels in a highly competitive market that is capital intensive and highly fragmented. Competition arises primarily from other vessel owners, some of whom may have substantially greater resources than we do. Competition for the transportation of dry bulk cargoes by sea is 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 the dry bulk shipping industry and operate larger fleets through consolidations or acquisitions and may be able to offer lower charter rates and higher quality vessels than we are able to offer. Although we believe that no single competitor has a dominant position in the markets in which we compete, we are aware that certain competitors may be able to devote greater financial and other resources to their activities than we can, resulting in a significant competitive threat to us. We cannot give assurances that we will continue to compete successfully with our competitors or that these factors will not erode our competitive position in the future.
 
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Due to our lack of fleet diversification, adverse developments in the maritime dry bulk shipping industry would adversely affect our business, financial condition, and operating results.
 
Our business currently depends on the transportation of dry bulk commodities, and our fleet consists exclusively of Capesize vessels. Our current lack of diversification could make us vulnerable to adverse developments in the maritime dry bulk shipping industry and demand for Capesize vessels in particular, which would have a significantly greater impact on our business, financial condition and operating results than it would if we maintained more diverse assets or lines of business.
 
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, personal injury claims, environmental claims or proceedings, asbestos and other toxic tort 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 or insurers may not remain solvent, which may have a material adverse effect on our financial condition.
 
The shipping industry has inherent operational risks that may not be adequately covered by our insurances. Further, because we obtain some of our insurances through protection and indemnity associations, we have been and may in the future be retrospectively subject to calls or premiums in amounts based not only on our own claim records, but also on the claim records of all other members of the protection and indemnity associations.

We procure insurance for our fleet against risks commonly insured against by vessel owners and operators. Our current insurances include hull and machinery insurance, war risks insurance, demurrage and defense insurance and protection and indemnity insurance (which includes environmental damage and pollution insurance). We do not expect to maintain for our vessels insurance against loss of hire, which covers business interruptions that result from the loss of use of a vessel, except in cases when our vessels transit through or call at high risk areas. We may not be adequately insured against all risks or our insurers may not pay a particular claim. Even if our insurance coverage is adequate to cover our losses, we may not be able to timely obtain a replacement vessel in the event of a loss. Furthermore, in the future, we may not be able to obtain adequate insurance coverage at reasonable rates for our fleet. Our insurance policies also contain deductibles, limitations and exclusions which, although we believe are standard in the shipping industry, may nevertheless increase our costs. If our insurances are not enough to cover claims that may arise, the deficiency may have a material adverse effect on our financial condition and results of operations. We have been and may in the future be retrospectively subject to calls, or premiums, in amounts based not only on our own claim records but also the claim records of all other members of the protection and indemnity associations through which we receive indemnity insurance coverage for tort liability, including pollution-related liability. In the past, we paid approximately $0.3 million in response to these calls, and our payment of such calls could in the future result in significant expenses to us.

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, 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.
 
We depend significantly on third-party technical and commercial managers for crewing and certain aspects of technical and commercial management of some of our ships. Our operations could be negatively affected if third-party managers fail to perform their services satisfactorily.
 
Seanergy Shipmanagement Corp., or Seanergy Shipmanagement, our wholly owned ship management subsidiary, provides certain technical management services to the Dukeship, Fellowship, Friendship, Goodship, Knightship, Lordship and Worldship and it is expected to undertake the technical management of more vessels of our fleet in the future. Seanergy Management Corp., or Seanergy Management, our wholly owned subsidiary, provides us with certain other management services. Moreover, we also depend significantly on third-party technical and commercial managers. V.Ships and V.Ships Greece provide us with certain technical, general administrative and support services (including vessel maintenance, crewing, purchasing, shipyard supervision, assistance with regulatory compliance, accounting related to vessels and provisions).   Anglo-Eastern Crew Management (Asia) Limited, or Anglo-Eastern, provide crew management services to the Worldship and Dukeship. Fidelity provides us with commercial management services for our vessels.
 
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Our operational success depends significantly upon V.Ships’, V.Ships Greece’s, Anglo-Eastern’s and Fidelity’s satisfactory performance of these services. Our business would be harmed if V.Ships, V.Ships Greece, Anglo-Eastern or Fidelity failed to perform these services satisfactorily. In addition, if our management agreements with any of V.Ships, V. Ships Greece or Fidelity were to be terminated or if their terms were to be altered, our business could be adversely affected, as we may not be able to immediately replace such services, and even if replacement services were immediately available, the terms offered could be less favorable than those under our existing management agreements.
 
In addition, our ability to compete for and enter into new period time and spot charters and to expand our relationships with our existing charterers depends significantly on our relationship with our third-party commercial manager, Fidelity. If Fidelity fails to perform its obligations, it may harm our ability to renew existing charters upon their expiration, obtain new charters, and maintain satisfactory relationships with our charterers and suppliers.
 
The failure of our third-party managers to perform their obligations satisfactorily could have a material adverse effect on our business, financial condition and results of operations. Because our third-party managers are each privately held companies, we and our shareholders might have little advance warning of financial or other problems affecting them even though their financial or other problems could have a material adverse effect on us. Although we may have rights against our third-party managers if they default on their obligations to us, our shareholders will share that recourse only indirectly to the extent that we recover funds.
 
Management fees will be payable to our managers regardless of our profitability, which could have a material adverse effect on our business, financial condition and results of operations.
 
Pursuant to our technical and crew management agreements we pay management fees to our managers as described in “Item 4.B. History and Development – Business Overview – Management of our fleet” in exchange for provision of technical, support and administrative services. The management fees do not cover expenses such as voyage expenses, vessel operating expenses, maintenance expenses and crewing costs, for which we reimburse the technical manager. The management fees are payable whether or not our vessels are employed and regardless of our profitability, and we have no ability to require our managers to reduce the management fees if our profitability decreases, which could have a material adverse effect on our business, financial condition and results of operations.
 
We may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. holders of our common stock.
 
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. For purposes of these tests, income derived from the performance of services does not constitute “passive income.” 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.
 
Based upon our current and anticipated method of operations, we do not believe that we should be a PFIC with respect to our 2021 taxable year, and we do not expect to become a PFIC in any future taxable year. In this regard, we intend to treat our gross income from time charters as active services income, rather than rental income. Accordingly, our income from our time chartering activities should not constitute “passive income,” and the assets that we own and operate in connection with the production of that income should not constitute passive assets. There is substantial legal authority supporting this position including case law and U.S. Internal Revenue Service, or IRS, pronouncements concerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes. However, it should be noted that there is also authority which characterizes time charter income as rental income rather than services income for other tax purposes. Accordingly, no assurance can be given that the IRS or a court of law will accept this 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 the nature and extent of our operations change.
 
If the IRS were to find that we are or have been a PFIC for any taxable year, our U.S. shareholders would face adverse U.S. federal income tax consequences and certain information reporting requirements. Under the PFIC rules, unless those shareholders make an election available under the United States Internal Revenue Code of 1986 as amended, or the Code (which election could itself have adverse consequences for such shareholders), 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 shares of our common stock, as if the excess distribution or gain had been recognized ratably over the shareholder's holding period of the shares of our common stock. Similar consequences would apply to holders of our warrants. See “Item 10.E. Tax Considerations – United States Federal Income Tax Consequences – United States Federal Income Taxation of U.S. Holders – Passive Foreign Investment Company Rules” for a more comprehensive discussion of the U.S. federal income tax consequences to U.S. shareholders if we are treated as a PFIC.
 
19
We may have to pay tax on U.S. source income, which would reduce our earnings.
 
Under the Code, 50% of the gross shipping income of a vessel-owning or chartering corporation, such as us and our subsidiaries, that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States, exclusive of certain U.S. territories and possessions, or “U.S. source gross shipping income” may be 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 and the applicable Treasury Regulations promulgated thereunder.
 
We believe that we qualify for exemption from the 4% tax under Section 883 of the Code for our 2021 taxable year.  However, there are factual circumstances beyond our control that could cause us not to have the benefit of the tax exemption under Section 883 in 2022 or future years and thereby cause us to become subject to U.S. federal income tax on our U.S. source shipping income. For example, there is a risk that we could fail to qualify for exemption under Section 883 of the Code for a particular taxable year if “non-qualified” shareholders with a five percent or greater interest in our stock were, in combination with each other, to own 50% or more of the outstanding shares of our stock on more than half the days during the taxable year. See the description of the ownership tests which must be satisfied to qualify for exemption under Section 883 of the Code in “Item 10.E. Tax Considerations – United States Federal Income Tax Consequences – Exemption of Operating Income from United States Federal Income Taxation.”
 
Because the availability of the exemption depends on factual circumstances beyond our control, we can give no assurances on the tax-exempt status of ourselves or that of any of our subsidiaries for our 2022 or subsequent taxable years. If we or our subsidiaries are not entitled to exemption under Section 883, we or our subsidiaries will be subject to the 4% U.S. federal income tax on 50% of any shipping income such companies derive that is attributable to the transport of cargoes to or from the United States. This tax is a cost, which, if unreimbursed, has a negative effect on our business and results in decreased earnings available for distribution to our shareholders.
 
We may be subject to tax in the jurisdictions in which we or our vessel-owning subsidiaries are incorporated or operate.
 
In addition to the tax consequences discussed herein, we may be subject to tax in one or more other jurisdictions where we or our vessel-owning subsidiaries are incorporated or conduct activities. We are subject to a corporate flat tax for our subsidiaries in Malta for the period from January 1, 2021 to December 31, 2021 and could be subject to additional taxation in the future in Malta or other jurisdictions where our subsidiaries are incorporated or do business. The amount of any such tax imposed upon our operations or on our subsidiaries' operations may be material and could have an adverse effect on our earnings.
 
We are a “foreign private issuer,” which could make our common stock 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. 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. 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 sales of our securities. Our exemption from the rules of Section 16 of the Exchange Act regarding sales of common stock 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. Accordingly, there may be less publicly available information concerning us than there is for other U.S. public companies. These factors could make our common stock less attractive to some investors or otherwise harm our stock price.
 
The Public Company Accounting Oversight Board inspection of our independent accounting firm could lead to adverse findings in our auditors' reports and challenges to the accuracy of our published audited consolidated financial statements.
 
Auditors of U.S. public companies are required by law to undergo periodic Public Company Accounting Oversight Board, or PCAOB, inspections that assess their compliance with U.S. law and professional standards in connection with performance of audits of financial statements filed with the SEC. For several years certain European Union countries, including Greece, did not permit the PCAOB to conduct inspections of accounting firms established and operating in such European Union countries, even if they were part of major international firms. Accordingly, unlike for most U.S. public companies, the PCAOB was prevented from evaluating our auditor's performance of audits and its quality control procedures, and, unlike stockholders of most U.S. public companies, we and our stockholders were deprived of the possible benefits of such inspections. Since 2015, Greece agreed to allow the PCAOB to conduct inspections of accounting firms operating in Greece. In the future, such PCAOB inspections could result in findings in our auditors' quality control procedures, question the validity of the auditor's reports on our published consolidated financial statements and the effectiveness of our internal control over financial reporting, and cast doubt upon the accuracy of our published audited financial statements.
 
20
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.
 
A cyber-attack could materially disrupt our business.
 
We rely on information technology systems and networks in our operations and administration of our business. Our business operations could be targeted by individuals or groups seeking to sabotage or disrupt our information technology systems and networks, or to steal data. A successful cyber-attack could materially disrupt our operations, including the safety of our operations, or lead to unauthorized release of information or alteration of information in our systems. Any such attack or other breach of our information technology systems could have a material adverse effect on our business and results of operations. 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 and results of operations.
 
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 escalation in conflict 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.
 
The smuggling of drugs or other contraband onto our vessels may lead to governmental claims against us.
 
Our vessels may call in ports in South America and other areas where smugglers attempt to hide drugs and other contraband on vessels, with or without the knowledge of crew members. Under some jurisdictions, vessels used for the conveyance of illegal drugs could subject the vessels to forfeiture to the government of such jurisdiction. To the extent our vessels are found with contraband, whether inside or attached to the hull of our vessel and whether with or without the knowledge of any member of our crew, we may face reputational damage and governmental or other regulatory claims or penalties which could have an adverse effect on our business, results of operations, cash flows and financial condition, as well as our ability to maintain cash flows, including cash available for distributions to pay dividends to our unitholders. Under some jurisdictions, vessels used for the conveyance of illegal drugs could subject result in forfeiture of the vessel to forfeiture to the government of such jurisdiction.
 
Risks Relating to Our Common Shares
 
We may issue additional common shares or other equity securities without shareholder approval, which would dilute our existing shareholders' 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 without shareholder approval in connection with, among other things, future vessel acquisitions, the repayment of outstanding indebtedness, and the conversion of convertible financial instruments.
 
Our issuance of additional common shares or other equity securities of equal or senior rank in these situations would have the following effects:
 
 
•
our existing shareholders' proportionate ownership interest in us would decrease;

 
•
the proportionate amount of cash available for dividends payable on our common shares could decrease;

 
•
the relative voting strength of each previously outstanding common share could be diminished; and

 
•
the market price of our common shares could decline.

In addition, as of March 29, 2022, we may be obliged to issue additional common shares pursuant to the terms of outstanding warrants and convertible notes as follows:
 
21
 
•
301,875 common shares issuable upon the exercise of outstanding Class B warrants at an exercise price of $16.00 per share, which warrants trade on the Nasdaq Capital Market under the ticker symbol “SHIPZ” and expire in May 2022;

 
•
113,970 common shares issuable upon the exercise of Class B warrants issued to JDH pursuant to a Securities Purchase Agreement dated May 9, 2019, at an exercise price of $16.00 per share;

 
•
13,125 common shares issuable upon the exercise of a representative’s warrant issued to Maxim Group LLC in connection with our public offering which closed on May 13, 2019, at an exercise price per share of $16.00, which warrant expires in May 2022;

 
•
110,281 common shares issuable upon the exercise of a representative’s warrant issued to Maxim Group LLC in connection with our public offering which closed on April 2, 2020, at an exercise price per share of $3.40, which warrant expires in March 2023;

 
•
273,046 common shares issuable upon the exercise of outstanding Class D warrants at an exercise price of $1.60 per share, which warrants were issued in our public offering which closed on April 2, 2020 and expire in April 2025;

 
•
8,632,713 common shares issuable upon the exercise of outstanding Class E Warrants at an exercise price of $0.70 per share, which warrants were issued in our underwritten public offering which closed on August 20, 2020 and which expire in August 2025;

 
•
9,304,166 common shares issuable upon the conversion of an outstanding convertible note that we issued to JDH, at a conversion price of $1.20 per common share.

Our issuance of additional common shares upon the exercise of such warrants and convertible notes would cause the proportionate ownership interest in us of our existing shareholders, other than the exercising warrant or note holders, to decrease; the relative voting strength of each previously outstanding common share held by our existing shareholders to decrease; and, depending on our share price when and if these warrants or notes are exercised, may result in dilution to our shareholders.
 
The market price of our common shares has been and 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 has been and 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 have in the past and could in the future affect our stock price are:
 
 
•
quarterly variations in our results of operations;

 
•
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;

 
•
speculation in the press or investment community about our business or the shipping industry generally;

 
•
strategic actions by us or our competitors such as acquisitions or restructurings;

 
•
the thin trading market for our common shares, which makes it somewhat illiquid;

 
•
regulatory developments;

 
•
additions or departures of key personnel;

 
•
general market conditions; and

 
•
domestic and international economic, market and currency factors unrelated to our performance.

On December 31, 2021, the closing price of our common shares on the Nasdaq Capital Market was $0.9184 per share, as compared to $1.14, which was the closing price on March 29, 2022. In addition, there has been volatility in our intra-day common share price. For example, the high and low intra-day prices on March 7, 2022 were $1.27 and $1.14, respectively. As a result, there is a potential for rapid and substantial decreases in the price of our common shares, including decreases unrelated to our operating performance or prospects.
 
22
The stock markets in general, and the markets for dry bulk 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. Our common shares commenced trading on the Nasdaq Global Market on October 15, 2008. Since December 21, 2012, our common shares have traded on the Nasdaq Capital Market. We cannot assure you that an active and liquid public market for our common shares will continue.
 
On July 15, 2019, we received written notification from the Nasdaq Stock Market, indicating that because the closing bid price of our common stock for 30 consecutive business days, from May 31, 2019 to July 12, 2019, was below the minimum $1.00 per share bid price requirement for continued listing on the Nasdaq Capital Market, we were not in compliance with Nasdaq Listing Rule 5550(a)(2). Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the applicable grace period to regain compliance was 180 days, or until January 13, 2020. On January 14, 2020, we received written notification from the Nasdaq Stock Market, indicating that we were granted an additional 180-day grace period, until July 13, 2020, to cure our non-compliance with Nasdaq Listing Rule 5550(a)(2). We received written notification from the Nasdaq Stock Market dated April 17, 2020, granting an extension of the grace period to cure such non-compliance from July 13, 2020 to September 25, 2020. The extension was granted as part of Nasdaq’s determination to toll the compliance periods for all public companies, not meeting the continued listing requirements, such as the bid price requirement, due to the extraordinary market conditions and unprecedented turmoil in U.S financial markets. On June 30, 2020, we conducted a 1-for-16 reverse stock split. On July 15, 2020, the Nasdaq Stock Market confirmed that we regained compliance with Nasdaq Listing Rule 5550(a)(2) concerning the minimum bid price of the Company’s common stock.
 
On September 30, 2020, we again received written notification from the Nasdaq Stock Market indicating that because the closing bid price of our common stock for 30 consecutive business days, from August 18, 2020 to September 29, 2020, was below the minimum $1.00 per share bid price requirement for continued listing on the Nasdaq Capital Market, we were not in compliance with Nasdaq Listing Rule 5550(a)(2). Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the applicable grace period to regain compliance was 180 days, or until March 29, 2021. On February 11, 2021, the Nasdaq Stock Market confirmed that we regained compliance with Nasdaq Listing Rule 5550(a)(2) concerning the minimum bid price of the Company’s common stock and this matter is now closed.
 
On January 26, 2022, we again received written notification from the Nasdaq Stock Market indicating that because the closing bid price of our common stock for 30 consecutive business days, from December 13, 2021 to January 25, 2022, was below the minimum $1.00 per share bid price requirement for continued listing on the Nasdaq Capital Market, we were not in compliance with Nasdaq Listing Rule 5550(a)(2). Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the applicable grace period to regain compliance was 180 days, or until July 25, 2022. On February 14, 2022, the Nasdaq Stock Market confirmed that we regained compliance with Nasdaq Listing Rule 5550(a)(2) concerning the minimum bid price of the Company’s common stock and this matter is now closed.
 
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.
 
The declaration and payment of dividends will always be subject to the discretion of our board of directors and will depend on a number of factors. Our board of directors may not declare dividends in the future.
 
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 Marshall Islands law affecting the payment of dividends to shareholders, overall market conditions and other factors. Our board of directors may not declare dividends in the future.
 
Further, Marshall Islands law generally prohibits the payment of dividends if the company is insolvent or would be rendered insolvent upon payment of such dividend, and dividends may be declared and paid out of our operating surplus. Dividends may also be declared or paid out of net profits for the fiscal year in which the dividend is declared and for the preceding fiscal year. We may be unable to pay dividends in any anticipated amount or at all.
 
23
The superior voting rights of our Series B Preferred Shares may limit the ability of our common shareholders to control or influence corporate matters, and the interests of the holder of such shares could conflict with the interests of common shareholders.

While our common shares have one vote per share, each of our 20,000 Series B Preferred Shares presently outstanding has 25,000 votes per share; however, the voting power of the Series B Preferred Shares is limited such that no holder of Series B Preferred Shares may exercise voting rights pursuant to any Series B Preferred Shares that would result in the total number of votes a holder is entitled to vote on any matter submitted to a vote of shareholders of the Company to exceed 49.99% of the total number of votes eligible to be cast on such matter. The Series B Preferred Shares, however, have no dividend rights or distribution rights, other than the right upon dissolution to receive a payment equal to the par value per of $0.0001 per share.

As of the date of this annual report, our Chairman and Chief Executive Officer can therefore control 49.99% of the voting power of our outstanding capital stock. Our Chairman and Chief Executive Officer will have substantial control and influence over our management and affairs and over matters requiring shareholder approval, including the election of directors and significant corporate transactions, even though he owns significantly less than 50% of the Company economically.

The superior voting rights of our Series B Preferred Shares may limit our common shareholders’ ability to influence corporate matters. The interests of the holder of the Series B Preferred Shares may conflict with the interests of our common shareholders, and as a result, the holders of our capital stock may approve actions that our common shareholders do not view as beneficial. Any such conflicts of interest could adversely affect our business, financial condition and results of operations, and the trading price of our common shares.

Anti-takeover provisions in our restated articles of incorporation, as amended, and third 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 restated articles of incorporation, as amended, 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 to maximize shareholder value in connection with any unsolicited offer to acquire our company. However, these anti-take-over provisions could make it difficult for our shareholders to change the composition of our board of directors in any one year, 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, such as the Series B Preferred Shares;

 
•
provide for a classified board of directors with staggered, three-year terms;

 
•
permit the removal of any director only for cause;

 
•
prohibiting shareholder action by written consent unless the written consent is signed by all shareholders entitled to vote on the action;

 
•
limiting the persons who may call special meetings of shareholders; and

 
•
establishing 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.

In addition, we have entered into a shareholders rights agreement that makes it more difficult for a third party to acquire us without the support of our board of directors. See “Description of Securities” filed as Exhibit 2.9 hereto for a description of our shareholders rights agreement. These anti-takeover provisions, along with provisions of our shareholders rights agreement, 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.

Issuance of preferred shares, such as our Series B Preferred Shares, may adversely affect the voting power of our common shareholders and have the effect of discouraging, delaying or preventing a merger or acquisition, which could adversely affect the market price of our common shares.
 
24
Our restated articles of incorporation, as amended, currently authorize our board of directors to issue preferred shares in one or more series and to determine the rights, preferences, privileges and restrictions, with respect to, among other things, dividends, conversion, voting, redemption, liquidation and the number of shares constituting any series without shareholders' approval. Our board of directors has issued, and may in the future issue, preferred shares with voting rights superior to those of the common shares, such as the Series B Preferred Shares. If our board of directors determines to issue preferred shares, such issuance may discourage, delay or prevent a merger or acquisition that shareholders may consider favorable. The issuance of preferred shares with voting and conversion rights may also adversely affect the voting power of the holders of common shares. This could substantially impede the ability of public shareholders to benefit from a change in control and, as a result, may adversely affect the market price of our common shares and our shareholders' ability to realize any potential change of control premium.
 
We are incorporated in the Republic of the Marshall Islands, which does not have a well-developed body of corporate law, which may negatively affect the ability of shareholders to protect their interests.
 
Our corporate affairs are governed by our restated articles of incorporation, as amended, our third amended and restated bylaws 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 laws 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 U.S. 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, shareholders may have more difficulty in protecting their interests in the face of actions by the management, directors or controlling shareholders than would shareholders of a corporation incorporated in a U.S. jurisdiction.
 
Additionally, the Republic of the Marshall Islands does not have a legal provision for bankruptcy or a general statutory mechanism for insolvency proceedings. As such, in the event of a future insolvency or bankruptcy, our shareholders and creditors may experience delays in their ability to recover for their claims after any such insolvency or bankruptcy. Further, 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. 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 be entitled to, or 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.
 
As a Marshall Islands corporation with principal executive offices in Greece, and also having subsidiaries in the Republic of the Marshall Islands and other offshore jurisdictions such as Liberia, Bermuda and the British Virgin Islands, our operations may be subject to economic substance requirements.
 
In March 2019, the Council of the European Union, or the Council, published a list of non-cooperative jurisdictions for tax purposes, the 2019 Conclusions. In the 2019 Conclusions, the Republic of the Marshall Islands, among others, was placed by the E.U. on the list of non-cooperative jurisdictions for failing to implement certain commitments previously made to the E.U. by the agreed deadline. However, it was announced by the Council in October 2019 that the Marshall Islands had been removed from the list of non-cooperative jurisdictions. E.U. member states have agreed upon a set of measures, which they can choose to apply against the listed countries, including, inter alia, increased monitoring and audits, withholding taxes and non-deductibility of costs. 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. E.U. legislation prohibits E.U. funds from being channelled or transited through entities in non-cooperative jurisdictions.
 
We are a Marshall Islands corporation with principal executive offices in Greece. Several of our subsidiaries are organized in the Republic of the Marshall Islands, Liberia, Bermuda and the British Virgin Islands. The Marshall Islands have enacted economic substance regulations with which we are obligated to comply. The Marshall Islands economic substance regulations require certain entities that carry out particular activities to comply with a three-part 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. Bermuda and the British Virgin Islands have enacted similar legislation.
 
If we fail to comply with our obligations under such 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 could be 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.
 
We do not know (i) if the E.U. will once again add the Marshall Islands, Liberia, Bermuda or the British Virgin Islands to the list of non-cooperative jurisdictions, (ii) how quickly the E.U. would react to any changes in legislation of the relevant jurisdictions, or (iii) how E.U. banks or other counterparties will react while we or any of our subsidiaries remain as entities organized and existing under the laws of listed countries. The effect of the E.U. list of non-cooperative jurisdictions, and any noncompliance by us with any legislation adopted by applicable countries to achieve removal from the list, including economic substance regulations, could have a material adverse effect on our business, financial conditions and operating results.
 
25
It may not be possible for investors to serve process on or enforce U.S. judgments against us.
 
We and all of 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, most 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 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.
 
ITEM 4.
INFORMATION ON THE COMPANY

A.
History and Development of the Company

Overview
 
We are an international shipping company specializing in the worldwide seaborne transportation of dry bulk commodities. We currently operate 17 Capesize vessels with a cargo-carrying capacity of approximately 3,011,083 dwt and an average fleet age of 12.1 years. We are the only pure-play Capesize shipowner publicly listed in the U.S.
 
We believe we have established a reputation in the international dry bulk shipping industry for operating and maintaining vessels with high standards of performance, reliability and safety. We have assembled a management team comprised of executives who have extensive experience operating large and diversified fleets, and who have strong ties to a number of international charterers.
 
We were incorporated under the laws of the Republic of the Marshall Islands, pursuant to the BCA, on January 4, 2008, originally under the name Seanergy Merger Corp.  We changed our name to Seanergy Maritime Holdings Corp. on July 11, 2008. Our executive offices are located at 154 Vouliagmenis Avenue, 166 74 Glyfada, Greece and our telephone number is + 30 213 0181507. Our website is www.seanergymaritime.com. The SEC maintains a website that contains reports, proxy and information statements, and other information that we file electronically at www.sec.gov.
 
History and Development
 
Business Development and Capital Expenditures and Divestitures
 
At the opening of trading on March 20, 2019, we effected a one-for-fifteen reverse split of our common stock in order to cure the deficiency of the Nasdaq minimum bid price requirement originally communicated to us on April 23, 2018.
 
In May 2019, we sold 262,500 units at a price of $54.40 per unit in a public offering. The gross proceeds were approximately $14.3 million. As of the date of this annual report, 301,875 Class B warrants and a Representative Warrant to purchase 13,125 common shares, issued in connection with this public offering, are outstanding. These warrants are exercisable at an adjusted exercise price of $16.00 per share and expire on May 13, 2022.
 
Concurrently with the public offering in May 2019, we sold 113,970 units in a private placement to JDH in exchange for, inter alia, the forgiveness of certain payment obligations of ours. As of the date of this annual report, the 113,970 Class B Warrants issued in connection with this private placement remain outstanding.
 
In December 2019, we completed our initial program of installation of scrubbers in anticipation of the IMO's low sulfur fuel oil requirements in effect from January 1, 2020.  We retrofitted five Capesize vessels with scrubbers.
 
On April 2, 2020, we sold 2,536,468 units (including the full exercise of the over-allotment option of 330,843 units granted to the underwriters) at a price of $2.72 per unit in a public offering for gross proceeds of $6.9 million. As of the date of this annual report, 4,368,750 Class D Warrants at an exercise price of $3.40, issued in connection with this offering, remain outstanding. The Class D Warrants expire on April 2, 2025.
 
Between April 23, 2020 and June 26, 2020, we issued 2,263,421 of our common shares pursuant to exercises of outstanding Class D Warrants with gross proceeds of $4.1 million.
 
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Between April and May 2020, we sold 11,690,625 of our common shares in four registered direct offerings concurrently with private placements of 11,690,625 warrants for a purchase price ranging between $2.16 and $1.92 per common share and warrant. The gross proceeds were approximately $23.2 million.
 
During May and June 2020, a total of 11,690,625 shares were issued pursuant to the exercises of all warrants issued under the four private placements, for gross proceeds of approximately $16.9 million.
 
On May 26, 2020, we entered into a definitive agreement with an unaffiliated third party to purchase a Japanese 2005- built Capesize vessel having a cargo-carrying capacity of approximately 177,500 dwt, the Goodship. The vessel was delivered to us on August 7, 2020. The gross purchase price of $11.4 million was funded with cash on hand at delivery and subsequently through the ABB Loan Facility (as defined below).
 
At the opening of trading on June 30, 2020, we effected a one-for-sixteen reverse stock split of our common stock in order to cure the deficiency of the Nasdaq minimum bid price requirement originally communicated to us on July 15, 2019.
 
In August 2020, we sold 35,714,286 units at a price of $0.70 per unit in an underwritten public offering. As of the date of this annual report, 8,632,713 Class E warrants at an exercise price of $0.70 per share, issued in connection with this offering, remain outstanding. The Class E warrants expire on August 20, 2025.
 
On September 30, 2020, we received written notification from the Nasdaq Stock Market indicating that because the closing bid price of our common stock for 30 consecutive business days, from August 18, 2020 to September 29, 2020, was below the minimum $1.00 per share bid price requirement for continued listing on the Nasdaq Capital Market, we were not in compliance with Nasdaq Listing Rule 5550(a)(2). Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the applicable grace period to regain compliance was 180 days, or until March 29, 2021. On February 11, 2021, the Nasdaq Stock Market confirmed that we regained compliance with Nasdaq Listing Rule 5550(a)(2) concerning the minimum bid price of the Company’s common stock.
 
Between January 15, 2021 and October 1, 2021, we issued 32,263,715 of our common shares pursuant to exercises of outstanding Class E warrants with gross proceeds of $22.6 million.
 
On February 12, 2021, we entered into a definitive agreement with an unaffiliated third party to purchase a Japanese 2006-built Capesize vessel having a cargo-carrying capacity of approximately 177,000 dwt, the Tradership. The vessel was delivered to us on June 9, 2021. The gross purchase price of $17 million was funded with cash on hand at delivery and subsequently through the ABB Loan Facility (as defined below).
 
On February 19, 2021, we issued 44,150,000 of our common shares in a registered direct offering for a purchase price of $1.70 per common share, for aggregate gross proceeds of approximately $75.0 million.
 
On March 10, 2021, we entered into a definitive agreement with an unaffiliated third party to purchase a Japanese 2013-built Capesize vessel having a cargo-carrying capacity of approximately 176,500 dwt, the Flagship. The vessel was delivered to us on May 6, 2021. The gross purchase price of approximately $28.4 million was funded with cash on hand at delivery and subsequently through a sale and leaseback transaction with Cargill.
 
On March 11, 2021, we entered into a definitive agreement with unaffiliated third parties to purchase a Japanese 2010-built Capesize vessel having a cargo-carrying capacity of approximately 182,000 dwt, the Patriotship. The vessel was delivered to us on June 1, 2021. The gross purchase price of $26.6 million was funded with cash on hand at delivery and subsequently through though a sale and leaseback agreement with CMB Financial Leasing Co., Ltd. (“CMBFL”).
 
On March 19, 2021, we entered into a definitive agreement with an unaffiliated third party to purchase a Japanese 2012-built Capesize vessel having a cargo-carrying capacity of approximately 181,00 dwt, the Hellasship. The vessel was delivered to us on May 6, 2021. The gross purchase price of $28.6 million was funded with cash on hand at delivery and subsequently through a sale and leaseback agreement with CMBFL.
 
On March 24, 2021, we issued 955,730 common shares to JDH, following JDH’s exercise of its pre-funded warrants from the December 30, 2020 transaction. Please see “Item 5. Operating and Financial Review and Prospects – B. Liquidity and Capital Resources – Loan Arrangements – JDH Transactions".
 
On May 17, 2021, we entered into an agreement with unaffiliated third parties for the purchase of a Japanese 2012-built Capesize vessel having a cargo-carrying capacity of approximately 181,400 dwt, the Worldship. The vessel was delivered to us on August 30, 2021 and the gross purchase price of $33.7 million was funded with cash on hand at delivery and subsequently through the Piraeus Bank Loan Facility (as defined below).

On June 22, 2021, we entered into an agreement with an unaffiliated third party for the purchase of a Japanese 2009-built Capesize vessel having a cargo-carrying capacity of approximately 177,000 dwt, the Friendship. The vessel was delivered to us on July 27, 2021. The gross purchase price of $24.6 million was financed with cash on hand at delivery and subsequently through the August 2021 Alpha Bank Loan Facility (as defined below).

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On August 10, 2021, our board of directors authorized a share repurchase plan of up to $17 million of our outstanding common shares or other securities, which has been fully utilized. Pursuant to the plan, we have repurchased common shares for $1.7 million, a common stock purchase warrant for $1.0 million and two convertible notes with an aggregate principal amount of $13.95 million (discussed below).

On September 30, 2021, we sold the Leadership to an unaffiliated third party for a gross sale price of $12.6 million. 
 
On October 05, 2021, we entered into an agreement with an unaffiliated third party for the purchase of a Japanese 2010-built Capesize vessel having a cargo-carrying capacity of approximately 181,500 dwt, the Dukeship. The vessel was delivered to us on November 26, 2021 and the gross purchase price of $34.3 million was funded with cash on hand. As of the date of this annual report this vessel remains unencumbered.

On October 14, 2021 we issued 3,000,000 common shares to JDH following the conversion of $3,600,000 of the principal amount of the First JDH Note, at the conversion price of $1.20 per share.

Through a series of transactions during the period of November and December 2021, we have repurchased 1,702,103 of our outstanding common shares at an average price of approximately $0.993.

On December 7, 2021, we entered into a warrant repurchase agreement with JDH to repurchase a common stock purchase warrant to purchase 4,285,714 of our common shares for $1.0 million. On December 10, 2021, we prepaid the outstanding principal amount of the First JDH Note and the Third JDH Note in an aggregate amount of $13.95 million. These transactions closed, all obligations were terminated under the two convertible notes and the warrant was cancelled, on December 10, 2021.

On December 7, 2021, our board of directors authorized a new share repurchase plan pursuant to which we could repurchase up to $10 million of our outstanding common shares or other securities. This share repurchase plan has been fully utilized.  Pursuant to the plan, we repurchased $5.0 million on January 26, 2022 and an additional $5.0 million on March 10, 2022 in relation to a convertible note (discussed below).  In connection with the first of these repurchases our cash sweep obligations for 2022 under the convertible note were waived pursuant to a waiver letter signed on January 19, 2022.

On December 10, 2021, we entered into a stock purchase agreement and issued 20,000 of our newly-designated Series B Preferred Shares, par value $0.0001 per share, to our Chairman and Chief Executive Officer, in return for cash consideration of $250,000.

On December 13, 2021, our previously-issued Class A Warrants, trading under the symbol SHIPW, expired.
 
On January 26, 2022, we voluntarily prepaid $5.0 million of the outstanding balance of the Second JDH Note using cash on hand.

On January 26, 2022, we received written notification from the Nasdaq Stock Market indicating that because the closing bid price of our common stock for 30 consecutive business days, from December 13, 2021 to January 25, 2022, was below the minimum $1.00 per share bid price requirement for continued listing on the Nasdaq Capital Market, we were not in compliance with Nasdaq Listing Rule 5550(a)(2). Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the applicable grace period to regain compliance was 180 days, or until July 25, 2022. On February 14, 2022, the Nasdaq Stock Market confirmed that we regained compliance with Nasdaq Listing Rule 5550(a)(2) concerning the minimum bid price of the Company’s common stock.

On February 28, 2022, we voluntarily prepaid the remaining balance of $1.85 million of the Second JDH Loan using cash on hand. All obligations under the Second JDH Loan were irrevocably and unconditionally discharged pursuant to the deed of release dated February 28, 2022.


On March 10, 2022, we voluntarily prepaid another $5.0 million of the outstanding balance of the Second JDH Note using cash on hand.

On March 10, 2022, we initiated the payment of quarterly cash dividends and declared a quarterly dividend of $0.025 per share and a special dividend of $0.025 per share with respect to the fourth quarter of 2021.

B.
Business Overview

We are an international shipping company specializing in the worldwide seaborne transportation of dry bulk commodities.  We currently operate 17 Capesize vessels, with a cargo-carrying capacity of approximately 3,011,083 dwt and an average fleet age of 12.1 years. We are the only pure-play Capesize shipping company listed in the U.S.
 
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We believe we have established a reputation in the international dry bulk shipping industry for operating and maintaining vessels with high standards of performance, reliability and safety. We have assembled a management team comprised of executives who have extensive experience operating large and diversified fleets, and who have strong ties to a number of international charterers.
 
Our Current Fleet
 
The following table lists the vessels in our fleet as of the date of this annual report:
 
Vessel Name
Year Built
Dwt
Flag
Yard
Type of Employment
Patriotship
2010
181,709
MI
Imabari
T/C – fixed rate(1)
Dukeship
2010
181,453
MI
Sasebo
T/C Index Linked(2)
Worldship
2012
181,415
MI
Koyo-Imabari
T/C – fixed rate(3)
Hellasship
2012
181,325
LIB
Imabari
T/C Index Linked(4)
Fellowship
2010
179,701
MI
Daewoo
T/C Index Linked(5)
Championship
2011
179,238
MI
Sungdong SB
T/C Index Linked(6)
Partnership
2012
179,213
MI
Hyundai
T/C Index Linked(7)
Knightship
2010
178,978
LIB
Hyundai
T/C Index Linked (8)
Lordship
2010
178,838
LIB
Hyundai
T/C Index Linked(9)
Goodship
2005
177,536
LIB
Mitsui
T/C Index Linked(10)
Friendship
2009
176,952
LIB
Namura
T/C Index Linked(11)
Tradership
2006
176,925
MI
Namura
T/C Index Linked(12)
Flagship
2013
176,387
MI
Mitsui
T/C Index Linked(13)
Gloriuship
2004
171,314
MI
Hyundai
T/C Index Linked(14)
Geniuship
2010
170,057
MI
Sungdong SB
T/C Index Linked(15)
Premiership
2010
170,024
IoM
Sungdong SB
T/C Index Linked(16)
Squireship
2010
170,018
LIB
Sungdong SB
T/C Index Linked(17)
           
 
(1)
Chartered by a European cargo operator and delivered to the charterer on June 7, 2021 for a period of about 12 to about 18 months. The daily charter hire is fixed at $31,000.

(2)
 Chartered by NYK and delivered to the charterer on December 1, 2021 for a period of about 13 to about 18 months. The daily charter hire is based on the BCI. In addition, the time charter provides the option to convert the index linked rate to a fixed rate for a period of between two and 12 months priced at the then prevailing Capesize Forward Freight Agreement rate, or FFA for the selected period.

(3)
Chartered by a U.S. commodity trading company and delivered to the charterer on September 2, 2021 for a period of about 12 to about 16 months. The daily charter hire is fixed at $31,750.

(4)
Chartered by NYK and delivered to the charterer on May 10, 2021 for a period of minimum 11 to maximum 15 months. The daily charter hire is based on the BCI.

(5)
Chartered by Anglo American, a leading global mining company, and delivered to the charterer on June 18, 2021 for a period of minimum 12 to about 15 months. The daily charter hire is based on the BCI. In addition, the time charter provides us with the option to convert the index linked rate to a fixed rate for a period of between three and 12 months priced at the then prevailing Capesize FFA for the selected period.

(6)
Chartered by Cargill and delivered to the charterer on November 7, 2018 for a period of employment of 60 months, with an optional period of about 16 to about 18 months. The daily charter hire is based on the BCI plus a net daily scrubber premium of $1,740. In addition, the time charter provides us with the option to convert the index linked rate to a fixed rate for a period of between three and 12 months priced at the then prevailing Capesize FFA for the selected period.

(7)
Chartered by a major European utility and energy company and delivered to the charterer on September 11, 2019 for a period of minimum 33 to maximum 37 months with an optional period of about 11 to maximum 13 months. The daily charter hire is based on the BCI. In addition, the time charter provides us with the option to convert the index linked rate to a fixed rate for a period of between three and 12 months priced at the then prevailing Capesize FFA for the selected period.

(8)
Chartered by Glencore and delivered to the charterer on May 15, 2020 for a period of about 36 to about 42 months with two optional periods of 11 to 13 months. The daily charter hire is based on the BCI.

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(9)
Chartered by a major European utility and energy company and delivered on August 4, 2019 for a period of minimum 33 to maximum 37 months with an optional period of about 11 to maximum 13 months. The daily charter hire is based on the BCI. In addition, the time charter provides us with the option to convert the index linked rate to a fixed rate for a period of between three and 12 months priced at the then prevailing Capesize FFA for the selected period.

(10)
Chartered by an international commodities trader and delivered to the charterer on November 12, 2021 for a period of about 9 to about 12 months. The daily charter hire is based on the BCI. In addition, the time charter provides us with the option to convert the index linked rate to a fixed rate for a period of between two and 12 months priced at the then prevailing Capesize FFA for the selected period.

(11)
Chartered by NYK and delivered to the charterer on July 29, 2021 for a period of minimum 17 to maximum 24 months. The daily charter hire is based on the BCI.

(12)
Chartered by a major South Korean industrial company and delivered to the charterer on June 15, 2021 for a period employment of minimum 11 to about 15 months. The daily charter hire is based on the BCI. In addition, the time charter provides us with the option to convert the index linked rate to a fixed rate for a period of between two and nine months priced at the then prevailing Capesize FFA for the selected period.

(13)
Chartered by Cargill. The vessel was delivered to the charterer on May 10, 2021 for a period of 60 months. The daily charter hire is based at a premium over the BCI minus $1,325 per day. In addition, the time charter provides us with the option to convert the index linked rate to a fixed rate for a period of between three and 12 months priced at the then prevailing Capesize FFA for the selected period.

(14)
Chartered by Pacbulk Shipping and delivered to the charterer on April 23, 2020 for a period of about 11 to about 15 months. In December 2021, the time charter was further extended until minimum December 16, 2022 to maximum April 15, 2023. The daily charter hire is based on the BCI. In addition, the time charter provides us with the option to convert the index linked rate to a fixed rate for a period of between three and 12 months priced at the then prevailing Capesize FFA for the selected period.

(15)
Chartered by NYK and delivered to the charterer on February 5, 2022 for a period of about 11 to about 15 months from the delivery date. The daily charter hire is based on the BCI. In addition, the time charter provides us with the option to convert the index linked rate to a fixed rate for a period of between three and 12 months priced at the then prevailing Capesize FFA for the selected period.

(16)
Chartered by Glencore and delivered to the charterer on November 29, 2019 for a period of minimum 36 to maximum 42 months with two optional periods of minimum 11 to maximum 13 months. The daily charter hire is based on the BCI plus a net daily scrubber premium of $2,055.

(17)
Chartered by Glencore and delivered to the charterer on December 19, 2019 for a period of minimum 36 to maximum 42 months with two optional periods of minimum 11 to maximum 13 months. The daily charter hire is based on the BCI plus a net daily scrubber premium of $2,055.

Key to Flags: IoM – Isle of Man, LIB – Liberia, MI – Marshall Islands.
 
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Our Business Strategy
 
We currently operate 17 Capesize vessels. We also intend to continue to review the market from time to time in order to identify potential acquisition targets which will be accretive to our earnings per share. Our acquisition strategy focuses on newbuilding or secondhand Capesize dry bulk vessels, although we may acquire vessels in other sectors which we believe offer attractive investment opportunities.
 
Management of Our Fleet
 
We manage our vessel's operations, insurances and bunkering and have the general supervision of our third-party technical and commercial managers.
 
Seanergy Shipmanagement, our wholly-owned subsidiary, provides certain technical management services to certain vessels of our fleet. In 2021 we paid a monthly fee of $14,000 and $10,000 per vessel for four and three vessels, respectively, to Seanergy Shipmanagement. Since January 1, 2022, we are paying a monthly fee of $14,000 and $10,000 per vessel for five and two vessels, respectively, to Seanergy Shipmanagement. These technical management services include, inter alia, general administrative and support services, bunkering, insurance arrangements and accounting related to vessels and provisions. These amounts are considered inter-company transactions and are, therefore, eliminated from our consolidated financial statements. Seanergy Shipmanagement is expected to undertake the technical management of more vessels of our fleet in the future.
 
V.Ships and V.Ships Greece, independent third parties, provide technical management for certain of our vessels that includes general administrative and support services, such as crewing and other technical management, accounting related to vessels and provisions. Pursuant to our technical management agreements with V.Ships and V.Ships Greece, we paid monthly fees of $8,750 per vessel managed by V.Ships and $9,167 per vessel managed by V.Ships Greece in 2021. Since January 1, 2022, we are paying a monthly fee of $9,013 per vessel for ten vessels managed by V.Ships and $9,167 per vessel for two vessels managed by V.Ships Greece in exchange for providing these technical, support and administrative services. The management fees do not cover expenses such as voyage expenses, vessel operating expenses, maintenance expenses and crewing costs, which are reimbursed by us to V.Ships and V.Ships Greece. These technical management agreements are for an indefinite period until terminated by either party, giving the other notice in writing, in which event the applicable agreement shall terminate after one month from the date upon which such notice is received.
 
Seanergy Management has entered into a commercial management agreement with Fidelity, an independent third party, pursuant to which Fidelity provides commercial management services for all of the vessels in our fleet. Fidelity serves as a commercial broker for Capesize vessels exclusively to us. Under the commercial management agreement, we have agreed to reimburse Fidelity for all reasonable running and/or out-of-pocket expenses, including but not limited to, telephone, fax, stationary and printing expenses, as well as any pre-approved travelling expenses. In addition, we have agreed to pay the following fees to Fidelity, (i) an annual fee of EUR 120,000 net payable in equal monthly payments and (ii) commission fees equal to 0.15% calculated on the collected gross hire/freight/demurrage payable when the relevant hire/freight/demurrage is collected. The fees under (i) and (ii) are capped at $0.4 million per year. The commercial management agreement may be terminated by either party upon giving one-month prior written notice to the other party.
 
V.Ships and Anglo-Eastern provide crew management services to certain vessels of our fleet. In 2021 we paid a monthly fee of $2,000 per vessel to each of V.Ships and Anglo-Eastern for two and two vessels, respectively. Since January 1, 2022, we are paying a monthly fee of $2,000 per vessel to each of V.Ships and Anglo-Eastern.
 
Employment of Our Fleet
 
As of the date of this report, fifteen of our vessels are employed under long-term time charters which have a charter hire calculated at an index-linked rate based on the 5-routes T/C average of the BCI. The remaining two of our vessels are employed under fixed rate charters. Under some of our time charter agreements we have the option to convert the index linked rate into a fixed rate corresponding to the prevailing value of the respective Capesize FFAs. In the future, we may opportunistically look to employ more of our vessels under time charter contracts with a fixed rate, should rates become more attractive.
 
The Dry Bulk Shipping Industry
 
The global dry bulk vessel fleet is divided into four categories based on a vessel's carrying capacity.  These categories are:
 
Capesize. Capesize vessels have a carrying capacity of exceeding 100,000 dwt.  Only the largest ports around the world possess the infrastructure to accommodate vessels of this size.  Capesize vessels are primarily used to transport iron ore or coal and, to a much lesser extent, grains, primarily on long-haul routes.
 
Panamax. Panamax vessels have a carrying capacity of between 60,000 and 100,000 dwt.  These vessels are designed to meet the physical restrictions of the Panama Canal locks (hence their name “Panamax” — the largest vessels able to transit the Panama Canal prior to its 2016 expansion, making them more versatile than larger vessels).  These vessels carry coal, grains, and, to a lesser extent, minerals such as bauxite/alumina and phosphate rock.
 
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Handymax/Supramax. Handymax vessels have a carrying capacity of between 30,000 and 60,000 dwt.  These vessels operate on a large number of geographically dispersed global trade routes, carrying primarily grains and minor bulks.  The standard vessels are usually built with 25-30 ton cargo gear, enabling them to discharge cargo where grabs are required (particularly industrial minerals), and to conduct cargo operations in countries and ports with limited infrastructure.  This type of vessel offers good trading flexibility and can, therefore, be used in a wide variety of bulk and neobulk trades, such as steel products.  Supramax are a sub-category of this category typically having a cargo carrying capacity of between 50,000 and 60,000 dwt.
 
Handysize.  Handysize vessels have a carrying capacity of up to 30,000 dwt.  These vessels almost exclusively carry minor bulk cargo.  Increasingly, vessels of this type operate on regional trading routes, and may serve as trans-shipment feeders for larger vessels.  Handysize vessels are well suited for small ports with length and draft restrictions.  Their cargo gear enables them to service ports lacking the infrastructure for cargo loading and discharging.
 
The supply of dry bulk vessels is dependent on the delivery of new vessels and the removal of vessels from the global fleet, either through scrapping or loss.  The level of scrapping activity is generally a function of scrapping prices in relation to current and prospective charter market conditions, as well as operating, repair and survey costs.
 
The demand for dry bulk vessel capacity is determined by the underlying demand for commodities transported in dry bulk vessels, which in turn is influenced by trends in the global economy.  Demand for dry bulk vessel capacity is also affected by the operating efficiency of the global fleet, with port congestion, which has been a feature of the market since 2004, absorbing tonnage and therefore leading to a tighter balance between supply and demand.  In evaluating demand factors for dry bulk vessel capacity, we believe that dry bulk vessels can be the most versatile element of the global shipping fleets in terms of employment alternatives.
 
Charter Hire Rates
 
Charter hire rates fluctuate by varying degrees among dry bulk vessel size categories.  The volume and pattern of trade in a small number of commodities (major bulks) affect demand for larger vessels.  Therefore, charter rates and vessel values of larger vessels often show greater volatility.  Conversely, trade in a greater number of commodities (minor bulks) drives demand for smaller dry bulk vessels.  Accordingly, charter rates and vessel values for those vessels are subject to less volatility.
 
Charter hire rates paid for dry bulk vessels are primarily a function of the underlying balance between vessel supply and demand, although at times other factors may play a role.  Furthermore, the pattern seen in charter rates is broadly mirrored across the different charter types and the different dry bulk vessel categories.  However, because demand for larger dry bulk vessels is affected by the volume and pattern of trade in a relatively small number of commodities, charter hire rates (and vessel values) of larger ships tend to be more volatile than those for smaller vessels.
 
In the time charter market, rates vary depending on the length of the charter period and vessel specific factors such as age, speed and fuel consumption.
 
In the voyage charter market, rates are influenced by cargo size, commodity, port dues and canal transit fees, as well as commencement and termination regions.  In general, a larger cargo size is quoted at a lower rate per ton than a smaller cargo size.  Routes with costly ports or canals generally command higher rates than routes with low port dues and no canals to transit.  Voyages with a load port within a region that includes ports where vessels usually discharge cargo or a discharge port within a region with ports where vessels load cargo also are generally quoted at lower rates, because such voyages generally increase vessel utilization by reducing the unloaded portion (or ballast leg) that is included in the calculation of the return charter to a loading area.
 
Within the dry bulk shipping industry, the charter hire rate references most likely to be monitored are the freight rate indexes issued by the Baltic Exchange.  These references are based on actual charter hire rates under charters entered into by market participants as well as daily assessments provided to the Baltic Exchange by a panel of major shipbrokers.
 
Competition
 
We operate in markets that are highly competitive and based primarily on supply and demand.  We compete for charters on the basis of price, vessel location, size, age and condition of the vessel, as well as on its reputation.  Fidelity negotiates the terms of our charters (whether voyage charters, period time charters, bareboat charters or pools) based on market conditions. We currently  compete primarily with other owners of dry bulk vessels, many of which may have more resources than us and may operate vessels that are newer, and therefore more attractive to charterers than vessels we may operate.  Ownership of dry bulk vessels is highly fragmented and is divided among publicly listed companies, state-controlled companies and independent dry bulk vessel owners.  We currently compete primarily with owners of dry bulk vessels in the Capesize class size.
 
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Customers
 
Our customers include or have included national, regional and international companies.  Customers individually accounting for more than 10% of our revenues during the years ended December 31, 2021, 2020 and 2019 were:
 
Customer
 
2021
 
2020
 
2019
A
 
23%
 
23%
 
-
B
  
15%
  
-
 
-
C
 
13%
 
-
 
-
D
  
11%
  
18%
  
15%
E
  
-
  
-
  
19%
F
 
-
 
-
 
18%
G
 
10%
 
-
 
-
Total
 
72%
 
41%
 
52%

Seasonality
 
Coal, iron ore and grains, which are the major bulks of the dry bulk shipping industry, are somewhat seasonal in nature. The energy markets primarily affect the demand for coal, with increases during hot summer periods when air conditioning and refrigeration require more electricity and towards the end of the calendar year in anticipation of the forthcoming winter period. The demand for iron ore tends to decline in the summer months because many of the major steel users, such as automobile makers, reduce their level of production significantly during the summer holidays. Grain trades are completely seasonal as they are driven by the harvest within a climate zone. Because three of the five largest grain producers (the United States of America, Canada and the European Union) are located in the northern hemisphere and the other two (Argentina and Australia) are located in the southern hemisphere, harvests occur throughout the year and grains transportation requires dry bulk shipping accordingly.
 
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 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 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. 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.
 
Increasing environmental concerns have created a demand for vessels that conform to stricter environmental standards. We are required to maintain operating standards for all of our vessels 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. 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.
 
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 dry bulk, tanker and LNG carriers, among other vessels, and is broken 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. Annex VI was separately adopted by the IMO in September of 1997.
 
In 2013, the IMO's Marine Environmental Protection Committee, or the MEPC, adopted a resolution amending MARPOL Annex I Condition Assessment Scheme, or CAS. These amendments became effective on October 1, 2014 and require 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. We may need to make certain financial expenditures to comply with these amendments.
 
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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 all 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.  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.  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, will become effective in 2022. These regulations subject ocean-going vessels to stringent emissions controls and may cause us to incur substantial costs.
 
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. 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 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 below.
 
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.
 
We may incur costs to comply with these revised standards. 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.
 
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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 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, under the ISM Code.  We have obtained applicable documents of compliance for our offices and safety management certificates for all of our vessels for which the certificates are required by the IMO. The document of compliance and safety management certificate are renewed as required.
 
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 to the IMDG Code relating to segregation requirements for certain substances, and classification and transport of carbon, following incidents involving the spontaneous ignition of charcoal, come into effect in June 2022.
 
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 the classification societies, which have incorporated SOLAS and STCW requirements into their class rules, to undertake surveys to confirm compliance.
 
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. Costs of compliance with these regulations may be substantial. The cost of compliance could increase for ocean carriers and may have a material effect on our operations. 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 will become effective in 2022.
 
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 ship's bunkers typically is determined by the national or other domestic laws in the jurisdiction where the events or damages occur.
 
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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.” The Anti‑fouling Convention 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. In 2023, amendments to the Anti-fouling Convention will come into effect which include controls on the biocide cybutryne; ships shall not apply or re-apply anti-fouling systems containing this substance from January 1, 2023. We have obtained Anti‑fouling System Certificates for all of our vessels that are subject to the Anti‑fouling Convention.
 
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 have indicated that vessels not in compliance with the ISM Code by applicable deadlines will be prohibited from trading in U.S. and European Union ports, respectively.  As of the date of this report, each of our vessels is 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;
 
(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.
 
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OPA contains statutory caps on liability and damages; such caps do not apply to direct clean-up costs.  Effective November 12, 2019, 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 $1,200 per gross ton or $997,100 (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 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 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 refused 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, which eliminated a number of provisions which could affect offshore drilling operations.  Compliance with any new requirements of OPA and future legislation or regulations applicable to the operation of our vessels could negatively impact the cost of our operations and adversely affect our business.
 
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. The Company intends to comply with all applicable state regulations in the ports where the Company's 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.
 
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. In November 2021, the EPA and U.S. Army Corps of Engineers announced the signing of a proposed rule to revise the definition of WOTUS, which proposes to put back into place the pre-2015 definition.
 
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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 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 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 will replace the 2013 Vessel General Permit, or VGP, program (as discussed above) and current Coast Guard ballast water management regulations adopted under the U.S. National Invasive Species Act, or NISA, such as 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.  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 or the implementation of other port facility disposal procedures at potentially substantial cost or may otherwise restrict our vessels from entering U.S. waters.
 
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 29 April 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 1 March 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. The Proposals are not yet in final form and may be subject to amendment. There are two key initiatives relevant to maritime arising from the Proposals: (a) a bespoke emissions trading scheme for the maritime sector (Maritime ETS) which is due to commence in 2023 and which is to apply to all ships above a gross tonnage of 5,000; and (b) a FuelEU draft regulation which seeks to require all ships above a gross tonnage of 5,000 to carry on board a ‘FuelEU certificate of compliance’ from 30 June 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, Maritime ETS is to apply gradually over the period from 2023-2025. 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). More recent proposed amendments signal that 100% of non-EU emissions may be caught if the IMO does not introduce a global market-based measure by 2028. Furthermore, the proposals envisage that all maritime allowances would be auctioned and there will be no free allocation. Both proposals are currently being negotiated and final drafts are expected in the summer of 2022.

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. As the Hong Kong Convention has yet to come into force, the 2013 regulations are vital to responsible ship recycling in the EU. SRR requires that, from 31 December 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.
 
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.  We believe that all 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.
 
At MEPC 70 and MEPC 71, a draft outline of the structure of the initial strategy for developing a comprehensive IMO strategy on reduction of greenhouse gas emissions from ships was approved. In accordance with this roadmap, in April 2018, nations at the MEPC 72 adopted an initial strategy to reduce greenhouse gas emissions from ships.  The initial strategy identifies “levels of ambition” to reducing greenhouse gas emissions, including (1) decreasing the carbon intensity from ships through implementation of further phases of the Energy-Efficiency Design Index for new ships (while the Ship Energy-Efficiency Management Plan is mandatory for all vessels); (2) reducing carbon dioxide emissions per transport work, as an average across international shipping, by at least 40% by 2030, pursuing efforts towards 70% by 2050, compared to 2008 emission levels; and (3) reducing the total annual greenhouse emissions by at least 50% by 2050 compared to 2008 while pursuing efforts towards phasing them out entirely.  The initial strategy notes that technological innovation, alternative fuels and/or energy sources for international shipping will be integral to achieve the overall ambition.  These regulations could cause us to incur additional substantial expenses.
 
As noted above, the 70th MEPC meeting in October 2016 adopted a mandatory data collection system (DCS) which requires ships above 5,000 gross tonnes to report consumption data for fuel oil, hours under way and distance travelled. 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, summarising the data collected. Thus, currently, data related to the GHG emissions of ships above 5,000 gross tonnes 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 4 February 2019 aims to align and facilitate the simultaneous implementation of the two systems however it is still not clear when the proposal will be adopted.
 
IMO’s MEPC 76 adopted amendments to MAPROL Annex VI that will require ships to reduce their greenhouse gas emissions. Effective November 1, 2022, the Revised MARPOL Annex VI will enter into force. 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.

39
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.
 
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.
 
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 may be detained, expelled from, or 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.  We intend to 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 off the coast of Somalia, including the Gulf of Aden and Arabian Sea area.  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, notably those contained in the BMP5 industry standard.
 
Inspection 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.  All of our vessels are certified as being “in class” by all the applicable Classification Societies (e.g., American Bureau of Shipping, DNV, Lloyd's Register of Shipping, Bureau Veritas).
 
40
A vessel must undergo annual surveys, intermediate surveys, drydockings and special surveys. In lieu of a special survey, a vessel's machinery may be on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. Every vessel is also required to be drydocked every 30 to 36 months for inspection of the underwater parts of the vessel.  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.
 
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 all of our vessels.  Each of our vessels is covered up to at least its fair market value with deductibles of $150,000 per vessel 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.
 
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 collisions with other vessels, damage to other third-party property such as fixed and floating objects, 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 the 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 13 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 $10.0 million up to, currently, approximately $8 billion.  As a member of P&I Associations, which are 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. 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.
 
41
C.
Organizational Structure

Seanergy Maritime Holdings Corp. is the ultimate parent company of the following wholly-owned subsidiaries, either directly or indirectly, as of the date of this annual report:
 
Subsidiary
Jurisdiction of Incorporation
Seanergy Management Corp.
Republic of the Marshall Islands
Seanergy Shipmanagement Corp.
Republic of the Marshall Islands
Leader Shipping Co.
Republic of the Marshall Islands
Sea Glorius Shipping Co.
Republic of the Marshall Islands
Sea Genius Shipping Co.
Republic of the Marshall Islands
Traders Shipping Co.
Republic of the Marshall Islands
Gladiator Shipping Co.
Republic of the Marshall Islands
Premier Marine Co.
Republic of the Marshall Islands
Emperor Holding Ltd.
Republic of the Marshall Islands
Champion Marine Co.
Republic of the Marshall Islands
Fellow Shipping Co.
Republic of the Marshall Islands
Patriot Shipping Co.
Republic of the Marshall Islands
Flag Marine Co.
Republic of the Marshall Islands
World Shipping Co.
Republic of the Marshall Islands
Partner Marine Co.
Republic of the Marshall Islands
Duke Shipping Co.
Republic of the Marshall Islands
United Maritime Corporation
Republic of the Marshall Islands
Squire Ocean Navigation Co.
Republic of Liberia
Lord Ocean Navigation Co.
Republic of Liberia
Knight Ocean Navigation Co.
Republic of Liberia
Good Ocean Navigation Co.
Republic of Liberia
Hellas Ocean Navigation Co.
Republic of Liberia
Friend Ocean Navigation Co.
Republic of Liberia
Partner Shipping Co. Limited
Malta
Pembroke Chartering Services Limited
Malta
Martinique International Corp.
British Virgin Islands
Harbour Business International Corp.
British Virgin Islands
Maritime Grace Shipping Limited
British Virgin Islands
Maritime Glory Shipping Limited
British Virgin Islands
Maritime Capital Shipping Limited
Bermuda
Maritime Capital Shipping (HK) Limited
Hong Kong

D.
Property, Plants and Equipment

We do not own any real estate property. We maintain our principal executive offices at Glyfada, Greece. Other than our vessels, we do not have any material property. See “Item 4.B. Business Overview - Our Current Fleet” and “Item 5. Operating and Financial Review and Prospects — B. Liquidity and Capital Resources – Loan Arrangements.”
 
ITEM 4A.
UNRESOLVED STAFF COMMENTS

None.
 
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.”   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. Key Information–D. Risk Factors.”
 
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;

42
 
•
period time charter rates;

 
•
the nature and duration of our voyage charters;

 
•
vessels repositioning;

 
•
vessel operating expenses and direct voyage costs;

 
•
maintenance and upgrade work;

 
•
the age, condition and specifications of our vessels;

 
•
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 dry bulk rates. Spot charters also expose vessel owners to the risk of declining dry bulk rates and rising fuel costs in case of voyage charters. As of the date of this report, all of the Company’s fleet is time chartered on long-term employment arrangements. Out of the seventeen long-term employment agreements in place as of December 31, 2021, nine were agreed during 2021 and the remaining eight between 2018 and 2020.

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. We have described below and in Item 5. Operating and Financial Review and Prospects – E. Critical Accounting Estimates our critical accounting policies, because they potentially result in material different results under different assumptions and conditions. For a description of all our significant accounting policies, see Note 2 to our annual audited financial statements included in this annual report.
 
Leases
A time charter is a contract for the use of a vessel as well as vessel operations for a specific period of time and a specified daily charter hire rate, which is generally payable in advance. A bareboat charter is a contract in which the vessel is provided to the charterer for a fixed period of time at a specified daily rate, which is generally payable in advance.
Time charter revenue, including bareboat charter revenue, is recorded over the term of the charter agreement as the service is provided and collection of the related revenue is reasonably assured. Under a time charter, revenue is adjusted for a vessel’s off hire days due to major repairs, dry dockings or special or intermediate surveys.
In February 2016, the FASB issued ASU No. 2016-02 - Leases (ASC 842), and as amended, it requires lessees to recognize most leases on the balance sheet. We early adopted ASC 842, as amended from time to time, retrospectively from January 1, 2018. We also elected to apply the additional and optional transition method to new and existing leases at the adoption date as well as all the practical expedients which allowed our existing lease arrangements, in which we were a lessee or lessor, classified as operating leases under ASC 840 to continue to be classified as operating leases under ASC 842. We concluded that the criteria for not separating lease and non-lease components of its time charter contracts are met, since (i) the time pattern of recognizing revenues for crew and other services for the operation of the vessels is similar to the time pattern of recognizing rental income, (ii) the lease component of the time charter contracts, if accounted for separately, would be classified as an operating lease, and (iii) the predominant component in its time charter agreements is the lease component. In this respect, we account for the combined component as an operating lease in accordance with ASC 842. We recognize income from lease payments over the lease term on a straight line basis. We assessed our new time charter contracts at the adoption date under the new guidance and concluded that these contracts contain a lease with the related executory costs (insurance), as well as non-lease components to provide other services related to the operation of the vessel, with the most substantial service being the crew cost to operate the vessel. We recognize income for variable lease payments in the period when changes in facts and circumstances on which the variable lease payments occur. Rental income on our time charterers is mostly calculated at an index linked rate based on the five T/C routes rate of the Baltic Capesize Index.

43
Results of Operations
 
Year ended December 31, 2021 as compared to year ended December 31, 2020
 

(In thousands of U.S. Dollars, except for share and per share data)
  
Year ended December
31,
    
Change
  
 
  
2021
    
2020
    
Amount
    
%
  
Revenues:
                        
Vessel revenue, net
    
153,108
      
63,345
      
89,763
      
142
%
 
                                
Expenses:
                                
Voyage expenses
    
(16,469
)
    
(18,567
)
    
2,098
      
(11
)%
Vessel operating expenses
    
(36,332
)
    
(22,347
)
    
(13,985
)
    
63
%
Management fees
    
(1,435
)
    
(1,052
)
    
(383
)
    
36
%
General and administration expenses
    
(13,739
)
    
(6,607
)
    
(7,132
)
    
108
%
Depreciation and amortization
    
(19,944
)
    
(15,040
)
    
(4,904
)
    
33
%
Gain on sale of vessel, net
    
697
      
-
      
697
      
-
  
Gain on forward freight agreements, net
    
24
      
-
      
24
      
-
  
Operating (loss) / income
    
65,910
      
(268
)
    
66,178
          
Other income / (expenses), net:
                                
Interest and finance costs
    
(17,779
)
    
(23,425
)
    
5,646
      
(24
)%
Loss on extinguishment of debt
    
(6,863
)
    
-
      
(6,863
)
    
-
  
Gain on debt refinancing
    
-
      
5,144
      
(5,144
)
    
(100
)%
Other, net
    
80
      
193
      
(113
)
    
(59
)%
Total other expenses, net:
    
(24,562
)
    
(18,088
)
    
(6,474
)
    
36
%
Net income / (loss) before income taxes
    
41,348
      
(18,356
)
    
59,704
      
(325
)%
Income taxes
    
-
      
-
      
-
      
-
  
Net income / (loss)
    
41,348
      
(18,356
)
    
59,704
      
(325
)%
                                 
Net income / (loss) per common share,
                                
Basic
    
0.27
      
(0.55
)
                
Diluted
    
0.25
      
(0.55
)
                
Weighted average number of common shares outstanding
                                
Basic
    
153,321,907
      
33,436,278
                  
Diluted
    
191,337,521
      
33,436,278
                  

44
Vessel Revenue, Net – The increase was attributable to both the increase in operating days and the increase in prevailing charter rates. We had 4,987 operating days in 2021, as compared to 3,747 operating days in 2020. We acquired seven vessels within 2021 and sold one of our vessels in the third quarter of 2021. The operating days in 2021 were affected by 153 off-hire and repair days compared to 61 days during 2020. The TCE rate increased by 129% in 2021 to $27,399, as compared to $11,950 in 2020. Please see the reconciliation below of TCE rate to net revenues from vessels, the most directly comparable U.S. GAAP measure.

Voyage Expenses – The decrease was primarily attributable to increased days that our vessels were chartered under time charter arrangements in 2021 (i.e. 85% of the operating days), since under these agreements, voyage expenses are borne by the charterer, additionally the vessel sold in the third quarter was operating in the spot market. We had 4,987 operating days in 2021 as compared to 3,747 operating days in 2020 and 4,231 and 2,445 days under time-charter employment in the respective years.
 
Vessel Operating Expenses - The increase was primarily attributable to an increase in ownership days due to the acquisition of seven vessels in 2021 and their incurred pre-delivery costs. Additionally, crew expenses and spares forwarding costs increased due to COVID-19 pandemic. In addition, we incurred additional insurance expenses due to supplementary (retrospective) calls and premiums by our protection and indemnity associations, which are outside our control. Lastly, we incurred additional tonnage tax charges related to the vessels that were transitioned to our in-house management platforms and therefore were subject to Greek tonnage tax. We had 5,140 ownership days in 2021 as compared to 3,807 ownership days in 2020.
 
Management Fees - The increase was attributable to an increase in ownership days. We had 5,140 ownership days in 2021 as compared to 3,807 ownership days in 2020.
 
General and Administration Expenses – The increase is mainly attributable to an increase in staff costs, as the total number of support staff at the end of 2021 were 47 compared to 35 at the end of 2020. Stock based compensation amounted to $4.9 million in 2021 compared to $0.8 million in 2020.
 
Depreciation and Amortization – For the year ended December 31, 2021, depreciation and amortization expense increased to $19.9 million from $15.0 million in 2020 mainly due to the increase in the average number of vessels, as we added seven vessels to our fleet in 2021 and sold one vessel during the year.
 
Gain on sale of vessel, net – The gain in the year ended December 31, 2021, is attributable to the sale of the Leadership.

Gain on forward freight agreements – The gain in the year ended December 31, 2021, is attributable to the net realized gains of our positions on the forward freight agreements entered within the year.

Interest and Finance Costs – This decrease is primarily attributable to the decline in the average interest rate on our outstanding indebtedness, mainly driven by the refinancing or the prepayment of certain of our debt agreements and interest bearing securities. The weighted average interest rate on our outstanding debt and convertible notes for the years ended 2021 and 2020 was approximately 4.81% and 6.09%, respectively.
 
Loss on extinguishment of debt – The loss in the year ended December 31, 2021, is attributable to the write-off of unamortized deferred finance costs and debt discounts upon the settlement of certain borrowing facilities, as follows: $0.4 million related to the Geniuship tranche of the July 2020 Entrust Loan Facility, $0.1 million related to the First JDH Loan, $0.1 million related to the Fourth JDH Loan and $6.2 million related to the Third JDH Note.

Gain on debt refinancing – The gain in the year ended December 31, 2020, is attributable to the settlement agreement entered into with Hamburg Commercial Bank AG on June 26, 2020.
 
Please see Item 5.A of our Form 20-F filed with the SEC on March 31, 2021 for a discussion of the year-to-year comparison between 2020 and 2019.
 
B.
Liquidity and Capital Resources

Our principal source of funds have been our operating cash inflows, long-term borrowings from banks, and equity provided by the capital markets and JDH. Our principal use of funds has primarily been capital expenditures to establish our fleet, maintain the quality of our dry bulk vessels, comply with international shipping standards and environmental laws and regulations, fund working capital requirements, and make principal repayments and interest payments on our outstanding debt obligations.
 
45
Our funding and treasury activities are conducted in accordance with corporate policies to maximize investment returns while maintaining appropriate liquidity for both our short- and long-term needs. This includes arranging borrowing facilities on a cost-effective basis. Cash and cash equivalents are held primarily in U.S. dollars, with minimal amounts held in Euros.
 
As of December 31, 2021, we had cash and cash equivalents of $41.5 million, as compared to $21.0 million as of December 31, 2020.
 
Working capital is equal to current assets minus current liabilities, including the current portion of long-term debt. As of December 31, 2021, we had a working capital deficit of $40.9 million as compared to a working capital deficit of $0.2 million as of December 31, 2020. The deficit is primarily due to two of our loan facilities which mature in 2022: (i) $27.2 million under the UniCredit Bank Loan Facility and (ii) $15.1 million under the February 2019 ATB Loan Facility, which was repaid in full on February 28, 2022. The vessel which was previously financed by the February 2019 ATB Loan Facility was subsequently financed by the Chugoku Sale and Leaseback agreement.
 
As of December 31, 2021, we had outstanding borrowings of $239.7 million (including long-term debt and other financial liabilities and convertible note) as compared to $212.0 million as of December 31, 2020.
 
In February 2021, we sold 44,150,000 common shares pursuant to a registered direct offering at a price of $1.70 per common share, in exchange for gross proceeds of $75.1 million, or net proceeds of approximately $70.0 million.
 
As of March 10, 2022, we had outstanding borrowings of $229.7 million (including long-term debt and other financial liabilities and convertible note), which includes the UniCredit Loan Facility maturing in December 2022. Our primary known and estimated liquidity needs for 2022 include obligations related to scheduled principal payments of outstanding borrowings and respective interest expenses payments and estimated drydocking expenditures. 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 the financial statements' issuance. Additional information on our annual scheduled obligations under our long-term debt and other financial liabilities are described in “Loan Arrangements” below and in Note 6 (“Long-Term Debt and Other Financial Liabilities”) and Note 7 (“Convertible Notes”) of our consolidated financial statements included in Item 18 of this Annual Report. Generally, we expect that, in addition to the cash generated from our operations, our long-term funding sources will include bank borrowings, lease financings and the issuance of debt and equity securities.
 
Cash Flows
 
(In thousands of US Dollars)
  
Year ended December 31,
  
 
  
2021
    
2020
    
2019
  
Cash Flow Data:
                  
Net cash provided by / (used in) operating activities
    
80,760
      
(9,735
)
    
13,108
  
Net cash used in investing activities
    
(184,620
)
    
(21,864
)
    
(12,349
)
Net cash provided by / (used in) financing activities
    
127,435
      
39,096
      
(6,351
)

Year ended December 31, 2021, as compared to year ended December 31, 2020
 
Operating Activities:  Net cash provided by operating activities amounted to $80.8 million in 2021. The increase compared to 2020 is primarily attributable to the increase in our operating income following the improved market conditions that prevailed in 2021 compared to 2020. Net cash provided by operating activities in 2021 consisted of net income after non-cash items of $79.8 million, an adjustment of $0.7 million from gain on the sale of a vessel plus an increase in working capital of $1.7 million. Net cash used in operating activities amounted to $9.7 million in 2020, consisting of net loss after non-cash items of $0.6 million, an adjustment of $1.0 million of restructuring expenses plus a decrease in working capital of $10.1 million.
 
Investing Activities: The 2021 cash outflow resulted from $197.2 million for the purchase of seven vessels, which was offset by $12.6 million from the proceeds from the sale of one vessel. The 2020 cash outflow resulted mainly from the acquisition of MV Goodship and from the completion of installation of exhaust gas cleaning systems, or scrubbers, on one of our vessels.
 
Financing Activities: The 2021 cash inflow resulted mainly from: proceeds from issuance of common stock and warrants, net of underwriters' fees and commissions, of $98.3 million, proceeds of $180.3 million from secured long-term debt and proceeds of $0.3 million obtained the issuance of preferred stock. The 2021 cash inflow was offset by total debt repayments of $132.1 million, $14.0 million repayments of convertible notes, $1.7 million for common stock repurchases, $1 million for warrants repurchases and $2.7 million financing and stock issuance fees payments. The 2020 cash inflow resulted mainly from: proceeds from issuance of common stock and warrants, net of underwriters' fees and commissions, of $73.8 million and proceeds of $22.5 million obtained from the New Entrust Loan Facility. The 2020 cash inflow was offset by total debt repayments of $53.5 million and $3.7 million financing and stock issuance fees payments.
 
Please see Item 5.A of our Form 20-F filed with the SEC on March 31, 2021 for a discussion of the year-to-year comparison between 2020 and 2019.
 
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Loan Arrangements
 
Senior Facilities
 
New Financing Activities during the year ended December 31, 2021
 

Aegean Baltic Bank S.A. (“ABB”) / ABB Loan Facility

On April 22, 2021, we entered into a $15.5 million secured loan facility with ABB. The loan is divided in two tranches of $7.5 million (“Tranche A”) and $8.0 million (“Tranche B”) to partly finance the acquisition cost of the Goodship and Tradership, respectively. Each tranche bears interest at LIBOR plus a margin 4.0% and is repayable in eighteen consecutive quarterly installments of $0.2 million each, commencing three months after the drawdown of each tranche, with a final balloon payment of $3.9 million due on October 26, 2025, for Tranche A and $4.4 million due on December 14, 2025, for Tranche B. The borrowers under the facility are the two applicable vessel-owning subsidiaries. The facility is secured, amongst others, by a first priority mortgage over each of the vessels and a guarantee by the company. The Company is required to maintain a corporate leverage ratio, as defined in the loan agreement, that will not be higher than 85% until the maturity. In addition, the borrowers shall ensure that the market value of the vessels plus any additional security shall not be less than 130% of the total facility outstanding.
 
As of December 31, 2021, $14.7 million was outstanding under the facility.

May 2021 Alpha Bank Loan Facility
 
On May 20, 2021, we entered into a $37.5 million secured loan facility with Alpha Bank S.A. for the purpose of (i) refinancing the outstanding indebtedness of the Leadership and Squireship and (ii) partly finance the previously unencumbered Lordship. The facility bore interest at LIBOR plus a margin of 3.5% and was repayable in sixteen consecutive quarterly installments, the first four installments being $1.5 million each, the next four installments being $1.3 million each and the next eight quarterly installments being $0.9 million each, with an interim balloon payment of $4.5 million concurrently with the eighth installment and a final balloon payment of $15.0 million due on May 21, 2025. The earliest maturity date of the facility could be on December 31, 2024 and the final balloon payment on such date would have been $16.7 million. The facility was secured, amongst others, by a first preferred mortgage over each of the vessels and a guarantee by the Company.  In addition, the borrowers had to ensure that the market value of the vessels plus any additional security would not be less than 125% of the total facility outstanding.

On August 11, 2021, the facility was refinanced in full by the August 2021 Alpha Bank Facility.
 
August 2021 Alpha Bank Loan Facility
 
On August 9, 2021, we entered into a $44.1 million secured loan facility with Alpha Bank S.A. for (i) refinancing of the May 2021 Alpha Bank Loan Facility and (ii) financing of the previously unencumbered Friendship, effectively replacing the Leadership with the Friendship in the security structure and increasing the loan amount. The August 2021 Alpha Bank Loan Facility is divided in two tranches, which were fully drawn on August 11, 2021: the first tranche of $31.1 million was used to partly refinance the outstanding indebtedness over the Squireship and the Lordship and the second tranche of $13.0 million was used to partly finance the acquisition cost of the Friendship. The first tranche bears interest at LIBOR plus a margin of 3.5% and is repayable by four quarterly installments of $1.3 million each, followed by four quarterly installments of $1.0 million each, followed by eight quarterly installments of $0.9 million each and a final balloon payment of $15.0 million due on May 21, 2025. The second tranche bears interest at LIBOR plus a margin of 3.25% and is repayable by installment four quarterly installments $0.7 million each, followed by twelve quarterly installments of $0.4 million each and a final balloon payment of $5.7 million due on August 11, 2025. The facility is secured by, amongst others, a first preferred mortgage over each of the relevant vessels and a guarantee by the Company. In addition, the borrowers shall ensure that the market value of the vessels plus any additional security shall not be less than 125% of the total facility outstanding.

As of December 31, 2021, $40.9 million was outstanding under the facility.

Piraeus Bank Loan Facility

On November 12, 2021 we entered into a $16.9 million secured loan facility with Piraeus Bank S.A. for the purpose of partially financing the acquisition of the Worldship. The facility bears interest at LIBOR plus a margin of 3.05% and is repayable in four quarterly installments of $1.0 million, followed by two quarterly installments of $0.8 million, followed by fourteen quarterly installments of $0.4 million each and a balloon installment of $6.1 million due on November 12, 2026. The facility is secured by, amongst others, a first preferred mortgage on the Worldship and a corporate guarantee by the Company. The Company is required to maintain a corporate leverage ratio (as defined therein) that will not be higher than 85% until the maturity. In addition, the borrower shall ensure that the market value of the vessel plus any additional security shall not be less than 130% of the total facility outstanding. The margin of the Piraeus Bank Loan Facility is also subject to a sustainability pricing adjustment, whereby it may be decreased to 2.95% if the Worldship meets certain emission reduction targets during the term of the facility.

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As of December 31, 2021, $16.9 million was outstanding under the facility.

Sinopac Loan Facility

On December 20, 2021 we entered into a $15.0 million secured loan facility with Sinopac Capital International (HK) Limited for the purpose of refinancing the outstanding indebtedness of the Geniuship. The facility bears interest at LIBOR plus a margin of 3.5% and is repayable by four quarterly installments of $0.5 million, followed by sixteen quarterly installments of $0.4 million and a balloon installment of $6.7 million due on December 20, 2026. The facility is secured by, amongst others, a first preferred mortgage over the Geniuship and a guarantee by the Company. In addition, the borrower shall ensure that the market value of the vessel plus any additional security shall not be less than 130% of the total facility outstanding.

As of December 31, 2021, $15.0 million was outstanding under the facility.

Pre - Existing Loan Facilities

UniCredit Bank Loan Facility
 
On September 11, 2015, we entered into a $52.7 million secured loan facility with UniCredit Bank AG to partly finance the acquisition of the Premiership, the Gladiatorship and the Guardianship, referred to as the UniCredit Bank Loan Facility. On November 22, 2018, we entered into an amendment and restatement of the UniCredit Bank Loan Facility, following the sale of the Gladiatorship and the Guardianship and the financing of the Fellowship as replacement collateral. Following the supplemental agreement entered into on February 8, 2021, the facility has an expiry date on December 29, 2022 and amortizes through six consecutive quarterly repayments of $1.2 million each, followed by a balloon installment of $22.4 million on the maturity date. The applicable interest rate is LIBOR plus a margin of 3.5% per annum. The facility is secured by, amongst others, first preferred mortgages over the Premiership and the Fellowship and a guarantee by the Company.

As of December 31, 2021, $27.2 million was outstanding under the UniCredit Bank Loan Facility.

February 2019 ATB Loan Facility
 
On February 13, 2019, we entered into a $20.9 million secured loan facility with ATB in order (i) to refinance the existing indebtedness over the Partnership under a previous loan facility provided by the same lender and (ii) for general working capital purposes, and more specifically, for the financing of installation of open loop scrubber systems on the Squireship and the Premiership. We refer to this facility as the February 2019 ATB Loan Facility. The borrower under the February 2019 ATB Loan Facility is the vessel-owning subsidiary of the Partnership. The facility, as amended and/or supplemented from time to time, bears interest of LIBOR plus a margin of 4.65% and was divided in Tranche A relating to the refinancing of the Partnership and Tranches B and C for the working capital purposes discussed above, respectively. Tranche A was repayable in six consecutive quarterly installments of $0.2 million each and a balloon payment of $13.2 million on November 26, 2022. Tranche B and C was repayable in five consecutive quarterly installments of $0.2 million with the last one falling due on August 26, 2022.  The Company was required to maintain a corporate leverage ratio (as defined therein), that would not be higher than 85% until the maturity. Following the supplemental agreement entered into on February 12, 2021, the borrower would ensure that the minimum required security cover (as defined therein) was 140% until June 30, 2021 (inclusive), 145% from July 1, 2021 until December 31, 2021 (inclusive) and 150% thereafter and until the maturity of the loan. The February 2019 ATB Loan Facility was secured by, amongst others, a first priority mortgage over the Partnership and a guarantee by the Company.  As of December 31, 2021, $15.1 million was outstanding under the facility.

On February 28, 2022, the outstanding amount of $15.1 million was repaid in full.

July 2020 Entrust Facility
 
On July 15, 2020, we entered into a $22.5 million secured loan facility with Lucid Agency Services Limited and Lucid Trustee Services Limited as facility agent and security agent, respectively, and certain nominees of EnTrust Global as lenders (the “July 2020 Entrust Facility”), for the purpose of partly refinancing the settlement amount of $23.5 million under the HCOB Loan Facility discussed below. The borrowers under the July 2020 Entrust Facility were the Company’s applicable vessel-owning subsidiaries and the facility is guaranteed by the Company. The July 2020 Entrust Facility was made available in two tranches, which were fully drawn on July 16, 2020: the first tranche of $6.5 million was used to partly refinance the outstanding indebtedness over the Gloriuship and the second tranche of $16.0 million was used to partly refinance the outstanding indebtedness over the Geniuship. On December 20, 2021, the second tranche was refinanced by the Sinopac Loan Facility secured by the Geniuship as described above. The July 2020 Entrust Facility matures on July 16, 2025 and is secured by, amongst others, a first priority mortgage over the Gloriuship and a guarantee by the Company. The July 2020 Entrust Facility bears fixed interest rate of 10.5% per annum while, following the prepayment of the second tranche, principal obligation amortizes through an instalment of $0.2 million and 14 consecutive quarterly instalments of $0.4 million each, followed by a balloon repayment of $0.4 million due at maturity. Moreover, the July 2020 Entrust Facility provides that: (i) the security cover percentage requirement (as defined therein) is required to be equal to 110% for the first 18 months following drawdown, 115% for months 19 – 24 following drawdown, 120% for months 25 – 36 following drawdown and 130% at all times thereafter until maturity, (ii) minimum liquidity of $0.3 million for the first three months following drawdown of the facility and $0.4 million at all times thereafter, as long as the Gloriuship is not subject to a time-charter exceeding 12 months in duration, shall be maintained in the borrower’s earnings account.
 
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As of December 31, 2021, $5.5 million was outstanding under the July 2020 Entrust Facility.
 
Certain of our loan facilities discussed above are secured by general assignments covering the respective vessels’ earnings, charter parties, insurances and requisition compensation; account pledge agreements covering the vessels’ earnings accounts; specific charterparty assignments, usually for charterparties exceeding twelve months in duration; technical and commercial managers’ undertakings; pledge agreements covering the shares of the applicable vessel-owning subsidiaries; and hedging assignment agreements.
 
Loan Facilities repaid during the years ended December 31, 2020 and December 31, 2021
 
Leader Alpha Bank Loan Facility
 
On March 6, 2015, we entered into a $8.8 million secured loan facility with Alpha Bank S.A. to partly finance the acquisition of the Leadership, referred to as the Leader Alpha Bank Loan Facility. The facility, as amended and/or supplemented from time to time, was expiring on December 31, 2022, with repayments of $0.3 million per quarter followed by a balloon installment of $2.3 million on the maturity date. The interest rate of the facility was equal to LIBOR plus a margin of 3.75%. The Leader Alpha Bank Loan Facility, among others, was secured by a first preferred mortgage over the Leadership and guarantee by the Company.
 
On May 20, 2021, the facility was refinanced in full by the May 2021 Alpha Bank Loan Facility.
 
Hamburg Commercial Bank AG (formerly HSH Nordbank AG) Loan Facility/Settlement Agreement
 
On September 1, 2015, we entered into a $44.4 million secured loan facility with Hamburg Commercial Bank AG (formerly HSH Nordbank AG), referred to as the HCOB Loan Facility. The facility, as amended and/or supplemented from time to time, was expiring on June 30, 2020, with quarterly repayments followed by a balloon installment on the maturity date. The interest rate of the facility was equal to LIBOR plus a margin of 3.75%. The HCOB Loan Facility, among others, was secured by a first preferred mortgages over the Geniuship and Gloriuship and guarantee by the Company.
 
On June 26, 2020, we entered into a settlement agreement with HCOB. Pursuant to the terms of the settlement agreement, the Company, in order to fully settle its obligations under the subject facility was required to pay a total amount of $23.5 million out of the then outstanding amount of the loan agreement of $29.1 million until July 31, 2020. On July 17, 2020, the Company settled the full amount of the HCOB Facility through a $23.5 million payment with the funds obtained from the proceeds of a new loan facility and cash on hand, following which all securities created in favor of HCOB were irrevocably and unconditionally released. As a result, the Company recognized a gain of $5.1 million.
 
Squire Alpha Bank Loan Facility
 
On November 4, 2015, we entered into a $33.8 million secured loan facility with Alpha Bank S.A. to partly finance the acquisition of the Squireship, referred to as the Squire Alpha Bank Loan Facility. The facility, as amended and/or supplemented from time to time, was expiring on December 31, 2022, with quarterly repayments followed by a balloon installment of $15.0 million on the maturity date. The interest rate of the facility was equal to LIBOR plus a margin of 3.50%. The Squire Alpha Bank Loan Facility, among others, was secured by a first preferred mortgage over the Squireship, a guarantee by Leader Shipping Co., being the vessel-owning subsidiary of the Leadership, a second preferred mortgage over the Leadership, and a guarantee by the Company.
 
On May 20, 2021, the facility was refinanced in full by the May 2021 Alpha Bank Loan Facility.
 
Entrust Loan Facility
 
On June 11, 2018, we entered into a $24.5 million secured loan agreement with certain Blue Ocean maritime lending funds managed by EnTrustPermal. The facility was expiring on June 13, 2023, or on June 13, 2025, subject to certain conditions with a balloon installment of $15.3 million or $9.5 million due at maturity, assuming a maturity date in June 2023 or in June 2025, respectively. The weighted average all-in interest rate was equal to 11.4% or 11.2% assuming a maturity date in June 2023 or in June 2025, respectively. The Entrust Loan Facility was secured, among others, by a first priority mortgage over the Lordship and a guarantee by the Company.
 
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On March 5, 2021, the outstanding balance of $21.6 million of the Entrust Loan Facility was prepaid in full with cash on hand and all underlying securities were discharged.

Subordinated & Other Loan Facilities
 
First JDH Loan Facility
 
On October 4, 2016, we entered into a $4.2 million loan facility with JDH to finance the initial deposits for the Lordship and the Knightship.  The facility was amended and supplemented on several occasions and along with the other facilities and convertible notes between the Company and JDH, was subject to comprehensive amendments that became effective on December 31, 2020 and the key applicable terms are described below. Following the amendments, the applicable interest rate was amended to a fixed rate of 5.5% per annum and the outstanding balance at that time was $5.9 million.
 
Through two separate payments made on February 11, 2021 and February 22, 2021, the outstanding balance of $5.9 million of the First JDH Loan Facility was prepaid in full and all securities created in favor of JDH were also irrevocably and unconditionally released pursuant to a deed of release.
 
Second JDH Loan Facility
 
On May 24, 2017, we entered into an up to $16.2 million loan facility with JDH to partially finance the acquisition of the Partnership. The facility was amended and supplemented on several occasions and along with the other facilities and convertible notes between the Company and JDH, was subject to comprehensive amendments that became effective on December 31, 2020 and the key applicable terms are described below.  Following the amendments and relevant prepayments, the applicable interest rate was amended to a fixed rate of 5.5% per annum and the outstanding balance at that time was $5.0 million. On February 22, 2021, the Second JDH Loan Facility was prepaid by $100,000 by proceeds from the Company’s capital raising activities as provided for in the amendment agreement. On April 26, 2021, JDH exercised its option to purchase 4,285,714 additional Units (with each unit consisting of one common share of the Company, or, at JDH’s option, one pre-funded warrant in lieu of such common share, and one warrant to purchase one common share at an exercise price of $0.70) at a price of $0.70 per Unit in exchange for the settlement of principal under the Second JDH Loan in an amount of $3.0 million (i.e., an amount equal to the aggregate purchase price of the units).
 
As of December 31, 2021, $1.9 million was outstanding under the Second JDH Loan Facility. On February 28, 2022, the outstanding balance of $1.9 million of the Second JDH Loan Facility was prepaid in full and all securities created in favor of JDH were also irrevocably and unconditionally released pursuant to a deed of release.
 
Fourth JDH Loan Facility
 
On March 26, 2019, we entered into a $7.0 million loan facility with JDH, the proceeds of which were utilized (i) to refinance the $2.0 million outstanding under the Third JDH Loan Facility and (ii) for general corporate purposes. The facility was amended and supplemented on various occasions and along with the other facilities and convertible notes between the Company and JDH, was subject to comprehensive amendments that became effective on December 31, 2020 and the key applicable terms are described below.  Following the amendments, the applicable interest rate was amended to a fixed rate of 5.5% per annum and the outstanding balance at that time was $6.0 million.  Through two separate payments made on February 11, 2021 and February 22, 2021, the outstanding balance of $6.0 million of the Fourth JDH Loan Facility was prepaid in full.
 
Other Financial Liabilities: Sale and Leaseback Transactions
 
New Sale and Leaseback Activities during the year ended December 31, 2021
 
Flagship Cargill Sale and Leaseback
 
On May 11, 2021, we entered into a $20.5 million sale and leaseback agreement with Cargill to partly finance the acquisition of the Flagship. The Company sold and chartered back the vessel from Cargill on a bareboat basis for a five-year period, having a purchase obligation at the end of the fifth year. The implied average applicable interest rate is equivalent to 2% per annum. The sale and leaseback agreement does not include any financial covenants or security value maintenance provisions. The Company has continuous options to buy back the vessel during the whole five-year sale and leaseback period at predetermined prices as set forth in the agreement and at the end of such period it has a purchase obligation at $10.0 million. Additionally, at the time of repurchase, if the market value of the vessel exceeds certain threshold prices, as set out in the agreement, the Company will pay to Cargill 15% of the difference between the market price and such threshold prices. The charterhire principal will be amortized in sixty monthly installments averaging approximately $0.2 million each along with a balloon payment of $10.0 million at maturity on May 10, 2026.
 
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The charterhire principal, as of December 31, 2021, was $19.3 million.
 
CMBFL Sale and Leaseback
 
On June 22, 2021, we entered into a $30.9 million sale and leaseback agreement with CMBFL to partly finance the acquisition of the Hellasship and Patriotship. The Company sold and chartered back the vessels from two affiliates of CMBFL on a bareboat basis for a five-year period. The financings bear interest of LIBOR plus a margin of 3.5%. The Company is required to maintain a corporate leverage ratio (as defined therein), that will not be higher than 85% until the maturity. Each of bareboat charterers are required to maintain a value maintenance ratio (as defined therein) of at least 120% of the charterhire principal. The Company has continuous options to buy back the Hellasship and Patriotship at any time following the second anniversary until the maturity of the bareboat charter at predetermined prices as defined in the agreement. The charterhire principal amortizes in twenty consecutive equal quarterly installments of $0.8 million along with a balloon payment of $15.3 million due on June 28, 2026.

The charterhire principal, as of December 31, 2021, was $29.3 million.
 
Existing Sale and Leaseback Activities

Hanchen Sale and Leaseback
 
On June 28, 2018, we entered into a $26.5 million sale and leaseback agreement for the Knightship with Hanchen Limited (“Hanchen”), an affiliate of AVIC International Leasing Co., Ltd. The Company’s sold and chartered back the vessel on a bareboat basis for an eight-year period, having a purchase obligation at the end of the eighth year. The charterhire principal bears interest at LIBOR plus a margin of 4%. The Company has continuous options to buy back the Knightship at any time following the second anniversary of the bareboat charter. Of the $26.5 million purchase price, $18.6 million were cash proceeds, $6.6 million were withheld by Hanchen as an upfront charterhire, and an amount of $1.3 million was paid by the Charterer to Hanchen as security of the due observance and performance by the Charterer of its obligations and undertakings as per the sale and leaseback agreement, or the Charterer’s Deposit. The Charterer’s Deposit can be set off against the balloon payment at maturity. The Charterer is required to maintain a value maintenance ratio (as defined in the additional clauses of the bareboat charter) of at least 120% of the charterhire principal minus the amount of the Charterer’s Deposit. The Company has continuous options to buy back the Knightship at any time following the second anniversary of the bareboat charter and a purchase obligation of $5.3 million at the end of the leaseback period. The charterhire principal amortizes through thirty-two consecutive equal quarterly installments of approximately $0.5 million along with a balloon payment of $5.3 million due on June 29, 2026.

The charterhire principal, as of December 31, 2021, was $13.5 million.
 
Championship Cargill Sale and Leaseback
 
On November 7, 2018, we entered into a $23.5 million sale and leaseback agreement for the Championship with Cargill. The Company sold and chartered back the vessel from Cargill on a bareboat basis for a five-year period, having a purchase obligation at the end of the fifth year. The cost of the financing is equivalent to an expected fixed interest rate of 4.71% for five years. The Company is required to maintain an amount of $1.6 million from the $23.5 million proceeds as a performance guarantee, which amount of $1.6 million will be used at the vessel’s repurchase. Moreover, under the subject sale and leaseback agreement, an additional tranche was provided to the Company for an amount of up to $2.8 million for the purpose of financing the cost associated with the acquisition and installation on board the Championship of an open loop scrubber system. The sale and leaseback agreement does not include any financial covenants or security value maintenance provisions. The Company has continuous options to buy back the vessel during the whole five-year sale and leaseback period at the end of which it has a purchase obligation at $14.1 million. Additionally, at the time of repurchase, if the market value of the vessel is greater than certain threshold prices (as set out in the agreement), the Company will pay to Cargill 20% of the difference between the market price and such threshold price. The charterhire principal will be amortized in sixty monthly installments averaging approximately $0.2 million each along with a balloon payment of $14.1 million, including the additional scrubber tranche, at maturity on November 7, 2023.

The charterhire principal, as of December 31, 2021, was $19.2 million including the additional scrubber tranche.

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 New Sale and Leaseback Activities initiated after December 31, 2021
 
Chugoku Sale and Leaseback

On February 25, 2022 the Company entered into a $21.3 million sale and leaseback agreement with Chugoku to refinance the loan facilities secured by the Partnership. The Company sold and chartered back the vessel from Chugoku on a bareboat basis for an eight-year period starting from March 9, 2022. The financing’s applicable interest rate is SOFR + 2.90% per annum. Following the second anniversary of the bareboat charter, the Company has continuous options to repurchase the vessel. The Company is required to maintain a minimum market value (as defined therein) of at least 120% of the charterhire principal. The charterhire principal amortizes in thirty-two consecutive quarterly installments averaging approximately $0.6 million along with a balloon payment of $2.4 million at the expiry of the bareboat charter.

Certain of the Company’s sale and leaseback agreements discussed above are secured by a guarantee from the Company; general assignments covering the respective vessels’ earnings, insurances and requisition compensation; account pledge agreements; technical and commercial managers’ undertakings and pledge agreements covering the shares of the applicable bareboat charterer subsidiary.
 
Convertible Notes
 
First JDH Note
 
On March 12, 2015, we issued a $4.0 million convertible note to JDH, or the First JDH Note. As amended, the applicable interest rate was at a fixed rate of 5.5% per annum and the outstanding balance at the time of the JDH Transactions (mentioned below) was $3.8 million. The First JDH Note was secured by a guarantee from the Company’s wholly owned subsidiary, Emperor Holding Ltd., or Emperor. On December 10, 2021, the First JDH Note was prepaid in full. In particular, following the exercise of JDH’s option, $3.6 million was repaid in October 2021 in common shares at a conversion price of $1.20 per share and $0.2 million was repaid in cash on December 10, 2021. The securities granted in favor of JDH were also irrevocably and unconditionally released.
 
 Second JDH Note
 
On September 7, 2015, we issued an up to $6.8 million, revolving convertible note to JDH, or the Second JDH Note. As amended to date, the applicable interest rate was at a fixed rate of 5.5% per annum and the outstanding balance at the time of the JDH Transactions (mentioned below) was $21.2 million. Emperor has provided a guarantee, dated September 27, 2017, to JDH for the Company’s obligations under the Second JDH Note.
 
As of December 31, 2021, $21.2 million was outstanding under the Second JDH Note.
 
On January 26, 2022 and on March 10, 2022 the Company made two voluntary cash prepayments of $5.0 million each, reducing the outstanding amount of the Second JDH Note to $11.2 million.
 
We may by giving a five business days prior written notice to JDH at any time, prepay the whole or any part of the Second JDH Note in cash or, subject to JDH’s prior written agreement on the price per share, in a number of fully paid and nonassessable shares of the Company equal to the amount of the note being prepaid divided by the agreed price per share. At JDH’s option, our obligation to repay the principal amount(s) under the Second JDH Note or any part thereof may be paid in common shares at a conversion price of $1.20 per share. JDH also has received customary registration rights with respect to any shares to be received upon conversion of the Second JDH Note.
 
Third JDH Note
 
On September 27, 2017, we issued a $13.8 million convertible note to JDH, or the Third JDH Note. As amended, the applicable interest rate was at a fixed rate of 5.5% per annum and the outstanding balance at the time of the JDH Transactions (mentioned below) was $13.8 million. The Third JDH Note was secured by a second preferred mortgage and second priority general assignment covering earnings, insurances and requisition compensation over the Partnership and guarantees from Emperor and from the vessel-owning subsidiary of the Partnership. On December 10, 2021, the outstanding balance of $13.8 million of the Third JDH Note was prepaid in full in cash and all securities provided in favor of JDH were also irrevocably and unconditionally released.
 
JDH Transactions
 
Securities Purchase Agreement
 
On December 30, 2020, we entered into a securities purchase agreement (the “Securities Purchase Agreement”) with JDH which sets forth the terms of the amendments agreed for the First JDH Loan Facility, Second JDH Loan Facility, Fourth JDH Loan Facility (together, the “JDH Loan Facilities”), First JDH Note, Second JDH Note and Third JDH Note (together, the “JDH Notes”).
 
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Pursuant to the Securities Purchase Agreement:
 
 
•
The Company prepaid $6.5 million of the principal amount of the Second JDH Loan Facility on December 31, 2020.

 
•
In exchange for the settlement of all accrued and unpaid interest under the JDH Loan Facilities and JDH Notes through December 31, 2020 in an aggregate amount of $4.3 million and an amendment fee of $1.2 million, the Company issued, on January 8, 2021, 7,986,913 units (“Units”) at a price of $0.70 per Unit, with each Unit consisting of one common share of the Company (or, at JDH’s option, one pre-funded warrant in lieu of such common share) and one warrant to purchase one common share at an exercise price of $0.70.

 
•
The Company granted JDH an option, exercisable only once until 45 days after the effectiveness of the resale registration statement described below, to purchase up to 4,285,714 additional Units at a price of $0.70 per Unit in exchange for the forgiveness of principal under the Second JDH Loan Facility in an amount equal to the aggregate purchase price of the Units. On April 26, 2021, JDH exercised this option to purchase 4,285,714 additional Units at a price of $0.70 per Unit in exchange for the settlement of principal under the Second JDH Loan in an amount of $3.0 million.

 
•
The Company granted JDH customary registration rights covering common shares issuable pursuant to the Securities Purchase Agreement as well as common shares underlying the JDH Notes. The registration statement covering the resale of these common shares was filed on February 19, 2021.

 
•
The Company and JDH agreed to amend the terms of each of the JDH Loan Facilities and JDH Notes pursuant to the omnibus supplemental agreements described below, including to extend the maturity date to December 31, 2024, to reduce the annual interest rate to 5.5% and to amend the conversion price under the JDH Notes to $1.20 per common share.

 
•
JDH agreed to a standstill undertaking, applicable for at least as long as the common shares are listed on Nasdaq, precluding any acquisition of the common shares, including through the exercise of warrants or the conversion of the JDH Notes, to the extent that it would result in JDH or its affiliates beneficially owning, including controlling the voting or disposition of, more than 9.99% of the outstanding common shares after giving effect to the acquisition.

 
•
JDH waived any and all prior breaches and events of default under the JDH Loan Facilities and JDH Notes.

The Securities Purchase Agreement and the transactions contemplated therein were approved by an independent committee of our board of directors.
 
The terms of the warrant and pre-funded warrant issued as part of Units are substantially the same as those of the Class E warrants and pre-funded warrants issued in the Company’s underwritten public offering in August 2020.
 
Omnibus Loan Supplemental Agreement
 
On December 31, 2020, the Company entered into an omnibus supplemental agreement (the “Omnibus Loan Supplemental Agreement”), amending each of the JDH Loan Facilities to reflect the changes agreed with JDH in the Securities Purchase Agreement, including:
 
 
(i)
accrued and unpaid interest of an aggregate of $1.9 million through December 31, 2020 was deemed fully and finally settled;

 
(ii)
the interest rate payable from January 1, 2021 through the maturity date was fixed at 5.5% per annum;

 
(iii)
the maturity date was extended to December 31, 2024;

 
(iv)
the addition of cash sweep provisions whereby the Company will make prepayments semi-annually commencing the fiscal quarter ending March 31, 2021 of the greater of the Company’s cash balances in excess of $25.0 million or the revenue of the Company’s Capesize fleet attributable to a time charter equivalent rate in excess of $18,000 but not exceeding $21,000;

 
(v)
a mandatory prepayment on each of December 31, 2022 and December 31, 2023 of $8.0 million less any prepayments previously made under the cash sweep provisions;

 
(vi)
an option to apply the proceeds of any cash exercise of the warrants issued to JDH as part of Units as a prepayment;

 
(vii)
an amendment to the existing mandatory prepayment provisions in the First JDH Loan Facility and Fourth JDH Loan Facility such that the Company will make a mandatory prepayment of an amount equal to 25% of the net proceeds of any future public offering and any cash exercise of the Company’s outstanding Class E warrants (the prepayment obligations set forth in (iv)-(vii) above, the “Mandatory Prepayment Obligations”); and

 
(viii)
a cap of $12.0 million on all Mandatory Prepayment Obligations in any calendar year.

53
Omnibus Note Supplemental Agreement
 
On December 31, 2020, the Company entered into an omnibus supplemental agreement (the “Omnibus Note Supplemental Agreement”), amending each of the JDH Notes to reflect the changes agreed with JDH in the Securities Purchase Agreement, including:
 
 
(i)
accrued and unpaid interest of an aggregate of $2.4 million through December 31, 2020 was deemed fully and finally settled;

 
(ii)
the interest rate payable from January 1, 2021 through the maturity date was fixed at 5.5% per annum;

 
(iii)
the maturity date was extended to December 31, 2024;

 
(iv)
the conversion price was amended to $1.20 per common share;

 
(v)
the existing conversion provision was amended to include a beneficial ownership limitation of 9.99% of the number of the common shares outstanding immediately after giving effect to the issuance of common shares issuable upon conversion; and

 
(vi)
the addition of provisions analogous to the Mandatory Prepayment Obligations requiring mandatory prepayment of the JDH Notes following the full repayment of the JDH Loan Facilities, and a cap of $12.0 million on all such mandatory prepayment obligations in any calendar year.

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. The widely accepted benchmark of charter market in the dry bulk industry is the Baltic Dry Index, or the BDI.
 
Since the start of the financial crisis in 2008 the performance of the BDI has been characterized by high volatility, as the growth in the size of the dry bulk fleet outpaced growth in vessel demand for an extended period of time.
 
Specifically, in the period from 2010 to 2020, the size of the fleet in terms of deadweight tons grew by an annual average of about 6.0% while the corresponding growth in demand for dry bulk carriers grew by 3.1%, resulting in a drop of about 61% in the value of the BDI over the period. In 2021, the volatility was apparent once again with the BDI registering a low of 1,303 on February 10, 2021 and a high of 5,650 on October 7, 2021. However, as the total size of the dry bulk fleet rose by about 3.6%, compared to demand growth of 3.8%, BDI increased by approximately 61%.
 
According to tentative projections, the total size of the dry bulk fleet is expected to rise by about 2.1% in 2022, slightly above the expected demand growth of 1.9%. At the same time the dry bulk orderbook as a percentage of the active fleet fell in 2021 to 7.3% from 10.5% in 2020, while the average figure for the period 2008-2020 was 33.3%.
 
Meanwhile, the geopolitical tensions in Ukraine are likely to increase further the volatility of the charter market, with the overall ton-mile demand to be affected, as cargoes exported from Ukraine and Russia will need to be substituted by cargoes from different sources.
 
As 88% of our fleet is based on index-linked charter contracts, while only two vessels have fixed rate agreements, we will be exposed to any near-term volatility in the charter market. We believe we have structured our capital expenditure requirements, debt commitments and liquidity resources in a way that will provide us with financial flexibility (see “Item 5. Operating and Financial Review and Prospects - B. Liquidity and Capital Resources” for more information).
 
Since its outbreak in late 2019, the COVID-19 pandemic has caused severe global disruptions and may continue to negatively impact the economic conditions regionally as well as globally and otherwise impact our operations and the operations of our customers and suppliers. The recent reopening of the global economy and consequent increased demand across key dry bulk commodities has positively affected our revenues. However, there is still high uncertainty on how the pandemic will evolve, with new variants emerging, forcing governments in affected countries to impose travel bans, quarantines and other emergency public health measures depending on the severity of the situation on each case. An increase in the severity or duration or a resurgence of the Covid-19 pandemic and any significant disruption of wide-scale vaccine distribution could have an adverse impact on the Company’s business, results of operations, cash flows, financial condition, the carrying value of the Company’s assets and the fair values of the Company’s vessels.

Important Measures and Definitions for Analyzing Results of Operations
 
We use a variety of financial and operational terms and concepts. These include the following:
 
Ownership days. Ownership days are the total number of calendar days in a period during which we owned or chartered in on bareboat basis each vessel in our fleet. Ownership days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses recorded during that period.
 
54
Available days. Available days are the number of ownership days less the aggregate number of days that our vessels are off-hire due to major repairs, dry-dockings, lay-up or special or intermediate surveys. The shipping industry uses available days to measure the aggregate number of days in a period during which vessels are available to generate revenues.
 
Operating days. Operating days are the number of available days in a period less the aggregate number of days that our vessels are off-hire due to unforeseen circumstances. Operating days include the days that our vessels are in ballast voyages without having fixed their next employment. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels could actually generate revenues.
 
Fleet utilization. Fleet utilization is the percentage of time that our vessels were generating revenues and is determined by dividing operating days by ownership days for the relevant period.
 
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.
 
Dry-docking. We periodically dry-dock each of our vessels for inspection, repairs and maintenance and any modifications to comply with industry certification or governmental requirements.
 
Time charter. A time charter is a contract for the use of a vessel for a specific period of time (period time charter) or for a specific voyage (trip time charter) during which the charterer pays substantially all of the voyage expenses, including port charges, bunker expenses, canal charges and other commissions. The vessel owner pays the vessel operating expenses, which include crew costs, provisions, deck and engine stores and spares, lubricants, insurance, maintenance and repairs. The vessel owner is also responsible for each vessel's dry-docking and intermediate and special survey costs. Time charter rates are usually fixed during the term of the charter. Prevailing time charter rates do fluctuate on a seasonal and year-to-year basis and may be substantially higher or lower from a prior time charter agreement when the subject vessel is seeking to renew the time charter agreement with the existing charterer or enter into a new time charter agreement with another charterer. Fluctuations in time charter rates are influenced by changes in spot charter rates.
 
Bareboat charter.  A bareboat charter is generally a contract pursuant to which a vessel owner provides its vessel to a charterer for a fixed period of time at a specified daily rate. Under a bareboat charter, the charterer assumes responsibility for all voyage and vessel operating expenses and risk of operation.
 
Voyage charter.  A voyage charter is generally a contract to carry a specific cargo from a load port to a discharge port for an agreed-upon total amount. Under voyage charters, voyage expenses, such as port charges, bunker expenses, canal charges and other commissions, are paid by the vessel owner, who also pays vessel operating expenses.
 
TCE.  Time charter equivalent, or TCE, rate is defined as our net revenue less voyage expenses during a period divided by the number of our operating days during the period. Voyage expenses include port charges, bunker expenses, canal charges and other commissions.
 
Daily Vessel Operating Expenses. Daily Vessel Operating Expenses are calculated by dividing vessel operating expenses less pre-delivery expenses by ownership days for the relevant time periods. Vessel operating expenses include crew costs, provisions, deck and engine stores, lubricants, insurance, maintenance and repairs. Vessel operating expenses before pre-delivery expenses exclude one-time pre-delivery and pre-joining expenses associated with initial crew manning and supply of stores of Company's vessels upon delivery.
 
Performance Indicators
 
The figures shown below are non-GAAP statistical ratios used by management to measure performance of our vessels. For the “Fleet Data” figures, there are no comparable U.S. GAAP measures.
 
 
  
Year Ended December 31,
  
Fleet Data:
  
2021
    
2020
    
2019
  
                 
Ownership days
    
5,140
      
3,807
      
3,650
  
Available days(1)
    
5,040
      
3,755
      
3,417
  
Operating days(2)
    
4,987
      
3,747
      
3,393
  
Fleet utilization
    
97.0
%
    
98.4
%
    
93
%
 
                        
Average Daily Results:
                        
TCE rate(3)
  
$
27,399
    
$
11,950
    
$
14,694
  
Daily Vessel Operating Expenses(4)
  
$
6,211
    
$
5,709
    
$
5,172
  

55
(1)
During the year ended December 31, 2021, we incurred 100 off-hire days for four scheduled dry-dockings. During the year ended December 31, 2020, we incurred 52 off-hire days for a scheduled dry-docking and scrubber installation on one of our vessels.

(2)
During the year ended December 31, 2021, we incurred 53 off-hire days due to unforeseen circumstances. During the year ended December 31, 2020, we incurred 8 off-hire days due to unforeseen circumstances.

(3)
We include TCE rate, a non-GAAP measure, as we believe it provides additional meaningful information in conjunction with net revenues from vessels, the most directly comparable U.S. GAAP measure, because it assists our management in making decisions regarding the deployment and use of our vessels and in evaluating their financial performance. Our calculation of TCE rate may not be comparable to that reported by other companies. The following table reconciles our net revenues from vessels to TCE rate.

 
  
Year Ended December 31,
  
(In thousands of US Dollars, except operating days and TCE rate)
  
2021
    
2020
    
2019
  
 
                  
Net revenues from vessels
  
$
153,108
    
$
63,345
    
$
86,499
  
Voyage expenses
    
(16,469
)
    
(18,567
)
    
(36,641
)
Time charter equivalent revenues
  
$
136,639
    
$
44,778
    
$
49,858
  
Operating days
    
4,987
      
3,747
      
3,393
  
Daily time charter equivalent rate
  
$
27,399
    
$
11,950
    
$
14,694
  

(4)
We include Daily Vessel Operating Expenses, a non-GAAP measure, as we believe it provides additional meaningful information in conjunction with vessel operating expenses, the most directly comparable U.S. GAAP measure, because it assists our management in making decisions regarding the deployment and use of our vessels and in evaluating their financial performance. Our calculation of Daily Vessel Operating Expenses may not be comparable to that reported by other companies. The following table reconciles our vessel operating expenses to Daily Vessel Operating Expenses.

(In thousands of US Dollars, except ownership days and Daily Vessel Operating Expenses)
  
Year Ended December 31,
  
 
  
2021
    
2020
    
2019
  
 
                  
Vessel operating expenses
  
$
36,332
    
$
22,347
    
$
18,980
  
Less: Pre-delivery expenses
    
(4,410
)
    
(611
)
    
(104
)
Vessel operating expenses before pre-delivery expenses
    
31,922
      
21,736
      
18,876
  
Ownership days
    
5,140
      
3,807
      
3,650
  
Daily Vessel Operating Expenses
  
$
6,211
    
$
5,709
    
$
5,172
  

Please also see “–B. Liquidity and Capital Resources.”
 
E.
Critical Accounting Estimates

The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of those financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions and conditions.

Critical accounting estimates are those that reflect significant judgments of uncertainties and potentially result in materially different results under different assumptions and conditions. We have described below what we believe is our most critical accounting estimate, because it generally involves a comparatively higher degree of judgment in its application. For a description of all our significant accounting policies, see Note 2 to our annual audited financial statements included in this annual report.

Impairment of long-lived assets
 
We review our long-lived assets for impairment whenever events or changes in circumstances, such as prevailing market conditions, obsolescence or damage to the asset, business plans to dispose a vessel earlier than the end of its useful life and other business plans, indicate that the carrying amount of the assets, plus any unamortized dry-docking costs, and cost of any equipment not yet installed, may not be recoverable. The volatile market conditions in the dry bulk market with decreased charter rates and decreased vessel market values are conditions we consider to be indicators of a potential impairment for our vessels.  We determine undiscounted projected operating cash flows, for each vessel and compare it to the vessel's carrying value, plus any unamortized dry-docking costs and cost of any equipment not yet installed. When the undiscounted projected operating cash flows expected to be generated by the use of the vessel and/or its eventual disposition are less than its carrying value, plus any unamortized dry-docking costs and cost of any equipment not yet installed, we impair the carrying amount of the vessel. Measurement of the impairment loss is based on the fair value of the asset as determined by independent valuators and use of available market data. The undiscounted projected operating cash inflows are determined by considering the charter revenues from existing time charters for the fixed fleet days and an estimated daily time charter equivalent for the non-fixed days (based on a combination of one year charter rates estimate and the average of the trailing 10-year historical charter rates, excluding the outliers) adjusted for commissions, expected off hires due to scheduled vessels' maintenance and estimated unexpected breakdown off hires. The undiscounted projected operating cash outflows are determined by applying various assumptions regarding vessel operating expenses, management fees and scheduled vessels' maintenance.
 
Our assessment concluded that no impairment loss should be recorded as of December 31, 2021 and 2020.
 
56
Our Fleet – Illustrative Comparison of Possible Excess of Carrying Value Over Estimated Charter-Free Market Value of Certain Vessels
 
Historically, the market values of vessels have experienced volatility, which from time to time may be substantial.  As a result, the charter-free market value of certain of our vessels may have declined below those vessels' carrying value, even though we would not impair those vessels' carrying value under our accounting impairment policy. The table set forth below indicates (i) the carrying value of each of our vessels as of December 31, 2021 and 2020, respectively, and (ii) which of our vessels we believe had a basic market value below their carrying value. The carrying value includes, as applicable, vessel costs, plus any unamortized deferred dry-docking costs and costs of any equipment not yet installed. This aggregate difference between the carrying value of our vessels and their market value of $5.0 million and $63.1 million, as of December 31, 2021 and 2020, respectively, represents the amount by which we believe we would have had to reduce our net income if we sold all of such vessels, on industry standard terms, in cash transactions, and to a willing buyer where we are not under any compulsion to sell, and where the buyer was not under any compulsion to buy as of December 31, 2021 and 2020, respectively. For purposes of this calculation, we assumed that the vessels would be sold at a price that reflected our estimate of their charter-free market values as of December 31, 2021 and 2020, respectively.
 
Our estimates of charter-free market value assume that our vessels were all in good and seaworthy condition without need for repair and if inspected would be certified in class without notations of any kind. Our estimates are based on information available from various industry sources, including:
 
 
•
reports by industry analysts and data providers that focus on our industry and related dynamics affecting vessel values;

 
•
news and industry reports of similar vessel sales;

 
•
offers that we may have received from potential purchasers of our vessels; and

 
•
vessel sale prices and values of which we are aware through both formal and informal communications with shipowners, shipbrokers, industry analysts and various other shipping industry participants and observers.

As we obtain information from various industry and other sources, our estimates of basic market value are inherently uncertain. In addition, vessel values are highly volatile; as such, our estimates may not be indicative of the current or future basic market value of our vessels or prices that we could achieve if we were to sell them.
 
 
Carrying Value  plus any unamortized dry-docking costs and cost of any equipment not yet installed as of

Vessel
  
Year Built
  
Dwt
    
December 31, 2021
(in millions of U.S. dollars)
      
December 31, 2020
(in millions of U.S. dollars)
  
Patriotship
  
2010
    
181,709
      
25.9
        
-
  
Dukeship
  
2010
    
181,453
      
34.2
 *      
-
  
Worldship
  
2012
    
181,415
      
33.2
        
-
  
Hellasship
  
2012
    
181,325
      
27.8
        
-
  
Fellowship
  
2010
    
179,701
      
27.4
        
26.6
*
Championship
  
2011
    
179,238
      
38.1
*
      
37.7
*
Partnership
  
2012
    
179,213
      
30.8
        
32.1
*
Knightship
  
2010
    
178,978
      
21.1
        
22.2
*
Lordship
  
2010
    
178,838
      
20.9
        
22.1
*
Goodship
  
2005
    
177,536
      
13.2
        
11.2
  
Friendship
  
2009
    
176,952
      
24.3
        
-
  
Tradership
  
2006
    
176,925
      
16.5
        
-
  
Flagship
  
2013
    
176,387
      
27.7
        
-
  
Gloriuship
  
2004
    
171,314
      
12.4
        
13.4
*
Geniuship
  
2010
    
170,057
      
23.6
        
22.6
*
Premiership
  
2010
    
170,024
      
27.1
        
28.8
*
Squireship
  
2010
    
170,018
      
30.5
        
32.5
*
Leadership
  
2001
    
171,199
      
-
        
11.9
 *
TOTAL
  
 
            
434.7
        
261.1
  

* Indicates dry bulk carrier vessels for which we believe, as of December 31, 2021 and 2020, respectively, the basic charter-free market value was lower than the vessel's carrying value plus any unamortized dry-docking costs and cost of any equipment not yet installed.

We refer you to the risk factor entitled “The market values of our vessels may decrease, which could limit the amount of funds that we can borrow or trigger certain financial covenants under our loan agreements and other financing agreements, and we may incur an impairment or, if we sell vessels following a decline in their market value, a loss.”
 
Although we believe that the assumptions used to evaluate potential asset impairment are based on historical trends and are reasonable and appropriate, such assumptions are highly subjective. To minimize such subjectivity, our analysis for the years ended December 31, 2021 and 2020 also involved sensitivity analysis to the model input we believe is more important and likely to change. In particular, in terms of our estimates for the time charter equivalent for the unfixed period, we use a combination of one-year charter rates estimate and the average of the trailing 10-year historical charter rates, excluding outliers. Although the trailing 10-year historical charter rates, excluding the outliers, cover at least a full business cycle, we sensitized our model with regards to long-term historical charter rate assumptions for the unfixed period beyond the first year. Our sensitivity analysis revealed that, to the extent that going forward the 10-year historical charter rates, excluding the outliers, would not decline by more than 29% for Capesize vessels and we would not be required to recognize impairment. For the year ended December 31, 2021, indicators of impairment existed for two of our vessels as their carrying value plus any unamortized dry-docking costs and cost of any equipment not yet installed was higher than their market value. The carrying value of the two vessels plus any unamortized dry-docking costs and cost of any equipment not yet installed for which impairment indicators existed as at December 31, 2021, was $72.3 million.
 


57
ITEM 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.
Directors and Senior Management

Set forth below are the names, ages and positions of our current directors and executive officers.  Members of our board of directors are elected annually on a staggered basis, and each director elected holds office for a three-year term.  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 154 Vouliagmenis Avenue, 166 74 Glyfada, Greece.
 
Name
 
Age
 
Position
 
Director Class
Stamatios Tsantanis
 
50
 
Chairman, Chief Executive Officer & Director
 
A (term expires in 2022)
Stavros Gyftakis
 
43
 
Chief Financial Officer
 
 
Christina Anagnostara
 
51
 
Director*
 
B (term expires in 2023)
Elias Culucundis
 
79
 
Director*
 
A (term expires in 2022)
Dimitrios Anagnostopoulos
 
75
 
Director*
 
C (term expires in 2024)
Ioannis Kartsonas
 
50
 
Director*
 
C (term expires in 2024)

*Independent Director

Biographical information with respect to each of our directors and our executive officers is set forth below.
 
Stamatios Tsantanis has been a member of our board of directors and our Chief Executive Officer since October 1, 2012 and has led the Company's significant growth to a world renowned Capesize dry bulk company of more than 3 million dwt. In addition, Mr. Tsantanis has been the Chairman of our board of directors since October 1, 2013 and also served as our Interim Chief Financial Officer from November 1, 2013 until October 2, 2018. Mr. Tsantanis brings more than 24 years of experience in shipping and finance and held senior management positions in prominent private and public shipping companies and financial institutions. Prior to that, he was an investment banker at Alpha Finance, a member of the Alpha Bank Group, with active roles in a number of major shipping corporate finance transactions in the U.S. capital markets. Mr. Tsantanis holds a Master of Science (MSc) in Shipping Trade and Finance from Bayes Business School (formerly known as Cass Business School) of City University in London and a Bachelor of Science (BSc) in Shipping Economics from the University of Piraeus. He is also a member of the board of directors of Breakwave Advisors (NYSE: BDRY & BSEA) and a fellow of the Institute of Chartered Shipbrokers.
 
Stavros Gyftakis was appointed as our Chief Financial Officer on October 3, 2018, and previously served as Finance Director since November 2017. He has more than 16 years of experience in senior positions in the shipping finance industry. Before joining Seanergy, he was a Senior Vice President in the Greek shipping finance desk at DVB Bank SE. Mr. Gyftakis holds a BSc in Mathematics from the Aristotle University of Thessaloniki, a MSc in Business Mathematics awarded with Honors, from the Athens University of Economics and Business and a MSc in Shipping, Trade and Finance, awarded with Distinction, from Bayes Business School (formerly known as Cass Business School) of City University in London.
 
Christina Anagnostara served as our Chief Financial Officer from November 17, 2008 until October 31, 2013 and has served as a member of our board of directors since December 2008. She has more than 24 years of maritime and international business experience in the areas of finance, banking, capital markets, consulting, accounting and audit. She has served in executive and board positions of publicly listed companies in the maritime industry and she was responsible for the financial, capital raising and accounting functions. Since June 2017 she is a Director of the Investment Banking Division of AXIA Ventures Group and from 2014 to 2017 she provided advisory services to corporate clients involved in all aspects of the maritime industry. Between 2006 and 2008 she served as Chief Financial Officer and member of the board of directors of Global Oceanic Carriers Ltd, a dry bulk shipping company listed on the Alternative Investment Market of the London Stock Exchange. Between 1999 and 2006, she was a senior management consultant of the Geneva-based EFG Group. Prior to EFG Group she worked for Eurobank EFG and Ernst & Young, the international accounting firm. Ms. Anagnostara studied Economics in Athens and is a Certified Chartered Accountant. She is a member of various industry organizations including ACCA, Propeller Club, WISTA, Shipping Finance Executives and American Hellenic Chamber of Commerce.
 
Elias Culucundis has been a member of our board of directors since our inception. Since 1999, Mr. Culucundis has been the President, Chief Executive Officer and Director of Equity Shipping Company Ltd., a company specializing in starting, managing and operating commercial and technical shipping projects. Additionally, from 1996 to 2000, he was a Director of Kassian Maritime Shipping Agency Ltd., a vessel management company operating a fleet of ten bulk carriers. During this time, Mr. Culucundis was also a Director of Point Clear Navigation Agency Ltd, a marine project company. From 1981 to 1995, Mr. Culucundis was a Director of Kassos Maritime Enterprises Ltd., a company engaged in vessel management. While at Kassos, he was initially a technical Director and eventually ascended to the position of Chief Executive Officer, overseeing a large fleet of Panamax, Aframax and VLCC tankers, as well as overseeing new vessel building contracts, specifications and the construction of new vessels. From 1971 to 1980, Mr. Culucundis was a Director and the Chief Executive Officer of Off Shore Consultants Inc. and Naval Engineering Dynamics Ltd. In Off Shore Consultants Inc. he worked in Floating Production, Storage and Offloading vessel, or FPSO, design and construction and was responsible for the technical and commercial supervision of a pentagon-type drilling rig utilized by Royal Dutch Shell Plc. Seven FPSOs were designed and constructed that were subsequently utilized by Pertamina, ARCO, Total and Elf-Aquitaine. Naval Engineering Dynamics Ltd. was responsible for purchasing, re-building and operating vessels that had suffered major damage. From 1966 to 1971, Mr. Culucundis was employed as a Naval Architect for A.G. Pappadakis Co. Ltd., London, responsible for tanker and bulk carrier new buildings and supervising the technical operation of their fleet. He is a graduate of Kings College, Durham University, Great Britain, with a degree in Naval Architecture and Shipbuilding. He is a member of the Hellenic National Committee of American Bureau of Shipping and he served in the Council of the Union of Greek Shipowners. Mr. Culucundis is a Fellow of the Royal Institute of Naval Architects and a Chartered Engineer.
 
58
Dimitrios Anagnostopoulos has been a member of our board of directors since May 2009. Mr. Anagnostopoulos has over 48 years of experience in Shipping, Ship finance and Bank Management. Mr. Anagnostopoulos obtained his BSc at the Athens University of Economics and Business. His career began in the 1970's as Assistant Lecturer at the same University followed by four years with the Onassis Shipping Group HQ in Monaco. Mr. Anagnostopoulos also held various posts at the National Investment Bank of Industrial Development (ETEBA), Continental Illinois National Bank of Chicago, the Greyhound Corporation, and with ABN AMRO, where he has spent nearly two decades with the Bank, holding the positions of Senior Vice-President and Head of Shipping. Since 2010 he is also an advisor and Board Member in the Aegean Baltic Bank S.A. Mr. Anagnostopoulos has been a speaker and panelist in various shipping conferences in Europe, and a regular guest lecturer at the Bayes Business School (formerly known as Cass Business School) of City University in London, the Athens University of Economics and Business and the ALBA Graduate Business School. He is a member (and ex-vice chairman) of the Association of Banking and Financial Executives of Greek Shipping and an Associate Member of the Institute of Energy of South East Europe. In 2008 he was named by the Lloyd's Organization as Shipping Financier of the Year.
 
Ioannis Kartsonas has been a member of our board of directors since May 2017. Mr. Kartsonas has more than 22 years of experience in finance and commodities trading. He is currently the Principal and Managing Partner of Breakwave Advisors LLC., a commodity-focused advisory firm based in New York. From 2011 to 2017, he was a Senior Portfolio Manager at Carlyle Commodity Management, a commodity-focused investment firm based in New York and part of the Carlyle Group, being responsible for the firm's Shipping and Freight investments. During his tenure, he managed one of the largest freight futures funds globally. Prior to his role, Mr. Kartsonas was a Co-Founder and Portfolio Manager at Sea Advisors Fund, an investment fund focused in Shipping. From 2004 to 2009, he was the leading Transportation Analyst at Citi Investment Research covering the broader transportation space including Shipping. Prior to that, he was an Equity Analyst focusing on Shipping and Energy for Standard & Poor's Investment Research. Mr. Kartsonas holds an MBA in Finance from the Simon School of Business, University of Rochester.
 
No family relationships exist among any of the directors and executive officers.
 
As a foreign private issuer listed on the Nasdaq Capital Market, we are required to disclose certain self-identified diversity characteristics about our directors pursuant to Nasdaq’s board diversity and disclosure rules approved by the Commission in August 2021. The Board Diversity Matrix set forth below contains the requisite information as of the date of this annual report.
 
Board Diversity Matrix (As of March 29, 2022)

To be completed by Foreign Issuers (with principal executive offices outside of the U.S.) and Foreign Private Issuers
Country of Principal Executive Offices
Greece
Foreign Private Issuer
Yes
Disclosure Prohibited under Home Country Law
No
Total Number of Directors
5
 
Female
Male
Non-Binary
Did Not Disclose Gender
Part I: Gender Identity
Directors
1
4
0
0
Part II: Demographic Background
Underrepresented Individual in Home Country Jurisdiction
0
LGBTQ+
0
Did Not Disclose Demographic Background
0

B.
Compensation

For the year ended December 31, 2021, the Company paid its executive officers and directors aggregate compensation of $1.4 million.  The Company’s executive officers are employed by it pursuant to employment and consulting contracts.
 
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Each member of the Company’s board of directors received a fee of $0.1 million in 2021. The aggregate director fees paid by the Company for the years ended December 31, 2021, 2020 and 2019 totalled $0.4 million, $0.3 million and $0.3 million, respectively.
 
On January 12, 2011 our board of directors adopted the Seanergy Maritime Holdings Corp. 2011 Equity Incentive Plan, or the Plan. On January 18, 2021, the Plan, as previously amended, was further amended and restated to increase the aggregate number of shares of the common stock reserved for issuance under the Plan to 4,000,000 shares. On August 2, 2021, the Plan was further amended and restated to increase the aggregate number of shares of the common stock reserved for issuance under the Plan to 3,500,000 shares. On January 12, 2022, the Plan was further amended and restated to increase the aggregate number of shares of the common stock reserved for issuance under the Plan to 5,500,000 shares. The Plan is administered by the Compensation Committee of our board of directors.  Under the Plan, our officers, key employees, directors, consultants and service providers may be granted incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, unrestricted stock, restricted stock units, and unrestricted stock at the discretion of our Compensation Committee. Any awards granted under the Plan that are subject to vesting are conditioned upon the recipient's continued service as an employee or a director of the Company, through the applicable vesting date.
 
On January 18, 2021, the Compensation Committee granted an aggregate of 3,600,000 restricted shares of common stock pursuant to the Plan. Of the total 3,600,000 shares issued, 1,400,000 shares were granted to the non-executive members of the board of directors, 950,000 were granted to the executive officers, 1,100,000 shares were granted to certain of the Company’s non-executive employees and 150,000 shares were granted to the sole director of the Company’s commercial manager, a non-employee. The fair value of each share on the grant date was $0.81. 1,200,030 shares vested on the grant date, 1,199,985 shares vested on October 1, 2021 and 1,199,985 shares will vest on October 1, 2022.
 
On August 2, 2021, the Compensation Committee granted an aggregate of 3,100,000 restricted shares of common stock pursuant to the Plan. Of the total 3,100,000 shares issued, 1,300,000 shares were granted to the non-executive members of the board of directors, 885,000 were granted to the executive officers, 790,000 shares were granted to certain of the Company’s non-executive employees and 125,000 shares were granted to the sole director of the Company’s commercial manager, a non-employee and another non-employee. The fair value of each share on the grant date was $1.02. 1,033,352 shares vested on the grant date, 1,033,324 shares vested on October 1, 2021 and 1,033,324 shares will vest on October 1, 2022.
 
On January 12, 2022, the Compensation Committee granted an aggregate of 5,337,000 restricted shares of common stock pursuant to the Plan. Of the total 5,337,000 shares issued, 1,600,000 shares were granted to the non-executive members of the board of directors, 1,700,000 were granted to the executive officers, 1,887,000 shares were granted to certain of the Company’s non-executive employees and 150,000 shares were granted to the sole director of the Company’s commercial manager, a non-employee. The fair value of each share on the grant date was $0.91. 1,779,028 shares vested on the grant date, 1,778,986 shares will vest on October 1, 2022 and 1,778,986 shares will vest on October 1, 2023.
 
C.
Board Practices

Our directors do not have service contracts and do not receive any benefits upon termination of their directorships.  Our board of directors has an audit committee, a compensation committee and a nominating committee.  Our board of directors has adopted a charter for each of these committees.
 
Audit Committee
 
Our audit committee consists of Messrs. Dimitrios Anagnostopoulos and Elias Culucundis.  Our board of directors has determined that the members of the audit committee meet the applicable independence requirements of the Commission and the Nasdaq Stock Market Rules. Our board of directors has determined that Mr. Dimitrios Anagnostopoulos is an “Audit Committee Financial Expert” under the Commission's rules and the corporate governance rules of the Nasdaq Stock Market.
 
The audit committee has powers and performs the functions customarily performed by such a committee (including those required of such a committee by Nasdaq and the Commission).  The audit committee is responsible for selecting and meeting with our independent registered public accounting firm regarding, among other matters, audits and the adequacy of our accounting and control systems.
 
Compensation Committee
 
Our compensation committee consists of Messrs. Dimitrios Anagnostopoulos and Elias Culucundis, each of whom is an independent director.  The compensation committee reviews and approves the compensation of our executive officers.
 
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Nominating Committee
 
Our nominating committee consists of Messrs. Elias Culucundis and Dimitrios Anagnostopoulos, each of whom is an independent director.  The nominating committee is responsible for overseeing the selection of persons to be nominated to serve on our board of directors.
 
D.
Employees

As of December 31, 2021, 2020 and 2019, we had two executive officers, Mr. Stamatios Tsantanis and Mr. Stavros Gyftakis, and we employed Ms. Theodora Mitropetrou, our general counsel.  In addition, as of December 31, 2021, 2020 and 2019, we employed a support staff consisting of 46, 35 and 35 employees, respectively.
 
E.
Share Ownership

The common shares beneficially owned by our directors and executive officers are disclosed below in “Item 7. Major Shareholders and Related Party Transactions.”
 
ITEM 7.
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.
Major Shareholders

The following table sets out information as of the date of this annual report regarding the beneficial ownership of our common shares by (i) the owners of five percent or more of our outstanding common shares and (ii) our directors and executive officers.  The beneficial ownership information set forth in the table below is based on beneficial ownership reports furnished to the Commission or information regarding the beneficial ownership of our common shares delivered to us.  To the best of our knowledge, except as disclosed in the table below or with respect to our directors and executive officers, we are not controlled, directly or indirectly, by another corporation, by any foreign government or by any other natural or legal persons.  All of our shareholders, including the shareholders listed in this table, are entitled to one vote for each common share held.
 
Identity of Person or Group
  
Number
of Shares
Owned
    
Percent
of Class
  
Stamatios Tsantanis(1)(2)
    
3,650,000
      
2.0
%
Stavros Gyftakis(1)
    
—
      
*
  
Christina Anagnostara(1)
    
—
      
*
  
Elias Culucundis(1)
    
—
      
*
  
Dimitrios Anagnostopoulos(1)
    
—
      
*
  
Ioannis Kartsonas(1)
    
—
      
*
  
Directors and executive officers as a group (6 individuals)(1)
    
8,465,748
      
4.7
%

* Less than one percent.

(1)
Calculation of percent of class beneficially owned by each such person is based on 178,316,471 common shares outstanding as of March 29, 2022 and any additional shares that such person may be deemed to beneficially own in accordance with Rule 13d-3 under the Exchange Act.

(2)
Stamatios Tsantanis also beneficially owns 20,000 Series B Preferred Shares, constituting 100% of our issued and outstanding Series B Preferred Shares, which were issued on December 10, 2021 pursuant to a stock purchase agreement between us and Stamatios Tsantanis.  Through his ownership of common shares and Series B Preferred Shares, Stamatios Tsantanis controls 49.99% of the voting power of our outstanding capital stock.  For a description of the Series B Preferred Shares, see “Description of Securities” filed as Exhibit 2.9 hereto.

B.
Related Party Transactions

 On December 10, 2021, we entered into a stock purchase agreement and issued 20,000 of our newly-designated Series B Preferred Shares, par value $0.0001 per share, to our Chairman and Chief Executive Officer, Stamatios Tsantanis, in return for cash consideration of $250,000. The issuance of the Series B preferred shares was approved by a special independent committee of the Board, which received a fairness opinion from an independent financial advisor. For a description of the Series B Preferred Shares, see “Description of Securities” filed as Exhibit 2.9 hereto.
 
C.
Interests of Experts and Counsel

Not applicable.
 
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ITEM 8.
FINANCIAL INFORMATION

A.
Consolidated Statements and Other Financial Information

See Item 18.
 
Legal Proceedings
 
We have previously reported that between 2010 and 2017 certain of our then shareholders, including our former Chairman that served between 2008 to 2010, had brought suits in Greece against certain other shareholders of the Company, our former Chief Financial Officer, and such Chairman's immediate successor that served between 2008 to 2013. The plaintiffs withdrew their suits filed in 2010 and 2014 and therefore these are now closed.
 
The hearing of the only two remaining suits that were filed in 2017 against, amongst other, the former Chairman's immediate successor, took place on November 15, 2018 and the court's final decision is expected to be issued. These suits seek damages from the defendants (including our former Chairman’s immediate successor that served between 2008 to 2013) for alleged wilful misconduct that purportedly caused the plaintiffs damage both by way of diminution of the value of their shares in the Company and harm to their reputations. Our former Chairman’s immediate successor that served between 2008 to 2013 has advised us that he does not believe the action has any merit.
 
Neither we nor our directors nor our current executive officers are named in any of these 2017 actions. We have also notified our insurance underwriters of these actions, and our underwriters are advancing a portion of the defendants' legal expenses.
 
Various claims, suits, and complaints, including those involving government regulations and product liability, arise in the ordinary course of the shipping business.  Other than the proceedings mentioned above, 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.
 
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. We have initiated the payment of quarterly cash dividends commencing with a quarterly dividend of $0.025 per share and a special dividend of $0.025 per share with respect to the fourth quarter of 2021. Our board of directors may review and amend our dividend policy from time to time in light of our plans for future growth and other factors. In addition, since we are a holding company with no material assets other than the shares of our subsidiaries and affiliates through which we conduct our operations, our ability to pay dividends will depend on our subsidiaries and affiliates distributing to us their earnings and cash flow. Some of our loan agreements limit our ability to pay dividends and our subsidiaries' ability to make distributions to us.
 
B.
Significant Changes

There have been no significant changes since the date of the consolidated financial statements included in this annual report.
 
ITEM 9.
THE OFFER AND LISTING

A.
Offer and Listing Details

Our common shares and Class B warrants trade on the Nasdaq Capital Market under the symbol “SHIP” and “SHIPZ”, respectively.
 
B.
Plan of Distribution

Not applicable.
 
C.
Markets

Our common shares and Class B warrants trade on the Nasdaq Capital Market under the symbol “SHIP” and “SHIPZ”, respectively.
 
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D.
Selling Shareholders

Not applicable.
 
E.
Dilution

Not applicable.
 
F.
Expenses of the Issue

Not applicable.
 
ITEM 10.
ADDITIONAL INFORMATION

A.
Share Capital

Not applicable.
 
B.
Memorandum and Articles of Incorporation

Our restated articles of incorporation have been filed as an exhibit to our report filed with the Commission on Form 6-K on August 30, 2019.  An amendment to our restated articles of incorporation was filed as an exhibit to our registration statement on Form F-1 filed on February 19, 2021. Our restated articles of incorporation, as amended, contained in such exhibits are incorporated by reference.  Our third amended and restated bylaws have been filed with the Commission on Form 6-K on September 25, 2020, which we incorporate by reference.  A description of the material terms of our restated articles of incorporation, as amended, and bylaws and of our capital stock is included in "Description of Securities" attached hereto as Exhibit 2.9 and 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. Information on the Company – A. History and Development of the Company,” “Item 4. Information on the Company – B. Business Overview,” “Item 5. Operating and Financial Review and Prospects – B. Liquidity and Capital Resources – Loan Arrangements” and “Item 7. Major Shareholders and Related Party Transactions–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 non-resident holders of our common shares.
 
E.
Taxation

The following is a summary of the material U.S. federal income tax and Marshall Islands tax consequences of the ownership and disposition of our common stock or warrants as well as the material U.S. federal and Marshall Islands income tax consequences applicable to us and our operations. The discussion below of the U.S. federal income tax consequences to “U.S. Holders” will apply to a beneficial owner of our common stock and/or warrants that is treated for U.S. federal income tax purposes as:
 
 
•
an individual citizen or resident of the United States;

 
•
a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) that is created or organized (or treated as created or organized) in or under the laws of the United States, any state thereof or the District of Columbia;

 
•
an estate whose income is includible in gross income for U.S. federal income tax purposes regardless of its source; or

 
•
a trust if (i) a U.S. court can exercise primary supervision over the trust's administration and one or more U.S. persons are authorized to control all substantial decisions of the trust, or (ii) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

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If you are not described as a U.S. Holder and are not an entity treated as a partnership or other pass-through entity for U.S. federal income tax purposes, you will be considered a “Non-U.S. Holder.” The U.S. federal income tax consequences applicable to Non-U.S. Holders is described below under the heading “United States Federal Income Taxation of Non-U.S. Holders.”
 
This discussion does not consider the tax treatment of partnerships or other pass-through entities or persons who hold our common stock or warrants through such entities. If a partnership (or other entity classified as a partnership for U.S. federal income tax purposes) is the beneficial owner of our common stock or warrants, the U.S. federal income tax treatment of a partner in the partnership generally will depend on the status of the partner and the activities of the partnership.
 
This summary is based on the U.S. Internal Revenue Code of 1986, as amended, or the Code, its legislative history, Treasury Regulations promulgated thereunder, published rulings and court decisions, all as currently in effect. These authorities are subject to change, possibly on a retroactive basis.
 
This summary does not address all aspects of U.S. federal income taxation that may be relevant to any particular holder based on such holder's individual circumstances. In particular, this discussion considers only holders that will own and hold our common stock and warrants as capital assets within the meaning of Section 1221 of the Code and does not address the potential application of the alternative minimum tax or the U.S. federal income tax consequences to holders that are subject to special rules, including:
 
 
•
financial institutions or “financial services entities”;

 
•
broker-dealers;

 
•
taxpayers who have elected mark-to-market accounting for U.S. federal income tax purposes;

 
•
tax-exempt entities;

 
•
governments or agencies or instrumentalities thereof;

 
•
insurance companies;

 
•
regulated investment companies;

 
•
real estate investment trusts;

 
•
certain expatriates or former long-term residents of the United States;

 
•
persons that actually or constructively own 10% or more (by vote or value) of our shares;

 
•
persons that own shares through an “applicable partnership interest”;

 
•
persons required to recognize income for U.S. federal income tax purposes no later than when such income is reported on an “applicable financial statement”;

 
•
persons that hold our common stock or warrants as part of a straddle, constructive sale, hedging, conversion or other integrated transaction; or

 
•
persons whose functional currency is not the U.S. dollar.

This summary does not address any aspect of U.S. federal non-income tax laws, such as gift or estate tax laws, or state, local or non-U.S. tax laws.
 
We have not sought, nor do we intend to seek, a ruling from the Internal Revenue Service, or the IRS, as to any U.S. federal income tax consequence described herein. The IRS may disagree with the description herein, and its determination may be upheld by a court.
 
Because of the complexity of the tax laws and because the tax consequences to any particular holder of our common stock and warrants may be affected by matters not discussed herein, each such holder is urged to consult with its tax advisor with respect to the specific tax consequences of the ownership and disposition of our common stock and warrants, including the applicability and effect of state, local and non-U.S. tax laws, as well as U.S. federal tax laws.
 
64
United States Federal Income Tax Consequences
 
Taxation of Operating Income in General
 
Unless exempt from United States federal income taxation under the rules discussed below, a foreign corporation is subject to United States 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 shipping pool, partnership, strategic alliance, joint operating agreement, code sharing arrangements 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 the gross shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States, exclusive of certain U.S. territories and possessions, constitutes income from sources within the United States, which we refer to as “U.S. source gross 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 prohibited by law from engaging in transportation that produces income 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 earned by us that is derived from sources outside the United States will not be subject to any United States federal income tax.
 
For our 2021 taxable year, we had U.S. source gross shipping income of approximately $3,741,888.
 
We are subject to a 4% tax imposed without allowance for deductions for such taxable year, as described in “ – Taxation in Absence of Exemption,” unless we qualify for exemption from tax under Section 883 of the Code, the requirements of which are described in detail below.  For our 2021 taxable year, we believe that we qualified for the exemption from tax under Section 883 of the Code.
 
Exemption of Operating Income from United States Federal Income Taxation
 
Under Section 883 of the Code and the regulations thereunder, we will be exempt from United States federal income taxation on our U.S.-source shipping income if (i) we are organized in a foreign country (our “country of organization”) that grants an “equivalent exemption” to corporations organized in the United States and (ii) one of the following statements is true:
 
 
•
more than 50% of the value of our stock is owned, directly or indirectly, by “qualified shareholders,” that are persons (i) who are “residents” of our country of organization or of another foreign country that grants an “equivalent exemption” to corporations organized in the United States, and (ii) we satisfy certain substantiation requirements, which we refer to as the “50% Ownership Test”; or

 
•
our stock is “primarily” and “regularly” traded on one or more established securities markets in our country of organization, in another country that grants an “equivalent exemption” to United States corporations, or in the United States, which we refer to as the “Publicly-Traded Test.”

The jurisdictions where we and our shipowning subsidiaries are incorporated grant “equivalent exemptions” to United States corporations. Therefore, we will be exempt from United States federal income taxation with respect to our U.S. source shipping income if we satisfy either the 50% Ownership Test or the Publicly-Traded Test.
 
50% Ownership Test
 
Under the regulations, a foreign corporation will satisfy the 50% Ownership Test for a taxable year if (i) for at least half of the number of days in the taxable year, more than 50% of the value of its stock is owned, directly or constructively through the application of certain attribution rules prescribed by the regulations, by one or more shareholders who are residents of foreign countries that grant “equivalent exemption” to corporations organized in the United States and (ii) the foreign corporation satisfies certain substantiation and reporting requirements with respect to such shareholders. Holders of warrants will not be treated as constructive owners of shares for purposes of the 50% Ownership Test.
 
We did not satisfy the 50% Ownership Test for our 2021 taxable year. Furthermore, these substantiation requirements are onerous and therefore there can be no assurance that we would be able to satisfy them, even if our share ownership would otherwise satisfy the requirements of the 50% Ownership Test.
 
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Publicly-Traded Test
 
The regulations provide that the stock of a foreign corporation will be considered to be “primarily traded” on an established securities market in a country if the number of shares of each class of stock used to satisfy the Publicly Traded Test that is traded during the taxable year on all established securities markets in that country exceeds the number of shares in each such class that is traded during that year on established securities markets in any other single country.
 
Under the regulations, the stock of a foreign corporation will be considered “regularly traded” if one or more classes of its stock representing 50% or more of its 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 (such as the Nasdaq Capital Market), which we refer to as the “listing threshold.”
 
The regulations further require that with respect to each class of stock relied upon to meet the listing requirement: (i) such class of the stock is traded on the market, other than in minimal quantities, on at least sixty (60) days during the taxable year or one-sixth (1/6) of the days in a short taxable year; and (ii) the aggregate number of shares of such class of stock traded on such market is at least 10% of the average number of shares of such class of stock outstanding during such year or as appropriately adjusted in the case of a short taxable year. Even if a foreign corporation does not satisfy both tests, the regulations provide that the trading frequency and trading volume tests will be deemed satisfied by a class of stock if such class of stock is traded on an established market in the United States and such class of stock is regularly quoted by dealers making a market in such stock.
 
Notwithstanding the foregoing, the regulations provide, in pertinent part, that a class of stock will not be considered to be “regularly traded” on an established securities market for any taxable year in which 50% or more of the vote and value of the outstanding shares of such class of stock are owned, actually or constructively under specified attribution rules, on more than half the days during the taxable year by persons who each own directly or indirectly 5% or more of the vote and value of such class of stock, whom we refer to as “5% Shareholders.” We refer to this restriction in the regulations as the “Closely-Held Rule.”
 
For purposes of being able to determine our 5% Shareholders, the regulations permit a foreign corporation to rely on Schedule 13G and Schedule 13D filings with the Commission. The regulations further provide that an investment company that is registered under the Investment Company Act of 1940, as amended, will not be treated as a 5% Shareholder for such purposes.
 
Additionally, holders of warrants will not be treated as constructive owners of shares for purposes of the Closely-Held Rule.
 
Based on our analysis of our shareholdings during 2021, we believe we satisfy the Publicly-Traded Test for the entire 2021 year in that less than 50% of our issued and outstanding shares were held by 5% Shareholders for more than half the days during the 2021 taxable year.
 
Due to the factual nature of the issues involved, there can be no assurance that we or any of our subsidiaries will qualify for the benefits of Section 883 of the Code for our subsequent taxable years.
 
Taxation in Absence of Exemption
 
To the extent the benefits of Section 883 are unavailable, our U.S. source gross 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, otherwise referred to as the “4% Tax.” 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% Tax.
 
To the extent the benefits of the Section 883 exemption are unavailable and our U.S. source gross 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 gross shipping income, net of applicable deductions, would be subject to the U.S. federal corporate income tax currently imposed at a rate of 21%. In addition, we may be subject to the 30% “branch profits” tax on earnings effectively connected with the conduct of such trade or business, as determined after allowance for certain adjustments, and for certain interest paid or deemed paid attributable to the conduct of our U.S. trade or business.
 
Our U.S. source gross 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 gross 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, in the case of income from the leasing of a vessel, is attributable to a fixed place of business in the United States.

66
We do not intend to have, or permit circumstances that would result in having, any vessel operating to the United States on a regularly scheduled basis, or earning income from the leasing of a vessel attributable to a fixed place of business in the United States. 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 gross shipping income will be “effectively connected” with the conduct of a U.S. trade or business.
 
United States Taxation of Gain on Sale of Vessels
 
Regardless of whether we qualify for exemption under Section 883, we will not be subject to United States 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 United States 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.
 
United States Federal Income Taxation of U.S. Holders
 
Taxation of Distributions Paid on Common Stock
 
Subject to the passive foreign investment company, or PFIC, rules discussed below, any distributions made by us with respect to common shares to a U.S. Holder will generally constitute dividends, which may be taxable as ordinary income or “qualified dividend income” as described in more detail below, to the extent of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of our earnings and profits will be treated first as a non-taxable return of capital to the extent of the U.S. Holder's tax basis in his 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 generally not be entitled to claim a dividends-received deduction with respect to any distributions they receive from us.
 
Dividends paid on common shares to a U.S. Holder which 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 shareholders at preferential U.S. federal income tax rates provided that (1) the common shares are readily tradable on an established securities market in the United States (such as the Nasdaq Capital Market on which the common shares are currently listed); (2) we are not a passive foreign investment company, or PFIC, for the taxable year during which the dividend is paid or the immediately preceding taxable year (which we do not believe we are or have been, and do not expect to be); (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) certain other conditions are met.
 
Any dividends paid by us which are not eligible for these preferential rates will be taxed as ordinary income to a U.S. Holder.
 
Special rules may apply to any “extraordinary dividend”—generally, a dividend in an amount which is equal to or in excess of 10% of a shareholder's adjusted basis in a common share—paid by us. If we pay an “extraordinary dividend” on our common stock 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 stock will be treated as long-term capital loss to the extent of such dividend.
 
Sale, Exchange or other Disposition of Common Shares
 
Assuming we do not constitute a PFIC for any taxable year, 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 in the common shares is greater than one year at the time of the sale, exchange or other disposition. A U.S. Holder's ability to deduct capital losses is subject to certain limitations.
 
Exercise, Sale, Retirement or Other Taxable Disposition of Warrants
 
Neither we nor a U.S. Holder of a warrant will recognize gain or loss as a result of the U.S. Holder's receipt of our common stock upon exercise of a warrant. A U.S. Holder's adjusted tax basis in the common shares received will be an amount equal to the sum of (i) the U.S. Holder's adjusted tax basis in the warrant exercised plus (ii) the amount of the exercise price for the warrant. If the warrants lapse without exercise, the U.S. Holder will recognize capital loss in the amount equal to the U.S. Holder's adjusted tax basis in the warrants. A U.S. Holder's holding period for common shares received upon exercise of a warrant will commence on the date the warrant is exercised.
 
67
Upon the sale, retirement or other taxable disposition of a warrant, the U.S. Holder will recognize gain or loss to the extent of the difference between the sum of the cash and the fair market value of any property received in exchange therefor and the U.S. Holder's tax basis in the warrant. Any such gain or loss recognized by a holder upon the sale, retirement or other taxable disposition of a warrant will be capital gain or loss and will be long-term capital gain or loss if the warrant has been held for more than one year.
 
The exercise price of a warrant is subject to adjustment under certain circumstances. If an adjustment increases a proportionate interest of the holder of a warrant in the fully diluted common stock without proportionate adjustments to the holders of our common stock, a U.S. Holder of the warrants may be treated as having received a constructive distribution, which may be taxable to the U.S. Holder as a dividend.
 
Passive Foreign Investment Company Rules
 
Special U.S. federal income tax rules apply to a U.S. Holder that holds stock or warrants 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 or warrants, 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 us during such taxable year produce, or is 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 companies in which we own at least 25% of the value of the subsidiary's stock or other ownership interest. Income earned, or deemed earned, by us in connection with the performance of services should not constitute passive income. By contrast, rental income, which includes bareboat hire, would generally constitute “passive income” unless we are treated under specific rules as deriving rental income in the active conduct of a trade or business.
 
Based on our current operations and future projections, we do not believe that we are or have been a PFIC during our 2021 taxable year, nor do we expect to become, a PFIC with respect to our 2022 taxable year or any future taxable year. Although there is no legal authority directly on point, our belief is based principally on the position that, for purposes of determining whether we are a PFIC, 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, we believe that such income does 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, do not constitute passive assets for purposes of determining whether we are a PFIC. We believe there is substantial legal authority supporting our position consisting of case law and Internal Revenue Service pronouncements concerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes. However, there is also authority which characterizes time charter income as rental income rather than services income for other tax purposes. It should be noted that in the absence of any legal authority specifically relating to the statutory provisions governing PFICs, the Internal Revenue Service or a court could disagree with this position. In addition, although we intend to conduct our affairs in a manner so as to avoid being classified as a PFIC with respect to any taxable year, there can be no assurance that the nature of our operations will not change in the future.
 
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 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 an alternative to making a QEF election, a U.S. Holder should be able to make a “mark-to-market” election with respect to the common shares, as discussed below. In addition, if we were to be treated as a PFIC, a U.S. Holder would be required to file an IRS Form 8621 with respect to such holder's common stock.
 
Taxation of U.S. Holders Making a Timely QEF Election
 
If a U.S. Holder makes a timely QEF election, which U.S. Holder is referred to as an “Electing Holder,” the Electing Holder must report each year for U.S. federal income tax purposes its pro rata share of our ordinary earnings and its 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 received from us by 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 the common shares. A U.S. Holder would make a QEF election with respect to any year that we are a PFIC by filing IRS Form 8621 with his, her or its U.S. federal income tax return. After the end of each taxable year, we will determine whether we were a PFIC for such taxable year. If we determine or otherwise become aware that we are a PFIC for any taxable year, we will use commercially best efforts to provide each U.S. Holder with all necessary information, including a PFIC Annual Information Statement, in order to enable such holder to make a QEF election for such taxable year. A U.S. Holder may not make a QEF election with respect to its ownership of a warrant.
 
68
Taxation of U.S. Holders Making a “Mark-to-Market” Election
 
Alternatively, if we were to be treated as a PFIC for any taxable year and, as anticipated, our common stock is treated as “marketable stock,” a U.S. Holder would be allowed to make a “mark-to-market” election with respect to our common shares. If that 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 the common shares over its 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. A U.S. Holder's tax basis in his common shares would be adjusted to reflect any such income or loss amount. Gain realized on the sale, exchange or other disposition of the common shares would be treated as ordinary income, and any loss realized on the sale, exchange 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 by the U.S. Holder. The mark-to-market election is generally unavailable to U.S. Holders of warrants.
 
Taxation of U.S. Holders Not Making a Timely QEF or Mark-to-Market Election
 
Finally, if we were to be treated as a PFIC for any taxable year, a U.S. Holder who does not make either a QEF election or a “mark-to-market” election for that year, whom we refer to as a “Non-Electing Holder,” would be subject to special rules with respect to (1) any excess distribution (i.e., the portion of any distributions received by the Non-Electing Holder on our common stock or warrants in a taxable year in excess of 125 percent 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 stock or warrants), and (2) any gain realized on the sale, exchange or other disposition of our common stock or warrants. Under these special rules:
 
 
•
the excess distribution or gain would be allocated ratably over the Non-Electing Holders' aggregate holding period for the common stock or warrants;

 
•
the amount allocated to the current taxable year and any taxable year before we became a passive foreign investment company 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 deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year.

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 our common stock or warrants. If a Non-Electing Holder who is an individual dies while owning our common stock, such Non-Electing Holder's successor generally would not receive a step-up in tax basis with respect to such stock or warrants.
 
Net Investment Income Tax
 
A U.S. Holder that is an individual or estate, or a trust that does not fall into a special class of trusts that is exempt from such tax, is subject to a 3.8% tax on the lesser of (1) such U.S. Holder's “net investment income” (or undistributed “net investment income” in the case of estates and trusts) for the relevant taxable year and (2) the excess of such U.S. Holder's modified adjusted gross income for the taxable year over a certain threshold (which in the case of individuals will be between $125,000 and $250,000, depending on the individual's circumstances). A U.S. Holder's net investment income will generally include its gross dividend income and its net gains from the disposition of the common shares, unless such dividends or net gains are derived in the ordinary course of the conduct of a trade or business (other than a trade or business that consists of certain passive or trading activities). 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 “—Taxation of U.S. Holders Making a Timely 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 urged to consult your tax advisor regarding the applicability of the net investment income tax to your income and gains in respect of your investment in our common shares or warrants.
 
United States Federal Income Taxation of Non-U.S. Holders
 
Dividends paid to a Non-U.S. Holder with respect to our common stock generally should not be subject to U.S. federal income tax, unless the dividends are effectively connected with the Non-U.S. Holder's conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base that such holder maintains in the United States).
 
In addition, a Non-U.S. Holder generally should not be subject to U.S. federal income tax on any gain attributable to a sale or other disposition of our common stock or warrants unless such gain is effectively connected with its conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base that such holder maintains 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 in the taxable year of sale or other disposition and certain other conditions are met (in which case such gain from United States sources may be subject to tax at a 30% rate or a lower applicable tax treaty rate).
 
69
Dividends and gains that are effectively connected with the Non-U.S. Holder's conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base in the United States) generally should be subject to tax in the same manner as for a U.S. Holder and, if the Non-U.S. Holder is a corporation for U.S. federal income tax purposes, it also may be subject to an additional branch profits tax at a 30% rate or a lower applicable tax treaty rate.
 
A Non-U.S. Holder will not recognize any gain or loss on the exercise or lapse of the warrants.
 
Backup Withholding and Information Reporting
 
In general, information reporting for U.S. federal income tax purposes should apply to distributions made on our common stock within the United States to a non-corporate U.S. Holder and to the proceeds from sales and other dispositions of our common stock to or through a U.S. office of a broker by a non-corporate U.S. Holder. Payments made (and sales and other dispositions effected at an office) outside the United States will be subject to information reporting in limited circumstances.
 
In addition, backup withholding of U.S. federal income tax, currently at a rate of 24%, generally should apply to distributions paid on our common stock to a non-corporate U.S. Holder and the proceeds from sales and other dispositions of our common stock by a non-corporate U.S. Holder, who:
 
 
•
fails to provide an accurate taxpayer identification number;

 
•
is notified by the IRS that backup withholding is required; or

 
•
fails in certain circumstances to comply with applicable certification requirements.

A Non-U.S. Holder generally may eliminate the requirement for information reporting and backup withholding by providing certification of its foreign status, under penalties of perjury, on a duly executed applicable IRS Form W-8 or by otherwise establishing an exemption.
 
Backup withholding is not an additional tax. Rather, the amount of any backup withholding generally should be allowed as a credit against a U.S. Holder's or a Non-U.S. Holder's U.S. federal income tax liability and may entitle such holder to a refund, provided that certain required information is timely furnished to 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.
 
Marshall Islands Tax Consequences
 
We are incorporated in the Republic of the Marshall Islands.  Under current Marshall Islands law, we are not subject to tax on income or capital gains, no Marshall Islands withholding tax will be imposed upon payment of dividends by us to its shareholders, and holders of our common stock that are not residents of or domiciled or carrying on any commercial activity in the Republic of the Marshall Islands will not be subject to Marshall Islands tax on the sale or other disposition of our common stock.
 
F.
Dividends and paying agents

Not applicable.
 
G.
Statement by experts

Not applicable.
 
70
H.
Documents on display

We file annual reports and other information with the Commission.  You may inspect and copy any report or document we file, including this annual report and the accompanying exhibits, at the Commission's public reference facilities located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549.  You may obtain information on the operation of the public reference facilities by calling the Commission at 1-800-SEC-0330, and you may obtain copies at prescribed rates.  Our Commission filings are also available to the public at the website maintained by the Commission at http://www.sec.gov, as well as on our website at http://www.seanergymaritime.com.  Information on our website does not constitute a part of this annual report and is not incorporated by reference.
 
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 Investor Relations, Seanergy Maritime Holdings Corp., 154 Vouliagmenis Avenue, 166 74 Glyfada, Greece, telephone number +30 213 0181507 or facsimile number +30 210 9638404.
 
I.
Subsidiary information

Not applicable.
 
ITEM 11.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk
 
We are exposed to risks associated with changes in interest rates relating to our unhedged variable–rate borrowings, according to which we pay interest at LIBOR plus a margin; as such increases in interest rates could affect our results of operations and ability to service our debt.  As of December 31, 2021, we had aggregate variable-rate borrowings, of $172.6 million.  An increase of 1% in the interest rates of our variable-rate borrowings, as of December 31, 2021 would increase our interest payments $1.3 million per year.  We have not entered into any hedging contracts to protect against interest rate fluctuations.
 
Foreign Currency Exchange Rate Risk
 
We generate all of our revenue in U.S. dollars.  The minority of our operating expenses (approximately 4% in 2021) and less than half of our general and administration expenses (approximately 45% in 2021) are in currencies other than the U.S. dollar, primarily the Euro.  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.  We do not consider the risk from exchange rate fluctuations to be material for our results of operations, as during 2021, these non-US dollar expenses represented 6% of our revenues.  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 not hedged currency exchange risks associated with our expenses.
 
Inflation Risk
 
We do not consider inflation to be a significant risk to direct expenses in the current and foreseeable future.  However, in the event that inflation becomes a significant factor in the global economy, inflationary pressures would result in increased operating, voyage and financing costs.
 
ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.
 
71
PART II
 
ITEM 13.
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.
 
ITEM 14.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

On July 2, 2021, we adopted a shareholders rights agreement, pursuant to which each of our common shares includes one preferred stock purchase right that entitles the holder to purchase from us a unit consisting of one-thousandth of a share of our Series A Participating Preferred Shares if any third-party seeks to acquire control of a substantial block of our common shares without the approval of our board of directors. See “Description of Securities” attached to this annual report as Exhibit 2.9 for a description of our shareholders rights agreement.
 
ITEM 15.
CONTROLS AND PROCEDURES

 
(1)
Disclosure Controls and Procedures

Management (our Chief Executive Officer and our Chief Financial Officer) has evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, as of the end of the period covered by this annual report (as of December 31, 2021).  The term disclosure controls and procedures is defined under the Commission's rules as controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management (our Chief Executive Officer and our Chief Financial Officer, or persons performing similar functions) as appropriate to allow timely decisions regarding required disclosure.  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.
 
Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures are effective as of the evaluation date.
 
 
(2)
Management's Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is identified in Exchange Act Rule 13a-15(f).  Our internal control over financial reporting is a process designed under the supervision of our Chief Executive Officer and our Chief Financial Officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with U.S. GAAP.
 
Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures are being made only in accordance with the authorization of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the consolidated financial statements.
 
Management (our Chief Executive Officer and our Chief Financial Officer), has assessed the effectiveness of our internal control over financial reporting as of December 31, 2021, based on the framework established in Internal Control - Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission.  Based on this assessment, management has determined that the Company's internal control over financial reporting is effective as of December 31, 2021.
 
However, it should be noted that because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements with certainty even when determined to be effective and can only provide reasonable assurance with respect to financial statement preparation and presentation.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate / obsolete because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.
 
72
 
(3)
Attestation Report of the Registered Public Accounting Firm

The independent registered public accounting firm, Ernst & Young (Hellas) Certified Auditors Accountants S.A., that audited our consolidated financial statements as at and for the year ended December 31, 2021, included in this Annual Report, has issued an attestation report on our internal control over financial reporting which is provided on page F-2.
 
 
(4)
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

Our board of directors has determined that Mr. Dimitrios Anagnostopoulos, an independent director and a member of our audit committee, is an “Audit Committee Financial Expert” under Commission rules and the corporate governance rules of the Nasdaq Stock Market.
 
ITEM 16B.
CODE OF ETHICS

We have adopted a Code of Business Conduct and Ethics that applies to our employees, officers and directors.  Our Code of Business Conduct and Ethics is available on the Corporate Governance section of our website at www.seanergymaritime.com.  Information on our website does not constitute a part of this annual report and is not incorporated by reference.  We will also provide a hard copy of our Code of Business Conduct and Ethics free of charge upon written request.  We intend to disclose any waivers to or amendments of the Code of Business Conduct and Ethics for the benefit of any of our directors and executive officers within 5 business days of such waiver or amendment.  Shareholders may direct their requests to the attention of Investor Relations, Seanergy Maritime Holdings Corp., 154 Vouliagmenis Avenue, 16674 Glyfada.
 
ITEM 16C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES

Our principal accountants are Ernst & Young (Hellas) Certified Auditors Accountants S.A. Audit, audit-related and non-audit services billed and accrued from Ernst & Young (Hellas) Certified Auditors Accountants S.A. are as follows:
 
 
  
2021
    
2020
  
Audit fees
  
$
345,000
    
$
205,000
  
Audit related fees
    
144,000
      
234,000
  
Tax fees
    
-
      
-
  
All other fees
    
-
      
-
  
Total fees
  
$
489,000
    
$
439,000
  

Audit fees for 2021 related to professional services rendered for the audit of our financial statements and the audit of internal control over financial reporting for the year ended December 31, 2021. Audit fees for 2020 related to professional services rendered for the audit of our financial statements for the year ended December 31, 2020. Audit related fees for 2021 and 2020 related to services provided related to our equity offerings during 2021 and 2020, respectively.  As per the audit committee charter, our audit committee pre-approves all audit, audit-related and non-audit services not prohibited by law to be performed by our independent registered public accounting firm and associated fees prior to the engagement of the independent registered public accounting firm with respect to such services.
 
ITEM 16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.
 
ITEM 16E.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Month
  
Total
Number of
Shares(or
Units)
Purchased
    
Average
Price Paid
per Share (or
Units)
    
Total Number of Shares
(or Units) Purchased as
Part of Publicly Announced Plans or
Programs
    
Maximum Number (or
Approximate Dollar Value) of
Shares ( or Units) that May Yet
Be Purchased Under the Plans
or Programs
  
November 1 – 30, 2021
    
1,595,803
      
0.997
      
1,595,803
    
$
15,408,942
  
December 1 – 31, 2021
    
106,300
      
0.939
      
106,300
    
$
0
  

73
The Company announced on August 11, 2021 that its board of directors authorized a share repurchase plan of up to $17 million of its outstanding common shares, expiring December 31, 2022. On December 7, 2021, the Company announced that the share repurchase plan was completed and that, in addition to the common share repurchases in the table above, certain outstanding warrants and convertible notes of the Company had been repurchased pursuant to the plan. On December 7, 2021 the Company announced that its board of directors authorized an additional share repurchase plan of up to $10 million of its common shares, expiring December 31, 2022. The share repurchase plan was completed with the repurchases described above under “Item 5. Operating and Financial Review and Prospects – B. Liquidity and Capital Resources – Loan Arrangements – Convertible Notes – Second JDH Note.”
 
Additionally, the Company’s Chairman and Chief Executive Officer acquired during 2021 a total of 300,000 common shares in the open market.
 
ITEM 16F.
CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT

None.
 
ITEM 16G.
CORPORATE GOVERNANCE

As a foreign private issuer, as defined in Rule 3b-4 under the Exchange Act, the Company is permitted to follow certain corporate governance rules of its home country in lieu of Nasdaq's corporate governance rules.  The Company's corporate governance practices deviate from Nasdaq's corporate governance rules in the following ways:
 
 
•
In lieu of obtaining shareholder approval prior to the issuance of designated securities or the adoption of equity compensation plans or material amendments to such equity compensation plans, we will comply with provisions of the BCA, providing that the board of directors approve share issuances and adoptions of and material amendments to equity compensation plans. Likewise, in lieu of obtaining shareholder approval prior to the issuance of securities in certain circumstances, consistent with the BCA and our restated articles of incorporation and third amended and restated bylaws, the board of directors approves certain share issuances.

 
•
The Company's board of directors is not required to have an Audit Committee comprised of at least three members. Our Audit Committee is comprised of two members.

 
•
The Company's board of directors is not required to meet regularly in executive sessions without management present.

 
•
As a foreign private issuer, we are not required to solicit proxies or provide proxy statements to Nasdaq pursuant to Nasdaq corporate governance rules or Marshall Islands law. Consistent with Marshall Islands law and as provided in our third amended and restated bylaws, 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.

Other than as noted above, we are in full compliance with all other applicable Nasdaq corporate governance standards.
 
ITEM 16H.
MINE SAFETY DISCLOSURE

Not applicable.
 
ITEM 16I.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

Not applicable.

74
PART III
 
ITEM 17.
FINANCIAL STATEMENTS

See Item 18.
 
ITEM 18.
FINANCIAL STATEMENTS

The financial information required by this item, together with the report of Ernst & Young (Hellas) Certified Auditors Accountants S.A., is set forth on pages F-1 through F-47 and are filed as part of this annual report.
 
ITEM 19.
EXHIBITS

Exhibit Number
Description
   
1.1
   
1.2
   
1.3
   
2.1
   
2.2
   
2.3
   
2.4
   
2.5
   
2.6
   
Description of Securities*
   
4.1
 
 
4.2
 
 
4.3
 
 
4.4
 
 
Amended and Restated 2011 Equity Incentive Plan of the registrant adopted on January 12, 2022*

75
4.6
 
 
4.7
 
 
4.8
 
 
4.9
   
Form of Ship Technical Management Agreement with Seanergy Shipmanagement*
   
Form of Ship Technical Management Agreement with Seanergy Shipmanagement for the Goodship and Friendship*
 
 
4.12
   
4.13
 
 
4.14
 
 
4.15
 
 
4.16
   
Amendment No. 5 dated November 3, 2021 between Seanergy Management Corp. and Fidelity Marine Inc. with respect to the Commercial Management Agreement dated March 2, 2015*
 
 
4.18
 
 
4.19
 
 
4.20
 
 
4.21
 
 
4.22
 
 
4.23
 
 
4.24
 
 
4.25
 
 
4.26

76
4.27
 
 
4.28
 
 
4.29
 
 
4.30
 
 
4.31
 
 
4.32
   
4.33
 
  
4.34
 
 
4.35
   
4.36
   
Side Letter dated January 11, 2022 between Premier Marine Co., Fellow Shipping Co., the registrant and UniCredit Bank AG with respect to the Facility Agreement dated September 11, 2015*
   
4.38
 
 
4.39
 
  
4.40
 
 
4.41
   
On Demand Guarantee dated March 8, 2022 by the registrant in favor of Uniper Global Commodities SE in respect of the charterparty for the Partnership*
 
 
4.43
   
4.44
 
 
4.45
 
 
4.46

77
4.47
 
 
4.48

 
4.49
 
 
4.50
 
 
4.51
   
Facility Agreement dated April 22, 2021 between the registrant, Good Ocean Navigation Co., Traders Shipping Co., and Aegean Baltic Bank S.A.*
   
Bareboat Charter Agreement dated May 11, 2021 between with Cargill International SA and Flag Marine Co. for the Flagship*
   
Guarantee and Indemnity in respect of Flagship dated May 11, 2021 between the registrant and Cargill International SA*
   
Bareboat Charter dated June 22, 2021 between Sea 241 Leasing Co. Limited and Hellas Ocean Navigation Co. for the Hellasship*
   
Guarantee in respect of Hellaship dated June 22, 2021 between the registrant and Sea 241 Leasing Co. Limited*
   
Bareboat Charter dated June 22, 2021 between Sea 242 Leasing Co. Limited and Patriot Shipping Co. for the Patriotship*
   
Guarantee in respect of Patriotship dated June 22, 2021 between the registrant and Sea 242 Leasing Co. Limited*
   
Facility Agreement dated August 9, 2021 between Friend Ocean Navigation Co., Lord Ocean Navigation Co., Squire Ocean Navigation Co. and Alpha Bank S.A.*
   
First Supplemental Letter dated December 1, 2021 with respect to the Facility Agreement dated August 9, 2021*
   
Facility Agreement dated November 12, 2021 between the registrant, World Shipping Co., and Piraeus Bank S.A.*
   
Facility Agreement dated December 20, 2021 between the registrant, Sea Genius Shipping Co., and Sinopac Capital International (HK) Limited*
   
Bareboat Charter Agreement dated February 25, 2022 between Artemis Lease 01 Limited and Partner Marine Co. for the Partnership*
   
Performance Guarantee in respect of Partnership between the registrant and Artemis Lease 01 Limited*
   
4.65
   
4.66
   
4.67
   
4.68
   
4.69
   
4.70
   
4.71

78
4.72
   
List of Subsidiaries*
 
 
Certificate of Principal Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act*
 
 
Certificate of Principal Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act*
 
 
Certificate of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
 
 
Certificate of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
 
 
Consent of Ernst & Young (Hellas) Certified Auditors Accountants S.A.*
   
101
The following financial information from the registrant’s annual report on Form 20-F for the fiscal year ended December 31, 2021, formatted in Extensible Business Reporting Language (XBRL)*
(1) Consolidated Balance Sheets as of December 31, 2021 and 2020;
(2) Consolidated Statements of Income/(loss) for the years ended December 31, 2021, 2020 and 2019;
(3) Consolidated Statements of Shareholders’ (Deficit) / Equity for the years ended December 31, 2021, 2020 and 2019; and
(4) Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019.

*Filed herewith
 
(1)
Incorporated herein by reference to Exhibit 3.1 to the registrant's report on Form 6-k filed with the Commission on August 30, 2019.

(2)
Incorporated herein by reference to Exhibit 3.2 to the registrant’s registration statement on Form F-1 filed with the Commission on February 19, 2021.

(3)
Incorporated herein by reference to Exhibit 99.2 to the registrant’s report on Form 6-K furnished with the Commission on September 25, 2020.

(4)
Incorporated herein by reference to Exhibit 4.1 to the registrant's report on Form 6-K filed with the Commission on March 19, 2019.

(5)
Incorporated herein by reference to Exhibit 3.1 to the registrant's report on Form 6-K filed with the Commission on July 2, 2021.

(6)
Incorporated herein by reference to Exhibit 4.1 to the registrant's report on Form 6-K filed with the Commission on July 2, 2021.

(7)
Incorporated herein by reference to Exhibit 99.4 to the registrant's report on Form 6-K filed with the Commission on December 10, 2021.

(8)
Incorporated herein by reference to Exhibit 4.2 to the registrant's registration statement on Form F-1/A filed with the Commission on May 2, 2019.

(9)
Incorporated herein by reference to Exhibit 4.2 to the registrant's registration statement on Form F-1/A filed with the Commission on May 2, 2019.

(10)
Incorporated herein by reference to Exhibit 4.1 to the registrant's annual report on Form 20-F filed with the Commission on April 28, 2017.

(11)
Incorporated herein by reference to Exhibit 4.2 to the registrant's annual report on Form 20-F filed with the Commission on April 28, 2017.

79
(12)
Incorporated herein by reference to Exhibit C to the Schedule 13D/A related to the registrant filed by United Capital Investments Corp. with the Commission on September 12, 2014.

(13)
Incorporated herein by reference to Exhibit D to the Schedule 13D related to the registrant filed by Jelco Delta Holding Corp. with the Commission on March 12, 2015.

(14)
Incorporated herein by reference to Exhibit 4.10 to the registrant's annual report on Form 20-F filed with the Commission on March 25, 2019.

(15)
Incorporated herein by reference to Exhibit 4.11 to the registrant's annual report on Form 20-F filed with the Commission on March 25, 2019.

(16)
Incorporated herein by reference to Exhibit 10.10 to the registrant's registration statement on Form F-1 filed with the Commission on November 8, 2018.

(17)
Incorporated herein by reference to Exhibit 4.12 to the registrant's annual report on Form 20-F filed with the Commission on April 20, 2016.

(18)
Incorporated herein by reference to Exhibit 4.52 to the registrant's annual report on Form 20-F filed with the Commission on April 21, 2015.

(19)
Incorporated herein by reference to Exhibit 4.14 to the registrant's annual report on Form 20-F filed with the Commission on April 20, 2016.

(20)
Incorporated herein by reference to Exhibit 4.15 to the registrant's annual report on Form 20-F filed with the Commission on April 20, 2016.

(21)
Incorporated herein by reference to Exhibit 4.13 to the registrant's annual report on Form 20-F filed with the Commission on March 7, 2018.

(22)
Incorporated herein by reference to Exhibit 4.19 to the registrant's annual report on Form 20-F filed with the Commission on March 25, 2019.

(23)
Incorporated herein by reference to Exhibit 4.58 to the registrant's annual report on Form 20-F filed with the Commission on April 21, 2015.

(24)
Incorporated herein by reference to Exhibit B to the Schedule 13D/A related to the registrant filed by Jelco Delta Holding Corp. with the Commission on October 29, 2015.

(25)
Incorporated herein by reference to Exhibit C to the Schedule 13D/A related to the registrant filed by Jelco Delta Holding Corp. with the Commission on December 29, 2015.

(26)
Incorporated herein by reference to Exhibit D to the Schedule 13D/A related to the registrant filed by Jelco Delta Holding Corp. with the Commission on December 29, 2015.

(27)
Incorporated herein by reference to Exhibit A to the Schedule 13D/A related to the registrant filed by Jelco Delta Holding Corp. with the Commission on February 11, 2016.

(28)
Incorporated herein by reference to Exhibit A to the Schedule 13D/A related to the registrant filed by Jelco Delta Holding Corp. with the Commission on March 14, 2016.

(29)
Incorporated herein by reference to Exhibit 10.1 to the registrant's report on Form 6-K filed with the Commission on August 5, 2016.

(30)
Incorporated herein by reference to Exhibit 10.2 to the registrant's report on Form 6-K filed with the Commission on August 5, 2016.

(31)
Incorporated herein by reference to Exhibit 10.3 to the registrant's report on Form 6-K filed with the Commission on August 5, 2016.

(32)
Incorporated herein by reference to Exhibit A to the Schedule 13D/A related to the registrant filed by Jelco Delta Holding Corp. with the Commission on April 7, 2017.

80
(33)
Incorporated herein by reference to Exhibit 10.34 to the registrant's registration statement on Form F-1 filed with the Commission on October 20, 2017.

(34)
Incorporated herein by reference to Exhibit C to the Schedule 13D/A related to the registrant filed by Jelco Delta Holding Corp. with the Commission on October 20, 2017.

(35)
Incorporated herein by reference to Exhibit 10.41 to the registrant's registration statement on Form F-1 filed with the Commission on November 8, 2018.

(36)
Incorporated herein by reference to Exhibit 10.48 to the registrant's registration statement on Form F-1/A filed with the Commission on April 5, 2019.

(37)
Incorporated herein by reference to Exhibit 4.51 to the registrant’s annual report on Form 20-F filed with the Commission on March 5, 2020.

(38)
Incorporated herein by reference to Exhibit 99.7 to the registrant’s report on Form 6-K furnished with the Commission on January 15, 2021.

(39)
Incorporated herein by reference to Exhibit 4.53 to the registrant's annual report on Form 20-F filed with the Commission on March 25, 2019.

(40)
Incorporated herein by reference to Exhibit 4.53 to the registrant’s annual report on Form 20-F filed with the Commission on March 5, 2020.

(41)
Incorporated herein by reference to Exhibit 10.98 to the registrant’s registration statement on Form F-1 filed with the Commission on February 19, 2021.

(42)
Incorporated herein by reference to Exhibit 10.81 to the registrant’s registration statement on Form F-1 filed with the Commission on February 19, 2021.

(43)
Incorporated herein by reference to Exhibit 10.82 to the registrant's registration statement on Form F-1 filed with the Commission on November 8, 2018.

(44)
Incorporated herein by reference to Exhibit 4.77 to the registrant's annual report on Form 20-F filed with the Commission on March 25, 2019.

(45)
Incorporated herein by reference to Exhibit 10.87 to the registrant's registration statement on Form F-1 filed with the Commission on November 8, 2018.

(46)
Incorporated herein by reference to Exhibit 10.88 to the registrant's registration statement on Form F-1 filed with the Commission on November 8, 2018.

(47)
Incorporated herein by reference to Exhibit 10.89 to the registrant's registration statement on Form F-1 filed with the Commission on November 8, 2018.

(48)
Incorporated herein by reference to Exhibit 10.90 to the registrant's registration statement on Form F-1 filed with the Commission on November 8, 2018.

(49)
Incorporated herein by reference to Exhibit 4.92 to the registrant's annual report on Form 20-F filed with the Commission on March 25, 2019.

(50)
Incorporated herein by reference to Exhibit 10.96 to the registrant's registration statement on Form F-1 filed with the Commission on November 8, 2018.

(51)
Incorporated herein by reference to Exhibit 4.93 to the registrant's annual report on Form 20-F filed with the Commission on March 25, 2019.

(52)
Incorporated herein by reference to Exhibit 4.94 to the registrant's annual report on Form 20-F filed with the Commission on March 25, 2019.

(53)
Incorporated herein by reference to Exhibit 4.4 to the registrant's report on Form 6-K filed with the Commission on May 17, 2019.

81
(54)
Incorporated herein by reference to Exhibit 4.5 to the registrant's report on Form 6-K filed with the Commission on May 17, 2019.

(55)
Incorporated herein by reference to Exhibit 4.1 to the registrant’s report on Form 6-K furnished with the Commission on April 3, 2020.

(56)
Incorporated herein by reference to Exhibit 4.2 to the registrant’s report on Form 6-K furnished with the Commission on April 3, 2020.

(57)
Incorporated herein by reference to Exhibit 4.3 to the registrant’s report on Form 6-K furnished with the Commission on May 17, 2019.

(58)
Incorporated herein by reference to Exhibit 4.4 to the registrant’s report on Form 6-K furnished with the Commission on April 3, 2020.

(59)
Incorporated herein by reference to Exhibit 4.1 to the registrant’s report on Form 6-K furnished to the Commission on August 19, 2020.

(60)
Incorporated herein by reference to Exhibit 4.2 to the registrant’s report on Form 6-K furnished to the Commission on August 19, 2020.

(61)
Incorporated herein by reference to Exhibit 99.2 to the registrant’s report on Form 6-K furnished with the Commission on January 15, 2021.

(62)
Incorporated herein by reference to Exhibit 99.3 to the registrant’s report on Form 6-K furnished with the Commission on January 15, 2021.

82
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.
 
 
SEANERGY MARITIME HOLDINGS CORP.
   
 
By:
/s/ Stamatios Tsantanis
 
Name:
Stamatios Tsantanis
 
Title:
Chairman & Chief Executive Officer
     
Date: March 31, 2022
    
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
Page
   
F-2
   
F-5
   
F-6
   
F-7
   
F-8
   
F-9


F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Stockholders and the Board of Directors of Seanergy Maritime Holdings Corp.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Seanergy Maritime Holdings Corp. (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 31, 2022 expressed an unqualified opinion thereon.

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 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. 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.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

F-2

   
Recoverability assessment of vessels held and used
     
Description of the matter
  
At December 31, 2021, the carrying value of the Company’s vessels plus any unamortized dry-docking costs and cost of any equipment not yet installed was $434.7 million, while the carrying value of the Company’s vessels plus any unamortized dry-docking costs and cost of any equipment not yet installed for which impairment indicators existed as at December 31, 2021, was $72.3 million. As discussed in Note 2 to the consolidated financial statements, the Company evaluates its vessels for impairment whenever events or changes in circumstances indicate that the carrying value of a vessel plus any unamortized dry-docking costs and cost of any equipment not yet installed may not be recoverable in accordance with the guidance in ASC 360 – Property, Plant and Equipment (“ASC 360”). If indicators of impairment exist, management analyzes the future undiscounted net operating cash flows expected to be generated throughout the remaining useful life of each vessel and compares it to the carrying value of the vessel plus any unamortized dry-docking costs and cost of any equipment not yet installed. Where the vessel’s carrying value plus any unamortized dry-docking costs and cost of any equipment not yet installed, exceeds the undiscounted net operating cash flows, management will recognize an impairment loss equal to the excess of the carrying value of the vessels plus any unamortized dry-docking costs and cost of any equipment not yet installed over its fair value.
 
Auditing management’s recoverability assessment was complex given the judgement and estimation uncertainty involved in determining certain assumptions in forecasting undiscounted net operating cash flows, specifically the future charter rates for non-contracted revenue days. These future charter rates are subjective as they involve the development and use of assumptions about the dry bulk shipping market through the end of the useful lives of the vessels. These assumptions are forward looking and subject to the inherent unpredictability of future global economic and market conditions.
     
How we addressed the matter in our audit
  
We obtained an understanding of the Company’s impairment process, evaluated the design, and tested the operating effectiveness of the controls over the Company’s determination of future charter rates for non-contracted revenue days.
 
We analyzed management’s recoverability assessment by comparing the methodology used to evaluate impairment of each vessel against the accounting guidance in ASC 360. To test management’s undiscounted net operating cash flow forecasts, our procedures included, among others, comparing the future vessel charter rates for non-contracted revenue days against internal and external data sources, such as available market data from various analysts, historical data for the vessels, and recent economic and industry changes. In addition, we performed sensitivity analyses to assess the impact of changes to future charter rates for non-contracted revenue days in the determination of the net operating cash flows. Our procedures also included testing the completeness and accuracy of the future charter rate data used within the forecasts.


/s/ Ernst & Young (Hellas) Certified Auditors Accountants S.A.

We have served as the Company’s auditor since 2012.

Athens, Greece
March 31, 2022
 
F-3
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Stockholders and the Board of Directors of Seanergy Maritime Holdings Corp.

Opinion on Internal Control over Financial Reporting

We have audited Seanergy Maritime Holdings Corp.’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Seanergy Maritime Holdings Corp. (the “Company”) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021 based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of operations, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and our report dated March 31, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


/s/ Ernst & Young (Hellas) Certified Auditors Accountants S.A.

Athens, Greece
March 31, 2022

F-4
Seanergy Maritime Holdings Corp.
Consolidated Balance Sheets
December 31, 2021 and 2020
(In thousands of US Dollars, except for share and per share data)

         
2021
    
2020
  
ASSETS
                  
Current assets:
                  
Cash and cash equivalents
    
3
      
41,496
      
21,011
  
Term deposits
    

     
1,500
      
1,600
  
Restricted cash
    
3
      
1,180
      
50
  
Accounts receivable trade, net
    
2
      
-
      
801
  
Inventories
    
4
      
1,448
      
4,650
  
Prepaid expenses
            
1,118
      
1,140
  
Other current assets
            
434
      
674
  
Deferred voyage expenses
    
2
      
-
      
621
  
Total current assets
            
47,176
      
30,547
  
                         
Fixed assets:
                        
Vessels, net
    
5
      
426,062
      
256,737
  
Other fixed assets, net
            
405
      
373
  
Total fixed assets
            
426,467
      
257,110
  
                         
Other non-current assets:
                        
Deposits assets, non-current
    
6
      
1,325
      
1,325
  
Deferred charges and other long-term investments, non-current
    
2
      
8,613
      
4,396
  
Restricted cash, non-current
    
3, 6
      
2,950
      
990
  
Right of use asset – leases
    
9
      
650
      
845
  
Other non-current assets
            
30
      
32
  
TOTAL ASSETS
            
487,211
      
295,245
  
                         
LIABILITIES AND STOCKHOLDERS EQUITY
                        
Current liabilities:
                        
Current portion of long-term debt and other financial liabilities, net of deferred finance costs and debt discounts of $1,347 and $995, respectively
    
6
      
68,473
      
19,417
  
Trade accounts and other payables
            
5,762
      
3,707
  
Convertible notes, net of deferred finance costs and debt discounts of $1,046 and $NIL, respectively
    
7
      
769
      
-
  
Accrued liabilities
            
5,173
      
2,988
  
Lease liability
    
9
      
121
      
140
  
Deferred revenue
    
2
      
7,735
      
4,510
  
Total current liabilities
            
88,033
      
30,762
  
                         
Non-current liabilities:
                        
Long-term debt and other financial liabilities, net of current portion and deferred finance costs and debt discounts of $2,030 and $2,532, respectively
    
6
      
146,701
      
150,345
  
Convertible notes, non-current, net of deferred finance costs and debt discounts of $1,597 and $5,839, respectively
    
7
      
6,804
      
14,516
  
Lease liability, non-current
    
9
      
529
      
705
  
Deferred revenue, non-current
    
2
      
538
      
2,773
  
Other liabilities, non-current
            
130
      
450
  
Total liabilities
            
242,735
      
199,551
  
                         
Commitments and contingencies
    
9
      
     
 
                         
STOCKHOLDERS EQUITY
                        
Preferred stock, $0.0001 par value; 25,000,000 shares authorized; 20,000 and NIL shares issued and outstanding as at December 31, 2021 and 2020, respectively
     10
     
-
      
-
  
Common stock, $0.0001 par value; 500,000,000 authorized shares as at December 31, 2021 and 2020; 172,986,137 and 68,314,985 shares issued and outstanding as at December 31, 2021 and 2020, respectively
    
10
      
17
      
7
  
Additional paid-in capital
    
10
      
597,708
      
490,284
  
Accumulated deficit
            
(353,249
)
    
(394,597
)
Total Stockholders’ equity
            
244,476
      
95,694
  
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
            
487,211
      
295,245
  
The accompanying notes are an integral part of these consolidated financial statements.

F-5
Seanergy Maritime Holdings Corp.
Consolidated Statements of Operations
For the years ended December 31, 2021, 2020 and 2019
(In thousands of US Dollars, except for share and per share data)

 
  
Notes
    
2021
    
2020
    
2019
  

                       
Vessel revenue, net
     2
      
153,108
      
63,345
      
86,499
  
Expenses:
                                
Voyage expenses
    
2
      
(16,469
)
    
(18,567
)
    
(36,641
)
Vessel operating expenses
            
(36,332
)
    
(22,347
)
    
(18,980
)
Management fees
            
(1,435
)
    
(1,052
)
    
(989
)
General and administration expenses
            
(13,739
)
    
(6,607
)
    
(5,989
)
Amortization of deferred dry-docking costs
            
(2,793
)
    
(2,319
)
    
(844
)
Depreciation
            
(17,151
)
    
(12,721
)
    
(11,016
)
Gain on sale of vessel, net
     5
     
697
       -
      
-
  
Gain on forward freight agreements, net
            24
       -
       -
  
Operating income / (loss)
            
65,910
      
(268
)
    
12,040
  
Other income / (expenses), net:
                                
Interest and finance costs
    
11
      
(17,779
)
    
(12,342
)
    
(15,216
)
Interest and finance costs – related party
    
1, 11
      
-
      
(11,083
)
    
(8,629
)
Loss on extinguishment of debt
     6, 7
       (6,863 )     -
       -
  
Gain on debt refinancing
    
6
      
-
      
5,144
      
-
  
Interest and other income
            
161
      
208
      
213
  
Foreign currency exchange losses, net
            
(81
)
    
(15
)
    
(52
)
Total other expenses, net
            
(24,562
)
    
(18,088
)
    
(23,684
)
Net income / (loss) before income taxes
            
41,348
      
(18,356
)
    
(11,644
)
Income taxes
            
-
      
-
      
(54
)
Net income/ (loss)
            
41,348
      
(18,356
)
    
(11,698
)
 
                                
Net income/(loss) per common share
                                
Basic
   
12
      
0.27
      
(0.55
)
    
(12.21
)
Diluted
    12
       0.25
       (0.55 )     (12.21 )
Weighted average number of common shares outstanding
                                
Basic
   
12
      
153,321,907
      
33,436,278
      
958,297
  
Diluted
     12
       191,337,521
       33,436,278
       958,297
  

The accompanying notes are an integral part of these consolidated financial statements.

F-6
Seanergy Maritime Holdings Corp.
Consolidated Statements of Stockholders’ Equity
For the years ended December 31, 2021, 2020 and 2019
 (In thousands of US Dollars, except for share data)

 
  
Preferred Stock Series B
    
Common stock
     Additional           Total  
 
   # of Shares    
Par
Value
    
# of Shares
    
Par
Value
    
paid-in
capital
    
Accumulated
deficit
    
stockholders’
equity
  
 
                                          
Balance, January 1, 2019
     -       -      
166,636
      
-
      
385,846
      
(364,543
)
    
21,303
  
Issuance of common stock and warrants (Notes 6, 7, & 10)
     -       -      
1,505,638
      
-
      
18,847
      
-
      
18,847
  
Related parties liabilities released (Notes 6 & 7)
     -
       -      
-
      
-
      
96
      
-
      
96
  
Stock based compensation (Note 13)
     -       -      
8,979
      
-
      
1,310
      
-
      
1,310
  
Net loss
             -      
-
      
-
      
-
      
(11,698
)
    
(11,698
)
Balance, December 31, 2019
     -       -      
1,681,253
      
-
      
406,099
      
(376,241
)
    
29,858
  
Issuance of common stock (including the exercise of warrants) (Note 10)
     -       -      
66,477,489
      
7
      
71,828
      
-
      
71,835
  
Stock based compensation (Note 13)
     -       -      
156,243
      
-
      
869
      
-
      
869
  
Issuable units (Notes 6, 7 & 8)
     -
       -      
-
      
-
      
6,021
      
-
      
6,021
  
Change in fair value of conversion option (Note 8)
     -
       -              
-
      
4,924
       -      
4,924
  
Issuance of option for units (Note 8)
     -
       -      
-
      
-
      
543
      
-
      
543
  
Net loss
     -
       -      
-
      
-
      
-
      
(18,356
)
    
(18,356
)
Balance, December 31, 2020
     -
       -      
68,314,985
      
7
      
490,284
      
(394,597
)
    
95,694
  
Issuance of common stock (including the exercise of warrants) (Note 10)
     -       -       92,387,541       10       98,208       -       98,218  
Issuance of common stock and warrants for repayment of subordinated long-term debt (Note 6)
     -       -       4,285,714       -       3,000       -       3,000  
Issuance of common stock upon conversion of convertible notes (Note 7)
     -       -       3,000,000       -       3,600       -       3,600  
Issuance of preferred shares to related party (Note 10)
     20,000       -       -       -       250       -       250  
Stock based compensation (Note 13)
     -       -       6,700,000       -       5,097       -       5,097  
Repurchase of common stock (Note 10)
     -       -       (1,702,103 )     -
       11,708
       -
       (1,708 )
Repurchase of warrants (Notes 8 & 10)
     -
       -       -
       -       11,023       -       (1,023 )
Net income
     -       -       -       -       -       41,348       41,348  
Balance, December 31, 2021     20,000       -       172,986,137       17       597,708       (353,249 )     244,476  

The accompanying notes are an integral part of these consolidated financial statements.

F-7
Seanergy Maritime Holdings Corp.
Consolidated Statements of Cash Flows
For the years ended December 31, 2021, 2020 and 2019
(In thousands of US Dollars)

 
  
2021
    
2020
    
2019
  
Cash flows from operating activities:
                  
Net income/ (loss)
    
41,348
      
(18,356
)
    
(11,698
)
Adjustments to reconcile net income/(loss) to net cash provided by / (used in) operating activities:
                        
Depreciation
    
17,151
      
12,721
      
11,016
  
Amortization of deferred dry-docking costs
    
2,793
      
2,319
      
844
  
Amortization of deferred finance costs and debt discounts
    
3,659
      
1,107
      
1,140
  
Amortization of convertible note beneficial conversion feature
    
2,887
      
5,518
      
3,713
  
Stock based compensation
    
5,097
      
869
      
1,310
  
Amortization of deferred finance costs and debt discounts – related party
    
-
      
201
      
3,745
  
Loss on extinguishment of debt
     6,863       -       -  
Gain on sale of vessel, net
     (697 )     -       -  
Gain on debt refinancing, gross of deferred financing fees and expenses
    
-
      
(5,556
)
    
-
  
Fair value measurement of units issued to former related party
    
-
      
596
      
-
  
Restructuring expenses
    
-
      
1,015
      
-
  
Changes in operating assets and liabilities:
                        
Accounts receivable trade, net
    
801
      
962
      
845
  
Inventories
    
3,202
      
(788
)
    
1,427
  
Prepaid expenses
    
22
   
(740
)
    
307
  
Other current assets
    
240
      
579
      
(212
)
Deferred voyage expenses
    
621
      
(525
)
    
311
  
Deferred charges, non-current
    
(6,433
)
    
(1,145
)
    
(2,297
)
Other non-current assets
    
2
      
(3
)
    
-
  
Trade accounts and other payables
    
348
      
(12,398
)
    
1,679
  
Accrued liabilities
    
2,187
      
3,526
      
(5,502
)
Deferred revenue
    
3,225
      
214
      
3,406
  
Deferred revenue, non-current
    
(2,236
)
    
(301
)
    
3,074
  
Other liabilities, non-current
    
(320
)
    
450
      
-
  
Net cash provided by / (used in) operating activities
    
80,760
      
(9,735
)
    
13,108
  
Cash flows from investing activities:
                        
Vessels acquisitions and improvements
    
(197,214
)
    
(20,189
)
    
(12,349
)
Gross proceeds from sale of vessels
    
12,600
      
-
      
-
  
Term deposits
    
100
      
(1,600
)
    
-
  
Other fixed assets, net
    
(106
)
    
(75
)
    
-
  
Net cash used in investing activities
    
(184,620
)
    
(21,864
)
    
(12,349
)
Cash flows from financing activities:
                        
Proceeds from issuance of common stock and warrants, net of underwriters fees and commissions
    
98,302
      
73,750
      
13,225
  
Proceeds from issuance of preferred stock
     250       -       -  
Payments for repurchase of common stock
     (1,708 )     -       -  
Payments for repurchase of warrants
     (1,023 )     -       -  
Proceeds from secured long-term debt
    
180,320
      
22,500
      
6,422
  
Proceeds from related party debt
    
-
      
-
      
5,000
  
Payments of financing and stock issuance costs
    
(2,698
)
    
(3,640
)
    
(698
)
Repayments of long-term debt and other financial liabilities
    
(132,058
)
    
(52,514
)
    
(17,598
)
Repayments of convertible notes
     (13,950 )     -
       -
  
Repayments of related party debt
    
-
      
(1,000
)
    
-
  
Net cash provided by financing activities
    
127,435
      
39,096
      
6,351
  
Net increase in cash and cash equivalents and restricted cash
    
23,575
      
7,497
      
7,110
  
Cash and cash equivalents and restricted cash at beginning of period
    
22,051
      
14,554
      
7,444
  
Cash and cash equivalents and restricted cash at end of period
    
45,626
      
22,051
      
14,554
  
 
                        
SUPPLEMENTAL CASH FLOW INFORMATION
                        
Cash paid during the period for:
                        
Interest
    
11,166
      
10,270
      
14,144
  
 
                        
Noncash investing activities:
                        
Vessels acquisitions and improvements
     837       -       -  
Noncash financing activities:
                        
Units issued for repayment of subordinated long term-debt (Note 6)     3,000       -       -  
Repayment of subordinated long term-debt by issuance of units (Note 6)     (3,000 )     -       -  
Common shares issued by conversion of notes (Note 7)     3,600       -       -  
Notes reduction via conversion (Note 7)     (3,600 )     -       -  
Units / shares issued to settle unpaid interest in connection with financing – former related party (Note 1, 6, 7 & 8)
    
-
      
4,814
      
2,115
  
Shares issued in lieu of interest payments in connection with financing – related party (Note 6, 7 & 8)
    
-
      
-
      
3,846
  
Units / shares issued to settle deferred finance cost in connection with financing – former related party (Note 1, 6 & 7)
    
-
      
1,374
      
239
  
Change in fair value of conversion option (Note 8)
    
-
      
4,924
      
-
  
Issuance of option for units (Note 8)
    
-
      
543
      
-
  
Unpaid interest waived – related party (Note 6 & 7)
    
-
      
-
      
96
  
Related party debt drawdown (Note 6 & 7)
    
-
      
-
      
2,000
  
Related party debt refinanced (Note 6 & 7)
    
-
      
-
      
(2,000
)

The accompanying notes are an integral part of these consolidated financial statements.
 
F-8
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)


1.
Basis of Presentation and General Information:
 
Seanergy Maritime Holdings Corp. (the “Company” or “Seanergy”) was formed under the laws of the Republic of the Marshall Islands on January 4, 2008, with executive offices located in Glyfada, Greece. The Company provides global transportation solutions in the dry bulk shipping sector through its subsidiaries.
 
The accompanying consolidated financial statements include the accounts of Seanergy Maritime Holdings Corp. and its subsidiaries (collectively, the “Company” or “Seanergy”).

Following Russia’s invasion of Ukraine in February 2022, the U.S., several European Union nations, the UK and other countries have announced sanctions against Russia. The sanctions announced by the U.S. and other countries against Russia include, among others, restrictions on selling or importing goods, services or technology in or from affected regions, travel bans and asset freezes impacting connected individuals and political, military, business and financial organizations in Russia, severing large Russian banks from U.S. and/or other financial systems, and barring some Russian enterprises from raising money in the U.S. market. The U.S., EU nations and other countries could impose wider sanctions and take other actions should the conflict further escalate.  With uncertainty remaining at high levels with regards to the global impact of the sanctions already announced to date and the possibility of additional sanctions as well as retaliation measures from Russia’s side that may follow in the period to come, it is difficult to accurately assess the exact impact on our Company. To date, no apparent consequences have been identified on the Company’s business, nor any specific implications on any of its existing counterparties, including clients, suppliers and lenders. It should be noted however that since the Company employs Ukrainian and Russian seafarers, it may face problems in relation to their employment, repatriation, salary payments and be subject to claims to this respect. Notwithstanding the foregoing, it is possible that these tensions might eventually have an adverse effect our business, financial condition, results of operations and cash flows.

On December 31, 2020, the Company concluded a series of amendment transactions of certain loan agreements and convertible notes entered into with Jelco Delta Holding Corp., or JDH, the Company’s creditor and a former affiliate and former related party (Notes 6 and 7). The Company considered JDH a related party up to the date that these amendments were concluded, since after that date, JDH did not meet the definition of related party as per ASC 850, on the basis that JDH was no longer able to significantly influence management nor held more than 10 per cent of the voting interests of the Company. As such, the Company no longer considers JDH a related party. As of December 31, 2021 and 2020, JDH Loans (as defined below) were classified in “Long-term debt and other financial liabilities” in the consolidated balance sheet. Amounts in the consolidated statement of operations and consolidated statement of cash flows for 2020 and 2019 until the date that JDH ceased to be a related party were presented as transactions with related party.

On June 30, 2020, the Company’s common stock began trading on a split-adjusted basis, following a June 25, 2020 approval from the Company’s board of directors to reverse split the Company’s common stock at a ratio of one-for-sixteen (Note 10). All share and per share amounts disclosed in the consolidated financial statements and notes give effect to this reverse stock split retroactively, for all periods presented. No fractional shares were issued in connection with the reverse split. Shareholders who would otherwise hold a fractional share of the Company’s common stock will receive a cash payment in lieu of such fractional share.

On March 20, 2019, the Company’s common stock began trading on a split-adjusted basis, following a February 26, 2019 approval from the Company’s Board of Directors to reverse split the Company’s common stock at a ratio of one-for-fifteen. All share and per share amounts disclosed in the consolidated financial statements and notes give effect to this reverse stock split retroactively, for all periods presented. No fractional shares were issued in connection with the reverse split. Shareholders who would otherwise hold a fractional share of the Company’s common stock received a cash payment in lieu of such fractional share.

F-9
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

a.           Subsidiaries in Consolidation:
 
Seanergy’s subsidiaries included in these consolidated financial statements as of December 31, 2021:
 
Company
 
Country of
Incorporation
 
Vessel name
 
Date of Delivery
 
Date of
Sale/Disposal
Seanergy Management Corp. (1)(3)
 
Marshall Islands
 
N/A
 
N/A
 
N/A
Seanergy Shipmanagement Corp. (1)(3)
 
Marshall Islands
 
N/A
 
N/A
 
N/A
Sea Glorius Shipping Co. (1)
 
Marshall Islands
 
Gloriuship
 
November 3, 2015
 
N/A
Sea Genius Shipping Co. (1)
 
Marshall Islands
 
Geniuship
 
October 13, 2015
 
N/A
Leader Shipping Co. (1)
 
Marshall Islands
 
Leadership
 
March 19, 2015
 
September 30, 2021
Premier Marine Co. (1)
 
Marshall Islands
 
Premiership
 
September 11, 2015
 
N/A
Gladiator Shipping Co. (1)(5)
 
Marshall Islands
 
Gladiatorship
 
September 29, 2015
 
October 11, 2018
Squire Ocean Navigation Co. (1)
 
Liberia
 
Squireship
 
November 10, 2015
 
N/A
Emperor Holding Ltd. (1)
 
Marshall Islands
 
N/A
 
N/A
 
N/A
Knight Ocean Navigation Co. (1)(6)
 
Liberia
 
Knightship
 
December 13, 2016
 
June 29, 2018
Lord Ocean Navigation Co. (1)
 
Liberia
 
Lordship
 
November 30, 2016
 
N/A
Partner Shipping Co. Limited (1)(Note 14)
 
Malta
 
Partnership
 
May 31, 2017
 
N/A
Pembroke Chartering Services Limited (1)(4)(5)
 
Malta
 
N/A
 
N/A
 
N/A
Martinique International Corp. (1)(5)
 
British Virgin Islands
 
Bremen Max
 
September 11, 2008
 
March 7, 2014
Harbour Business International Corp. (1)(5)
 
British Virgin Islands
 
Hamburg Max
 
September 25, 2008
 
March 10, 2014
Maritime Capital Shipping Limited (1)
 
Bermuda
 
N/A
 
N/A
 
N/A
Maritime Capital Shipping (HK) Limited (1)(2)(3)
 
Hong Kong
 
N/A
 
N/A
 
N/A
Maritime Glory Shipping Limited (1)(2)
 
British Virgin Islands
 
Clipper Glory
 
May 21, 2010
 
December 4, 2012
Maritime Grace Shipping Limited (1)(2)
 
British Virgin Islands
 
Clipper Glory
 
May 21, 2010
 
October 15, 2012
Fellow Shipping Co. (1)
 
Marshall Islands
 
Fellowship
 
November 22, 2018
 
N/A
Champion Marine Co. (1)(6)(Note 5)
 
Marshall Islands
 
Championship
 
N/A
 
N/A
Good Ocean Navigation Co. (1)
 
Liberia
 
Goodship
 
August 7, 2020
 
N/A
Flag Marine Co. (1)(6) (Note 5)
 
Marshall Islands
 
Flagship
 
May 6, 2021
 
May 11, 2021
Hellas Ocean Navigation Co. (1)(6)(Note 5)
 
Liberia
 
Hellasship
 
May 6, 2021
 
June 28, 2021
Patriot Shipping Co. (1)(6)(Note 5)
 
Marshall Islands
 
Patriotship
 
June 1, 2021
 
June 28, 2021
Traders Shipping Co. (1)
 
Marshall Islands
 
Tradership
 
June 9, 2021
 
N/A
World Shipping Co. (1)
 
Marshall Islands
 
Worldship
 
August 30, 2021
 
N/A
Friend Ocean Navigation Co. (1)
 
Liberia
 
Friendship
 
July 27, 2021
 
N/A
Duke Shipping Co. (1)
 
Marshall Islands
 
Dukeship
 
November 26, 2021
 
N/A

(1)
Subsidiaries wholly owned
(2)
Former vessel-owning subsidiaries owned by Maritime Capital Shipping Limited (or “MCS”)
(3)
Management companies
(4)
Chartering services company
(5)
Dormant companies
(6)
Bareboat charters

F-10
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

2.
Significant Accounting Policies:

(a)          Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP) and include the accounts and operating results of Seanergy and its wholly-owned subsidiaries where Seanergy has control. Control is presumed to exist when Seanergy, through direct or indirect ownership, retains the majority of the voting interest. In addition, Seanergy evaluates its relationships with other entities to identify whether they are variable interest entities and to assess whether it is the primary beneficiary of such entities. If the determination is made that the Company is the primary beneficiary, then that entity is included in the consolidated financial statements. When the Company does not have a controlling interest in an entity, but exerts a significant influence over the entity, the Company applies the equity method of accounting. All significant intercompany balances and transactions and any intercompany profit or loss on assets remaining with the Group have been eliminated in the accompanying consolidated financial statements.
 
The Company deconsolidates a subsidiary or derecognizes a group of assets when the Company no longer controls the subsidiary or group of assets specified in Accounting Standards Codification (ASC or Codification) 810-10-40-3A. When control is lost, the Company derecognizes the assets and liabilities of the qualifying subsidiary or group of assets. The Financial Accounting Standards Board (“FASB”) concluded that the loss of control and the related deconsolidation of a subsidiary or derecognition of a group of assets specified in ASC 810-10-40-3A is a significant economic event that changes the nature of the investment held in the subsidiary or group of assets. Based on this consideration, a gain or loss is recognized upon the deconsolidation of a subsidiary or derecognition of a group of assets.

(b)         Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates include evaluation of relationships with other entities to identify whether they are variable interest entities, determination of vessel useful lives, allocation of purchase price in a business combination, determination of vessels’ impairment and determination of goodwill impairment.
 
(c)          Foreign Currency Translation

Seanergy’s functional currency is the United States dollar since the Company’s vessels operate in international shipping markets and therefore primarily transact business in U.S. Dollars. The Company’s books of accounts are maintained in U.S. Dollars. Transactions involving other currencies are translated into the United States dollar using exchange rates that are in effect at the time of the transaction. At the balance sheet dates, monetary assets and liabilities, which are denominated in other currencies, are translated to United States dollars at the foreign exchange rate prevailing at year-end. Gains or losses resulting from foreign currency translation are reflected in the consolidated statement of loss.
 
(d)         Concentration of Credit Risk

Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of cash and cash equivalents and trade accounts receivable. The Company places its cash and cash equivalents, consisting mostly of deposits, with high credit qualified financial institutions. The Company performs periodic evaluations of the relative credit standing of the financial institutions in which it places its deposits. The Company limits its credit risk with accounts receivable by performing ongoing credit evaluations of the financial condition of its customers, receives charter hires in advance and generally does not require collateral for its accounts receivable.
 
(e)          Cash and Cash Equivalents

Seanergy considers time deposits and all highly liquid investments with an original maturity of three months or less to be cash equivalents.

F-11
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

(f)          Term Deposits

Seanergy classifies time deposits and all highly liquid investments with an original maturity of more than three months as Term Deposits.
 
(g)          Restricted Cash

Restricted cash is excluded from cash and cash equivalents. Restricted cash represents minimum cash deposits or cash collateral deposits required to be maintained with certain banks under the Company’s borrowing arrangements or in relation to bank guarantees issued on behalf of the Company, which are legally restricted as to withdrawal or use. In the event that the obligation relating to such deposits is expected to be terminated within the next twelve months, these deposits are classified as current assets; otherwise they are classified as non-current assets.
 
(h)          Accounts Receivable Trade, Net

Accounts receivable trade, net at each balance sheet date, includes receivables from charterers for hire, freight and demurrage billings, net of a provision for doubtful accounts. Receivables related to spot voyages are determined to be unconditional and are included  in “Accounts Receivable Trade, Net”. At each balance sheet date, all potentially uncollectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts. The Company also assessed the provisions of ASC 326, Financial Instruments—Credit Losses, by assessing the counterparties’ credit worthiness and concluded that there is no material impact in the Company’s financial statements as of the date of the adoption of ASC 326 on January 1, 2020 and as of December 31, 2021 and 2020. No provision for doubtful accounts was established as of December 31, 2021 and 2020.

(i)          Inventories

Inventory is measured at the lower of cost or net realizable value according to the provisions of ASU 2015-11, Inventory. Net realizable value is defined as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.  Cost is determined by the first in, first out method.
 
(j)          Insurance Claims

The Company records insurance claim recoveries for insured losses incurred on damage to fixed assets and for insured crew medical expenses and for legal fees covered by directors’ and officers’ liability insurance. Insurance claim recoveries are recorded, net of any deductible amounts, at the time the Company’s fixed assets suffer insured damages or when crew medical expenses are incurred, recovery is probable under the related insurance policies, the claim is not subject to litigation and the Company can make an estimate of the amount to be reimbursed. The classification of the insurance claims into current and non-current assets is based on management’s expectations as to their collection dates. On January 1, 2020, the Company adopted and assessed the provisions of ASC 326, Financial Instruments—Credit Losses, by assessing the counterparties’ credit worthiness and concluded that there is no material impact in the Company’s financial statements as of the date of the adoption.  No provision for credit losses was recorded as of December 31, 2021 and 2020.
 
(k)          Vessels

Vessels acquired as a part of a business combination are recorded at fair market value on the date of acquisition. Vessels acquired as asset acquisitions are stated at historical cost, which consists of the contract price less discounts, plus any material expenses incurred upon acquisition (delivery expenses and other expenditures to prepare for the vessel’s initial voyage). Vessels acquired from entities under common control are recorded at historical cost. Subsequent expenditures for conversions and major improvements are capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels. Expenditures for routine maintenance and repairs are expensed as incurred.
F-12
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

 
In addition, other long-term investments, relating to vessels’ equipment not yet installed, are included in “Deferred charges and other-long term investments, non-current” in the consolidated balance sheets. Amounts paid for this equipment are included in “Vessels acquisitions and improvements” under “Cash flows from investing activities” in the consolidated statements of cash flows.
 
(l)          Vessel Depreciation

Depreciation is computed using the straight-line method over the estimated useful life of the vessels (25 years), after considering the estimated salvage value. Salvage value is estimated by the Company by taking the cost of steel times the weight of the ship noted in lightweight ton. Salvage values are periodically reviewed and revised to recognize changes in conditions, new regulations or for other reasons. Revisions of salvage values affect the depreciable amount of the vessels and affect depreciation expense in the period of the revision and future periods.
 
(m)        Impairment of Long-Lived Assets (Vessels)

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances, such as prevailing market conditions, obsolescence or damage to the asset, business plans to dispose a vessel earlier than the end of its useful life and other business plans, indicate that the carrying amount of the assets, plus any unamortized dry-docking costs and cost of any equipment not yet installed, may not be recoverable. The volatile market conditions in the dry bulk market with decreased charter rates and decreased vessel market values are conditions that the Company considers to be indicators of a potential impairment for its vessels.
 
The Company determines undiscounted projected operating cash flows for each vessel and compares it to the vessel’s carrying value, plus any unamortized dry-docking costs and cost of any equipment not yet installed. When the undiscounted projected operating cash flows expected to be generated by the use of the vessel and/or its eventual disposition are less than the vessel’s carrying value, plus any unamortized dry-docking costs and cost of any equipment not yet installed, the Company impairs the carrying amount of the vessel. Measurement of the impairment loss is based on the fair value of the asset as determined by independent valuators and use of available market data. The undiscounted projected operating cash inflows are determined by considering the charter revenues from existing time charters for the fixed fleet days and an estimated daily time charter equivalent for the non-fixed days (based on a combination of one year charter rates estimates and the average of the trailing 10-year historical charter rates, excluding outliers) adjusted for commissions, expected off hires due to scheduled maintenance and estimated unexpected breakdown off hires. The undiscounted projected operating cash outflows are determined by applying various assumptions regarding vessel operating expenses and scheduled maintenance.

For the year ended December 31, 2021, indicators of impairment existed for two of the Company’s vessels as their carrying value plus any unamortized dry-docking costs and cost of any equipment not yet installed was higher than their market value. The carrying value of the Company’s vessels plus any unamortized dry-docking costs and cost of any equipment not yet installed for which impairment indicators existed as at December 31, 2021, was $72,328. From the impairment exercise performed, the undiscounted projected operating cash flows expected to be generated by the use of these two vessels were higher than the vessels’ carrying value, plus any unamortized dry-docking costs and cost of any equipment not yet installed, and thus the Company concluded that no impairment charge should be recorded.

(n)         Dry-Docking and Special Survey Costs

The Company follows the deferral method of accounting for dry-docking costs and special survey costs whereby actual costs incurred are deferred and are amortized on a straight-line basis over the period through the expected date of the next dry-docking which is scheduled to become due in 2 to 3 years. Dry-docking costs which are not fully amortized by the next dry-docking period are expensed. Amounts are included in “Deferred charges and other long-term investments, non-current”.
 
(o)         Commitments and Contingencies

Liabilities for loss contingencies, arising from claims, assessments, litigation, fines and penalties, environmental and remediation obligations and other sources are recorded when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

F-13
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

(p)         Revenue Recognition

Revenues are generated from time charters, bareboat charters and spot charters. A time charter is a contract for the use of a vessel as well as vessel operations for a specific period of time and a specified daily charter hire rate, which is generally payable in advance. A bareboat charter is a contract in which the vessel is provided to the charterer for a fixed period of time at a specified daily rate, which is generally payable in advance. Spot charter agreements are charter hires, where a contract is made in the spot market for the use of a vessel for a specific voyage at a specified charter rate per ton of cargo.

Time charter revenue, including bareboat charter revenue, is recorded over the term of the charter agreement as the service is provided and collection of the related revenue is reasonably assured. Under a time charter, revenue is adjusted for a vessel’s off hire days due to major repairs, dry dockings or special or intermediate surveys.

In February 2016, the FASB issued ASU No. 2016-02 - Leases (ASC 842), and as amended, it requires lessees to recognize most leases on the balance sheet. The Company early adopted ASC 842, as amended from time to time, retrospectively from January 1, 2018. The Company also elected to apply the additional and optional transition method to new and existing leases at the adoption date as well as all the practical expedients which allowed the Company’s existing lease arrangements, in which it was a lessee or lessor, classified as operating leases under ASC 840 to continue to be classified as operating leases under ASC 842. The Company concluded that the criteria for not separating lease and non-lease components of its time charter contracts are met, since (i) the time pattern of recognizing revenues for crew and other services for the operation of the vessels is similar to the time pattern of recognizing rental income, (ii) the lease component of the time charter contracts, if accounted for separately, would be classified as an operating lease, and (iii) the predominant component in its time charter agreements is the lease component. In this respect, the Company accounts for the combined component as an operating lease in accordance with ASC 842. The Company recognizes income from lease payments over the lease term on a straight line basis. The Company assessed its new time charter contracts at the adoption date under the new guidance and concluded that these contracts contain a lease with the related executory costs (insurance), as well as non-lease components to provide other services related to the operation of the vessel, with the most substantial service being the crew cost to operate the vessel. The Company recognizes income for variable lease payments in the period when changes in facts and circumstances on which the variable lease payments occur. Rental income on the Company’s time charterers is mostly calculated at an index linked rate based on the five T/C routes rate of the Baltic Capesize Index.

Spot charter revenue is recognized on a pro-rata basis over the duration of the voyage from loading to discharge, when a voyage agreement exists, the price is fixed or determinable, service is provided and the collection of the related revenue is reasonably assured.  For voyage charters, the Company satisfies its single performance obligation to transfer cargo under the contract over the voyage period. The Company has taken the practical expedient not to disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

Demurrage income, which is considered a form of variable consideration and is recognized as the performance obligation is satisfied, is included in voyage revenues, and represents payments by the charterer to the vessel owner when loading or discharging time exceeds the stipulated time in the voyage charter agreements. Demurrage income for the years ended December 31, 2021, 2020 and 2019 was $800, $819 and $1,528, respectively.

Despatch expense, which is considered a form of variable consideration and is recognized as the performance obligation is satisfied, is included in voyage revenues, and represents payments to the charterer by the vessel owner when loading or discharging time is faster than the stipulated time in the voyage charter agreements. Despatch expense for the years ended December 31, 2021, 2020 and 2019 was $110, $133 and $432, respectively.

Charterers individually accounting for more than 10% of revenues during the years ended December 31, 2021, 2020 and 2019 were:

Customer
  
2021
    
2020
    
2019
  
A
    
23
%
    
23
%
    
-
  
B
    
15
%
    
-
      
-
  
C
    
13
%
    
-
      
-
  
D
    
11
%
    
18
%
    
15
%
E
    
-
      
-
      
19
%
F
     -       -       18 %
F
     10 %     -       -  
Total
    
72
%
    
41
%
    
52
%

F-14
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

As of December 31, 2021, all of the Company’s fleet was time chartered on long-term employment arrangements. Out of the seventeen long-term employment agreements in place on December 31, 2021, nine were agreed during 2021 and the remaining eight between 2018 and 2020.

Prior to 2021, the Company successfully installed exhaust gas cleaning systems, or scrubbers, on six of its vessels. A portion of the scrubbers cost was paid for by the charterers, where such portion is provided for by the chartering agreements as an increased daily rate or as a prepayment, which the Company accounts for on a straight-line basis over the minimum duration of each charter party. Amounts received in advance related to scrubber increased daily rates are recorded in “Deferred revenue” in the consolidated balance sheets. Such amount as of December 31, 2021, was $2,773, of which $2,235 is the current portion and $538 is the non-current porion. As of December 31, 2020, the current portion was $3,155 and the non-current portion was $2,773.

Disaggregation of Revenue

The following table presents the Company’s income statement figures derived from spot charters and time charters for the years ended December 31, 2021, 2020 and 2019:

   
Year ended December 31,
  
    2021     2020     2019  
Vessel revenues from spot charters, net of commissions
    
28,264
      
27,033
       55,701  
Vessel revenues from time charters, net of commissions
    
124,844
    36,312     30,798
Total
    
153,108
       63,345       86,499  
 
The Company disaggregates its revenue from contracts with customers by the type of charter (time and spot charters). The following table presents the Company’s net trade accounts receivable disaggregated by revenue source as at December 31, 2021 and 2020:

 
  
December 31,
  
 
  
2021
    
2020
  
Accounts receivable trade, net from spot charters
    
-
      
801
  
Accounts receivable trade, net from time charters
    
-
      
-
  
Total
    
-
      
801
  

Deferred revenue represents cash received in advance of performance under the contract prior to the balance sheet date and is realized when the associated revenue is recognized under the contract in periods after such date. The current portion of Deferred revenue as of December 31, 2021 was $7,735 and relates entirely to ASC 842. The non-current portion of Deferred revenue as of December 31, 2021 was $538 and relates entirely to ASC 842 and is related to scrubber premiums (i.e. increased daily hire rates provided for by the chartering agreements) for scrubber-fitted vessels. The Deferred revenue is allocated on a straight-line basis over the minimum duration of each charter party, except for unearned revenue, which represents cash received in advance of services which have not yet been provided. Revenue recognized in 2021 from amounts included in deferred revenue at the beginning of the period was $4,105.

(q)          Office Lease

In April 2018, the Company moved into new office spaces. Under ASC 842, the lease is classified as an operating lease and a lease liability and right-of-use asset based on the present value of future minimum lease payments have been recognized on the balance sheet. The monthly rent expense is recorded in general and administration expenses.The Company paid $134 for rent expense during 2021 and such amount is included in the consolidated statement of cash flows in operating activities. The Company has assessed the lease for impairment, and since no impairment indicators existed, no impairment charge was recorded. The Company recognized a right of use asset for rental of office space at the adoption date and elected the practical expedient on not separating lease components from nonlease components.

F-15
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)
(r)          Sale and Leaseback Transactions

In accordance with ASC 842, the Company, as seller-lessee, determines whether the transfer of an asset should be accounted for as a sale in accordance with ASC 606. The existence of an option for the seller-lessee to repurchase the asset precludes the accounting for the transfer of the asset as a sale unless both of the following criteria are met: (1) the exercise price of the option is the fair value of the asset at the time the option is exercised and (2) there are alternative assets, substantially the same as the transferred asset, readily available in the marketplace; and the classification of the leaseback as a finance lease or a sales-type lease, precludes the buyer-lessor from obtaining control of the asset. The existence of an obligation for the Company, as seller-lessee, to repurchase the asset precludes accounting for the transfer of the asset as sale as the transaction would be classified as a financing arrangement by the Company as it effectively retains control of the underlying asset. If the transfer of the asset meets the criteria of sale, the Company, as seller-lessee recognizes the transaction price for the sale when the buyer-lessor obtains control of the asset, derecognizes the carrying amount of the underlying asset and accounts for the lease in accordance with ASC 842. If the transfer does not meet the criteria of sale, the Company does not derecognize the transferred asset, accounts for any amounts received as a financing arrangement and recognizes the difference between the amount of consideration received and the amount of consideration to be paid as interest.

(s)          Commissions

Commissions, which include address and brokerage commissions, are recognized in the same period as the respective charter revenues. Address commissions to third parties are included in “Vessel revenue, net” while brokerage commissions to third parties are included in “Voyage expenses”.

(t)          Vessel Voyage Expenses

Vessel voyage expenses primarily consist of port, canal, bunker expenses and brokerage commissions that are unique to a particular charter and are paid for by the charterer under time charter agreements, bareboat charters and other non-specified voyage expenses. Under a spot charter, the Company incurs and pays for certain voyage expenses, primarily consisting of bunkers consumption, brokerage commissions, port and canal costs. Under ASC 606 and after implementation of ASC 340-40 “Other assets and deferred costs” for contract costs, incremental costs of obtaining a contract with a customer, and contract fulfillment costs, are capitalized and amortized as the performance obligation is satisfied, if certain criteria are met. The Company has adopted the practical expedient not to capitalize incremental costs when the amortization period (voyage period) is less than one year. Costs to fulfill the contract prior to arriving at the load port primarily consist of bunkers which are deferred and amortized during the voyage period. Costs amortized during 2021 to fulfill contracts were $1,475. Voyage costs arising as performance obligation are expensed as incurred.

The following table presents the Company’s income statement figures derived from spot charters and time charters for the years ended December 31, 2021, 2020 and 2019:

    Year ended December 31,  
   
2021
     2020
    2019  
Voyage expenses from spot charters
    
13,465
       17,099       33,109  
Voyage expenses from time charters
    
3,004

    1,468
    3,532
Total
    
16,469
       18,567       36,641  

(u)         Repairs and Maintenance

All repair and maintenance expenses, including major overhauling and underwater inspection expenses are expensed in the year incurred. Such costs are included in “Vessel operating expenses”.

F-16
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

(v)         Financing Costs

Underwriting, legal and other direct costs incurred with the issuance of long-term debt or to refinance existing debt are deferred and amortized to interest expense over the life of the related debt using the effective interest method under modification guidance. The Company presents unamortized deferred financing costs as a reduction of long-term debt in the accompanying balance sheets. For the accounting of the unamortized deferred financing costs following debt extinguishment, see below (Note 2(ab)).

(w)        Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized, when applicable, for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognized tax benefits in interest expense and penalties in general and administration expenses.

Maritime Capital Shipping (HK) Limited, the Company’s former management company, is subject to Hong Kong profits tax at a rate of 16.5% on the estimated assessable profit for the year. The estimated profits tax for the year ended December 31, 2021 is $NIL.

Seanergy Management Corp. (“Seanergy Management”), the Company’s management company, established in Greece under Greek Law 89/67 (as amended to date), is subject to an annual contribution calculated on the total amount of foreign exchange annually imported and converted to Euros. The contribution to be paid in 2022 by Seanergy Management for 2021 is estimated at $97 and is included in “General and administration expenses”.

Seanergy Shipmanagement Corp. (“Seanergy Shipmanagement”), the Company’s second management company, established in Greece under Greek Law 89/67 (as amended to date), is subject to an annual contribution calculated on the total amount of foreign exchange annually imported and converted to Euros. The contribution to be paid in 2022 by Seanergy Shipmanagement for 2021 is estimated at $NIL.

Two of the Company’s subsidiaries are registered in Malta since May 23, 2018. These subsidiaries are subject to a corporate flat tax in Malta and could be subject to additional taxation in the future in Malta or other jurisdictions where the subsidiaries are incorporated or do business. The amount of any such tax imposed upon the Company’s operations or on the Company’s subsidiaries’ operations may be material and could have an adverse effect on earnings. No tax expense has been recognized for the years presented in these financials statements.

Pursuant to the Internal Revenue Code of the United States (the “Code”), U.S. source income from the international operations of ships is generally exempt from U.S. tax if the company operating the ships meets both of the following requirements: (a) the Company is organized in a foreign country that grants an equivalent exception to corporations organized in the United States and (b) either (i) more than 50% of the value of the Company’s stock is owned, directly or indirectly, by individuals who are “residents” of the Company’s country of organization or of another foreign country that grants an “equivalent exemption” to corporations organized in the United States (50% Ownership Test) or (ii) the Company’s stock is “primarily and regularly traded on an established securities market” in its country of organization, in another country that grants an “equivalent exemption” to United States corporations, or in the United States (Publicly-Traded Test).

Notwithstanding the foregoing, the regulations provide, in pertinent part, that each class of the Company’s stock will not be considered to be “regularly traded” on an established securities market for any taxable year in which 50% or more of the vote and value of the outstanding shares of such class are owned, actually or constructively under specified stock attribution rules, on more than half the days during the taxable year by persons who each own 5% or more of the value of such class of the Company’s outstanding stock (“5 Percent Override Rule”).

F-17
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

Based on the Company’s analysis of its shareholdings during 2021, the Publicly-Traded Test for the entire 2021 year has been satisfied in that less than 50% of the Company’s issued and outstanding shares were held by persons who each own directly or indirectly 5% or more of the vote and value of such class of stock for more than half the days during the 2021 taxable year. Effectively, the Company and each of its subsidiaries qualify for this statutory tax exemption for the 2021 taxable year.

Certain charterparties of the Company contain clauses that permit the Company to seek reimbursement from charterers of any U.S. tax paid. The Company has in the past sought reimbursement and has secured payment from most of its charterers. The Company’s U.S. federal income tax based on its U.S. source shipping income for 2021, 2020 and 2019, taking into consideration charterers’ reimbursement, was $NIL, $NIL and $22, respectively.

(x)         Stock-based Compensation

Stock-based compensation represents vested and non-vested common stock granted to directors and employees for their services as well as to non-employees. The Company calculates stock-based compensation expense for the award based on its fair value on the grant date and recognizes it on an accelerated basis over the vesting period. The Company assumes that all non-vested shares will vest. The Company does not include estimated forfeitures in determining the total stock-based compensation expense because it estimates the forfeitures of non-vested shares to be immaterial. The Company re-evaluates the reasonableness of its assumption at each reporting period.
 
(y)         Earnings (Losses) per Share

Basic earnings (losses) per common share are computed by dividing net income (loss) available to Seanergy’s shareholders by the weighted average number of common shares outstanding during the period. Unvested shares granted under the Company’s incentive plan, or else, are entitled to receive dividends which are not refundable, even if such shares are forfeited, and therefore are considered participating securities for basic earnings per share calculation purposes, using the two class method. Diluted earnings (losses) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted at the beginning of the periods presented, or issuance date, if later. The treasury stock method is used to compute the dilutive effect of warrants and shares issued under the Equity Incentive Plan. The if-converted method is used to compute the dilutive effect of shares which could be issued upon conversion of the convertible notes. Potential common shares that have an anti-dilutive effect (i.e. those that increase income per share or decrease loss per share) are excluded from the calculation of diluted earnings per share.

(z)          Segment Reporting

Seanergy reports financial information and evaluates its operations by total charter revenues and not by the length of vessel employment, customer, or type of charter. As a result, management, including the chief operating decision maker, reviews operating results solely by revenue per day and operating results of the fleet and thus, Seanergy has determined that it operates under one reportable segment. Furthermore, when Seanergy charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, disclosure of geographic information is impracticable.

(aa)
Fair Value Measurements

The Company follows the provisions of ASC 820, Fair Value Measurement, which defines fair value and provides guidance for using fair value to measure assets and liabilities. The guidance creates a fair value hierarchy of measurement and describes fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts. In accordance with the requirements of accounting guidance relating to Fair Value Measurements, the Company classifies and discloses its assets and liabilities carried at the fair value in one of the following categories:

•
Level 1: Quoted market prices in active markets for identical assets or liabilities;
•
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data;
•
Level 3: Unobservable inputs that are not corroborated by market data.

F-18
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

(ab)
Debt Modifications and Extinguishments

The Company follows the provisions of ASC 470-50, Modifications and Extinguishments, to account for all modifications or extinguishments of debt instruments, except debt that is extinguished through a troubled debt restructuring or a conversion of debt to equity securities of the debtor pursuant to conversion privileges provided in terms of the debt at issuance. This Subtopic also provides guidance on whether an exchange of debt instruments with the same creditor constitutes an extinguishment and whether a modification of a debt instrument should be accounted for in the same manner as an extinguishment. In circumstances where an exchange of debt instruments or a modification of a debt instrument does not result in extinguishment accounting, this Subtopic provides guidance on the appropriate accounting treatment. Costs associated with new loans or refinancing of existing loans, including fees paid to lenders or required to be paid to third parties on the lender’s behalf for obtaining new loans or refinancing existing loans, are recorded as deferred charges. Costs paid directly to third parties are expensed as incurred. Deferred financing costs are presented as a deduction from the corresponding liability. Such fees are deferred and amortized to interest and finance costs during the life of the related debt using the effective interest method. Unamortized fees relating to loans repaid or refinanced, meeting the criteria of debt extinguishment, are expensed in the period the repayment or refinancing is made. In particular, ASC 470-50-40-2 indicates that for extinguishments of debt, the difference between the reacquisition price and the net carrying amount of the extinguished debt (which includes any deferred debt issuance costs) should be recognized as a gain or loss when the debt is extinguished and identified as a separate item.

(ac)
Troubled Debt Restructurings

A restructuring of a debt constitutes a troubled debt restructuring if the lender or creditor for economic or legal reasons related to the Company’s financial difficulties grants a concession to the Company that it would not otherwise consider. Troubled debt that is fully satisfied by foreclosure, repossession, or other transfer of assets or by grant of equity securities by the Company is included in the term troubled debt restructuring and is accounted as such.

The Company, when issuing or otherwise granting an equity interest to a lender or creditor to fully settle a payable or debt, accounts for the equity interest granted at its fair value. The difference between the fair value of the equity interest granted and the carrying amount of the payable or debt settled is recognized as a gain on restructuring of payables or debt. Legal fees and other direct costs incurred in granting an equity interest to a creditor reduce the fair value of the equity interest issued. All other direct costs incurred in connection with a troubled debt restructuring are deducted in measuring gain on restructuring or expensed for the period if no gain is recognized.

(ad)
Convertible Notes and related Beneficial Conversion Features

The convertible notes are accounted for in accordance with ASC 470-20 “Debt with Conversion and Other Options.” The terms of each convertible note included an embedded conversion feature which provided for a conversion at the option of the holder into shares of common stock at a predetermined rate.  The Company determined that the conversion features were beneficial conversion features (“BCF”) pursuant to ASC 470-20. The Company considered the BCF guidance only after determining that the features did not need to be bifurcated under ASC 815 “Derivatives and Hedging” or separately accounted for under the cash conversion literature of ASC 470-20.

Accounting for an embedded BCF in a convertible instrument requires that the BCF be recognized separately at issuance by allocating a portion of the proceeds equal to the intrinsic value of the BCF to additional paid-in capital, resulting in a discount on the convertible instrument. This discount is accreted from the date on which the BCF is first recognized through the stated maturity date of the convertible instrument using the effective yield method. If the intrinsic value of the BCF is greater than the proceeds allocated to the convertible instrument, the amount of the discount assigned to the BCF is limited to the amount of the proceeds allocated to the convertible instrument. The intrinsic value of the BCF is determined as the number of shares converted from the convertible note times the positive difference between the fair value of the stock on the commitment date and the contractual conversion price. The BCF is not reassessed following any amendments to the terms of the convertible notes. If the modification or exchange of a convertible note is not accounted for as an extinguishment, the accounting for the change in the fair value of the conversion option follows the guidance of ASC 470-50-40-15.

F-19
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

ASC 470-20-40-1 indicates that for instruments with beneficial conversion features all of the unamortized discount remaining at the date of conversion shall be recognized immediately at that date as interest expense. ASC 470-20-40-3 indicates that if a convertible debt instrument containing an embedded beneficial conversion feature is extinguished before conversion, the amount of the reacquisition price to be allocated to the repurchased beneficial conversion feature shall be measured using the intrinsic value of that conversion feature at the extinguishment date. The residual amount, if any, would be allocated to the convertible security. Thus, the issuer shall record a gain or loss on extinguishment of the convertible debt security. The amount allocated to the BCF is the intrinsic value of the conversion feature on the extinguishment date, which is computed by multiplying any excess of the conversion-date fair value of the common stock or other securities into which the instrument is convertible over the effective conversion price by the number of shares into which the instrument is convertible.


(ae)
Distinguishing Liabilities from Equity

The Company follows the provisions of ASC 480 “Distinguishing liabilities from equity” to determine the classification of certain freestanding financial instruments as either liabilities or equity. The Company in its assessment for the accounting of the warrants issued in connection with the May 13, 2019 public offering, the concurrent private placement with JDH, the Class D warrants issued in connection with the April 2, 2020 public offering, the Class E warrants issued in connection with the August 20, 2020 underwritten public offering as well as the restructuring agreement with JDH in December 2020 has taken into consideration ASC 480 “Distinguishing liabilities from equity” and determined that the warrants should be classified as equity instead of liability. The Company further analyzed key features of the warrants to determine whether these are more akin to equity or to debt and concluded that the warrants are equity-like. In its assessment, the Company identified certain embedded features, examined whether these fall under the definition of a derivative according to ASC 815 applicable guidance or whether certain of these features affected the classification. Derivative accounting was deemed inappropriate and thus no bifurcation of these features was performed. Upon exercise of the warrants, the holder is entitled to receive common shares. ASC 480 requires that a warrant which contains an obligation that may require the issuer to redeem the shares in cash, be classified as a liability and accounted for at fair value. No warrants were classified as liabilities.
 
(af)
Going Concern

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern. ASU No. 2014-15 provides guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and on related required footnote disclosures.  For each reporting period, management is required to evaluate whether there are conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern within one year from the date the financial statements are issued.

(ag)
Derivatives - Forward Freight Agreements

From time to time, the Company may take positions in derivative instruments including forward freight agreements, or FFAs. Generally, FFAs and other derivative instruments 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 for the specified route and time period, as reported by an identified index, 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 FFAs are not intended to serve as an economic hedge for the Company’s vessels that are being chartered in the spot market, but are assumed across all dry bulk vessel sectors based on the Company’s views of the underlying markets and short-term outlook. The Company measures the fair value of all open positions at each reporting date on this basis (Level 1). There were no open positions as of December 31, 2021. The Company’s FFAs do not qualify for hedge accounting and therefore gains or losses are recognized in the consolidated statements of operations under “Gain on forward freight agreements, net” and in the consolidated statements of cash flows in changes in operating assets and liabilities.

(ah)
Share and warrant repurchases

The Company records the repurchase of its common shares and warrants at cost. The Company’s common shares repurchased for retirement, are immediately cancelled and the Company’s common stock is accordingly reduced. Any excess of the cost of the shares over their par value is allocated in additional paid-in capital, in accordance with ASC 505-30-30, Treasury Stock. For warrants repurchased, if the instrument is classified as equity, any cash received in the settlement is recorded as a debit for the amounts received with an offset to additional paid-in capital. The Company’s warrants are all classified as equity.
F-20
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

Recent Accounting Pronouncements – Not Yet Adopted

In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. The ASU reduces the number of accounting models for convertible debt instruments by eliminating the cash conversion model. As compared with current U.S. GAAP, more convertible debt instruments will be reported as a single liability instrument and the interest rate of more convertible debt instruments will be closer to the coupon interest rate. The ASU also aligns the consistency of diluted Earnings Per Share ("EPS") calculations for convertible instruments by requiring that (1) an entity use the if-converted method and (2) share settlement be included in the diluted EPS calculation for both convertible instruments and equity contracts when those contracts include an option of cash settlement or share settlement. The ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The FASB has specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The FASB Board decided to allow entities to adopt the guidance through either a modified retrospective method of transition or a fully retrospective method of transition. In applying the modified retrospective method, entities should apply the guidance to transactions outstanding as of the beginning of the fiscal year in which the amendments are adopted. Transactions that were settled (or expired) during prior reporting periods are unaffected. The cumulative effect of the change should be recognized as an adjustment to the opening balance of retained earnings at the date of adoption. The Company will adopt ASU 2020-06 in 2022 using the modified retrospective approach. The Company is currently evaluating the impact this guidance may have on its consolidated financial statements and related disclosures. As of December 31, 2021, the unamortized $10,949 BCF subject to change is recorded in equity and concerns the Second JDH Note (Note 8).
 
In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope. The ASU clarifies that all derivative instruments affected by changes to the interest rates used for discounting, margining or contract price alignment due to reference rate reform are in the scope of ASC 848. As such, entities may apply certain optional expedients in ASC 848 to derivative instruments that do not reference LIBOR or another rate expected to be discontinued as a result of reference rate reform if there is a change to the interest rate used for discounting, margining or contract price alignment. In addition, the ASU clarifies other aspects of the guidance in ASC 848 and provides new guidance on how to address the effects of the cash compensation adjustment that is provided as part of the above change on certain aspects of hedge accounting. The ASU is effective for all entities as of January 7, 2021, allows for retrospective or prospective application with certain conditions, and generally can be applied through December 31, 2022. The Company is currently evaluating its contracts and the impact this optional guidance may have on its consolidated financial statements and related disclosures, taking into account that none of the Company’s floating rate credit facilities are based on the U.S. dollar LIBOR rates that were discontinued as of January 1, 2022.


In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50), Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force). The ASU addresses the diversity in practice in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (e.g., warrants) that remain equity classified after modification or exchange. Under the guidance, an issuer determines the accounting for the modification or exchange based on whether the transaction was done to issue equity, to issue or modify debt or for other reasons. The ASU is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but entities need to apply the guidance as of the beginning of the fiscal year that includes the interim period in which they choose to early adopt the guidance. The guidance is applied prospectively to all modifications or exchanges that occur on or after the date of adoption. The Company is currently evaluating the impact this guidance may have on its consolidated financial statements and related disclosures.



In July 2021, the FASB issued ASU No. 2021-05 Leases (Topic 842): Lessors-Certain Leases with Variable Lease Payments. The ASU amends the lessor lease classification guidance in ASC 842 for leases that include any amount of variable lease payments that are not based on an index or rate. If such a lease meets the criteria in ASC 842-10-25-2 through 25-3 for classification as either a sales-type or direct financing lease, and application of the sales-type or direct financing lease recognition guidance would result in recognition of a selling loss, then the amendments require the lessor to classify the lease as an operating lease. For public business entities that have adopted ASC 842 as of July 19, 2021, the amendments in ASU 2021-05 are effective for fiscal years beginning after Dec 15, 2021 and for interim periods within those fiscal years. The Company is currently evaluating the impact this guidance may have on its consolidated financial statements and related disclosures.
F-21
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

3.
Cash and Cash Equivalents and Restricted Cash:

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows:

 
  
December 31,
2021
    
December 31,
2020
  
Cash and cash equivalents
    
41,496
      
21,011
  
Restricted cash
    
1,180
      
50
  
Restricted cash, non-current
    
2,950
      
990
  
Total
    
45,626
      
22,051
  

Restricted cash as of December 31, 2021 includes $850 of minimum liquidity requirements as per the Piraeus Bank Loan Facility (Note 6), $500 of minimum liquidity requirements as per the February 2019 ATB Loan Facility (Note 6), $500 of minimum liquidity requirements as per the August 2021 Alpha Bank Loan Facility (Note 6), $1,600 of minimum liquidity requirement as per the Championship Cargill Sale and Leaseback (Note 6), $630 in a dry-docking reserve account as per the February 2019 ATB Loan Facility and $50 of restricted deposits pledged as collateral regarding credit cards balances with one of the Company’s financial institutions. The restricted cash amount that relates to the February 2019 ATB Loan Facility was classified as current due to the fact that the respective facility is repayable within the year ending December 31, 2022 (Note 6). Minimum liquidity, not legally restricted, as of December 31, 2021, of $7,100 as per the Company’s credit facilities’ covenants, is included in “Cash and cash equivalents”.

Restricted cash as of December 31, 2020 includes $500 of minimum liquidity requirements as per the February 2019 ATB Loan Facility (Note 6), $490 in a dry-docking reserve account as per the February 2019 ATB Loan Facility and $50 of restricted deposits pledged as collateral regarding credit cards balances with one of the Company’s financial institutions. Minimum liquidity, not legally restricted, as of December 31, 2020, of $4,500 as per the Company’s credit facilities covenants, calculated as $500 per owned vessel, is included in “Cash and cash equivalents”.

4.
Inventories:

The amounts in the accompanying consolidated balance sheets are analyzed as follows:

 
  
December 31,
2021
    
December 31,
2020
  
Lubricants
    
1,448
      
591
  
Bunkers
    
-
      
4,059
  
Total
    
1,448
      
4,650
 

As of December 31, 2021, there was no bunkers inventory as all vessels were employed under time charter agreements.

F-22
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

5.
Vessels, Net:
 
The amounts in the accompanying consolidated balance sheets are analyzed as follows:
 
 
  
December 31,
2021
    
December 31,
2020
  
Cost:
            
Beginning balance
    
307,870
      
292,280
  
- Additions
    
197,306
      
15,590
  
- Disposals
    (17,127 )     -  
Ending balance
    
488,049
      
307,870
  
 
                
Accumulated depreciation:
                
Beginning balance
    
(51,133
)
    
(38,499
)
- Depreciation for the period
    
(17,076
)
    
(12,634
)
- Disposals
    6,222       -  
Ending balance
    
(61,987
)
    
(51,133
)
 
                
Net book value
    
426,062
      
256,737
  

On February 12, 2021, the Company entered into an agreement with an unaffiliated third party for the purchase of a secondhand Capesize vessel, the Tradership, for a gross purchase price of $17,000. The vessel was delivered to the Company on June 9, 2021. The acquisition of the vessel was financed with cash on hand at the time of delivery and subsequently through the ABB Loan Facility (Note 6).


On March 10, 2021, the Company entered into an agreement with an unaffiliated third party for the purchase of a secondhand Capesize vessel, the Flagship, for a gross purchase price of $28,385. The vessel was delivered to the Company on May 6, 2021. The acquisition of the vessel was financed with cash on hand at the time of delivery and subsequently through the sale and leaseback agreement entered into with Cargill International S.A., or Cargill, on May 11, 2021 (Note 6).



On March 11, 2021, the Company entered into an agreement with unaffiliated third parties for the purchase of a secondhand Capesize vessel, the Patriotship, for a gross purchase price of $26,600. The vessel was delivered to the Company on June 1, 2021. The acquisition of the vessel was financed with cash on hand at the time of delivery and subsequently through the sale and leaseback agreement entered into with CMB Financial Leasing Co., Ltd., or CMBFL, on June 22, 2021 (Note 6).



On March 19, 2021, the Company entered into an agreement with an unaffiliated third party for the purchase of a secondhand Capesize vessel, the Hellasship, for a gross purchase price of $28,600. The vessel was delivered to the Company on May 6, 2021. The acquisition of the vessel was financed with cash on hand at the time of delivery and subsequently through the sale and leaseback agreement entered into with CMBFL on June 22, 2021 (Note 6).



On May 17, 2021, the Company entered into an agreement with unaffiliated third parties for the purchase of a secondhand Capesize vessel, the Worldship, for a gross purchase price of $33,700. The vessel was delivered to the Company on August 30, 2021. The acquisition of the vessel was financed with cash on hand at the time of delivery and subsequently through the Piraeus Bank Loan Facility (Note 6).



On June 22, 2021, the Company entered into an agreement with an unaffiliated third party for the purchase of a secondhand Capesize vessel, the Friendship, for a gross purchase price of $24,600. The vessel was delivered to the Company on July 27, 2021. The acquisition of the vessel was financed with cash on hand at the time of delivery and subsequently through the August 2021 Alpha Bank Loan Facility (Note 6).



On October 5, 2021, the Company entered into an agreement with an unaffiliated third party for the purchase of a secondhand Capesize vessel, the Dukeship, for a gross purchase price of $34,300. The vessel was delivered to the Company on November 26, 2021. The acquisition of the vessel was financed with cash on hand.


F-23
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

During the year ended December 31, 2021, an amount of $3,973 of expenditures were capitalized that concern improvements on vessels performance and meeting environmental standards mainly due to installation of ballast water treatment systems and other energy saving devices. During the year ended December 31, 2020, the Company installed an exhaust gas cleaning system, or scrubber, on one of its vessels. The cost of this scrubber amounted to $3,705 in the aggregate. The cost of the ballast water treatment systems, scrubbers and energy saving devices are accounted as major improvement and are capitalized to vessels’ cost and depreciated over the remaining useful life of each vessel. Additionally, an amount of $148 and $485 of expenditures were capitalized during the years ended December 31, 2021 and 2020, respectively. Amounts paid in each period in relation to the aforementioned additions are included in “Vessels acquisitions and improvements” under “Cash flows from investing activities” in the consolidated statements of cash flows.

As of December 31, 2021, the Knightship, the Championship, the Flagship, the Hellasship and the Patriotship are financed through other financial liabilities (sale and leaseback agreements) (Note 6). All vessels, except the ones financed through sale and leaseback agreements and the Dukeship, are mortgaged to secured loans of the Company (Note 6).

Gain on sale of vessel, net

On June 30, 2021, the Company entered into an agreement with an unaffiliated third party for the sale of the Leadership for a gross sale price of $12,600. As of June 30, 2021, the vessel was classified in current assets as “Vessels held for sale” in the consolidated balance sheet, according to the provisions of ASC 360, as all the criteria for this classification were met. The specific vessel was not impaired as of June 30, 2021, since its carrying amount plus unamortized dry-dock costs as at the balance sheet date was lower than its fair value less cost to sell. The vessel was delivered to her new owners on September 30, 2021. A gain on sale of vessel net of sale expenses amounting to $697 was recognized in the consolidated statement of operations, since its carrying amount plus unamortized dry-dock costs as at the balance sheet date was lower than its fair value less cost to sell and was presented as “Gain on vessel sale, net” in the consolidated statement of operations.

6.
Long-Term Debt and Other Financial Liabilities:
 
The amounts in the accompanying consolidated balance sheets are analyzed as follows:

 
  
December 31,
2021
    
December 31,
2020
  
Long-term debt and other financial liabilities
    
218,551
      
173,289
  
Less: Deferred financing costs and debt discounts
    
(3,377
)
    
(3,527
)
Total
    
215,174
      
169,762
  
Less - current portion
    
(68,473
)
    
(19,417
)
Long-term portion
    
146,701
      
150,345
  

Senior long-term debt

New Financing Activities during the year ended December 31, 2021

Aegean Baltic Bank S.A. (“ABB”) / ABB Loan Facility  

On April 22, 2021, the Company entered into a facility agreement with Aegean Baltic Bank S.A. for a $15,500 term loan for the financing of the Goodship and the Tradership, or the ABB Loan Facility. The facility was available in two tranches: (i) Tranche A of $7,500 for the Goodship was drawn down on April 26, 2021 and (ii) Tranche B of $8,000 for the Tradership was drawn down on June 14, 2021. The loan bears interest of LIBOR plus a margin of 4%. Tranche A is repayable in 18 quarterly installments of $200 each, with the last installment, together with a balloon installment of $3,900, payable in October 2025. Tranche B is repayable in 18 quarterly installments of $200 each, with the last installment, together with a balloon installment of $4,400, payable in December 2025. The Company is required to maintain a corporate leverage ratio (as defined therein), that will not be higher than 85% until the maturity. Each borrower is required to maintain minimum liquidity of $300 in its earnings account. In addition, the borrowers shall ensure that the market value of the vessels plus any additional security shall not be less than 130% of the aggregate outstanding loan amount. As of December 31, 2021, the amount outstanding under the facility was $14,700.

F-24
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

May 2021 Alpha Bank Loan Facility & August 2021 Alpha Bank Loan Facility 

On May 20, 2021, the Company entered into a facility agreement with Alpha Bank S.A. for a $37,450 term loan for the (i) refinancing of two existing loan facilities with Alpha Bank with an aggregate outstanding of $25,459 secured by the Leadership and the Squireship and (ii) partial financing of the previously unencumbered Lordship. On August 9, 2021, the Company entered into another facility agreement with Alpha Bank S.A. for a $44,120 term loan for the (i) refinancing of the loan facility with Alpha Bank secured by the Leadership, the Squireship and the Lordship and (ii) financing of the previously unencumbered Friendship, effectively replacing the Leadership with the Friendship in the security structure and increasing the loan amount. The loan is divided into two tranches as follows: Tranche A, secured by and corresponding to the Squireship and the Lordship and Tranche B, secured by and corresponding to the Friendship. The applicable interest rate for is LIBOR plus 3.5% and LIBOR plus 3.25% for Tranche A and Tranche B respectively. Tranche A matures on May 21, 2025, and Tranche B on August 11, 2025. Tranche A will be repaid through four quarterly installments of $1,250, followed by four quarterly installments of $1,040, followed by eight quarterly installments of $875 and a balloon of $14,960 payable together with the last installment. Tranche B will be repaid through four quarterly installments of $700 followed by twelve quarterly installments of $375 and a balloon of $5,700 payable together with the last installment. Each of the borrowers owning the Squireship and the Lordship are required to maintain average quarterly minimum free liquidity of $500, whereas the borrower owning the Friendship is required to maintain $500 at all times. In addition, the borrowers shall ensure that the market value of the vessels plus any additional security shall not be less than 125% of the aggregate outstanding loan amount. Both facility agreements were assessed based on provisions of ASC 470-50 and were treated as debt modifications. As of December 31, 2021, the amount outstanding under the facility was $40,920.

Piraeus Bank Loan Facility

On November 12, 2021, the Company entered into a $16,850 sustainability-linked loan facility with Piraeus Bank S.A. to finance part of the acquisition cost of the Worldship. The interest rate is 3.05% plus LIBOR, which can be decreased to 2.95% based on certain emission reduction thresholds (as described in detail therein) (Note 8). The principal will be repaid over a five-year term, through four  installments of $1,000, followed by two installments of $750, followed by 14 installments of $375, followed by a balloon of $6,100 payable together with the last installment. The Company is required to maintain a corporate leverage ratio (as defined therein), that will not be higher than 85% until the maturity. The borrower is required to maintain minimum liquidity of $850 in its earnings account. In addition, the borrower shall ensure that the market value of the vessel plus any additional security shall not be less than 130% of the aggregate outstanding loan amount. As of December 31, 2021, the amount outstanding under the facility was $16,850.

Sinopac Loan Facility 

On December 20, 2021, the Company entered into a $15,000 loan facility with Sinopac Capital International (HK) Limited to refinance the previous loan facility of Entrust Global secured by the Geniuship. The interest rate is 3.5% plus LIBOR. The principal will be repaid over a five-year term, through four quarterly installments of $530 followed by 16 quarterly installments of $385 and a final balloon payment of $6,720 payable together with the last installment. The borrower shall ensure that the market value of the vessel plus any additional security shall not be less than 130% of the aggregate outstanding loan amount. As of December 31, 2021, the amount outstanding under the facility was $15,000.

Pre - Existing Loan Facilities

UniCredit Bank Loan Facility 

On September 11, 2015, the Company entered into a facility agreement with UniCredit Bank AG, for a secured loan facility of $52,705 to partially finance the acquisition of the Premiership, Gladiatorship and Guardianship. On November 22, 2018 following the sale of the Gladiatorship and Guardianship, the Company entered into an amendment and restatement of the facility in order to (i) release the respective vessel-owning subsidiaries of the Gladiatorship and the Guardianship as borrowers and (ii) include as replacement borrower the vessel-owning subsidiary of the Fellowship. On July 3, 2019, the Company entered into a supplemental agreement pursuant to which: (i) $2,208 of installments originally falling due within 2019 were deferred to the balloon installment on December 28, 2020, (ii) the applicable margin was increased by 1% from 3.20% to 4.20% with effect from March 26, 2019 until December 27, 2019 inclusive and reinstated to the original levels subsequently and (iii) the requirement for each borrower to hold minimum liquidity of $500 cash was cancelled. On February 8, 2021, the Company entered into a supplemental agreement to the facility with UniCredit Bank AG. Pursuant to the supplemental agreement: (i) the application of the Leverage Ratio, the ratio of EBITDA to interest payments and the Security Cover Ratio (each term as defined therein) were waived with retrospective effect from June 2020 onwards (January 2020 for the Security Cover Ratio only) and for the remaining duration of the facility, (ii)  quarterly installments were reduced from $1,550 to $1,200, effective as of the December 2020 installment, (iii) the applicable margin was increased from 3.2% to 3.5% with effect as of December 29, 2020 until the maturity of the facility, and (iv) the maturity of the loan was extended to December 29, 2022 from December 29, 2020 initially. As of December 31, 2021, the amount outstanding under this facility was $27,185.

F-25
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

February 2019 ATB Loan Facility 

On February 13, 2019, the Company entered into a new loan facility with ATB, or the February 2019 ATB Loan Facility, in order to (i) refinance the existing indebtedness over the Partnership under the May 2017 ATB Loan Facility and (ii) for the financing of installation of open loop scrubber systems on the Squireship and Premiership. The February 2019 ATB Loan Facility is divided in Tranche A, relating to the refinancing of the Partnership, and Tranches B and C for the financing of the scrubber systems on the Squireship and the Premiership, respectively. Pursuant to the terms of the facility, Tranche A is repayable in eight equal quarterly installments being $200 each and a balloon payment of $13,190 payable on November 27, 2022 and each of Tranche B and C is repayable in seven quarterly installments of $189.8 until August 26, 2022. On February 12, 2021, the Company entered into a supplemental agreement to the facility with ATB. Pursuant to the supplemental agreement: (i) the Leverage Ratio (as defined therein) was amended to 85% from 75% previously, with retrospective effect from June 2020 onwards and for the remaining duration of the facility, (ii) the ratio of EBITDA to *interest payments (as defined therein) was waived with retrospective effect from June 2020 onwards and for the remaining duration of the facility and (iii) the minimum required security cover (as defined therein) was amended to (a) 140% until June 30, 2021 (inclusive), (b) 145% until December 31, 2021 (inclusive) and (c) 150% thereafter and until the maturity of the loan on November 26, 2022. On December 9, 2021, the Company entered into a supplemental letter to the facility with ATB. Pursuant to the supplemental letter: the lender (i) provided its consent for the prepayment of the Third JDH Note secured by the Partnership and being subject to an intercreditor agreement entered into between the Company, ATB and the holder of the convertible note, (ii) waived a breach of the borrower concerning the repayment of certain subordinated liabilities (as defined therein) in the amount of $1,080 and (iii) waived the borrower’s obligation to make an additional repayment (as defined therein) in the amount of $1,080. An amendment fee of $50 was paid in respect of the supplemental letter. As of December 31, 2021, the amount outstanding under this facility was $15,129.

July 2020 Entrust Facility 

On July 15, 2020, the Company entered into a secured loan facility of $22,500 with Lucid Agency Services Limited and Lucid Trustee Services Limited, as facility agent and security agent, respectively, and certain nominees of EnTrust Global as lenders, or the “July 2020 Entrust Facility”, the proceeds of which were used for the settlement of the HCOB Facility. The Company drew down the $22,500 on July 16, 2020. In addition, the July 2020 Entrust Facility was cross collateralized with an existing loan facility secured by the Lordship. The cross-collateral security structure was released following the full prepayment of the loan facility secured by the Lordship (discussed below under “Entrust Loan Facility”). On December 20, 2021, the Company repaid the balance of $14,618 related to Tranche B for the Geniuship. All securities created for the Geniuship were irrevocably and unconditionally released. On the date of repayment, $438 of unamortized debt discounts were written off according to the debt extinguishment guidance of ASC 470-50 “Debt Modifications and Extinguishments”. As of December 31, 2021, $5,500 was outstanding under the July 2020 Entrust Facility.

As of December 31, 2021, each of the facilities mentioned above was secured by a first priority mortgage over the respective vessel and a corporate guarantee by the Company. In addition, certain of these loan facilities are secured by general assignments covering the respective vessels’ earnings, charter parties, insurances and requisition compensation; account pledge agreements covering the vessels’ earnings accounts; specific charterparty assignments, usually for charterparties exceeding 12 months in duration; technical and commercial managers’ undertakings; pledge agreements covering the shares of the applicable vessel-owning subsidiaries and hedging assignment agreements.

F-26
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

Loan Facilities repaid during the years ended December 31, 2021, 2020 and 2019

Leader Alpha Bank Loan Facility 

On March 6, 2015, the Company entered into a loan agreement with Alpha Bank S.A., for a secured loan facility in an amount of $8,750. The loan was used to partially finance the acquisition of the Leadership. The loan, among others, was secured by a first preferred mortgage over the Leadership and a corporate guarantee by the Company. The interest rate of the facility was equal to LIBOR plus a margin of 3.75%. On March 17, 2020, the Company entered into a fifth supplemental agreement with Alpha Bank S.A. regarding the subject facility. Pursuant to the terms of the supplemental agreement: (i) the maturity date was extended from March 18, 2020 to December 31, 2022, (ii) the repayment of the facility would be made by eight consecutive quarterly repayments of $250 each followed by a balloon installment of $2,303 to be made on the maturity date, (iii) the financial covenants at the corporate guarantor level would not be applicable any longer save for the minimum liquidity covenant and (iv) a 30-days moving average balance of $500 was required to be maintained in the Earnings Account of the Leadership. An amendment fee of $50 was paid in respect of the fifth supplemental agreement. The fifth supplemental agreement was assessed based on provisions of ASC 470-50 and was treated as debt modification. The subject facility was refinanced in full on May 20, 2021.
 
Hamburg Commercial Bank AG (formerly HSH Nordbank AG) Loan Facility/Settlement Agreement 

On September 1, 2015, the Company entered into a loan agreement with Hamburg Commercial Bank AG (formerly HSH Nordbank AG), or HCOB, for a secured loan facility of $44,430, or the HCOB Facility. The loan was fully drawn down in 2015 and was used to pay for the acquisition of the Geniuship and the Gloriuship and had an original final maturity date of June 30, 2020. The HCOB Facility, was secured, among others, by first preferred mortgages over the Geniuship and Gloriuship and a corporate guarantee by the Company. The interest rate of the facility was equal to LIBOR plus a margin of 3.75%. On June 26, 2020, the Company entered into a settlement agreement with HCOB. Pursuant to the terms of the settlement agreement, the Company, in order to fully settle its obligations under the loan agreement was required to pay a total amount of $23,500 out of the then outstanding amount of the loan agreement of $29,056 until July 31, 2020. On July 17, 2020, the Company settled the full amount of the HCOB Facility through a $23,500 payment with the funds obtained from the proceeds of a new loan facility and cash on hand, following which all securities created in favor of HCOB were irrevocably and unconditionally released. As a result, the Company recognized a gain of $5,144. The settlement agreement was assessed based on provisions of ASC 470-60 and was treated as troubled debt restructuring.

Squire Alpha Bank Loan Facility

On November 4, 2015, the Company entered into a loan agreement with Alpha Bank S.A., for a secured loan facility of $33,750. The loan was used to partially finance the acquisition of the Squireship. The subject facility was secured, among others, by a first preferred mortgage over the Squireship, a corporate guarantee by Leader Shipping Co., being the vessel-owning subsidiary of the Leadership, a second preferred mortgage over the Leadership and a corporate guarantee by the Company. The interest rate of the facility was equal to LIBOR plus a margin of 3.50%. On March 31, 2020, the Company entered into a fourth supplemental agreement with Alpha Bank S.A. regarding the subject facility. Pursuant to the terms of the supplemental agreement: (i) the maturity date was extended from November 10, 2021 to December 31, 2022, (ii) the repayment of the facility would be made by two prepayments of $500 each on August 26, 2020 and October 1, 2020 as well as eight consecutive quarterly repayments of $919 each followed by a balloon installment of $14,975 to be made on the maturity date, (iii) the ratio of the market value of the Squireship plus any additional security to the total facility outstanding would not be less than 100% for 2020, not less than 110% starting for 2021 and not less than 115% until maturity, (iv) the financial covenants at the corporate guarantor level would not be applicable any longer save for the minimum liquidity covenant and (v) a 30-days moving average balance of $500 was required to be maintained in the earnings account of the Squireship. An amendment fee of $75 was paid in respect of the fourth supplemental agreement. The fourth supplemental agreement was assessed based on provisions of ASC 470-50 and was treated as debt modification. The subject facility was refinanced in full on May 20, 2021.

May 2017 ATB Loan Facility

On May 24, 2017, the Company entered into a loan agreement with ATB for a secured loan facility of up to $18,000 to partially finance the acquisition of the Partnership. On September 25, 2017, in order to partially fund the refinancing of a previous loan facility with Natixis dated December 2, 2015, the facility was amended and restated (referred to hereunder as the “May 2017 ATB Loan Facility”), increasing the loan amount by an additional tranche of $16,500, or Tranche B. The amendment and restatement of the facility did not alter the interest rate, the maturity date, the amortization and the repayment terms of the existing tranche under the loan facility, or the financial covenants applicable to the Company as guarantor. On November 7, 2018, ATB entered into a deed of release with respect to the Championship, releasing the underlying borrower in full after the settlement of the outstanding balance of $15,700 pertaining to the specific vessel tranche. The first-priority mortgage over the Championship and all other securities created in favor of ATB for the specific vessel’s tranche were irrevocably and unconditionally released pursuant to the deed of release. On February 15, 2019, ATB entered into a further deed of release with respect to the Partnership resulting in a complete release of the facility agreement after full settlement of the outstanding balance of $16,390.

F-27
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

Entrust Loan Facility 

On June 11, 2018, the Company entered into a $24,500 loan agreement with certain Blue Ocean maritime lending funds managed by EnTrust Permal as lenders and Wilmington Trust, National Association as facility and security agent for the purpose of refinancing the outstanding indebtedness of the Lordship under a previous loan facility with Northern Shipping Fund, of NSF. The facility was expiring on June 13, 2023, or on June 13, 2025, subject to certain conditions, and had a balloon installment of $15,300 or $9,500 due at maturity, assuming a maturity date in June 2023 or in June 2025, respectively. The weighted average all-in interest rate was equal to 11.4% or 11.2% assuming a maturity date in June 2023 or in June 2025, respectively. The subject facility was secured, among others, by a first priority mortgage over the Lordship and a corporate guarantee by the Company. On July 15, 2020, the Company entered into an amendment and restatement of the $24,500 loan agreement mentioned above. The amended and restated facility is hereunder referred to us the “Entrust Loan Facility”. Pursuant to the terms of the Entrust Loan Facility (i) Wilmington Trust, National Association resigned as facility agent and security agent and Lucid Agency Services Limited and Lucid Trustee Services Limited were appointed as successor facility agent and security agent, respectively and (ii) the facility was cross-collateralized with the July 2020 Entrust Facility . The original terms and securities of the subject facility agreement were not otherwise altered by the amendment and restatement. The amendment and restatement of the agreement was assessed based on provisions of ASC 470-50 and was treated as debt modification. On March 5, 2021, the Company repaid the full balance of the Entrust Loan Facility and all securities created to cross-collateralize the Entrust Loan Facility with the July 2020 Entrust Facility  were irrevocably and unconditionally released. As of December 31, 2021, an amount of $438 was recognized as loss on debt extinguishment according to the debt extinguishment guidance of ASC 470-50 “Debt Modifications and Extinguishments” and was included in “Loss in extinguishment of debt” in the consolidated statement of operations.

Other Financial Liabilities - Sale and Leaseback Transactions

New Sale and Leaseback Activities during the year ended December 31, 2021

Flagship Cargill Sale and Leaseback 

On May 11, 2021, the Company entered into a $20,500 sale and leaseback agreement with Cargill for the purpose of financing part of the acquisition cost of the Flagship. The Company sold and chartered back the vessel from Cargill on a bareboat basis for a five-year period, having a purchase obligation at the end of the fifth year. Under ASC 842-40, the transaction was accounted for as a financial liability. The implied average applicable interest rate is equivalent to 2% per annum. The sale and leaseback agreement does not include any financial covenants or security value maintenance provisions. The Company has continuous options to buy back the vessel during the whole five-year sale and leaseback period at predetermined prices as set forth in the agreement and at the end of such period it has a purchase obligation at $10,000. Additionally, at the time of repurchase, if the market value of the vessel exceeds certain threshold prices, as set forth in the agreement, the Company will pay to Cargill 15% of the difference between the market price and such threshold prices. The Company has concluded that such contingent payment shall not be accrued in the consolidated financial statements, since information available does not indicate that it is probable that a liability has been incurred (i.e., buy back option) as of the latest balance sheet date and cannot be estimated. The charterhire principal amortizes in sixty monthly installments averaging approximately $175 each along with a balloon payment of $10,000, at maturity on May 10, 2026. The charterhire principal as of December 31, 2021, was $19,334.

CMB Financial Leasing Co., Ltd. (“CMBFL”) Sale and Leaseback 

On June 22, 2021, the Company entered into sale and leaseback agreements for the Hellasship and the Patriotship in the total amount of a $30,900 with CMBFL for the purpose of financing the outstanding acquisition price of both vessels. The Company sold and chartered back the vessels from two affiliates of CMBFL on a bareboat basis for a five-year period. The financings bear interest of LIBOR plus a margin of 3.5%. The Company is required to maintain a corporate leverage ratio (as defined therein) that will not be higher than 85% until the maturity. Additionally, each bareboat Charterer is required to maintain minimum liquidity of $550 in its earnings account. The bareboat charterers are also required to maintain a value maintenance ratio of at least 120% of the charterhire principals. The Company has the option to buy back the vessels between the end of the second year until the end of the fifth year at predetermined prices as defined in the agreement. Under ASC 842-40, the transaction was accounted for as a financial liability as it was determined that the Company’s exercise of the option to buy back the vessels was highly probable considering the Company’s significant equity participation in the project, and as a result, the expiry cost of each vessel will be considerably lower than the respective net book value at such time. The charterhire principal amortizes in twenty quarterly installments of $780 each along with a balloon payment of $15,300, at maturity on June 28, 2026. The charterhire principal as of December 31, 2021, was $29,340.

F-28
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

Existing Sale and Leaseback Agreements

Hanchen Sale and Leaseback 

On June 28, 2018, the Company entered into a $26,500 sale and leaseback agreement for the Knightship with Hanchen Limited (“Hanchen”), an affiliate of AVIC International Leasing Co., Ltd.. The Company’s wholly-owned subsidiary, Knight Ocean Navigation Co (“Knight” or the “Charterer”) sold and chartered back the vessel on a bareboat basis for an eight year period, having a purchase obligation at the end of the eighth year. The charterhire principal bears interest at LIBOR plus a margin of 4%.  Under ASC 842-40, the transaction was accounted for as a financial liability.  Of the $26,500, $18,550 were cash proceeds, $6,625 was withheld by Hanchen as an upfront charterhire upon the delivery of the vessel, and an amount of $1,325, or Charterer’s Deposit, included in “Deposits assets, non-current” in the consolidated balance sheets as of December 31, 2021 and 2020, was given as a deposit by Knight to Hanchen upon the delivery of the vessel in order to secure the due observance and performance by Knight of its obligations and undertakings as per the sale and leaseback agreement. The Charterer’s Deposit can be set off against the balloon payment at maturity. The Charterer is required to maintain a value maintenance ratio (as defined in the additional clauses of the bareboat charter) of at least 120% of the charterhire principal minus the Charterer’s Deposit. The Company has continuous options to buy back the Knightship at any time following the second anniversary of the bareboat charter and a purchase obligation of $5,299 at the end of the leaseback period. The charterhire principal amortizes in thirty-two consecutive equal quarterly installments of approximately $456 along with a balloon payment of $5,299 at maturity on June 29, 2026. The charterhire principal, as of December 31, 2021, was $13,498.

Championship Cargill Sale and Leaseback 

On November 7, 2018, the Company entered into a $23,500 sale and leaseback agreement for the Championship with Cargill International SA (“Cargill”) for the purpose of refinancing the outstanding indebtedness of the Championship under the May 2017 ATB Loan Facility. The Company sold and chartered back the vessel from Cargill on a bareboat basis for a five year period, having a purchase obligation at the end of the fifth year. The cost of the financing is equivalent to a fixed interest rate of 4.71% for five years. Under ASC 842-40, the transaction was accounted for as a financial liability. The Company is required to maintain an amount of $1,600 which may be set-off against the vessel repurchase price (Note 3). Moreover, under the subject sale and leaseback agreement, an additional tranche was provided to the Company for an amount of up to $2,750 for the purpose of financing the cost associated with the acquisition and installation on board the Championship of an open loop scrubber system which was fully drawn. The sale and leaseback agreement does not include any financial covenants or security value maintenance provisions. Moreover, as part of the transaction, the Company issued 7,500 of its common shares to Cargill which were subject to customary statutory registration requirements. The fair market value of the shares on the date issued to Cargill was $1,541 and amortize over the lease term using the effective interest method.  The unamortized balance is accounted for as a deferred finance cost and is classified in other financial liabilities on the consolidated balance sheets. The Company has continuous options to buy back the vessel during the whole five-year sale and leaseback period at predetermined prices as set forth in the agreement and at the end of which period it has a purchase obligation at $14,051. Additionally, at the time of repurchase, if the market value of the vessel exceeds certain threshold prices, as set forth in the agreement, the Company will pay to Cargill 15% of the difference between the market price and such threshold prices.   The Company has concluded that such contingent payment shall not be accrued in the consolidated financial statements, since information available does not indicate that it is probable that a liability has been incurred (i.e., buy back option) as of the latest balance sheet date and cannot be estimated.  The charterhire principal amortizes in sixty monthly installments averaging approximately $167 each along with a balloon payment of $14,051, including the additional scrubber tranche, at maturity on November 7, 2023. The charterhire principal and the scrubber tranche, as of December 31, 2021, was $17,594 and $1,652, respectively.

F-29
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

As of December 31, 2021, certain of the Company’s sale and leaseback agreements discussed above are secured by a guarantee from the Company; general assignments covering the respective vessels’ (i) earnings, (ii) insurances and requisition compensation; account pledge agreements; technical and commercial managers’ undertakings and pledge agreements covering the shares of the applicable bareboat charterer subsidiary.
 
All of the Company’s secured facilities (i.e., long-term debt and other financial liabilities) bear either floating interest at LIBOR plus a margin or fixed interest.

Certain of the Company’s long-term debt and other financial liabilities contain financial covenants and undertakings requiring the Company to maintain various financial ratios, including:

•
a minimum borrower’s liquidity;
•
a minimum guarantor’s liquidity;
•
a borrower’s security coverage requirement; and
•
a guarantor’s leverage ratio.

As of December 31, 2021, the Company was in compliance with all covenants relating to its loan facilities as at that date.

As of December 31, 2021, eleven of the Company’s owned vessels, having a net carrying value of $253,276, were subject to first and second priority mortgages as collaterals to their long-term debt facilities. In addition, the Company’s five bareboat chartered vessels, having a net carrying value of $138,592 as of December 31, 2021, have been financed through sale and leaseback agreements. As of December 31, 2021, one of the Company’s owned vessels, having a net carrying value of $34,194, was not subject to any mortgage as collateral to a long-term facility.

Subordinated long-term debt

The Company refers to the First JDH Loan, the Second JDH Loan and the Fourth JDH Loan (all mentioned below) as the “JDH Loans”.


Securities Purchase Agreements and Omnibus Supplemental Agreements:

On May 9, 2019, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with JDH in exchange for, among other things, the full and final settlement of certain unpaid interest and the neutralization of the interest rate under the JDH Loans and the JDH Notes (Note 7) for the period of April 1, 2019 until December 31, 2019 inclusive and a waiver of a mandatory prepayment requirement under the Fourth JDH Loan. In particular, in exchange for: (a) 621,958 Units, JDH settled $2,115 of accrued unpaid interest through March 31, 2019 and (b) 1,201,571 Units, JDH (i) amended the interest rate at 0% per annum under each of the JDH Notes and JDH Loans for the period between April 1, 2019 and December 31, 2019 inclusive, resulting in an elimination of interest payments in an aggregate amount of $3,846 (which was accounted for as a deferred finance cost), and (ii) waived the mandatory prepayment obligation under the Fourth JDH Loan to prepay the full or any part of the loan by utilizing at least 25% of the net proceeds of any public offering of securities, resulting in a deferred finance cost of $239. The $2,115 accrued unpaid interest settled was written off and an equal amount was recorded in equity at a price of $3.40 per unit which was determined as the fair value of the units at the date of the transaction, by reference to the public offering of units that took place concurrently with the private placement. In this respect, no gain or loss was recognized in the accompanying consolidated financial statements in relation with this transaction. The Company considered the guidance under ASC 470-50 “Debt Modifications and Extinguishments” regarding the elimination of interest payments and the deferred finance cost for the waiver of the prepayment of $3,846 and $239, respectively. Such amounts were deemed equivalent to the fair value of the shares issued to JDH under the Purchase Agreement. The transaction was accounted for as debt modification, and as such, both amounts were recorded in equity and were deferred and amortized over the duration of the related facilities (and presented on the balance sheet against the respective balances as “net of deferred finance costs”).

F-30
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

In December 2020, the Company and JDH entered into another securities purchase agreement, or SPA, an omnibus supplemental agreement with respect to the JDH Loans (as mentioned below), or Omnibus Loans Agreement, and an omnibus supplemental agreement with respect to the JDH Notes (as mentioned below), or Omnibus Notes Agreement, which set forth the terms of the amendments of the outstanding loan facilities and convertible notes between the Company and JDH. Pursuant to these agreements, all maturities under the JDH Loans and the JDH Notes (as mentioned below) were extended to December 2024 and the interest rate was set at 5.5% until maturity. The conversion price under the JDH Notes was set to $1.20 per common share. In connection with this transaction, the Company prepaid $6,500 of the principal amount of the Second JDH Loan on December 31, 2020. In exchange for the settlement of all accrued and unpaid interest under the JDH Loans and JDH Notes through December 31, 2020, in an aggregate amount of $4,350, and an amendment fee of $1,241, the Company issued, on January 8, 2021, 7,986,913 units at a price of $0.70 per unit, with each unit consisting of one common share of the Company (or, at JDH’s option, one pre-funded warrant in lieu of such common share) and one warrant to purchase one common share at an exercise price of $0.70. Furthermore, the Company granted to JDH an option, to purchase up to 4,285,714 additional Units at a price of $0.70 per Unit in exchange for the settlement of principal under the Second JDH Loan in an amount equal to the aggregate purchase price of the units. In addition, pursuant to the terms of the Omnibus Loans Agreement, in 2022 and 2023, two mandatory repayments of $8,000 will be made, which will be applied to the JDH Loans on a pro rata basis based upon the principal amounts outstanding at that time. Any amounts outstanding after the two mandatory repayments will be repaid at the maturity date. Furthermore, the Omnibus Loans Agreement provides for certain prepayment provisions through a cash sweep mechanism, capturing (i) corporate liquidity in excess of $25,000 or (ii) Time Charter Equivalent revenues in excess of $18,000 and up to $21,000. Lastly the JDH Loans are mandatorily prepaid on a pro rata basis from 25% of the net proceeds from any future equity offerings and warrant exercises. Pursuant to the terms of the Omnibus Loans Agreement, the total repayments on the JDH Loans (including the mandatory repayments and any prepayments) shall not exceed $12,000 in any twelve-month period ending on December 31.

The Company considered the troubled debt restructuring guidance regarding the December 31, 2020 JDH amendments and concluded that it was not met. The Company further considered the modification and extinguishment accounting guidance under ASC 470-50 and concluded that modification accounting was appropriate. The Company concluded:

(i) amount of $1,015 was expensed as incurred in 2020, since it concerned amounts paid to third parties in relation to the JDH amendments, whereas the remaining amount of $166 was included in additional paid-in capital, since these costs related to the issuance of units;

(ii) the amendment fee of $1,241 has been accounted for as a debt deferred cost and will be amortized to each facility’s maturity;

(iii) the fair value of the option granted to JDH to purchase up to 4,285,714 additional units was recorded as debt discount and will be amortized to Second JDH Loan’s maturity (Note 7);

(iv) for the accounting treatment of the fair value of the units issued to JDH and the change in the fair value of the conversion option, refer to Note 7.

All amounts regarding the JDH amendments discussed above were recorded as of December 31, 2020, the date of the closing of the transaction.


First JDH Loan originally entered into on October 4, 2016


On October 4, 2016, the Company entered into a loan facility with JDH to partly finance the acquisition of the Lordship and Knightship. As amended, the aggregate amount borrowed was $12,800. As further amended, the facility was repayable in one bullet payment together with accrued interest on the maturity date. On February 13, 2019, the Company and JDH amended and restated the First JDH Loan, in order to, among other things, extend the final repayment date to June 30, 2020. On May 29, 2019, the Company and JDH further amended the First JDH Loan in order to reflect the changes agreed with JDH in the Purchase Agreement: (i) interest of $159 unpaid and accrued up to March 31, 2019 inclusive was deemed fully and finally settled, (ii) the interest rate was amended to 0% per annum for the period between April 1, 2019 and December 31, 2019 inclusive, and (iii) the interest rate from January 1, 2020 until maturity was set at three-month LIBOR plus a margin of 8.5%. The Company obtained extension of the maturity of this facility which was originally due on June 30, 2020 until November 13, 2020. Following the extension, the interest rate margin of the facility was increased by 1% per annum.


Pursuant to the terms of the SPA, all unpaid interest accrued of $630 under the First JDH Loan through December 31, 2020 was deemed fully and finally settled.  This facility was secured by a second preferred mortgage and second priority general assignment covering earnings, insurances and requisition compensation over the Partnership and a guarantee from the vessel-owning subsidiary of the Partnership, all cross collateralized with the Third JDH Note and the Second JDH Loan, and a guarantee from the Company’s wholly-owned subsidiary, Emperor Holding Ltd. (“Emperor”), which is the holding company of the vessel-owning subsidiary that owns the Lordship and of the bareboat charterer of the Knightship.

F-31
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

In February 2021, the Company fully repaid the outstanding balance of $5,900 of the First JDH Loan using proceeds from (i) Class E warrants exercises during 2021 (Note 10) and (ii) its February 2021 registered direct offering (Note 10), pursuant to the mandatory prepayment terms of the SPA and Omnibus Loans Agreement. On the date of repayment, $111 of unamortized debt discounts were written off according to the debt extinguishment guidance of ASC 470-50 “Debt Modifications and Extinguishments” and was included in “Loss in extinguishment of debt” in the consolidated statement of operations.

Second JDH Loan originally entered into on May 24, 2017
 
On May 24, 2017, the Company entered into a $16,200 loan facility with JDH to partially finance the acquisition of the Partnership. On February 13, 2019, the Company and JDH amended the Second JDH Loan, in order to, among other things, extend the final repayment date to December 30, 2020. On May 29, 2019, the Company and JDH further amended the Second JDH Loan to reflect the changes agreed with JDH in the Purchase Agreement: (i) interest of $354 unpaid and accrued up to March 31, 2019 was deemed fully and finally settled, (ii) the interest rate was amended to 0% per annum for the period between April 1, 2019 and December 31, 2019 inclusive and (iii) the interest rate from January 1, 2020 until maturity was set at three-month LIBOR plus a margin of 6.0%.

Pursuant to the terms of the SPA, all unpaid interest accrued of $841 under the Second JDH Loan through December 31, 2020 was deemed fully and finally settled.  The facility was secured by a second preferred mortgage and second priority general assignment covering earnings, insurances and requisition compensation over the Partnership and a guarantee from the vessel-owning subsidiary of the Partnership; all cross collateralized with the Third JDH Note and the First JDH Loan, and a guarantee from Emperor. The unamortized deferred financing costs as of December 31, 2020, include an amount of $543, being the fair value of the option granted to JDH to purchase additional securities (Note 8).

In February 2021, the Company prepaid $100 of the outstanding balance of the Second JDH Loan, using proceeds from (i) Class E warrants exercises during 2021 (Note 10) and (ii) its February 2021 registered direct offering (Note 10). On April 26, 2021, JDH exercised its option to purchase 4,285,714 additional Units (with each unit consisting of one common share of the Company, or, at JDH’s option, one pre-funded warrant in lieu of such common share, and one warrant to purchase one common share at an exercise price of $0.70) at a price of $0.70 per Unit in exchange for the settlement of principal under the Second JDH Loan in an amount of $3,000 (i.e., an amount equal to the aggregate purchase price of the units). The issuance of units to JDH and associated reduction in debt balance took place on May 6, 2021. On the same date, the Company fully amortized the unamortized balance of $424 of the fair value of the option to purchase the 4,285,714 Units, in accordance with its original conversioin terms and recognized such amount in “Interest and Finance costs”. As of December 31, 2021, an amount of $1,850, gross of deferred financing costs of $44, was outstanding under the Second JDH Loan (Note 14).

Fourth JDH Loan originally entered into on March 26, 2019

On March 26, 2019, the Company entered into a $7,000 loan facility with JDH, the proceeds of which were utilized (i) to refinance a loan facility originally entered with JDH in April 2018 and (ii) for general corporate purposes. The Company drew down the entire $7,000 on March 27, 2019. The facility had a maturity date of September 27, 2020 and was repayable through one installment of $1,000 due on January 5, 2020 and a balloon installment of $6,000 payable at maturity. If the balance of Cash and Cash Equivalents (including Restricted Cash) as of December 31, 2019 was lower than $7,500, the Company had the option to request the deferral of the first repayment installment to the balloon installment; the Company repaid the $1,000 to JDH in January 2020. On May 29, 2019, the Company and JDH amended the Fourth JDH Loan to reflect the changes agreed with JDH in the Purchase Agreement: (i) interest of $6 unpaid and accrued up to March 31, 2019 inclusive was deemed fully and finally settled, (ii) the interest rate was amended to 0% per annum for the period between April 1, 2019 and December 31, 2019 inclusive, (iii) the interest rate from January 1, 2020 until maturity was set at 6.0% per annum and (iv) the mandatory obligation to prepay the full or any part of the Fourth JDH Loan by utilizing an amount equal to not less than 25% of the net proceeds of any public offering of securities was waived. The Company obtained an extension of the maturity of this facility which was originally due on September 27, 2020 until November 13, 2020.

Pursuant to the terms of the SPA, all unpaid interest of $454 accrued under the Fourth JDH Loan through December 31, 2020 was deemed fully and finally settled. The Fourth JDH Loan Facility was secured by a guarantee from Emperor.

F-32
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

In February 2021, the Company fully repaid the outstanding balance of $6,000 of the Fourth JDH Loan using proceeds from (i) Class E warrants exercises during 2021 (Note 10) and (ii) its February 2021 registered direct offering (Note 10), pursuant to the mandatory prepayment terms of the SPA and Omnibus Loans Agreement. On the date of repayment, $113 of unamortized debt discounts were written off according to the debt extinguishment guidance of ASC 470-50 “Debt Modifications and Extinguishments” and was included in “Loss in extinguishment of debt” in the consolidated statement of operations.

The annual principal payments required to be made after December 31, 2021 for all long-term debt and other financial liabilities are as follows:

Twelve month periods ending December 31,
  
Amount
  
2022
    
69,821
  
2023
    
35,731
  
2024
    
18,108
  
2025
    
45,041
  
Thereafter
    
49,850
  
Total
    
218,551
  

F-33
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

7.
Convertible Notes:

The Company refers to the First JDH Note, the Second JDH Note and the Third JDH Note (mentioned below) as the “JDH Notes”.

The amounts in the accompanying consolidated balance sheets are analyzed as follows:

 
  
December 31,
2021
    
December 31,
2020
  
Convertible notes
    
21,165
      
38,715
  
Less: beneficial conversion feature
    
(10,949
)
    
(18,360
)
Convertible notes, net of beneficial conversion feature
    
10,216
      
20,355
  
Less: Deferred financing costs
    
(75
)
    
(915
)
Less: Change in fair value of conversion option
    
(2,568
)
    
(4,924
)
Total
    
7,573
      
14,516
  
Less - current portion
    
(769
)
    
-
  
Long-term portion
    
6,804
      
14,516
  

On December 31, 2020, the Company entered into the Omnibus Notes Agreement pursuant to which the maturity of the JDH Notes were extended to December 31, 2024, the interest rate was set at a fixed rate of 5.5% and the conversion price was adjusted to $1.20. In addition, pursuant to the terms of the Omnibus Notes Agreement, in 2022 and 2023, two mandatory repayments will be made towards the JDH Notes in an amount equal to the difference between $8,000 and any repayments made towards the First, Second and Fourth JDH Loans under the Omnibus Loans Agreement. Amounts repaid will be applied to the JDH Notes on a pro rata basis based upon the principal amounts outstanding. Any amounts outstanding after the two mandatory repayments will be repaid at the maturity date. Furthermore, the Omnibus Notes Agreement provides for certain prepayment provisions through a cash sweep mechanism, capturing (i) corporate liquidity in excess of $25,000 or (ii) Time Charter Equivalent revenues in excess of $18,000 and up to $21,000. The total amount to be repaid on the JDH Notes (including the mandatory repayments and any prepayments) and on the JDH Loans shall not exceed $12,000 in any twelve-month period ending on December 31. Additionally, pursuant to the terms of the SPA, all unpaid interest accrued under the JDH Notes through December 31, 2020 of $2,425 was deemed fully and finally settled.
F-34
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

March 12, 2015 - $4,000 Convertible Note (First JDH Note)

On March 12, 2015, the Company issued a convertible note of $4,000 to JDH for general corporate purposes. The First JDH Note was secured by a guarantee from Emperor. On March 26, 2019, the Company and JDH amended the First JDH Note, in order to, among other things, (i) extend the maturity to December 31, 2020 and (ii) provide that the aggregate outstanding principal amount along with accrued interest shall be repaid in one bullet payment on the maturity date. On May 29, 2019, the Company and JDH further amended the First JDH Note, in order to reflect the changes agreed with JDH in the Purchase Agreement: (i) interest of $155 unpaid and accrued up to March 31, 2019 inclusive was deemed fully and finally settled, (ii) the interest rate was amended to 0% per annum for the period between April 1, 2019 and December 31, 2019 inclusive and (iii) the interest rate from January 1, 2020 until maturity was set at three-month LIBOR plus a margin of 5% with quarterly interest payments. Pursuant to the terms of the SPA, all unpaid interest accrued of $238 under the First JDH Note through December 31, 2020 was deemed fully and finally settled.

On October 5, 2021, JDH elected to convert $120 of the principal amount of the First JDH Note into 100,000 fully paid and non-assessable shares. On the date of conversion, $19 of unamortized debt discounts were expensed as interest according to the debt conversion guidance of ASC 470-20-40-1.

On October 8, 2021, JDH elected to convert an additional $3,480 of the principal amount of the First JDH Note into 2,900,000 fully paid and non-assessable shares. On the date of conversion, $543 of unamortized debt discounts were expensed as interest according to the debt conversion guidance of ASC 470-20-40-1.

On December 10, 2021, the Company redeemed at par the $200 outstanding balance of the First JDH Note with cash on hand by utilizing the note’s voluntary prepayment provisions (as described therein). On the date of prepayment, $30 of unamortized debt discounts were written off according to the debt extinguishment guidance of ASC 470-20-40-3 and was included in “Loss in extinguishment of debt” in the consolidated statement of operations. As of December 31, 2021, no amounts were outstanding under the First JDH Note.

September 27, 2017 - $13,750 Convertible Note (Third JDH Note)

On September 27, 2017, the Company issued a convertible note of $13,750 to JDH for, inter alia, general corporate purposes. The Third JDH Note was secured by a second preferred mortgage and second priority general assignment covering earnings, insurances and requisition compensation over the Partnership and a guarantee from the Company’s vessel-owning subsidiary that owns the Partnership; all cross collateralized with the First and the Second JDH Loans (Note 6) and by a guarantee from Emperor. On February 13, 2019, the Company and JDH amended the Third JDH Note, in order to, among other things, (i) extend the note’s maturity to December 31, 2022, (ii) provide that the aggregate outstanding principal amount along with unpaid and accrued interest shall be repaid in one bullet payment on the maturity date and (iii) record the second priority securities and the guarantee from Emperor mentioned above. The second priority mortgage, second priority general assignment covering earnings, insurances and requisition compensation over the Partnership and the guarantee issued from the vessel’s owning subsidiary were executed on February 15, 2019. Additionally, an option was given to the Company to prepay at any time the whole or any part of the note in a number of fully paid and non-assessable shares in the Company equal to an amount of the note being prepaid divided by a price per share to be agreed with JDH. On May 29, 2019, the Company and JDH further amended the Third JDH Note, in order to reflect the changes agreed with JDH in the Purchase Agreement: (i) interest of $540 unpaid and accrued up to March 31, 2019 inclusive was deemed fully and finally settled, (ii) the interest rate was amended to 0% per annum for the period between April 1, 2019 and December 31, 2019 inclusive and (iii) the interest rate from January 1, 2020 until the note’s maturity was set at three-month LIBOR plus a margin of 5% with quarterly interest payments. Pursuant to the terms of the SPA, all unpaid interest accrued of $861 under the Third JDH Note through December 31, 2020 was deemed fully and finally settled.

On December 10, 2021, the Company redeemed at par the $13,750 outstanding balance of the Third JDH Note with cash on hand by utilizing the note’s voluntary prepayment provisions (as described therein). On the date of prepayment, $6,171 of unamortized debt discounts, which included BCF, were written off according to the debt extinguishment guidance of ASC 470-20-40-3 and was included in “Loss in extinguishment of debt” in the consolidated statement of operations. As of December 31, 2021, no amounts were outstanding under the Third JDH Note.

F-35
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

The net debt at inception (i.e. initial applicable limit minus debt discount related to BCF), accumulated deficit and debt movement of the First and Third JDH Notes is presented below:
   
Net debt at inception
    
Accumulated deficit
    
Debt
  
Balance, December 31, 2019
    
3,361
      
5,801
      
9,162
  
Amortization (Note 11)
    
-
      
2,869
      
2,869
  
Balance, December 31, 2020
    
3,361
      
8,670
      
12,031
  
Repayments/ Conversions
    
(17,550
)
    
-
      
(17,550
)
Amortization (Note 11)
    
-
      
995
      
995
  
Loss on extinguishment
    
-
      
4,524
      
4,524
  
Balance, December 31, 2021
    
(14,189
)
    
14,189
      
-
  

The equity movement of the First and Third JDH Notes is presented below:

   
Additional
paid-in capital
  
Balance, December 31, 2019
    
14,189
  
Balance, December 31, 2020
    
14,189
  
Balance, December 31, 2021
    
14,189
  

September 7, 2015 - $21,165 Revolving Convertible Note (Second JDH Note)

On September 7, 2015, the Company issued a revolving convertible note of $6,765 (the “Applicable Limit”) to JDH for general corporate purposes. Following twelve amendments to the Second JDH Note between December 2015 and May 2019, the Applicable Limit was raised to $24,665. Moreover, pursuant to the eleventh amendment entered into on March 26, 2019, the Company was provided with the option to drawdown up to $3,500 by April 10, 2020, or the Final Revolving Advance Date. Since such request was not made by the Final Revolving Advance Date, the Applicable Limit was reduced to $21,165. The aggregate outstanding principal was repayable in December 2022. The Second JDH Note is secured by a guarantee from Emperor. On May 29, 2019, the Company and JDH amended the Second JDH Note, in order to reflect the changes agreed with JDH in the Purchase Agreement: (i) interest of $901 unpaid and accrued up to March 31, 2019 inclusive was deemed fully and finally settled, (ii) the interest rate was amended to 0% per annum for the period between April 1, 2019 and December 31, 2019 inclusive and (iii) the interest rate from January 1, 2020 until the note’s maturity was set at three-month LIBOR plus a margin of 5% with quarterly interest payments. Pursuant to the terms of the SPA, all unpaid interest accrued of $1,326 under the Second JDH Note through December 31, 2020 was deemed fully and finally settled. As of December 31, 2021, $21,165 was outstanding under the Second JDH Note. The Company voluntarily prepaid $5,000 of the Second JDH Note on January 26, 2022 and another $5,000 on March 10, 2022 (Note 14).

The net debt at inception (i.e. initial applicable limit minus debt discount related to BCF), accumulated deficit and debt movement of the Second JDH Note is presented below:

   
Net debt at inception
    
Accumulated deficit
     Debt  
Balance, December 31, 2019
    
3,500
      
5,675
      
5,675
  
Deductions
    
(3,500
)
    
-
      
-
  
Amortization (Note 11)
    
-
      
2,649
      
2,649
  
Balance, December 31, 2020
    
-
      
8,324
      
8,324
  
Amortization (Note 11)
    
-
      
1,892
      
1,892
  
Balance, December 31, 2021
    
-
      
10,216
      
10,216
  

F-36
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

The equity movement of the Second JDH Note is presented below:

   
Additional
paid-in capital
  
Balance, December 31, 2019
    
21,165
  
Balance, December 31, 2020
    
21,165
  
Balance, December 31, 2021
    
21,165
  
 
The Company may, by giving five business days prior written notice to JDH at any time, prepay the whole or any part of the JDH Notes in cash or, subject to JDH’s prior written agreement on the price per share, in a number of fully paid and nonassessable shares of the Company equal to the amount of the note(s) being prepaid divided by the agreed price per share. At JDH’s option, the Company’s obligation to repay the principal amount(s) under the JDH Notes or any part thereof may be paid in common shares at a conversion price of $1.20 per share. JDH has also received customary registration rights with respect to any shares to be received upon conversion of the JDH Notes. Refer above to discussion of the First JDH Note with regards to conversions within the year.

The annual principal payments required to be made after December 31, 2021, are as follows:

Twelve month periods ending December 31,
  
Amount
  
2022
    
6,150
  
2023
    
8,000
  
2024
    
7,015
  
2025
    
-
  
Thereafter
    
-
  
Total
    
21,165
  

8.
Financial Instruments:
 
The guidance for fair value measurements applies to all assets and liabilities that are being measured and reported on a fair value basis. This guidance enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The same guidance requires that assets and liabilities carried at fair value should be classified and disclosed in one of the following three categories based on the inputs used to determine its fair value:
 
•
Level 1: Quoted market prices in active markets for identical assets or liabilities;
•
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data;
•
Level 3: Unobservable inputs that are not corroborated by market data.

(a)          Significant Risks and Uncertainties, including Business and Credit Concentration
 
The Company places its temporary cash investments, consisting mostly of deposits, primarily with high credit qualified financial institutions. The Company performs periodic evaluations of the relative credit standing of those financial institutions that are considered in the Company’s investment strategy. The Company limits its credit risk with accounts receivable by performing ongoing credit evaluations of its customers’ financial condition and generally does not require collateral for its accounts receivable and does not have any agreements to mitigate credit risk.
 
(b)          Fair Value of Financial Instruments
 
The fair values of the financial instruments shown in the consolidated balance sheets as of December 31, 2021 and 2020, represent management’s best estimate of the amounts that would be received to sell those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants at that date.
 
F-37
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

Those fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company’s own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by the Company based on the best information available in the circumstances.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments:
 
a.
Cash and cash equivalents, restricted cash, accounts receivable trade, other current assets and trade accounts and other payables: the carrying amounts approximate fair value because of the short maturity of these instruments. The carrying value approximates the fair market value for interest bearing cash classified as restricted cash, non-current.
b.
Long-term debt and other financial liabilities: The carrying value of long-term debt and other financial liabilities with variable interest rates approximates the fair market value as the long-term debt and other financial liabilities bear interest at floating interest rate. The fair value of fixed interest long-term debt is estimated using prevailing market rates as of the period end. The Company believes the terms of its fixed interest long-term debt are similar to those that could be procured as of December 31, 2021, and the carrying value of $7,350 is 2% lower than the fair market value of $7,523. The fair value of the fixed interest long-term debt has been obtained through Level 2 inputs (interest rate curves) of the fair value hierarchy.
c.
The Piraeus Bank Loan Facility has a sustainability-linked clause, whereby the interest rate, currently set at 3.05% plus LIBOR, can be decreased to 2.95% based on certain emission reduction thresholds. The potential reduction of the interest rate goes into effect in July 2023. The Company has concluded that the potential effect on its financial statements is immaterial.

As at December 31, 2020, the Company also considered the fair valuation measurement guidance regarding (i) the value of the units issued to JDH at $0.70 each, (ii) the value of the option granted to JDH to purchase up to 4,285,714 additional units at a price of $0.70 per unit in exchange for the settlement of principal under the Second JDH Loan and (iii) the change in the fair value of the conversion option of the JDH Notes to $1.20 (from $216). The fair values are determined through Level 2 of the fair value hierarchy as defined in FASB guidance for Fair Value Measurements and are derived principally from or corroborated by observable market data, interest rates, yield curves and other items that allow value to be determined. The Company used the Black-Sholes pricing model for the valuations. The Company concluded:

 
i)
the fair value of the units issued to JDH to be $0.77 each, whereby the difference to the issue price of $0.70 amounted to $596 and was immediately recognized in Interest and finance costs and with a corresponding increase to additional paid-in capital;
 
ii)
the fair value of the option granted to JDH to purchase up to 4,285,714 additional units to be $0.13, whereby the carrying value of the Second JDH Loan was reduced by $543 as a debt discount with a corresponding increase to additional paid-in capital; and
 
iii)
the change in the fair value of the conversion option of the JDH Notes amounted to $4,924. The carrying value of the JDH Notes was reduced by this amount with a corresponding increase to additional paid-in capital. This change in the fair value will be amortized through the effective interest rate method to the notes’ maturities.

9.
Commitments and Contingencies:

Contingencies

Various claims, lawsuits, and complaints, including those involving government regulations and product liability, arise in the ordinary course of the shipping business. In addition, losses may arise from disputes with charterers, agents, insurance and other claims with suppliers relating to the operations of the Company’s vessels. As of December 31, 2021, management is not aware of any material claims or contingent liabilities, which have not been disclosed, or for which a provision has not been established in the accompanying consolidated financial statements.
 
The Company accrues for the cost of environmental liabilities when management becomes aware that a liability is probable and is able to reasonably estimate the probable exposure. Currently, management is not aware of any such claims or contingent liabilities that should be disclosed, or for which a provision should be established in the accompanying consolidated financial statements. The Company is covered for liabilities associated with the individual vessels’ actions to the maximum limits as provided by Protection and Indemnity (P&I) Clubs, members of the International Group of P&I Clubs.
 
F-38
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

Commitments
 
The Company operates certain of its vessels under lease agreements. Time charters typically may provide for charterers’ options to extend the lease terms and termination clauses. The Company’s time charters range from 9 to 60 months and extension periods vary from 11 to 27 months. In addition, the time charters contain termination clauses which protect either the Company or the charterers from material adverse events. Variable lease payments in the Company’s time charters vary based on changes on freight market index. The Company has the option to convert some of these variable lease payments to fixed based on the prevailing Capesize forward freight agreement rates.

The following table sets forth the Company’s future minimum contractual charter revenue based on vessels committed to non-cancelable time charter contracts as at December 31, 2021, using the initial charter rates for index-linked time charters (these amounts do not include any assumed off-hire):
 
Twelve month periods ending December 31,
  
Amount
  
2022
    
106,394
  
2023
    
20,800
  
2024
    
15,097
  
2025
     15,056  
2026
     5,321  
Total
    
162,668
  

In April 2018, the Company moved into its new office spaces under a five-year lease term, with a Company’s option to extend the lease term for another five-year term. On September 16, 2020, the lease term was amended, whereby the lease term was set for ten years (i.e., April 2028), with a Company’s option to extend the lease term for two consecutive five-year terms thereafter. The monthly rent was Euro 13,000 (or $15 based on the Euro/U.S. dollar exchange rate of €1.0000: $1.1326 as of December 31, 2021) until the September 2020 renewal, and was amended to a constant Euro 12,747 (or $14 based on the Euro/U.S. dollar exchange rate of €1.0000: $1.1326 as of December 31, 2021) thereafter. The monthly rent was adjusted annually by one percent for inflation until the September 2020 renewal. Under ASC 842, the lease is classified as an operating lease and a lease liability and right-of-use asset based on the present value of future minimum lease payments have been recognized on the balance sheet. The monthly rent expense is recorded in general and administration expenses. The rent expense for the years December 31, 2021, 2020 and 2019 was $179, $180 and $175, respectively.

The following table sets forth the Company’s undiscounted office rental obligations as at December 31, 2021:
 
Twelve month periods ending December 31,
  
Amount
  
2022
    
136
  
2023
    
136
  
2024
    
136
  
2025
    
136
  
Thereafter
    
306
  
Total
    
850
  
Less: imputed interest
    
(200
)
Present value of lease liabilities
    
650
  
 
        
Lease liabilities, current
    
121
  
Lease liabilities, non-current
    
529
  
Present value of lease liabilities
    
650
  

F-39
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

10.
Capital Structure:

(a)
Preferred Stock
 
The Company is authorized to issue up to 25,000,000 registered shares of preferred stock with a par value of $0.0001. The board of directors of the Company is expressly granted the authority to issue preferred shares and to establish such series of preferred shares with such designations, preferences and relative participating, rights, qualifications, limitations or restrictions at it determines. As at December 31, 2021 and 2020, the Company had 20,000 and NIL, respectively, series B preferred shares issued and outstanding with par value $0.0001 per share. The series B preferred shares were issued on December 10, 2021, to the Company’s Chief Executive Officer, considered a related party, for a total cash consideration of $250. The issuance of the Series B preferred shares was approved by a special independent committee of the board of directors of the Company which obtained a fairness opinion from an independent financial advisor regarding the value of the preferred shares. Each series B preferred shares entitle the holder to 25,000 votes per share on all matters submitted to a vote of the shareholders of the Company, provided however, that no holder of series B preferred shares may exercise voting rights pursuant to series B preferred shares that would result in the aggregate voting power of any beneficial owner of such shares and its affiliates to exceed 49.99% of the total number of votes eligible to be cast on any matter submitted to a vote of shareholders of the Company. The holder of series B preferred shares shall have no special voting or consent rights and shall vote together as one class with the holders of the common shares on all matters put before the shareholders. The series B preferred shares are not convertible into common shares or any other security, are not redeemable, are not transferable and have no dividend rights. Upon any liquidation, dissolution or winding up of the Company, the series B preferred shares will rank pari-passu with the common shareholders and shall be entitled to receive a payment equal to the par value of $0.0001 per share. The Series B preferred holder has no other rights to distributions upon any liquidation, dissolution or winding up of the Company.

(b)
Common Stock
 
 
i)
NASDAQ Notification – Effect of Reverse Stock Split

On September 30, 2020, the Company received written notification from The Nasdaq Stock Market (“Nasdaq”), indicating that because the closing bid price of the Company’s common stock for 30 consecutive business days, from August 18, 2020 to September 29, 2020, was below the minimum $1.00 per share bid price requirement for continued listing on the Nasdaq Capital Market, the Company was not in compliance with Nasdaq Listing Rule 5550(a)(2). On February 11, 2021, the Company received written notification from Nasdaq that the Company has regained compliance with Nasdaq Listing Rule 5550(a)(2) concerning the minimum bid price of the Company’s common stock.

On June 30, 2020, the Company’s common stock began trading on a split-adjusted basis, following a June 25, 2020 approval from the Company’s board of directors to reverse split the Company’s common stock at a ratio of one-for-sixteen, in order to cure the deficiency of the minimum bid price requirement originally communicated to the Company on July 15, 2019. All share and per share amounts disclosed in the consolidated financial statements and notes give effect to this reverse stock split retroactively, for all periods presented. No fractional shares were issued in connection with the reverse split. Shareholders who would otherwise hold a fractional share of the Company’s common stock received a cash payment in lieu of such fractional share.
 
On March 20, 2019, the Company’s common stock began trading on a split-adjusted basis, following a February 26, 2019 approval from the Company’s Board of Directors to reverse split the Company’s common stock at a ratio of one-for-fifteen. All share and per share amounts disclosed in the consolidated financial statements and notes give effect to this reverse stock split retroactively, for all periods presented. No fractional shares were issued in connection with the reverse split. Shareholders who would otherwise hold a fractional share of the Company’s common stock received a cash payment in lieu of such fractional share.

F-40
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

 
ii)
Equity Offerings

On February 19, 2021, the Company sold 44,150,000 common shares under a registered direct offering at a price of $1.70 per common share, in exchange for gross proceeds of $75,055, or net proceeds of approximately $69,971.

During April through August 2020, the Company raised $73,750 in proceeds net of underwriters fees and commissions or $71,835 in proceeds net of underwriters fees, commissions and other expenses, from two follow-on public offering, four registered direct offerings, and from the partial exercises of Class D warrants issued in the follow-on public offering as well as the full exercise of all warrants issued in four private placements that took place concurrently with the registered direct offerings (see below).

On April 2, 2020, the Company completed a follow-on public offering of 2,536,468 units (including the full exercise of the over-allotment option of 330,843 units granted to the underwriters), each unit consisting of one common share or pre-funded warrants in lieu of common shares and 40,583,500 Class D warrants to purchase an aggregate of 2,536,468 common shares of the Company, at a combined price of $2.72 per share and Class D warrant. On April 22, 2020, the exercise price of the Class D warrants was lowered from $2.72 per share initially to $1.92 per share and on June 8, 2020 was further reduced to $1.60 per share. The gross proceeds from the follow-on public offering were $6,899. Each Class D warrant has an exercise price of $1.60, is exercisable upon issuance and expires in April 2025.
 
On April 14, 2020, the Company sold 3,125,000 of its common shares in a registered direct offering at a price of $2.16 per share and private warrants to purchase an aggregate of 3,125,000 common shares of the Company in a concurrent private placement. The gross proceeds from the registered direct offering were $6,750.

On April 22, 2020, the Company sold 3,171,875 of its common shares in a registered direct offering at a price of $1.92 per share and private warrants to purchase an aggregate of 3,171,875 common shares of the Company in a concurrent private placement. The gross proceeds from the registered direct offering were $6,090.

On May 4, 2020, the Company sold 2,684,375 of its common shares in a registered direct offering at a price of $1.92 per share and private warrants to purchase an aggregate of 2,684,375 common shares of the Company in a concurrent private placement. The gross proceeds from the registered direct offering were $5,154.

On May 7, 2020, the Company sold 2,709,375 of its common shares in a registered direct offering at a price of $1.92 per share and private warrants to purchase an aggregate of 2,709,375 common shares of the Company in a concurrent private placement. The gross proceeds from the registered direct offering were $5,202.

On August 20, 2020, the Company completed an underwritten public offering of (i) 35,714,286 units, each unit consisting of 35,714,286 common shares or pre-funded warrants in lieu of common shares and 35,714,286 Class E Warrants to purchase an aggregate of 35,714,286 common shares of the Company, at a combined price of $0.70 per share and Class E warrant and (ii) 5,182,142 Class E Warrants purchased by the underwriters under their over-allotment option at a price of $0.01. The gross proceeds from public offering were $25,000.

On September 1, 2020, 2,582,142 common shares were issued following the partial exercise of the overallotment option granted to the underwriters related to the underwritten public offering which closed on August 20, 2020, in exchange for gross proceeds of $1,782.

In October 2020, 2,000,000 common shares were issued following the partial exercise of the remaining outstanding pre-funded warrants related to the underwritten public offering which closed on August 20, 2020, in exchange for gross proceeds of $20.

On May 13, 2019, the Company completed a public offering of 262,500 Units, each unit consisting of (i) one common share, par value $0.0001 per share (a “Common Share”) or a pre-funded warrant to purchase one Common Share at an exercise price equal to $0.01 per common share (a “Pre-Funded Warrant”), (ii) one Class B Warrant to purchase one common share (a “Class B Warrant”) and (iii) one Class C Warrant to purchase one common share (a “Class C Warrant”), for $54.40 per unit. Under (i) above, the Company issued 172,812 common shares and 89,687 pre-funded warrants. All Pre-Funded Warrants have been exercised as of June 30, 2019 resulting in issuance of 89,687 Common Shares.  The offering was consummated in connection with the Company’s form F-1 originally filed with the SEC on October 20, 2017, which was further amended. The gross proceeds of the offering, before underwriting discounts and commissions and estimated offering expenses, were approximately $14,923. The net proceeds from the sale of common shares and warrants, after deducting underwriters’ fees and expenses, were approximately $12,647, which proceeds were used for general corporate purposes, including, among other things, prepaying debt.

On May 13, 2019, the Company sold 113,970 Units of the Company in a separate private placement to JDH, each Unit consisting of (i) one Common Share, (ii) one Class B Warrant, and (iii) one Class C Warrant, for $54.40 per unit, to JDH in exchange for, amongst  others, the waiver or forgiveness of certain payment obligations of the Company, pursuant to the Purchase Agreement (Notes 6 & 7).

F-41
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)


 iii)
Common stock issuances and buybacks

On April 26, 2021, JDH exercised its option to purchase 4,285,714 additional Units (with each unit consisting of one common share of the Company, or, at JDH’s option, one pre-funded warrant in lieu of such common share, and one warrant to purchase one common share at an exercise price of $0.70) at a price of $0.70 per Unit in exchange for the settlement of principal under the Second JDH Loan in an amount of $3,000 (i.e., an amount equal to the aggregate purchase price of the units) (Note 6). 4,285,714 common shares were issued to JDH in this transaction. 

On July 2, 2021, the Company’s board of directors declared a dividend of one preferred share purchase right (a “Right”) for each of the Company’s outstanding common shares and adopted a shareholder rights plan (the “Shareholders Rights Agreement”). The dividend was payable on July 19, 2021 to the shareholders of record on July 2, 2021. Each Right will allow its holder to purchase from the Company one one-thousandth of a Series A Participating Preferred Share (a “Preferred Share”) for $5.00 (the “Exercise Price”), once the Rights become exercisable. This portion of a Preferred Share will give the shareholder approximately the same dividend, voting and liquidation rights as would one common share. Prior to exercise, the Right does not give its holder any dividend, voting, or liquidation rights. The Rights will not be exercisable until ten days after the public announcement that a person or group has become an “Acquiring Person” by obtaining beneficial ownership of 10% (15% in the case of a passive institutional investor) or more of the Company’s outstanding common shares. The Acquiring Person will not be entitled to exercise these Rights. If an Acquiring Person obtains beneficial ownership of 10% (15% in the case of a passive institutional investor) or more of the Company’s common shares, then each Right will entitle the holder to purchase for the Exercise Price, in lieu of one one-thousandth of a share of Series A Preferred Stock, a number of common shares having a then-current market value of twice the Exercise Price. In addition, if after an Acquiring Person obtains 10% (15% in the case of a passive institutional investor) or more of the Company’s common shares, (i) the Company merges into another entity; (ii) an acquiring entity merges into the Company; or (iii) the Company sells or transfers 50% or more of its assets, cash flow or earning power, then each Right will entitle the holder to purchase, for the Exercise Price, a number of common shares of the person engaging in the transaction having a then-current market value of twice the Exercise Price. The board of directors may redeem the Rights for $0.0001 per Right under certain circumstances. The Rights expire on the earliest of (i) July 1, 2024; or (ii) the redemption or exchange of the Rights. As at December 31, 2021, no Rights were exercised.

On October 5, 2021, JDH elected to convert $120 of the principal amount of the First JDH Note into 100,000 fully paid and non-assessable shares (Note 7).

On October 8, 2021, JDH elected to convert an additional $3,480 of the principal amount of the First JDH Note into 2,900,000 fully paid and non-assessable shares (Note 7).

During the fourth quarter of 2021, the Company repurchased 1,702,103 of its outstanding common shares at an average price of approximately $0.993 pursuant to its share repurchase program for a total of $1,708, inclusive of commissions and fees. All  the repurchased shares were cancelled as of December 31, 2021.

(c)          Warrants

In connection with the public offering which closed on April 2, 2020, the Company granted to the representative of the underwriters 1,764,500 Class D warrants to purchase 110,281 common shares, at an exercise price of $3.40. The warrants expire in March 2023.

On May 20, 2020, the Company entered into a warrant exercise agreement with each holder of private warrants issued in the private placements in April and May 2020, pursuant to which such holders agreed to exercise their warrants to purchase 2,507,812 of the Company’s common shares, and the Company agreed to reduce the exercise price of the warrants to $1.44 per common share solely with respect to the exercise of the warrants pursuant to such agreements. The initial exercise price of such warrants was $1.92. The Company’s gross proceeds were $3,611.

On May 26, 2020, the Company entered into a warrant exercise agreement with each holder of private warrants issued in the private placements in April and May 2020, pursuant to which such holders agreed to exercise their warrants to purchase 4,953,813 of the Company’s common shares, and the Company agreed to reduce the exercise price of the warrants to $1.28 per common share solely with respect to the exercise of the warrants pursuant to such agreements. The initial exercise price of such warrants ranged from $2.16 and $1.92. The Company’s gross proceeds were $6,341.
On June 5, 2020, holders of private warrants issued in the private placements in April and May 2020 exercised their warrants to purchase 556,250 common shares at an exercise price of $1.92.  The Company’s gross proceeds were $1,068.

On June 8, 2020, the Company entered into a warrant exercise agreement with each holder of private warrants issued in the private placements in April and May 2020, pursuant to which such holders agreed to exercise their warrants to purchase 3,672,750 of the Company’s common shares, and the Company agreed to reduce the exercise price of the warrants to $1.60 per common share solely with respect to the exercise of the warrants pursuant to such agreements. The initial exercise price of such warrants was $1.92. The Company’s gross proceeds were $5,877. Following this exercise, no warrants under the private placements remained unexercised.

F-42
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

On June 8, 2020, the company entered into a warrant exercise agreement with each holder of Class D warrants pursuant to which public warrants were exercised to purchase 614,046 shares at a price of $1.60 per share. The Company’s gross proceeds were $982.

As of December 31, 2020, out of the 40,583,500 Class D Warrants from the April 2020 follow-on public offering, the Company has issued 2,263,421 common shares in exchange for gross proceeds of $4,100, including the $982 received under the June 8, 2020 Class D warrant exercise agreement. 4,368,750 Class D Warrants remained unexercised as of December 31, 2021 and 2020, for the issuance of 273,046 shares at an exercise price of $1.60.

On August 20, 2020, the Company completed an underwritten public offering of (i) 35,714,286 units, each unit consisting of 35,714,286 common shares or pre-funded warrants in lieu of common shares and 35,714,286 Class E Warrants to purchase an aggregate of 35,714,286 common shares of the Company, at a combined price of $0.70 per share and Class E warrant and (ii) 5,182,142 Class E Warrants purchased by the underwriters under their over-allotment option at a price of $0.01. Each Class E warrant has an exercise price of $0.70, is exercisable upon issuance and expires in August 2025. All pre-funded warrants have been exercised as of December 31, 2020.  No Class E warrants were exercised within 2020. During the year ended December 31, 2021, 32,263,715 shares were issued from Class E warrants’ exercises, for proceeds of $22,585. 8,632,713 Class E warrants remain outstanding as of December 31, 2021.

On December 31, 2020, the Company agreed to issue to JDH (i) 7,986,913 warrants to purchase one common share at an exercise price of $0.70 and (ii) 955,730 pre-funded warrants with an exercise price of $0.0001 in lieu of such common shares as part of the December 2020 JDH amendments. The 7,986,913 warrants were issued on January 8, 2021 and expire in January 2026. On March 24, 2021, the Company issued 955,730 common shares to JDH, following JDH’s exercise of its pre-funded warrants. On April 26, 2021, JDH exercised its option to purchase 4,285,714 additional Units (with each unit consisting of one common share of the Company, or, at JDH’s option, one pre-funded warrant in lieu of such common share, and one warrant to purchase one common share at an exercise price of $0.70) at a price of $0.70 per Unit in exchange for the settlement of principal under the Second JDH Loan in an amount of $3,000 (i.e., an amount equal to the aggregate purchase price of the units) (Note 6). The issuance of shares to JDH and associated reduction in debt balance took place on May 6, 2021 (Note 6). The 4,285,714 warrants were issued on May 6, 2021 and had an expiration date of May 2026. On May 12, 2021, JDH exercised 7,986,913 warrants to purchase 7,986,913 common shares at an exercise price of $0.70. The Company received the funds of $5,591 on May 14, 2021 and the shares were issued to JDH on May 19, 2021. On December 10, 2021, the Company bought back the warrant to purchase 4,285,714 common shares from JDH for $1,023.

On May 13, 2019, the Company sold a total of 376,470 Units in connection with the public offering and the JDH Private Placement, with each Unit consisting of (i) one Common Share or Pre-Funded Warrant, (ii) one Class B Warrant and (iii) one Class C Warrant. Each Class B Warrant had an exercise price of $59.84 per share, which was adjusted to $16.00 on December 13, 2019 pursuant to the terms of the warrant agreement, is exercisable upon issuance and expires three years from issuance. The underwriters partially exercised an over-allotment option granted in connection with the offering and purchased an additional 630,000 Class B Warrants and 630,000 Class C Warrants, in each case to purchase 39,375 shares.  In connection with the Offering, the Company issued the representative of the underwriters a warrant to purchase 13,125 Common Shares (Representative Warrant). Each Class C Warrant had an exercise price of $59.84 per share, was exercisable upon issuance, and expired six months from issuance. Beginning on June 14, 2019, each Class C Warrant was exercisable on a cashless basis under certain circumstances for a number of common shares calculated according to a formula based on the market price at the time of exercise. Each Representative Warrant had an exercise price of $68.00 per share, which was adjusted to $16.00 on December 13, 2019 pursuant to the terms of the warrant agreement, and is exercisable at any time between November 9, 2019 and May 9, 2022.

In connection to the public offering and private placement that took place on May 13, 2019, 415,845 Class C Warrants and 415,845 Class B Warrants were issued. As of December 31, 2019, 6,594,029 Class C Warrants were exercised in a cashless exercise that resulted in the issuance of 1,129,226 common shares according to the terms of the Warrants’ Agreement. On November 13, 2019, all remaining unexercised Class C Warrants expired. No Class B Warrants and Representative Warrant have been exercised.

The Company may at any time during the term of its warrants reduce the then current exercise price of each warrant to any amount and for any period of time deemed appropriate by the board of directors of the Company, subject to terms disclosed in each warrants’ agreements. The warrants also contain a cashless exercise provision, whereby if at the time of exercise, there is no effective registration statement, then the warrants can be exercised by means of a cashless exercise as disclosed in each warrants’ agreements.

On December 13, 2021, the Company’s 47,916 Class A Warrants expired.

All warrants are classified in equity, according to the Company’s significant accounting policy.

F-43
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

As of December 31, 2021, the number of common shares that can potentially be issued under each outstanding warrant are:

Warrant
  
Shares to be issued upon
exercise of remaining
warrants
  
Class B
    
415,845
  
Class D
    
273,046
  
Class E
    
8,632,713
  
Representative Warrants
    
123,406
  
Total
    
9,445,010
  

The Class B Warrants are listed on the Nasdaq Capital Market under the symbol “SHIPZ”.

11.
Interest and Finance Costs:
 
Interest and finance costs are analyzed as follows:

 
  
Year ended December 31,
  
 
  
2021
    
2020
    
2019
  
Interest on long-term debt and other financial liabilities
    
8,766
      
10,279
      
13,630
  
Convertible notes interest expense
     2,067       -       -  
Amortization of deferred finance costs and debt discounts
    
3,333
      
757
      
738
  
Amortization of deferred finance costs and debt discounts (shares issued to third party - non-cash)
    
326
      
350
      
402
  
Amortization of convertible note beneficial conversion feature (non-cash)
     2,887       -       -  
Fair value measurement of units issued to former related party
    
-
      
596
      
-
  
Other
    
400
      
360
      
446
  
Total
    
17,779
      
12,342
      
15,216
  

Interest and finance costs, related party, are analyzed as follows:

 
  
Year ended December 31,
  
 
  
2021
    
2020
    
2019
  
Interest expense long term debt related party
    
-
      
1,924
      
420
  
Amortization of deferred finance costs and debt discounts
    
-
      
-
      
240
  
Convertible notes interest expense
    
-
      
2,425
      
751
  
Amortization of convertible note beneficial conversion feature (non-cash)
    
-
      
5,518
      
3,713
  
Amortization of deferred finance costs and debt discounts (shares issued to JDH - non-cash)
    
-
      
201
      
3,505
  
Restructuring expenses
    
-
      
1,015
      
-
  
Total
    
-
      
11,083
      
8,629
  

F-44
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

12.
Earnings / (Losses) per Share:

The calculation of net income / (loss) per common share is summarized below:

   
For the years ended December 31,
  
   
2021
    
2020
    
2019
  
                   
Net income / (loss) - basic
    
41,348
      
(18,356
)
    
(11,698
)
Interest effect of convertible notes
    
6,473
      
-
      
-
  
Net income / (loss) - diluted
  

47,821
    

(18,356)
  

(11,698)
                         
Weighted average common shares outstanding – basic
    
153,321,907
      
33,436,278
      
958,297
  
Effect of dilutive securities:
                        
Dilutive effect of warrants
    
5,410,086
      
-
      
-
  
Dilutive effect of non-vested shares
    
1,695,220
      
-
      
-
  
Dilutive effect of convertible notes shares
    
30,910,308
      
-
      
-
  
      38,015,614       -       -  
Weighted average common shares outstanding – diluted
    
191,337,521
      
33,436,278
      
958,297
  
Net income / (loss) per common share – basic
   $ 0.27     $ (0.55 )   $ (12.21 )
Net income / (loss) per common share – diluted
  
$
0.25
    
$
(0.55
)
  
$
(12.21
)

As of December 31, 2020 and 2019, securities that could potentially dilute basic loss per share (LPS) in the future that were not included in the computation of diluted LPS, because to do so would have anti-dilutive effect, are any incremental shares of non-vested equity incentive plan shares (Note 13) and of unexercised warrants (Note 10), both calculated with the treasury stock method, as well as shares assumed to be converted with respect to the convertible notes (Note 7) calculated with the if-converted method.

13.
Equity Incentive Plan:
 
On February 24, 2020, the Compensation Committee granted an aggregate of 156,250 restricted shares of common stock pursuant to the Plan. Of the total 156,250 shares issued, 45,000 shares were granted to the non-executive members of the board of directors, 42,812 were granted to the executive officers, 60,626 shares were granted to certain of the Company’s non-executive employees and 7,812 shares were granted to the sole director of the Company’s commercial manager, a non-employee. The fair value of each share on the grant date was $5.12. All the shares vested over a period of two years. 52,084 shares vested on February 24, 2020, 52,083 shares vested on October 1, 2020 and 52,083 shares vested on October 1, 2021.

On January 18, 2021, the Company’s Equity Incentive Plan was amended and restated to increase the aggregate number of shares of the common stock reserved for issuance under the Plan to 4,000,000 shares. The same date, the Compensation Committee granted an aggregate of 3,600,000 restricted shares of common stock pursuant to the Equity Incentive Plan. Of the total 3,600,000 shares issued, 1,400,000 shares were granted to the non-executive members of the board of directors, 950,000 were granted to the executive officers, 1,100,000 shares were granted to certain of the Company’s non-executive employees and 150,000 shares were granted to the sole director of the Company’s commercial manager, a non-employee. The fair value of each share on the grant date was $0.81. 1,200,030 shares vested on the grant date, 1,199,985 shares vested on October 1, 2021 and 1,199,985 shares will vest on October 1, 2022.

On August 2, 2021, the Company’s Equity Incentive Plan was amended and restated to increase the aggregate number of shares of the common stock reserved for issuance under the Plan to 3,500,000 shares. The same date, the Compensation Committee granted an aggregate of 3,100,000 restricted shares of common stock pursuant to the Equity Incentive Plan. Of the total 3,100,000 shares issued, 1,300,000 shares were granted to the non-executive members of the board of directors, 885,000 were granted to the executive officers, 790,000 shares were granted to certain of the Company’s non-executive employees and 125,000 shares were granted to the sole director of the Company’s commercial manager, a non-employee and another non-employee. The fair value of each share on the grant date was $1.02. 1,033,352 shares vested on the grant date, 1,033,324 shares vested on October 1, 2021 and 1,033,324 shares will vest on October 1, 2022.


F-45
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

The related expense for shares granted to the Company’s board of directors and certain of its employees for the years ended December 31, 2021, 2020 and 2019, amounted to $4,907, $826 and $1,295, respectively, and is included under general and administration expenses. The related expense for shares granted to non-employees for the years ended December 31, 2021, 2020 and 2019, amounted to $190, $43 and $15, respectively, and is included under voyage expenses.
Restricted shares during 2021, 2020 and 2019 are analyzed as follows:

 
  
Number of
Shares
    
Weighted
Average
Grant
Date Price
  
Outstanding at December 31, 2018
    
2,157
    
$
261.60
  
Granted
    
9,000
      
146.40
  
Vested
    
(8,156
)
    
112.32
  
Forfeited
    
(20
)
    
146.40
  
Outstanding at December 31, 2019
    
2,981
    
$
133.76
  
Granted
    
156,250
      
5.12
  
Vested
    
(107,139
)
    
5.23
  
Forfeited
    
(28
)
    
5.12
  
Outstanding at December 31, 2020
    
52,064
    
$
2.48
  
Granted
    
6,700,000
      
0.91
  
Vested
    
(4,518,774
)
    
0.96
  
Forfeited
    
-
   
-
  
Outstanding at December 31, 2021
    
2,233,290
    
$
0.79
  

The unrecognized cost for the non-vested shares granted to the Company’s board of directors and certain of its employees as of December 31, 2021 and 2020 amounted to $1,106 and $119, respectively. On December 31, 2021, the weighted-average period over which the total compensation cost related to non-vested awards granted to the Company’s board of directors and its other employees not yet recognized is expected to be recognized is 0.75 years.
 
14.
Subsequent Events

On January 12, 2022, the Company’s Equity Incentive Plan, as previously amended, was further amended and restated to increase the aggregate number of shares of the common stock reserved for issuance under the Plan to 5,500,000 shares. The same date, the Compensation Committee granted an aggregate of 5,337,000 restricted shares of common stock pursuant to the Equity Incentive Plan. Of the total 5,337,000 shares issued, 1,600,000 shares were granted to the non-executive members of the board of directors, 1,700,000 were granted to the executive officers, 1,887,000 shares were granted to certain of the Company’s non-executive employees and 150,000 shares were granted to the sole director of the Company’s commercial manager, a non-employee. The fair value of each share on the grant date was $0.91. 1,779,028 shares vested on the grant date, 1,778,986 shares will vest on October 1, 2022 and 1,778,986 shares will vest on October 1, 2023.

On January 26, 2022, the Company voluntarily prepaid $5,000 of the outstanding balance of the Second JDH Note using cash on hand (Note 7). In connection with this prepayment the Company’s cash sweep obligations for 2022 under the JDH Loans and JDH Notes were waived pursuant to a waiver letter signed on January 19, 2022.

On January 26, 2022, the Company received written notification from Nasdaq, indicating that because the closing bid price of the Company’s common stock for 30 consecutive business days, from December 13, 2021 to January 25, 2022, was below the minimum $1.00 per share bid price requirement for continued listing on the Nasdaq Capital Market, the Company was not in compliance with Nasdaq Listing Rule 5550(a)(2). On February 14, 2022, the Company received written notification from Nasdaq that the Company has regained compliance with Nasdaq Listing Rule 5550(a)(2) concerning the minimum bid price of the Company’s common stock.

F-46
Seanergy Maritime Holdings Corp.
Notes To The Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

On February 28, 2022, the Company voluntarily prepaid the remaining balance of $1,850 of the Second JDH Loan using cash on hand. All obligations under the Second JDH Loan were irrevocably and unconditionally discharged pursuant to the deed of release dated February 28, 2022.

On February 28, 2022, ATB entered into a deed of release with respect to the Partnership resulting in a complete release of the facility agreement after full settlement of the outstanding balance of $15,129 of the February 2019 ATB Loan Facility.

On March 9, 2022, the Company entered into a sale and leaseback transaction with Chugoku Bank, Ltd. to refinance the vessel which was previously financed by the February 2019 ATB Loan Facility and the Second JDH Loan secured by the Partnership through first and second priority mortgages respectively. The Company sold and chartered back the vessel from Chugoku Bank on a bareboat basis. The financing amount is $21,300 and the interest rate is 2.9% plus SOFR per annum. The principal will be repaid over an eight-year term, through 32 quarterly installments averaging at approximately $590 and a balloon payment of $2,388 at the expiration of the bareboat. Following the second anniversary of the bareboat charter, the Company has continuous options to repurchase the vessel.

On March 10, 2022, the Company voluntarily prepaid another $5,000 of the outstanding balance of the Second JDH Note using cash on hand (Note 7).

On March 10, 2022, the Company announced a regular quarterly dividend of $0.025 per share as well as a special dividend of $0.025 per share for the fourth quarter of 2021, both payable in the first week of April 2022 to all shareholders of record as of March 25, 2022.

F-47
Exhibit 2.7

DESCRIPTION OF SECURITIES
 
For the complete terms of our capital stock, please refer to our restated articles of incorporation, as amended, and our third amended and restated bylaws, which are filed as exhibits to the annual report of which this exhibit forms a part. The Business Corporations Act (“BCA”) of the Republic of the Marshall Islands may also affect the terms of our capital stock.
 
For purposes of the following description of capital stock, references to “us”, “we” and “our” refer only to Seanergy Maritime Holdings Corp. and not any of its subsidiaries.
 
Purpose
 
Our purpose, as stated in our restated articles of incorporation, as amended, is to engage in any lawful act or activity for which corporations may now or hereafter be organized under the BCA. Our restated articles of incorporation, as amended, and third amended and restated bylaws do not impose any limitations on the ownership rights of our shareholders.
 
Authorized Capitalization
 
Our authorized capital stock consists of 500,000,000 registered common shares, par value $0.0001 per share, of which 178,316,471 shares are issued and outstanding, and 25,000,000 registered preferred shares with par value of $0.0001, of which 20,000 shares of Series B preferred stock are issued and outstanding. Our board of directors has the authority to establish such series of preferred shares and with such designations, preferences and relative, participating, optional or special rights and qualifications, limitations or restrictions as shall be stated in the resolution or resolutions providing for the issue of such preferred shares.
 
Description of Common Shares

Subject to preferences that may be applicable to any outstanding preferred shares, holders of common shares are entitled to receive ratably all dividends, if any, declared by our board of directors out of funds legally available for dividends.  Upon our dissolution or liquidation or the sale of all or substantially all of our assets, 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 shares will be entitled to receive pro rata our remaining assets available for distribution.  Holders of common shares do not have conversion, redemption or preemptive rights to subscribe to any of our securities.  The rights, preferences and privileges of holders of common shares are subject to the rights of the holders of any preferred shares which we have issued or may issue in the future.  Our common shares are not subject to any sinking fund provisions and no holder of any shares will be required to make additional contributions of capital with respect to our shares in the future.

We are not aware of any limitations on the rights to own our common shares, including rights of non-resident or foreign stockholders to hold or exercise voting rights on our common shares, imposed by foreign law or by our restated articles of incorporation, as amended, or third amended and restated bylaws.

Each outstanding common share entitles the holder to one vote on all matters submitted to a vote of stockholders.  Amendments to our restated articles of incorporation, as amended, generally require the affirmative vote of the holders of a majority of all outstanding shares entitled to vote. Amendments to our third amended and restated bylaws generally require the affirmative vote of a majority of our entire board of directors or the affirmative vote of a majority of votes cast at a meeting of shareholders. Unless otherwise required by law, our restated articles of incorporation, as amended, or third amended and restated bylaws, at any annual or special general meeting of shareholders where there is a quorum, 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 all meetings of shareholders except otherwise expressly provided by law, there must be present in person or proxy shareholders of record holding at least one third of the shares issued and outstanding and entitled to vote at such meeting in order to constitute a quorum but if less than a quorum is present, a majority of those shares present either in person or by proxy shall have power to adjourn any meeting until a quorum shall be present.
 
Description of Preferred Stock Purchase Rights

On July 2, 2021, our board of directors declared a dividend of one preferred stock purchase right (a “Right”) for each of our outstanding common shares and adopted a shareholder rights plan, as set forth in the Shareholders Rights Agreement dated as of July 2, 2021 (the “Rights Agreement”), by and between us and Continental Stock Transfer & Trust Company, as rights agent. The dividend was paid on July 19, 2021 to the shareholders of record on July 19, 2021.

1
The board of directors has adopted the Rights Agreement to protect shareholders from coercive or otherwise unfair takeover tactics. In general terms, it works by imposing a significant penalty upon any person or group that acquires 10% (15% in the case of a passive institutional investor) or more of the outstanding common shares without the approval of the board of directors. If a shareholder’s beneficial ownership of our common shares as of the time of the public announcement of the rights plan and associated dividend declaration is at or above the applicable threshold, that shareholder's then-existing ownership percentage would be grandfathered, but the rights would become exercisable if at any time after such announcement, the shareholder increases its ownership percentage. The Rights Agreement should not interfere with any merger or other business combination approved by the board of directors.

The summary description of Rights Agreement and the related Rights in this section is not complete and is qualified in all respects by the terms of the Certificate of Designations of Series A Participating Preferred Stock, which is filed as an exhibit to the annual report of which this exhibit forms a part.

The Rights

The Rights will initially trade with, and will be inseparable from, our common shares. The Rights are evidenced only by the certificates or book-entry notations that represent our common shares. New Rights will accompany any new common shares we issue after July 19, 2021 until the Distribution Date described below.

Exercise Price

Each Right will allow its holder to purchase from us one one-thousandth of a share of Series A Participating Preferred Shares (a “Preferred Share”) for $5.00 (the “Exercise Price”), once the Rights become exercisable. This portion of a Preferred Share will give the shareholder approximately the same dividend, voting and liquidation rights as would one common share. Prior to exercise, the Right does not give its holder any dividend, voting, or liquidation rights.
 
Exercisability
 
The Rights will not be exercisable until ten days after the public announcement that a person or group has become an “Acquiring Person” by obtaining beneficial ownership of 10% (15% in the case of a passive institutional investor) or more of our outstanding common shares.

Certain synthetic interests in securities created by derivative positions—whether or not such interests are considered to be ownership of the underlying common shares or are reportable for purposes of Regulation 13D of the Securities Exchange Act of 1934, as amended—are treated as beneficial ownership of the number of shares of our common shares equivalent to the economic exposure created by the derivative position, to the extent actual shares of our common shares are directly or indirectly held by counterparties to the derivatives contracts. Swaps dealers unassociated with any control intent or intent to evade the purposes of the Rights Agreement are excepted from such imputed beneficial ownership.

For persons who, prior to the time of public announcement of the Rights Agreement, beneficially own 10% (15% in the case of a passive institutional investor) or more of our outstanding common shares, the Rights Agreement “grandfathers” their current level of ownership, so long as they do not purchase additional shares in excess of certain limitations.

The date when the Rights become exercisable is the “Distribution Date.” Until that date, the common shares certificates (or, in the case of uncertificated shares, by notations in the book-entry account system) will also evidence the Rights, and any transfer of common shares will constitute a transfer of Rights. After that date, the Rights will separate from the common shares and be evidenced by book-entry credits or by Rights certificates that we will mail to all eligible holders of common shares. Any Rights held by an Acquiring Person are null and void and may not be exercised.

Preferred Share Provisions

Each one one-thousandth of a Preferred Share, if issued, will, among other things:
•
not be redeemable;
•
entitle holders to quarterly dividend payments in an amount per share equal to the aggregate per share amount of all cash dividends, and the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in common shares or a subdivision of our outstanding common shares (by reclassification or otherwise), declared on common shares since the immediately preceding quarterly dividend payment date; and

2
•
entitle holders to one vote on all matters submitted to a vote of the shareholders of the Company.

The value of one one-thousandth interest in a Preferred Share should approximate the value of one common share.

Consequences of a Person or Group Becoming an Acquiring Person
•
Flip In. If an Acquiring Person obtains beneficial ownership of 10% (15% in the case of a passive institutional investor) or more of our common shares, then each Right will entitle the holder thereof to purchase, for the Exercise Price, a number of common shares (or, in certain circumstances, cash, property or other securities of ours) having a then-current market value of twice the Exercise Price. However, the Rights are not exercisable following the occurrence of the foregoing event until such time as the Rights are no longer redeemable by us, as further described below.
 
Following the occurrence of an event set forth in preceding paragraph, all Rights that are or, under certain circumstances specified in the Rights Agreement, were beneficially owned by an Acquiring Person or certain of its transferees will be null and void.
•
Flip Over. If, after an Acquiring Person obtains 10% (15% in the case of a passive institutional investor) or more of our common shares, (i) the Company merges into another entity; (ii) an acquiring entity merges into the Company; or (iii) the Company sells or transfers 50% or more of its assets, cash flow or earning power, then each Right (except for Rights that have previously been voided as set forth above) will entitle the holder thereof to purchase, for the Exercise Price, a number of common shares of the person engaging in the transaction having a then-current market value of twice the Exercise Price.
 
•
Notional Shares. Shares held by affiliates and associates of an Acquiring Person, including certain entities in which the Acquiring Person beneficially owns a majority of the equity securities, and Notional Common Shares (as defined in the Rights Agreement) held by counterparties to a Derivatives Contract (as defined in the Rights Agreement) with an Acquiring Person, will be deemed to be beneficially owned by the Acquiring Person.

Redemption

The board of directors may redeem the Rights for $0.0001 per Right under certain circumstances. If the board of directors redeems any Rights, it must redeem all of the Rights. Once the Rights are redeemed, the only right of the holders of the Rights will be to receive the redemption price of $0.0001 per Right. The redemption price will be adjusted if the Company has a stock dividend or a stock split.

Exchange

After a person or group becomes an Acquiring Person, but before an Acquiring Person owns 50% or more of the outstanding common shares, the board of directors may extinguish the Rights by exchanging one common share or an equivalent security for each Right, other than Rights held by the Acquiring Person. In certain circumstances, we may elect to exchange the Rights for cash or other securities of the Company having a value approximately equal to one common share.

Expiration

The Rights expire on the earliest of (i) July 1, 2024; or (ii) the redemption or exchange of the Rights as described above.

Anti-Dilution Provisions

The board of directors may adjust the purchase price of the Preferred Shares, the number of Preferred Shares issuable and the number of outstanding Rights to prevent dilution that may occur from a stock dividend, a stock split, or a reclassification of the Preferred Shares or common shares. No adjustments to the Exercise Price of less than 1% will be made.

3
Amendments

The terms of the Rights and the Rights Agreement may be amended in any respect without the consent of the holders of the Rights on or prior to the Distribution Date. Thereafter, the terms of the Rights and the Rights Agreement may be amended without the consent of the holders of Rights, with certain exceptions, in order to (i) cure any ambiguities; (ii) correct or supplement any provision contained in the Rights Agreement that may be defective or inconsistent with any other provision therein; (iii) shorten or lengthen any time period pursuant to the Rights Agreement; or (iv) make changes that do not adversely affect the interests of holders of the Rights (other than an Acquiring Person or an affiliate or associate of an Acquiring Person).

Taxes

The distribution of Rights should not be taxable for federal income tax purposes. However, following an event that renders the Rights exercisable or upon redemption of the Rights, shareholders may recognize taxable income.

Description of Series B Preferred Stock

The following description of the characteristics of the Series B preferred stock is a summary and does not purport to be complete and is qualified by reference to the Statement of Designation attached as an exhibit to the annual report of which this exhibit forms a part.

Voting.  To the fullest extent permitted by law, each Series B preferred share entitles the holder hereof to 25,000 votes per share on all matters submitted to a vote of our shareholders, provided however, that no holder of Series B preferred shares may exercise voting rights pursuant to Series B preferred shares that would result in the aggregate voting power of any beneficial owner of such shares and its affiliates (whether pursuant to ownership of Series B preferred shares, common shares or otherwise) to exceed 49.99% of the total number of votes eligible to be cast on any matter submitted to a vote of our shareholders. To the fullest extent permitted by law, the holder of Series B preferred shares shall have no special voting or consent rights and shall vote together as one class with the holders of the common shares on all matters put before the shareholders.

Conversion. The Series B preferred shares are not convertible into common shares or any other security.

Redemption.  The Series B preferred shares are not redeemable.

Dividends. The Series B preferred shares have no dividend rights.

Transferability. All issued and outstanding Series B preferred shares must be held of record by one holder, and the Series B preferred shares shall not be transferred or sold without the prior approval of our board of directors.

Liquidation Preference. Upon any liquidation, dissolution or winding up of the Company, the Series B preferred shares will rank pari-passu with the common shareholders and shall be entitled to receive a payment equal to the par value of $0.0001 per share. The Series B preferred holder has no other rights to distributions upon any liquidation, dissolution or winding up of the Company.

Description of Class B Warrants

The following description of the characteristics of the Class B Warrants is a summary and does not purport to be complete and is qualified by reference to the Form of Class B Warrant Certificate and Class B Warrant Agreement attached as exhibits to the annual report of which this exhibit forms a part.

Exercisability. The Class B Warrants are exercisable at any time after their original issuance and at any time up to the date that is three years after their original issuance. The Class B Warrants will be exercisable, at the option of each holder, in whole or in part by delivering to us a duly executed exercise notice and, at any time a registration statement registering the issuance of the common shares underlying the Class B Warrants under the Securities Act is effective and available for the issuance of such shares, or an exemption from registration under the Securities Act is available for the issuance of such shares, by payment in full in immediately available funds for the number of common shares purchased upon such exercise. If a registration statement registering the issuance of the common shares underlying the Class B Warrants under the Securities Act is not effective or available and an exemption from registration under the Securities Act is not available for the issuance of such shares, the holder may, in its sole discretion, elect to exercise the warrant through a cashless exercise, in which case the holder would receive upon such exercise the net number of common shares determined according to the formula set forth in the warrant. No fractional common shares will be issued in connection with the exercise of a warrant. In lieu of fractional shares, we will pay the holder an amount in cash equal to the fractional amount multiplied by the exercise price.

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Exercise Limitation. A holder will not have the right to exercise any portion of the warrant if the holder (together with its affiliates) would beneficially own in excess of 4.99% of the number of shares of our common shares outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Class B Warrants.

Exercise Price. The exercise price per whole common share purchasable upon exercise of the Class B Warrants is $16.00 per share. The exercise price is subject to appropriate adjustments in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting our common shares and also upon any distributions of assets, including cash, stock or other property to our shareholders.

Transferability. Subject to applicable laws, the Class B Warrants may be offered for sale, sold, transferred or assigned without our consent.

Exchange Listing. Our Class B Warrants trade on the Nasdaq Capital Market under the symbol “SHIPZ”.

Warrant Agent. The Class B Warrants are issued in registered form under warrant agreements between Continental Stock Transfer & Trust, as warrant agent, and us.

Fundamental Transactions. In the event of a fundamental transaction, as described in the Class B Warrants and generally including, with certain exceptions, any reorganization, recapitalization or reclassification of our common shares, the sale, transfer or other disposition of all or substantially all of our properties or assets, our consolidation or merger with or into another person, the acquisition of more than 50% of our outstanding common shares, or any person or group becoming the beneficial owner of 50% of the voting power represented by our outstanding common shares, the holders of the Class B Warrants will be entitled to receive upon exercise of the Class B Warrants the kind and amount of securities, cash or other property that the holders would have received had they exercised the Class B Warrants immediately prior to such fundamental transaction.

Rights as a Shareholder. Except as otherwise provided in the Class B Warrants or by virtue of such holder’s ownership of our common shares, the holder of a Class B Warrant does not have the rights or privileges of a holder of our common shares, including any voting rights, until the holder exercises the warrant.

Governing Law. The Class B Warrants and the Class B Warrant Agreement are governed by New York law.

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, a majority of the entire board of directors, or the chief executive officer. 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.
 
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 restated articles of incorporation, as amended, and third amended and restated bylaws do not provide for cumulative voting in the election of directors.
 
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The board of directors must consist of at least one member and not more than thirteen. Each director shall be elected to serve until the third succeeding 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.
 
Classified Board
 
Our restated articles of incorporation, as amended, provide for the division of our board of directors into three classes of directors, with each class as nearly equal in number as possible, serving staggered, three-year terms. Approximately one-third of our board of directors will be elected each year. This classified board provision could discourage a third party from making a tender offer for our shares or attempting to obtain control of our company. It could also delay shareholders who do not agree with the policies of the board of directors from removing a majority of the board of directors for two years.
 
Election and Removal
 
Our third amended and restated bylaws require parties other than the board of directors to give advance written notice of nominations for the election of directors. The entire board of directors or any individual director may be removed, with cause, by a majority vote of the holders of the outstanding shares then entitled to vote at an election of directors. No Director may be removed without cause by either the stockholders or the Board of Directors. Except as otherwise provided by applicable law, cause for the removal of a Director shall be deemed to exist only if the Director whose removal is proposed: (i) has been convicted, or has been granted immunity to testify in any proceeding in which another has been convicted, of a felony by a court of competent jurisdiction and that conviction is no longer subject to direct appeal; (ii) has been found to have been negligent or guilty of misconduct in the performance of his duties to the Corporation in any matter of substantial importance to the Corporation by (A) the affirmative vote of at least 80% of the directors then in office at any meeting of the Board of Directors called for that purpose or (B) a court of competent jurisdiction; or (iii) has been adjudicated by a court of competent jurisdiction to be mentally incompetent, which mental incompetence directly affects his ability to serve as a director of the Corporation. These provisions may discourage, delay or prevent the removal of incumbent officers and directors.
 
Dissenters’ Rights of Appraisal and Payment
 
Under the BCA, our shareholders generally have the right to dissent from the sale of all or substantially all of our assets not made in the usual 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, 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 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 of common shares both at the time the derivative action is commenced and at the time of the transaction to which the action relates.
 
Anti-takeover Provisions of our Charter Documents
 
Several provisions of our restated articles of incorporation, as amended, and third amended and restated bylaws may have anti-takeover effects. In addition, we have entered into the Rights Agreement, pursuant to which our board of directors may cause the substantial dilution of any person that attempts to acquire us without the approval of our board of directors. These provisions of our organizational documents and the Rights Agreement 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, including those 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.
 
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Classified Board of Directors

Our restated articles of incorporation, as amended, provide for the division of our board of directors into three classes of directors, with each class as nearly equal in number as possible, serving staggered, three-year terms. Approximately one-third of our board of directors is elected each year. This classified board provision could discourage a third party from making a tender offer for our shares or attempting to obtain control of us. It could also delay shareholders who do not agree with the policies of our board of directors from removing a majority of our board of directors for two years.

Election and Removal of Directors

Our restated articles of incorporation, as amended, prohibit cumulative voting in the election of directors. Our third amended and restated bylaws require parties other than the board of directors to give advance written notice of nominations for the election of directors. Our third amended and restated bylaws also provide that our directors may be removed only for cause and only upon the affirmative vote of a majority of the outstanding shares of our capital stock entitled to vote for those directors. These provisions may discourage, delay or prevent the removal of incumbent officers and directors.

Advance Notice Requirements for Shareholder Proposals and Director Nominations

Our third amended and restated 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 to the corporate secretary. Generally, to be timely, a shareholder’s notice must be received at our principal executive offices not less than 150 days nor more than 180 days prior to the one-year anniversary of the preceding year’s annual meeting. Our third amended and restated bylaws also specify requirements as to the form and content of a shareholder’s notice. 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.

Limited Actions by Shareholders
 
Our third amended and restated bylaws provide that any action required or permitted to be taken by our shareholders must be effected at an annual or special meeting of shareholders or by the unanimous written consent of our shareholders.
 
Our third amended and restated bylaws provide that the chairman of the board of directors, a majority of the board of directors, or the chief executive officer may call special meetings of our shareholders and the business transacted at the special meeting is limited to the purposes stated in the notice. 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.
 
Blank Check Preferred Stock
 
Under the terms of our restated articles of incorporation, as amended, our board of directors has authority, without any further vote or action by our shareholders, to issue up to 25,000,000 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.
 
Transfer Agent
 
The registrar and transfer agent for our common shares and warrants is Continental Stock Transfer & Trust Company.
 
Listing
 
Our common shares (including the Rights) and Class B Warrants trade on the Nasdaq Capital Market under the symbols “SHIP” and “SHIPZ”, respectively.
 
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CERTAIN MARSHALL ISLANDS COMPANY CONSIDERATIONS
 
Our corporate affairs are governed by our restated articles of incorporation, as amended, 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, if any, 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.
 
Marshall Islands
​
Delaware
Shareholder Meetings
Held at a time and place as designated in the bylaws.
​
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.
May be held in or outside of the Marshall Islands.
​
May be held in or outside of Delaware.
Notice:
​
Notice:
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.
A copy of the notice of any meeting shall be given personally or sent by mail not less than 15 nor more than 60 days before the meeting.
​
Written notice shall be given not less than 10 nor more than 60 days before the meeting.

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.
Any person authorized to vote may authorize another person or persons to act for him by proxy.
​
Any person authorized to vote may authorize another person or persons to act for him by proxy.

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Marshall Islands
  
Delaware
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.
​
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.
​
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.
​
The certificate of incorporation may provide for cumulative voting in the election of directors.
Removal:
​
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.
​
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.
​
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.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.
​
The board of directors must consist of at least one member.

Dissenter’s Rights of Appraisal
Shareholders have a right to dissent from any plan of merger, consolidation or sale of all or substantially all assets not made in the usual 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 assets, 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.
​
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.

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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:
​
  
Alters or abolishes any preferential right of any outstanding shares having preference; or
​
​
Creates, alters or abolishes any provision or right in respect to the redemption of any outstanding shares.
​
​
Alters or abolishes any preemptive right of such holder to acquire shares or other securities; or
​
​
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.
​
​

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.
​
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.
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.
​
  
Reasonable expenses including attorneys’ fees may be awarded if the action is successful.
​
  
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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Exhibit 4.5

AMENDED AND RESTATED
 
SEANERGY MARITIME HOLDINGS CORPORATION
2011 EQUITY INCENTIVE PLAN
 
ADOPTED ON JANUARY 12, 2022
 
ARTICLE I.
General
 
1.1.         Purpose
 
The Seanergy Maritime Holdings Corp. 2011 Equity Incentive Plan (the “Plan”) is designed to provide certain Key Persons (as defined below), whose initiative and efforts are deemed to be important to the successful conduct of the business of Seanergy Maritime Holdings Corp. (the “Company”), with incentives to (a) enter into and remain in the service of the Company or its Affiliates (as defined below), (b) acquire a proprietary interest in the success of the Company, (c) maximize their performance and (d) enhance the long-term performance of the Company.
 
1.2.         Administration
 
(a)          Administration.  The Plan shall be administered by the Compensation Committee of the Company’s Board of Directors (the “Board”) or such other committee of the Board as may be designated by the Board to administer the Plan (the “Administrator”); provided that (i) in the event the Company is subject to Section 16 of the U.S. Securities Exchange Act of 1934, as amended (the “1934 Act”), the Administrator shall be composed of two or more directors, each of whom is a “Non-Employee Director” (a “Non-Employee Director”) under Rule 16b-3 (as promulgated and interpreted by the Securities and Exchange Commission (the “SEC”) under the 1934 Act, or any successor rule or regulation thereto as in effect from time to time (“Rule 16b-3”)), and (ii) the Administrator shall be composed solely of two or more directors who are “independent directors” under the rules of any stock exchange on which the Company’s Common Stock (as defined below) is traded; provided further, however, that, (A) the requirement in the preceding clause (i) shall apply only when required to exempt an Award intended to qualify for an exemption under the applicable provisions referenced therein, (B) the requirement in the preceding clause (ii) shall apply only when required pursuant to the applicable rules of the applicable stock exchange and (C) if at any time the Administrator is not so composed as required by the preceding provisions of this sentence, that fact will not invalidate any grant made, or action taken, by the Administrator hereunder that otherwise satisfies the terms of the Plan.  Subject to the terms of the Plan and applicable law, and in addition to other express powers and authorizations conferred on the Administrator by the Plan, the Administrator shall have the full power and authority to: (1) designate the Persons (as defined below) to receive Awards (as defined below) under the Plan; (2) determine the types of Awards granted to a participant under the Plan; (3) determine the number of shares to be covered by, or with respect to which payments, rights or other matters are to be calculated with respect to, Awards; (4) determine the terms and conditions of any Awards; (5) determine whether, and to what extent, and under what circumstances, Awards may be settled or exercised in cash, shares, other securities, other Awards or other property, or cancelled, forfeited or suspended, and the methods by which Awards may be settled, exercised, cancelled, forfeited or suspended; (6) determine whether, to what extent, and under what circumstances cash, shares, other securities, other Awards, other property and other amounts payable with respect to an Award shall be deferred, either automatically or at the election of the holder thereof or the Administrator; (7) construe, interpret and implement the Plan and any Award Agreement (as defined below); (8) prescribe, amend, rescind or waive rules and regulations relating to the Plan, including rules governing its operation, and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (9)  correct any defect, supply any omission and reconcile any inconsistency in the Plan or any Award Agreement; and (10) make any other determination and take any other action that the Administrator deems necessary or desirable for the administration of the Plan.  Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Administrator, may be made at any time and shall be final, conclusive and binding upon all Persons.
 
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(b)          General Right of Delegation.  Except to the extent prohibited by applicable law, the applicable rules of a stock exchange or any charter, by-laws or other agreement governing the Administrator, the Administrator may delegate all or any part of its responsibilities to any Person or Persons selected by it; provided, however, that in no event shall an officer of the Company be delegated the authority to grant Awards to, or amend Awards held by, the following individuals: (i) individuals who are subject to Section 16 of the 1934 Act, or (ii) officers of the Company (or directors of the Company) to whom authority to grant or amend Awards has been delegated hereunder; provided, further, that any delegation of administrative authority shall only be permitted to the extent it is permissible under applicable securities laws (including, without limitation, Rule 16b-3, to the extent applicable) and the rules of any applicable stock exchange.  Any delegation hereunder shall be subject to the restrictions and limits that the Administrator specifies at the time of such delegation, and the Administrator may at any time rescind the authority so delegated or appoint a new delegate.  At all times, the delegatee appointed under this Section 1.2(b) shall serve in such capacity at the pleasure of the Administrator.
 
(c)          Indemnification.  No member of the Board, the Administrator or any employee of the Company or an Affiliate (each such Person, a “Covered Person”) shall be liable for any action taken or omitted to be taken or any determination made in good faith with respect to the Plan or any Award hereunder.  Each Covered Person shall be indemnified and held harmless by the Company against and from (i) any loss, cost, liability or expense (including attorneys’ fees) that may be imposed upon or incurred by such Covered Person in connection with or resulting from any action, suit or proceeding to which such Covered Person may be a party or in which such Covered Person may be involved by reason of any action taken or omitted to be taken under the Plan or any Award Agreement and (ii) any and all amounts paid by such Covered Person, with the Company’s approval, in settlement thereof, or paid by such Covered Person in satisfaction of any judgment in any such action, suit or proceeding against such Covered Person; provided that the Company shall have the right, at its own expense, to assume and defend any such action, suit or proceeding and, once the Company gives notice of its intent to assume the defense, the Company shall have sole control over such defense with counsel of the Company’s choice.  The foregoing right of indemnification shall not be available to a Covered Person to the extent that a court of competent jurisdiction in a final judgment or other final adjudication, in either case not subject to further appeal, determines that the acts or omissions of such Covered Person giving rise to the indemnification claim resulted from such Covered Person’s bad faith, fraud or willful criminal act or omission or that such right of indemnification is otherwise prohibited by law or by the Company’s articles of incorporation or by-laws (in each case, as amended and/or restated).  The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which Covered Persons may be entitled under the Company’s articles of incorporation or by-laws (in each case, as amended and/or restated), as a matter of law, or otherwise, or any other power that the Company may have to indemnify such Persons or hold them harmless.
 
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(d)       Delegation of Authority to Senior Officers.  The Administrator may, in accordance with and subject to the terms of Section 1.2(b), delegate, on such terms and conditions as it determines, to one or more senior officers of the Company the authority to make grants of Awards to employees of the Company and its Subsidiaries (as defined below) (including any such prospective employee) and consultants of the Company and its Subsidiaries.
 
(e)          Award Grants.  Notwithstanding anything to the contrary contained herein, the Board may, in its sole discretion, at any time and from time to time, grant Awards to Non-Employee Directors or administer the Plan with respect to such Awards, in which event the Board shall have all the authority and responsibility granted to the Administrator herein with respect to such Awards.  In determining Awards to be granted under the Plan, the Administrator shall take into account such factors as it deem advisable, which may include taking into account the Company’s performance, the Award recipient’s performance, and/or the satisfaction of any performance goals or targets as may established from time to time.
 
1.3.         Persons Eligible for Awards
 
The Persons eligible to receive Awards under the Plan are those directors, officers and employees (including any prospective officer or employee) of the Company and its Subsidiaries and Affiliates and consultants and service providers (including individuals who are employed by or provide services to any entity that is itself such a consultant or service provider) to the Company and its Subsidiaries and Affiliates (collectively, “Key Persons”) as the Administrator shall select.
 
1.4.         Types of Awards
 
Awards may be made under the Plan in the form of (a) “incentive stock options” that are intended to qualify for special U.S. federal income tax treatment pursuant to Sections 421 and 422 of the Code (as defined below), as may be amended from time to time, or pursuant to a successor provision of the Code, and which is so designated in the applicable Award Agreement, (b) non-qualified stock options (i.e., any stock options granted under the Plan that are not “incentive stock options”), (c) stock appreciation rights, (d) restricted stock, (e) restricted stock units and (f) unrestricted stock, all as more fully set forth in the Plan.  The term “Award” means any of the foregoing that are granted under the Plan. No incentive stock option (other than an incentive stock option that may be assumed or issued by the Company in connection with a transaction to which Section 424(a) of the Code applies) may be granted under the Plan to a Person who is not eligible to receive an incentive stock option under the Code.
 
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1.5.         Shares Available for Awards; Adjustments for Changes in Capitalization
 
(a)         Maximum Number.  Subject to adjustment as provided in Section 1.5(c), the aggregate number of shares of common stock of the Company, par value $.0001 (“Common Stock”), with respect to which Awards may at any time be granted under the Plan shall be 5,500,000.  The following shares of Common Stock shall again become available for Awards under the Plan: (i) any shares that are subject to an Award under the Plan and that remain unissued upon the cancellation or termination of such Award for any reason whatsoever; (ii) any shares of restricted stock forfeited pursuant to the Plan or the applicable Award Agreement; provided that any dividend equivalent rights with respect to such shares that have not theretofore been directly remitted to the grantee are also forfeited; and (iii) any shares in respect of which an Award is settled for cash without the delivery of shares to the grantee.  Any shares tendered or withheld to satisfy the grant or exercise price or tax withholding obligation pursuant to any Award shall again become available to be delivered pursuant to Awards under the Plan.
 
(b)        Source of Shares.  Shares issued pursuant to the Plan may be authorized but unissued Common Stock or treasury shares.  The Administrator may direct that any stock certificate evidencing shares issued pursuant to the Plan shall bear a legend setting forth such restrictions on transferability as may apply to such shares.
 
(c)          Adjustments.  (i)  In the event that any dividend or other distribution (whether in the form of cash, Company shares, other securities or other property), stock split, reverse stock split, reorganization, merger, consolidation, split-up, combination, repurchase or exchange of Company shares or other securities of the Company, issuance of warrants or other rights to purchase Company shares or other securities of the Company, or other similar corporate transaction or event, other than an Equity Restructuring (as defined below), affects the Company shares such that an adjustment is determined by the Administrator to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to an Award, then the Administrator shall, in such manner as it may deem equitable, adjust any or all of the number of shares or other securities of the Company (or number and kind of other securities or property) with respect to which Awards may be granted under the Plan, including the maximum number of shares issuable to an individual as set forth in Section 1.5(d).
 
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(ii)          The Administrator is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including the events described in Section 1.5(c)(i) or the occurrence of a Change in Control (as defined below), other than an Equity Restructuring) affecting the Company, any Affiliate, or the financial statements of the Company or any Affiliate, or of changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange, accounting principles or law, whenever the Administrator determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to an Award, including providing for (A) adjustment to (1) the number of shares or other securities of the Company (or number and kind of other securities or property) subject to outstanding Awards or to which outstanding Awards relate and (2) the Exercise Price (as defined below) with respect to any Award and (B) a substitution or assumption of Awards, accelerating the exercisability or vesting of, or lapse of restrictions on, Awards, or accelerating the termination of Awards by providing for a period of time for exercise prior to the occurrence of such event, or, if deemed appropriate or desirable, providing for a cash payment to the holder of an outstanding Award in consideration for the cancellation of such Award (it being understood that, in such event, any option or stock appreciation right having a per share Exercise Price equal to, or in excess of, the Fair Market Value (as defined below) of a share subject to such option or stock appreciation right may be cancelled and terminated without any payment or consideration therefor); provided, however, that with respect to options and stock appreciation rights, unless otherwise determined by the Administrator, such adjustment shall be made in accordance with the provisions of Section 424(h) of the Code.
 
(iii)        In the event of (A) a dissolution or liquidation of the Company, (B) a sale of all or substantially all the Company’s assets or (C) a merger, reorganization or consolidation involving the Company or one of its Subsidiaries (as defined below), the Administrator shall have the power to:
 
(1)  provide that outstanding options, stock appreciation rights and/or restricted stock units (including any related dividend equivalent right) shall either continue in effect, be assumed or an equivalent award shall be substituted therefor by the successor corporation or a parent corporation or subsidiary corporation;
 
(2)  cancel, effective immediately prior to the occurrence of such event, options, stock appreciation rights and/or restricted stock units (including each dividend equivalent right related thereto) outstanding immediately prior to such event (whether or not then exercisable) and, in full consideration of such cancellation, pay to the holder of such Award a cash payment in an amount equal to the excess, if any, of the Fair Market Value (as of a date specified by the Administrator) of the shares subject to such Award over the aggregate Exercise Price of such Award (it being understood that, in such event, any option or stock appreciation right having a per share Exercise Price equal to, or in excess of, the Fair Market Value of a share subject to such option or stock appreciation right may be cancelled and terminated without any payment or consideration therefor); or
 
(3)  notify the holder of an option or stock appreciation right in writing or electronically that each option and stock appreciation right shall be fully vested and exercisable for a period of 30 days from the date of such notice, or such shorter period as the Administrator may determine to be reasonable, and the option or stock appreciation right shall terminate upon the expiration of such period (which period shall expire no later than immediately prior to the consummation of the corporate transaction).

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(iv)         In connection with the occurrence of any Equity Restructuring, and notwithstanding anything to the contrary in this Section 1.5(c):
 
(A)          The number and type of securities or other property subject to each outstanding Award and the Exercise Price or grant price thereof, if applicable, shall be equitably adjusted; and
 
(B)          The Administrator shall make such equitable adjustments, if any, as the Administrator may deem appropriate to reflect such Equity Restructuring with respect to the aggregate number and kind of shares that may be issued under the Plan (including, but not limited to, adjustments of the limitations set forth in Sections 1.5(a) and 1.5(d)).  The adjustments provided under this Section 1.5(c)(iv) shall be nondiscretionary and shall be final and binding on the affected participant and the Company.
 
(d)          Individual Limit.  Except for the limits set forth in this Section 1.5, no provision of this Plan shall be deemed to limit the number or value of shares of Common Stock with respect to which the Administrator may make Awards to any Key Person.  Subject to adjustment as provided in Section 1.5(c), the total number of shares of Common Stock with respect to which incentive stock options may be granted under the Plan to any one employee of the Company or a “parent corporation” or “subsidiary corporation” (as such terms are defined in Section 424 of the Code) of the Company during any one calendar year shall not exceed 3,125,000.  Incentive stock options granted and subsequently cancelled or deemed to be cancelled (e.g., as a result of re-pricing) in a calendar year count against the limit in the preceding sentence even after their cancellation.
 
1.6.         Definitions of Certain Terms
 
(a)          “Affiliate” shall mean (i) any entity that, directly or indirectly, is controlled by, controls or is under common control with, the Company and (ii) any entity in which the Company has a significant equity interest, in either case as determined by the Administrator.
 
(b)         Unless otherwise set forth in the applicable Award Agreement, in connection with a termination of employment or consultancy/service relationship or a dismissal from Board membership, for purposes of the Plan, the term “for Cause” shall be defined as follows:
 
(i)       if there is an employment, severance, consulting, service, change in control or other agreement governing the relationship between the grantee, on the one hand, and the Company or an Affiliate, on the other hand, that contains a definition of “cause” (or similar phrase), for purposes of the Plan, the term “for Cause” shall mean those acts or omissions that would constitute “cause” under such agreement; or
 
(ii)         if the preceding clause (i) is not applicable to the grantee, for purposes of the Plan, the term “for Cause” shall mean any of the following:
 
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(A)         any failure by the grantee substantially to perform the grantee’s employment or consulting/service or Board membership duties;
 
(B)          any excessive unauthorized absenteeism by the grantee;
 
(C)         any refusal by the grantee to obey the lawful orders of the Board or any other Person to whom the grantee reports;
 
(D)          any act or omission by the grantee that is or may be injurious to the Company or any Affiliate, whether monetarily, reputationally or otherwise;
 
(E)          any act by the grantee that is inconsistent with the best interests of the Company or any Affiliate;
 
(F)          the grantee’s gross negligence that is injurious to the Company or any Affiliate, whether monetarily, reputationally or otherwise;
 
(G)       the grantee’s material violation of any of the policies of the Company or an Affiliate, as applicable, including, without limitation, those policies relating to discrimination or sexual harassment;
 
(H)          the grantee’s material breach of his or her employment or service contract with the Company or any Affiliate;
 
(I)          the grantee’s unauthorized (1) removal from the premises of the Company or an Affiliate of any document (in any medium or form) relating to the Company or an Affiliate or the customers or clients of the Company or an Affiliate or (2) disclosure to any Person of any of the Company’s, or any Affiliate’s, confidential or proprietary information;
 
(J)          the grantee’s being convicted of, or entering a plea of guilty or nolo contendere to, any crime that constitutes a felony or involves moral turpitude; and
 
(K)          the grantee’s commission of any act involving dishonesty or fraud.
 
Any rights the Company or its Affiliates may have under the Plan in respect of the events giving rise to a termination or dismissal “for Cause” shall be in addition to any other rights the Company or its Affiliates may have under any other agreement with a grantee or at law or in equity.  Any determination of whether a grantee’s employment, consultancy/service relationship or Board membership is (or is deemed to have been) terminated “for Cause” shall be made by the Administrator.  If, subsequent to a grantee’s voluntary termination of employment or consultancy/service relationship or voluntarily resignation from the Board or involuntary termination of employment or consultancy/service relationship without Cause or removal from the Board other than “for Cause”, it is discovered that the grantee’s employment or consultancy/service relationship or Board membership could have been terminated “for Cause”, the Administrator may deem such grantee’s employment or consultancy/service relationship or Board membership to have been terminated “for Cause” upon such discovery and determination by the Administrator.
 
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(c)          “Code” shall mean the Internal Revenue Code of 1986, as amended.
 
(d)          Unless otherwise set forth in the applicable Award Agreement, “Disability” shall mean the grantee’s being unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or the grantee’s, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the grantee’s employer.  The existence of a Disability shall be determined by the Administrator.
 
(e)       “Equity Restructuring” shall mean a non-reciprocal transaction between the Company and its stockholders, such as a stock dividend, stock split, spin-off, rights offering or recapitalization through a large, nonrecurring cash dividend, that affects the shares of Common Stock (or other securities of the Company) or the share price thereof and causes a change in the per share value of the shares underlying outstanding Awards.
 
(f)          “Exercise Price” shall mean (i) in the case of options, the price specified in the applicable Award Agreement as the price-per-share at which such share can be purchased pursuant to the option or (ii) in the case of stock appreciation rights, the price specified in the applicable Award Agreement as the reference price-per-share used to calculate the amount payable to the grantee.
 
(g)          The “Fair Market Value” of a share of Common Stock on any day shall be the closing price on the Nasdaq Global Market, or such other primary stock exchange upon which such shares are then listed, as reported for such day in The Wall Street Journal, or, if no such price is reported for such day, the average of the high bid and low asked price of Common Stock as reported for such day.  If no quotation is made for the applicable day, the Fair Market Value of a share of Common Stock on such day shall be determined in the manner set forth in the preceding sentence for the next preceding trading day.  Notwithstanding the foregoing, if there is no reported closing price or high bid/low asked price that satisfies the preceding sentences, or if otherwise deemed necessary or appropriate by the Administrator, the Fair Market Value of a share of Common Stock on any day shall be determined by such methods and procedures as shall be established from time to time by the Administrator.  The “Fair Market Value” of any property other than Common Stock shall be the fair market value of such property determined by such methods and procedures as shall be established from time to time by the Administrator.
 
(h)       “Person” shall mean any individual, firm, corporation, partnership, limited liability company, trust, incorporated or unincorporated association, joint venture, joint stock company, governmental body or other entity of any kind.
 
(i)          “Repricing” shall mean (i) lowering the Exercise Price of an option or a stock appreciation right after it has been granted, (ii) the cancellation of an option or a stock appreciation right in exchange for cash or another Award when the Exercise Price exceeds the Fair Market Value of the underlying shares subject to the Award and (iii) any other action with respect to an option or a stock appreciation right that is treated as a repricing under (A) generally accepted accounting principles or (B) any applicable stock exchange rules.
 
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(j)          Unless otherwise set forth in the applicable Award Agreement, “Retirement” shall mean a grantee’s resignation of employment or consultancy/service relationship or dismissal from the Board, with the Company’s or its applicable Affiliate’s prior consent, on or after (i) his or her 65th birthday, (ii) the date on which he or she has attained age 60 and completed at least five years of service with the Company or one or more of its Affiliates (using any method of calculation the Administrator deems appropriate) or (iii) if approved by the Administrator, on or after his or her having completed at least 20 years of service with the Company or one or more of its Affiliates (using any method of calculation the Administrator deems appropriate).
 
(k)          “Subsidiary” shall mean any entity in which the Company, directly or indirectly, has a 50% or more equity interest.
 
 
ARTICLE II.
Awards Under The Plan
 
2.1.         Agreements Evidencing Awards
 
Each Award granted under the Plan shall be evidenced by a written certificate (“Award Agreement”), which shall contain such provisions as the Administrator may deem necessary or desirable and which may, but need not, require execution or acknowledgment by a grantee.  The Award shall be subject to all of the terms and provisions of the Plan and the applicable Award Agreement.
 
2.2.         Grant of Stock Options and Stock Appreciation Rights
 
(a)          Stock Option Grants.  The Administrator may grant non-qualified stock options and/or incentive stock options (collectively, “options”) to purchase shares of Common Stock from the Company to such Key Persons, and in such amounts and subject to such vesting and forfeiture provisions and other terms and conditions, as the Administrator shall determine, subject to the provisions of the Plan.  Except to the extent otherwise specifically provided in the applicable Award Agreement, no option will be treated as an “incentive stock option” for purposes of the Code.  Incentive stock options may be granted to employees of the Company and any “parent corporation” or “subsidiary corporation” (as such terms are defined in Section 424 of the Code) of the Company.  In the case of incentive stock options, the terms and conditions of such Awards shall be subject to such applicable rules as may be prescribed by Sections 421, 422 and 424 of the Code and any regulations related thereto, as may be amended from time to time.  If an option is intended to be an incentive stock option, and if for any reason such option (or any portion thereof) shall not qualify as an incentive stock option for purposes of Section 422 of the Code, then, to the extent of such non-qualification, such option (or portion thereof) shall be regarded as a non-qualified stock option appropriately granted under the Plan; provided that such option (or portion thereof) otherwise complies with the Plan’s requirements relating to option Awards.  It shall be the intent of the Administrator to not grant an Award in the form of stock options to any Key Person who is then subject to the requirements of Section 409A of the Code with respect to such Award if the Common Stock (as defined below) underlying such Award does not then qualify as “service recipient stock” for purposes of Section 409A.  Furthermore, it shall be the intent of the Administrator, in granting options to Key Persons who are subject to Section 409A and/or 457 of the Code, to structure such options so as to comply with the requirements of Section 409A and/or 457 of the Code, as applicable.
 
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(b)        Stock Appreciation Right Grants; Types of Stock Appreciation Rights.  The Administrator may grant stock appreciation rights to such Key Persons, and in such amounts and subject to such vesting and forfeiture provisions and other terms and conditions, as the Administrator shall determine, subject to the provisions of the Plan.  The terms of a stock appreciation right may provide that it shall be automatically exercised for a payment upon the happening of a specified event that is outside the control of the grantee and that it shall not be otherwise exercisable.  Stock appreciation rights may be granted in connection with all or any part of, or independently of, any option granted under the Plan.  It shall be the intent of the Administrator to not grant an Award in the form of stock appreciation rights to any Key Person (i) who is then subject to the requirements of Section 409A of the Code with respect to such Award if the Common Stock underlying such Award does not then qualify as “service recipient stock” for purposes of Section 409A or (ii) if such Award would create adverse tax consequences for such Key Person under Section 457A of the Code.
 
(c)          Nature of Stock Appreciation Rights.  The grantee of a stock appreciation right shall have the right, subject to the terms of the Plan and the applicable Award Agreement, to receive from the Company an amount equal to (i) the excess of the Fair Market Value of a share of Common Stock on the date of exercise of the stock appreciation right over the Exercise Price of the stock appreciation right, multiplied by (ii) the number of shares with respect to which the stock appreciation right is exercised.  Each Award Agreement with respect to a stock appreciation right shall set forth the Exercise Price of such Award and, unless otherwise specifically provided in the Award Agreement, the Exercise Price of a stock appreciation right shall equal the Fair Market Value of a share of Common Stock on the date of grant; provided that in no event may such Exercise Price be less than the greater of (A) the Fair Market Value of a share of Common Stock on the date of grant and (B) the par value of a share of Common Stock.  Payment upon exercise of a stock appreciation right shall be in cash or in shares of Common Stock (valued at their Fair Market Value on the date of exercise of the stock appreciation right) or any combination of both, all as the Administrator shall determine.  Repricing of stock appreciation rights granted under the Plan shall not be permitted (1) to the extent such action could cause adverse tax consequences to the grantee under Sections 409A or 457A of the Code or (2) without prior shareholder approval, to the extent such approval would be required to be obtained by the Company pursuant to the applicable rules of any applicable stock exchange on which the Common Stock is then listed, and any action that would be deemed to result in a Repricing of a stock appreciation right shall be deemed null and void if it would cause such adverse tax consequences or if any requisite shareholder approval related thereto is not obtained prior to the effective time of such action.  Upon the exercise of a stock appreciation right granted in connection with an option, the number of shares subject to the option shall be reduced by the number of shares with respect to which the stock appreciation right is exercised.  Upon the exercise of an option in connection with which a stock appreciation right has been granted, the number of shares subject to the stock appreciation right shall be reduced by the number of shares with respect to which the option is exercised.
 
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(d)          Option Exercise Price.  Each Award Agreement with respect to an option shall set forth the Exercise Price of such Award and, unless otherwise specifically provided in the Award Agreement, the Exercise Price of an option shall equal the Fair Market Value of a share of Common Stock on the date of grant; provided that in no event may such Exercise Price be less than the greater of (i) the Fair Market Value of a share of Common Stock on the date of grant and (ii) the par value of a share of Common Stock.  Repricing of options granted under the Plan shall not be permitted (1) to the extent such action could cause adverse tax consequences to the grantee under Sections 409A or 457A of the Code or (2) without prior shareholder approval, to the extent such approval would be required to be obtained by the Company pursuant to the applicable rules of any applicable stock exchange on which the Common Stock is then listed, and any action that would be deemed to result in a Repricing of an option shall be deemed null and void if it would cause such adverse tax consequences or if any requisite shareholder approval related thereto is not obtained prior to the effective time of such action.
 
2.3.         Exercise of Options and Stock Appreciation Rights
 
Subject to the other provisions of this Article II and the Plan, each option and stock appreciation right granted under the Plan shall be exercisable as follows:
 
(a)          Timing and Extent of Exercise.  Options and stock appreciation rights shall be exercisable at such times and under such conditions as determined by the Administrator and set forth in the corresponding Award Agreement, but in no event shall any portion of such Award be exercisable subsequent to the tenth anniversary of the date on which such Award was granted.  Unless the applicable Award Agreement otherwise provides, an option or stock appreciation right may be exercised from time to time as to all or part of the shares as to which such Award is then exercisable.
 
(b)          Notice of Exercise.  An option or stock appreciation right shall be exercised by the filing of a written notice with the Company or the Company’s designated exchange agent (the “Exchange Agent”), on such form and in such manner as the Administrator shall prescribe.
 
(c)          Payment of Exercise Price.  Any written notice of exercise of an option shall be accompanied by payment for the shares being purchased.  Such payment shall be made: (i) by certified or official bank check (or the equivalent thereof acceptable to the Company or its Exchange Agent) for the full option Exercise Price; (ii) with the consent of the Administrator, which consent shall be given or withheld in the sole discretion of the Administrator, by delivery of shares of Common Stock having a Fair Market Value (determined as of the exercise date) equal to all or part of the option Exercise Price and a certified or official bank check (or the equivalent thereof acceptable to the Company or its Exchange Agent) for any remaining portion of the full option Exercise Price; or (iii) at the sole discretion of the Administrator and to the extent permitted by law, by such other provision, consistent with the terms of the Plan, as the Administrator may from time to time prescribe (whether directly or indirectly through the Exchange Agent), or by any combination of the foregoing payment methods.
 
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(d)          Delivery of Certificates Upon Exercise.  Subject to Sections 3.2, 3.4 and 3.13, promptly after receiving payment of the full option Exercise Price, or after receiving notice of the exercise of a stock appreciation right for which the Administrator determines payment will be made partly or entirely in shares, the Company or its Exchange Agent shall (i) deliver to the grantee, or to such other Person as may then have the right to exercise the Award, a certificate or certificates for the shares of Common Stock for which the Award has been exercised or, in the case of stock appreciation rights, for which the Administrator determines will be made in shares or (ii) establish an account evidencing ownership of the stock in uncertificated form.  If the method of payment employed upon an option exercise so requires, and if applicable law permits, an optionee may direct the Company or its Exchange Agent, as the case may be, to deliver the stock certificate(s) to the optionee’s stockbroker.
 
(e)          No Stockholder Rights.  No grantee of an option or stock appreciation right (or other Person having the right to exercise such Award) shall have any of the rights of a stockholder of the Company with respect to shares subject to such Award until the issuance of a stock certificate to such Person for such shares.  Except as otherwise provided in Section 1.5(c), no adjustment shall be made for dividends, distributions or other rights (whether ordinary or extraordinary, and whether in cash, securities or other property) for which the record date is prior to the date such stock certificate is issued.
 
2.4.         Termination of Employment; Death Subsequent to a Termination of Employment
 
(a)          General Rule.  Except to the extent otherwise provided in paragraphs (b), (c), (d), (e) or (f) of this Section 2.4 or Section 3.5(b)(iii), a grantee who incurs a termination of employment or consultancy/service relationship or dismissal from the Board may exercise any outstanding option or stock appreciation right on the following terms and conditions: (i) exercise may be made only to the extent that the grantee was entitled to exercise the Award on the date of termination of employment or consultancy/service relationship or dismissal from the Board, as applicable; and (ii) exercise must occur within three months after termination of employment or consultancy/service relationship or dismissal from the Board but in no event after the original expiration date of the Award.
 
(b)       Dismissal “for Cause”.  If a grantee incurs a termination of employment or consultancy/service relationship or dismissal from the Board “for Cause”, all options and stock appreciation rights not theretofore exercised shall immediately terminate upon the grantee’s termination of employment or consultancy/service relationship or dismissal from the Board.
 
(c)      Retirement.  If a grantee incurs a termination of employment or consultancy/service relationship or dismissal from the Board as the result of his or her Retirement, then any outstanding option or stock appreciation right shall, to the extent exercisable at the time of such Retirement, remain exercisable for a period of three years after such Retirement; provided that in no event may such option or stock appreciation right be exercised following the original expiration date of the Award.
 
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(d)        Disability.  If a grantee incurs a termination of employment or consultancy/service relationship or a dismissal from the Board by reason of a Disability, then any outstanding option or stock appreciation right shall, to the extent exercisable at the time of such termination or dismissal, remain exercisable for a period of one year after such termination or dismissal; provided that in no event may such option or stock appreciation right be exercised following the original expiration date of the Award.
 
(e)           Death.
 
 (i)          Termination of Employment as a Result of Grantee’s Death.  If a grantee incurs a termination of employment or consultancy/service relationship or leaves the Board as the result of his or her death, then any outstanding option or stock appreciation right shall, to the extent exercisable at the time of such death, remain exercisable for a period of one year after such death; provided that in no event may such option or stock appreciation right be exercised following the original expiration date of the Award.
 
    (ii)      Restrictions on Exercise Following Death.  Any such exercise of an Award following a grantee’s death shall be made only by the grantee’s executor or administrator or other duly appointed representative reasonably acceptable to the Administrator, unless the grantee’s will specifically disposes of such Award, in which case such exercise shall be made only by the recipient of such specific disposition.  If a grantee’s personal representative or the recipient of a specific disposition under the grantee’s will shall be entitled to exercise any Award pursuant to the preceding sentence, such representative or recipient shall be bound by all the terms and conditions of the Plan and the applicable Award Agreement which would have applied to the grantee.
 
(f)          Administrator Discretion.  The Administrator may, in writing, waive or modify the application of the foregoing provisions of this Section 2.4.
 
2.5.         Transferability of Options and Stock Appreciation Rights
 
Except as otherwise specifically provided in this Plan or the applicable Award Agreement evidencing an option or stock appreciation right, during the lifetime of a grantee, each such Award granted to a grantee shall be exercisable only by the grantee, and no such Award may be sold, assigned, transferred, pledged or otherwise encumbered or disposed of other than by will or by the laws of descent and distribution.  The Administrator may, in any applicable Award Agreement evidencing an option or stock appreciation right, permit a grantee to transfer all or some of the options or stock appreciation rights to (a) the grantee’s spouse, children or grandchildren (“Immediate Family Members”), (b) a trust or trusts for the exclusive benefit of such Immediate Family Members or (c) other parties approved by the Administrator.  Following any such transfer, any transferred options and stock appreciation rights shall continue to be subject to the same terms and conditions as were applicable immediately prior to the transfer.
 
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2.6.         Grant of Restricted Stock
 
(a)       Restricted Stock Grants.  The Administrator may grant restricted shares of Common Stock to such Key Persons, in such amounts and subject to such vesting and forfeiture provisions and other terms and conditions as the Administrator shall determine, subject to the provisions of the Plan.  A grantee of a restricted stock Award shall have no rights with respect to such Award unless such grantee accepts the Award within such period as the Administrator shall specify by accepting delivery of a restricted stock Award Agreement in such form as the Administrator shall determine and, in the event the restricted shares are newly issued by the Company, makes payment to the Company or its Exchange Agent by certified or official bank check (or the equivalent thereof acceptable to the Administrator) in an amount at least equal to the par value of the shares covered by the Award (which payment may be waived at the time of grant of the restricted stock Award to the extent the restricted shares granted hereunder are otherwise deemed to be fully paid and non-assessable).
 
(b)          Issuance of Stock Certificate.  Promptly after a grantee accepts a restricted stock Award in accordance with Section 2.6(a), subject to Sections 3.2, 3.4 and 3.13, the Company or its Exchange Agent shall issue to the grantee a stock certificate or stock certificates for the shares of Common Stock covered by the Award or shall establish an account evidencing ownership of the stock in uncertificated form.  Upon the issuance of such stock certificates, or establishment of such account, the grantee shall have the rights of a stockholder with respect to the restricted stock, subject to: (i) the nontransferability restrictions and forfeiture provisions described in the Plan (including paragraphs (d) and (e) of this Section 2.6); (ii) in the Administrator’s sole discretion, a requirement, as set forth in the Award Agreement, that any dividends paid on such shares shall be held in escrow and, unless otherwise determined by the Administrator, shall remain forfeitable until all restrictions on such shares have lapsed; and (iii) any other restrictions and conditions contained in the applicable Award Agreement.
 
(c)        Custody of Stock Certificate.  Unless the Administrator shall otherwise determine, any stock certificates issued evidencing shares of restricted stock shall remain in the possession of the Company until such shares are free of any restrictions specified in the applicable Award Agreement.  The Administrator may direct that such stock certificates bear a legend setting forth the applicable restrictions on transferability.
 
(d)          Nontransferability.  Except as otherwise specifically provided in this Plan or the applicable Award Agreement evidencing a restricted stock Award, shares of restricted stock granted under the Plan may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of prior to the lapsing of all restrictions thereon.  The Administrator at the time of grant shall specify the date or dates (which may depend upon or be related to the attainment of performance goals and other conditions) on which the nontransferability of the restricted stock shall lapse.  The Administrator may, in any applicable Award Agreement evidencing a restricted stock Award, permit a grantee to transfer all or some of the shares of restricted stock prior to the lapsing of all restrictions thereon to (i) the grantee’s Immediate Family Members, (ii) a trust or trusts for the exclusive benefit of such Immediate Family Members or (iii) other parties approved by the Administrator.  Following any permitted transfer prior to the lapsing of all restrictions on the restricted stock, any transferred shares of restricted stock shall continue to be subject to the same terms and conditions as were applicable immediately prior to the transfer.
 
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(e)          Consequence of Termination of Employment.  Unless otherwise set forth in the applicable Award Agreement, (i) a grantee’s termination of employment or consultancy/service relationship or dismissal from the Board for any reason other than death, Disability or Retirement shall cause the immediate forfeiture of all shares of restricted stock that have not yet vested as of the date of such termination of employment or consultancy/service relationship or dismissal from the Board and (ii) if a grantee incurs a termination of employment or consultancy/service relationship or dismissal from the Board as the result of his or her death, Disability or Retirement, all shares of restricted stock that have not yet vested as of the date of such termination or departure from the Board shall immediately vest as of such date.  Unless otherwise determined by the Administrator, all dividends paid on shares forfeited under this Section 2.6(e) that have not theretofore been directly remitted to the grantee shall also be forfeited, whether by termination of any escrow arrangement under which such dividends are held or otherwise.  The Administrator may, in writing, waive or modify the application of the foregoing provisions of this Section 2.6(e).
 
2.7.         Grant of Restricted Stock Units
 
(a)          Restricted Stock Unit Grants.  The Administrator may grant restricted stock units to such Key Persons, and in such amounts and subject to such vesting and forfeiture provisions and other terms and conditions, as the Administrator shall determine, subject to the provisions of the Plan.  A restricted stock unit granted under the Plan shall confer upon the grantee a right to receive from the Company, conditioned upon the occurrence of such vesting event as shall be determined by the Administrator and specified in the Award Agreement, the number of such grantee’s restricted stock units that vest upon the occurrence of such vesting event multiplied by the Fair Market Value of a share of Common Stock on the date of vesting.  Payment upon vesting of a restricted stock unit shall be in cash or in shares of Common Stock (valued at their Fair Market Value on the date of vesting) or both, all as the Administrator shall determine, and such payments shall be made to the grantee at such time as provided in the Award Agreement, which the Administrator shall intend to be (i) if Section 409A of the Code is applicable to the grantee, within the period required by Section 409A such that it qualifies as a “short-term deferral” pursuant to Section 409A and the Treasury Regulations issued thereunder, unless the Administrator shall provide for deferral of the Award intended to comply with Section 409A, (ii) if Section 457A of the Code is applicable to the grantee, within the period required by Section 457A(d)(3)(B) such that it qualifies for the exemption thereunder, or (iii) if Sections 409A and 457A of the Code are not applicable to the grantee, at such time as determined by the Administrator.
 
(b)          Dividend Equivalents.  The Administrator may include in any Award Agreement with respect to a restricted stock unit a dividend equivalent right entitling the grantee to receive amounts equal to the ordinary dividends that would be paid, during the time such Award is outstanding and unvested, on the shares of Common Stock underlying such Award if such shares were then outstanding.  In the event such a provision is included in a Award Agreement, the Administrator shall determine whether such payments shall be (i) paid to the holder of the Award, as specified in the Award Agreement, either (A) at the same time as the underlying dividends are paid, regardless of the fact that the restricted stock unit has not theretofore vested, or (B) at the time at which the Award’s vesting event occurs, conditioned upon the occurrence of the vesting event, (ii) made in cash, shares of Common Stock or other property and (iii) subject to such other vesting and forfeiture provisions and other terms and conditions as the Administrator shall deem appropriate and as shall be set forth in the Award Agreement.
 
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(c)          Consequence of Termination of Employment.  Unless otherwise set forth in the applicable Award Agreement, (i) a grantee’s termination of employment or consultancy/service relationship or dismissal from the Board for any reason other than death, Disability or Retirement shall cause the immediate forfeiture of all restricted stock units that have not yet vested as of the date of such termination of employment or consultancy/service relationship or dismissal from the Board and (ii) if a grantee incurs a termination of employment or consultancy/service relationship or dismissal from the Board as the result of his or her death, Disability or Retirement, all restricted stock units that have not yet vested as of the date of such termination or departure from the Board shall immediately vest as of such date.  Unless otherwise determined by the Administrator, any dividend equivalent rights on any restricted stock units forfeited under this Section 2.7(c) that have not theretofore been directly remitted to the grantee shall also be forfeited, whether by termination of any escrow arrangement under which such dividends are held or otherwise.  The Administrator may, in writing, waive or modify the application of the foregoing provisions of this Section 2.7(c).
 
(d)          No Stockholder Rights.  No grantee of a restricted stock unit shall have any of the rights of a stockholder of the Company with respect to such Award unless and until a stock certificate is issued with respect to such Award upon the vesting of such Award (it being understood that the Administrator shall determine whether to pay any vested restricted stock unit in the form of cash or Company shares or both), which issuance shall be subject to Sections 3.2, 3.4 and 3.13.  Except as otherwise provided in Section 1.5(c), no adjustment to any restricted stock unit shall be made for dividends, distributions or other rights (whether ordinary or extraordinary, and whether in cash, securities or other property) for which the record date is prior to the date such stock certificate, if any, is issued.
 
(e)          Transferability of Restricted Stock Units.  Except as otherwise provided in an applicable Award Agreement evidencing a restricted stock unit, no restricted stock unit granted under the Plan shall be assignable or transferable.  The Administrator may, in any applicable Award Agreement evidencing a restricted stock unit, permit a grantee to transfer all or some of the restricted stock units to (i) the grantee’s Immediate Family Members, (ii) a trust or trusts for the exclusive benefit of such Immediate Family Members or (iii) other parties approved by the Administrator.  Following any such transfer, any transferred restricted stock units shall continue to be subject to the same terms and conditions as were applicable immediately prior to the transfer.
 
2.8.         Grant of Unrestricted Stock
 
The Administrator may grant (or sell at a purchase price at least equal to par value) shares of Common Stock free of restrictions under the Plan to such Key Persons and in such amounts and subject to such forfeiture provisions as the Administrator shall determine.  Shares may be thus granted or sold in respect of past services or other valid consideration.
 
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ARTICLE III.
Miscellaneous
 
3.1.         Amendment of the Plan; Modification of Awards
 
(a)          Amendment of the Plan.  The Board may from time to time suspend, discontinue, revise or amend the Plan in any respect whatsoever, except that no such amendment shall materially impair any rights or materially increase any obligations under any Award theretofore made under the Plan without the consent of the grantee (or, upon the grantee’s death, the Person having the right to exercise the Award).  For purposes of this Section 3.1, any action of the Board or the Administrator that in any way alters or affects the tax treatment of any Award shall not be considered to materially impair any rights of any grantee.
 
(b)       Stockholder Approval Requirement.  If (1) required by applicable rules or regulations of a national securities exchange or the SEC, the Company shall obtain stockholder approval with respect to any amendment to the Plan that (i) expands the types of Awards available under the Plan, (ii) materially increases the aggregate number of shares which may be issued under the Plan, except as permitted pursuant to Section 1.5(c), (iii) materially increases the benefits to participants under the Plan, including any material change to (A) permit, or that has the effect of, a Repricing of any outstanding Award, (B) reduce the price at which shares or options to purchase shares may be offered or (C) extend the duration of the Plan, or (iv) materially expands the class of Persons eligible to receive Awards under the Plan, or (2) the Administrator determines that it desires to retain the ability to grant incentive stock options under the Plan thereafter, the Company shall obtain stockholder approval with respect to any amendment to the Plan that (i) increases the number of shares that may be issued under the Plan or the individual limit set forth under Section 1.5(d) of the Plan (except, in each case, as permitted pursuant to Section 1.5(c)) or (ii) expands the class of Persons eligible to receive incentive stock options under the Plan.
 
(c)         Modification of Awards.  The Administrator may cancel any Award under the Plan.  The Administrator also may amend any outstanding Award Agreement, including, without limitation, by amendment which would: (i) accelerate the time or times at which the Award becomes unrestricted, vested or may be exercised; (ii) waive or amend any goals, restrictions or conditions set forth in the Award Agreement; or (iii) waive or amend the operation of Sections 2.4, 2.6(e) or 2.7(c) with respect to the termination of the Award upon termination of employment or consultancy/service relationship or dismissal from the Board; provided, however, that no such amendment shall be made without shareholder approval if such approval is necessary to comply with any tax or regulatory requirement applicable to the Award.  However, any such cancellation or amendment (other than an amendment pursuant to Section 1.5, 3.5 or 3.16) that materially impairs the rights or materially increases the obligations of a grantee under an outstanding Award shall be made only with the consent of the grantee (or, upon the grantee’s death, the Person having the right to exercise the Award).  In making any modification to an Award (e.g., an amendment resulting in a direct or indirect reduction in the Exercise Price or a waiver or modification under Section 2.4(f), 2.6(e) or 2.7(c)), the Administrator may consider the implications, if any, of such modification under the Code with respect to incentive stock options granted under the Plan and/or Sections 409A and 457A of the Code with respect to Awards granted under the Plan to individuals subject to such provisions of the Code.
 
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3.2.         Consent Requirement
 
(a)          No Plan Action Without Required Consent.  If the Administrator shall at any time determine that any Consent (as defined below) is necessary or desirable as a condition of, or in connection with, the granting of any Award under the Plan, the issuance or purchase of shares or other rights thereunder, or the taking of any other action thereunder (each such action being hereinafter referred to as a “Plan Action”), then such Plan Action shall not be taken, in whole or in part, unless and until such Consent shall have been effected or obtained to the full satisfaction of the Administrator.
 
(b)          Consent Defined.  The term “Consent” as used herein with respect to any Plan Action means (i) any and all listings, registrations or qualifications in respect thereof upon any securities exchange or under any federal, state or local law, rule or regulation, (ii) any and all written agreements and representations by the grantee with respect to the disposition of shares, or with respect to any other matter, which the Administrator shall deem necessary or desirable to comply with the terms of any such listing, registration or qualification or to obtain an exemption from the requirement that any such listing, qualification or registration be made and (iii) any and all consents, clearances and approvals in respect of a Plan Action by any governmental or other regulatory bodies.
 
3.3.         Nonassignability
 
Except as provided in Sections 2.4(e), 2.5, 2.6(d) or 2.7(e), (a) no Award or right granted to any Person under the Plan or under any Award Agreement shall be assignable or transferable other than by will or by the laws of descent and distribution and (b) all rights granted under the Plan or any Award Agreement shall be exercisable during the life of the grantee only by the grantee or the grantee’s legal representative or the grantee’s permissible successors or assigns (as authorized and determined by the Administrator).  All terms and conditions of the Plan and the applicable Award Agreements will be binding upon any permitted successors or assigns.
 
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3.4.         Taxes
 
(a)          Withholding.  A grantee or other Award holder under the Plan shall be required to pay, in cash, to the Company, and the Company and its Affiliates shall have the right and are hereby authorized to withhold from any Award, from any payment due or transfer made under any Award or under the Plan or from any compensation or other amount owing to such grantee or other Award holder, the amount of any applicable withholding taxes in respect of an Award, its grant, its exercise, its vesting, or any payment or transfer under an Award or under the Plan, and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for payment of such taxes.  Whenever shares of Common Stock are to be delivered pursuant to an Award under the Plan, with the approval of the Administrator, which the Administrator shall have sole discretion whether or not to give, the grantee may satisfy the foregoing condition by electing to have the Company withhold from delivery shares having a value equal to the amount of minimum tax required to be withheld.  Such shares shall be valued at their Fair Market Value as of the date on which the amount of tax to be withheld is determined.  Fractional share amounts shall be settled in cash.  Such a withholding election may be made with respect to all or any portion of the shares to be delivered pursuant to an Award as may be approved by the Administrator in its sole discretion.
 
(b)          Liability for Taxes.  Grantees and holders of Awards are solely responsible and liable for the satisfaction of all taxes and penalties that may arise in connection with Awards (including, without limitation, any taxes arising under Sections 409A and 457A of the Code) and the Company shall not have any obligation to indemnify or otherwise hold any such Person harmless from any or all of such taxes.  The Administrator shall have the discretion to organize any deferral program, to require deferral election forms, and to grant or, notwithstanding anything to the contrary in the Plan or any Award Agreement, to unilaterally modify any Award in a manner that (i) conforms with the requirements of Sections 409A and 457A of the Code (to the extent applicable), (ii) voids any participant election to the extent it would violate Sections 409A or 457A of the Code (to the extent applicable) and (iii) for any distribution event or election that could be expected to violate Section 409A of the Code, make the distribution only upon the earliest of the first to occur of a “permissible distribution event” within the meaning of Section 409A of the Code or a distribution event that the participant elects in accordance with Section 409A of the Code.  The Administrator shall have the sole discretion to interpret the requirements of the Code, including, without limitation, Sections 409A and 457A, for purposes of the Plan and all Awards.
 
3.5.         Change in Control
 
(a)          Change in Control Defined.  Unless otherwise set forth in the applicable Award Agreement, for purposes of the Plan, “Change in Control” shall mean the occurrence of any of the following:
 
(i)          any “person” (as defined in Section 13(d)(3) of the 1934 Act), company or other entity (other than (A) the Company, (B) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or an Affiliate or (C) any company or other entity owned, directly or indirectly, by the holders of the voting stock of the Company in substantially the same proportions as their ownership of the aggregate voting power of the capital stock ordinarily entitled to elect directors of the Company directly or indirectly “controls” (as defined in Rule 12b-2 under the 1934 Act)) acquires “beneficial ownership” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of more than 50% of the aggregate voting power of the capital stock ordinarily entitled to elect directors of the Company;
 
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(ii)          the sale of all or substantially all the Company’s assets in one or more related transactions to any “person” (as defined in Section 13(d)(3) of the 1934 Act), company or other entity, other than such a sale (A) to a Subsidiary which does not involve a material change in the equity holdings of the Company, (B) to an entity which has acquired all or substantially all the Company’s assets (any such entity described in clause (A) or (B), the “Acquiring Entity”) if, immediately following such sale, 50% or more of the aggregate voting power of the capital stock ordinarily entitled to elect directors of the Acquiring Entity (or, if applicable, the ultimate parent entity that directly or indirectly has beneficial ownership of more than 50% of the aggregate voting power of the capital stock ordinarily entitled to elect directors of the Acquiring Entity) is beneficially owned by the holders of the voting stock of the Company, and such voting power among the persons who were holders of the voting stock of the Company immediately prior to such sale is, immediately following such sale, held in substantially the same proportions as the aggregate voting power of the capital stock ordinarily entitled to elect directors of the Company immediately prior to such sale;
 
(iii)          any merger, consolidation, reorganization or similar event of the Company or any Subsidiary as a result of which the holders of the voting stock of the Company immediately prior to such merger, consolidation, reorganization or similar event do not directly or indirectly hold 50% or more of the aggregate voting power of the capital stock of the surviving entity ordinarily entitled to elect directors of the surviving entity (or, if applicable, the ultimate parent entity that directly or indirectly has beneficial ownership of more than 50% of the aggregate voting power of the capital stock ordinarily entitled to elect directors of the surviving entity) and such voting power among the persons who were holders of the voting stock of the Company immediately prior to such sale is, immediately following such sale, held in substantially the same proportions as the aggregate voting power of the capital stock ordinarily entitled to elect directors of the Company immediately prior to such sale;
 
(iv)      the approval by the Company’s stockholders of a plan of complete liquidation or dissolution of the Company; or
 
(v)          during any period of 12 consecutive calendar months, individuals:
 

 (A)
who were directors of the Company on the first day of such period, or
 

 (B)
whose election or nomination for election to the Board was recommended or approved by at least a majority of the directors then still in office who were directors of the Company on the first day of such period, or whose election or nomination for election were so approved,
 
shall cease to constitute a majority of the Board.
 
Notwithstanding the foregoing, unless otherwise set forth in the applicable Award Agreement, for each Award subject to Section 409A of the Code, a Change in Control shall be deemed to have occurred under this Plan with respect to such Award only if a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company shall also be deemed to have occurred under Section 409A of the Code, provided that such limitation shall apply to such Award only to the extent necessary to avoid adverse tax effects under Section 409A of the Code.
 

 
20
(b)          Effect of a Change in Control.  Unless the Administrator provides otherwise in an Award Agreement, upon the occurrence of a Change in Control:
 
(i)      notwithstanding any other provision of this Plan, any Award then outstanding shall become fully vested and any restriction and forfeiture provisions thereon imposed pursuant to the Plan and the Award Agreement shall lapse and any Award in the form of an option or stock appreciation right shall be immediately exercisable;
 
(ii)          to the extent permitted by law and not otherwise limited by the terms of the Plan, the Administrator may amend any Award Agreement in such manner as it deems appropriate;
 
(iii)      a grantee who incurs a termination of employment or consultancy/service relationship or dismissal from the Board for any reason, other than a termination or dismissal “for Cause”, concurrent with or within one year following the Change in Control may exercise any outstanding option or stock appreciation right, but only to the extent that the grantee was entitled to exercise the Award on the date of his or her termination of employment or consultancy/service relationship or dismissal from the Board, until the earlier of (A) the original expiration date of the Award and (B) the later of (x) the date provided for under the terms of Section 2.4 without reference to this Section 3.5(b)(iii) and (y) the first anniversary of the grantee’s termination of employment or consultancy/service relationship or dismissal from the Board.
 
(c)          Miscellaneous.  Whenever deemed appropriate by the Administrator, any action referred to in paragraph (b)(ii) of this Section 3.5 may be made conditional upon the consummation of the applicable Change in Control transaction.  For purposes of the Plan and any Award Agreement granted hereunder, the term “Company” shall include any successor to Seanergy Maritime Holdings Corporation.
 
3.6.         Operation and Conduct of Business
 
Nothing in the Plan or any Award Agreement shall be construed as limiting or preventing the Company or any Affiliate from taking any action with respect to the operation and conduct of their business that they deem appropriate or in their best interests, including any or all adjustments, recapitalizations, reorganizations, exchanges or other changes in the capital structure of the Company or any Affiliate, any merger or consolidation of the Company or any Affiliate, any issuance of Company shares or other securities or subscription rights, any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock or other securities or rights thereof, any dissolution or liquidation of the Company or any Affiliate, any sale or transfer of all or any part of the assets or business of the Company or any Affiliate, or any other corporate act or proceeding, whether of a similar character or otherwise.
 
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3.7.         No Rights to Awards
 
No Key Person or other Person shall have any claim to be granted any Award under the Plan.
 
3.8.         Right of Discharge Reserved
 
Nothing in the Plan or in any Award Agreement shall confer upon any grantee the right to continue his or her employment with the Company or any Affiliate, his or her consultancy/service relationship with the Company or any Affiliate, or his or her position as a director of the Company or any Affiliate, or affect any right that the Company or any Affiliate may have to terminate such employment or consultancy/service relationship or service as a director.
 
3.9.         Non-Uniform Determinations
 
The Administrator’s determinations and the treatment of Key Persons and grantees and their beneficiaries under the Plan need not be uniform and may be made and determined by the Administrator selectively among Persons who receive, or who are eligible to receive, Awards under the Plan (whether or not such Persons are similarly situated).  Without limiting the generality of the foregoing, the Administrator shall be entitled, among other things, to make non-uniform and selective determinations, and to enter into non-uniform and selective Award Agreements, as to (a) the Persons to receive Awards under the Plan, (b) the types of Awards granted under the Plan, (c) the number of shares to be covered by, or with respect to which payments, rights or other matters are to be calculated with respect to, Awards and (d) the terms and conditions of Awards.
 
3.10.       Other Payments or Awards
 
Nothing contained in the Plan shall be deemed in any way to limit or restrict the Company from making any award or payment to any Person under any other plan, arrangement or understanding, whether now existing or hereafter in effect.
 
3.11.       Headings
 
Any section, subsection, paragraph or other subdivision headings contained herein are for the purpose of convenience only and are not intended to expand, limit or otherwise define the contents of such subdivisions.
 
3.12.       Effective Date and Term of Plan
 
(a)         Adoption; Stockholder Approval.  The Plan was adopted by the Board on January 12, 2011.  The Board may, but need not, make the granting of any Awards under the Plan subject to the approval of the Company’s stockholders.
 
(b)          Termination of Plan.  The Board may terminate the Plan at any time.  All Awards made under the Plan prior to its termination shall remain in effect until such Awards have been satisfied or terminated in accordance with the terms and provisions of the Plan and the applicable Award Agreements.  No Awards may be granted under the Plan following the tenth anniversary of the date on which the Plan was adopted by the Board.
 
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3.13.       Restriction on Issuance of Stock Pursuant to Awards
 
The Company shall not permit any shares of Common Stock to be issued pursuant to Awards granted under the Plan unless such shares of Common Stock are fully paid and non-assessable under applicable law.  Notwithstanding anything to the contrary in the Plan or any Award Agreement, at the time of the exercise of any Award, at the time of vesting of any Award, at the time of payment of shares of Common Stock in exchange for, or in cancellation of, any Award, or at the time of grant of any unrestricted shares under the Plan, the Company and the Administrator may, if either shall deem it necessary or advisable for any reason, require the holder of an Award (a) to represent in writing to the Company that it is the Award holder’s then-intention to acquire the shares with respect to which the Award is granted for investment and not with a view to the distribution thereof or (b) to postpone the date of exercise until such time as the Company has available for delivery to the Award holder a prospectus meeting the requirements of all applicable securities laws; and no shares shall be issued or transferred in connection with any Award unless and until all legal requirements applicable to the issuance or transfer of such shares have been complied with to the satisfaction of the Company and the Administrator.  The Company and the Administrator shall have the right to condition any issuance of shares to any Award holder hereunder on such Person’s undertaking in writing to comply with such restrictions on the subsequent transfer of such shares as the Company or the Administrator shall deem necessary or advisable as a result of any applicable law, regulation or official interpretation thereof, and all share certificates delivered under the Plan shall be subject to such stop transfer orders and other restrictions as the Company or the Administrator may deem advisable under the Plan, the applicable Award Agreement or the rules, regulations and other requirements of the SEC, any stock exchange upon which such shares are listed, and any applicable securities or other laws, and certificates representing such shares may contain a legend to reflect any such restrictions.  The Administrator may refuse to issue or transfer any shares or other consideration under an Award if it determines that the issuance or transfer of such shares or other consideration might violate any applicable law or regulation or entitle the Company to recover the same under Section 16(b) of the 1934 Act, and any payment tendered to the Company by a grantee or other Award holder in connection with the exercise of such Award shall be promptly refunded to the relevant grantee or other Award holder.  Without limiting the generality of the foregoing, no Award granted under the Plan shall be construed as an offer to sell securities of the Company, and no such offer shall be outstanding, unless and until the Administrator has determined that any such offer, if made, would be in compliance with all applicable requirements of any applicable securities laws.
 
3.14.     Requirement of Notification of Election Under Section 83(b) of the Code or Upon Disqualifying Disposition Under Section 421(b) of the Code
 
(a)          Notification of Election Under Section 83(b) of the Code.  If an Award recipient, in connection with the acquisition of Company shares under the Plan, makes an election under Section 83(b) of the Code (to include in gross income in the year of transfer the amounts specified in Section 83(b) of the Code), the grantee shall notify the Administrator of such election within ten days of filing notice of the election with the U.S. Internal Revenue Service, in addition to any filing and notification required pursuant to regulations issued under Section 83(b) of the Code.
 
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(b)          Notification of Disqualifying Disposition of Incentive Stock Options.  If an Award recipient shall make any disposition of Company shares delivered pursuant to the exercise of an incentive stock option under the circumstances described in Section 421(b) of the Code (relating to certain disqualifying dispositions) or any successor provision of the Code, the grantee shall notify the Company of such disposition within ten days thereof.
 
3.15.       Severability
 
If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Administrator, such provision shall be construed or deemed amended to conform to the applicable laws or, if it cannot be construed or deemed amended without, in the determination of the Administrator, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in full force and effect.
 
3.16.       Sections 409A and 457A
 
To the extent applicable, the Plan and Award Agreements shall be interpreted in accordance with Sections 409A and 457A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder.  Notwithstanding any provision of the Plan or any applicable Award Agreement to the contrary, in the event that the Administrator determines that any Award may be subject to Section 409A or 457A of the Code, the Administrator may adopt such amendments to the Plan and the applicable Award Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Administrator determines are necessary or appropriate to (i) exempt the Plan and Award from Sections 409A and 457A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (ii) comply with the requirements of Sections 409A and 457A of the Code and related Department of Treasury guidance and thereby avoid the application of penalty taxes under Sections 409A and 457A of the Code.
 
3.17.       Forfeiture; Clawback
 
The Administrator may, in its sole discretion, specify in the applicable Award Agreement that any realized gain with respect to options or stock appreciation rights and any realized value with respect to other Awards shall be subject to forfeiture or clawback, in the event of (a) a grantee’s breach of any non-competition, non-solicitation, confidentiality or other restrictive covenants with respect to the Company or any Affiliate or (ii) a financial restatement that reduces the amount of bonus or incentive compensation previously awarded to a grantee that would have been earned had results been properly reported.
 
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3.18.       No Trust or Fund Created
 
Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and an Award recipient or any other Person.  To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or its Affiliate.
 
3.19.       No Fractional Shares
 
No fractional shares shall be issued or delivered pursuant to the Plan or any Award, and the Administrator shall determine whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional shares or whether such fractional shares or any rights thereto shall be canceled, terminated, or otherwise eliminated.
 
3.20.       Governing Law
 
The Plan will be construed and administered in accordance with the laws of the State of New York, without giving effect to principles of conflict of laws.
 

 25
Exhibit 4.10

1. Date of Agreement
 
M/V [name of vessel]
2.
 
Owner (name, place of registered office and law of registry) (Cl. 1)
[name of owner]
3.
Managers (name, place of registered office and law of registry) (Cl. 1)
SEANERGY SHIPMANAGEMENT CORP.
Name
 
 
Name
 
Trust Company Complex, Ajeltake Road, Ajeltake Island
Majuro MH96960, Marshall Islands
Place of registered office
Place of registered office

Republic of the Marshall Islands
Law of registry
Law of registry
4. Day and year of commencement of Agreement (Cl. 2)
 
  
5. Crew Management (state “yes” or “no” as agreed) (Cl. 3.1)
NO
 
6. Technical Management (state “yes” or “no” as agreed) (Cl. 3.2)
YES
7. Commercial Management (state “yes” or “no” as agreed) (Cl. 3.3)
NO
 
8. Insurance Arrangements (state “yes” or “no” as agreed) (Cl. 3.4)
YES
9. Accounting Services (state “yes” or “no” as agreed) (Cl. 3.5)
YES
 
10. Sale or purchase of the Vessel (state “yes” or “no” as agreed) (Cl. 3.6)
YES, upon Owner’s request
11. Provisions (state “yes” or “no” as agreed) (Cl. 3.7)
YES
 
12. Bunkering (state “yes” or “no” as agreed) (Cl. 3.8)
YES
13. Chartering Services (only to be filled in if  “yes” stated in box 7) (Cl . 3.3(i))
NO
 
14. Managers’ Insurance (state alternative (i), (ii) or (iii) of Cl. 6.3)
YES AS PER CLAUSE 6.3  ( i )
15. Annual Management Fee (state annual amount) (Cl. 8.1)
US$ [   ] monthly
 
16. Severance Costs (state maximum amount) (Cl. 8.4(ii))
N/A
17. Day and year of termination of Agreement (Cl. 17)
N/A
18. Law and Arbitration (state alternative 19.1, 19.2 or 19.3; if 19.3 place of arbitration must be stated) (Cl. 19)
AS PER CLAUSE 19.1
 
19. Notices (state postal and cable addresses, telex and telefax number for serving notice and communication to the Owners) (Cl. 20)
 
20. Notices (state postal and cable addresses, telex and telefax number for serving notice and communication to the Managers) (Cl. 20)
 
154 VOULIAGMENIS AVENUE
16674 GLYFADA, ATHENS, GREECE
Fax: +30 2109638404
Email: legal@seanergy.gr

It is mutually agreed between the party stated in Box 2 and the party stated in Box 3 that this Agreement consisting of PART I and PART II as well as Annexes “A” (Details of Vessel) and “B” (Budget) attached hereto, shall be performed subject to the conditions contained herein.  In the event of a conflict of conditions, the provisions of PART I and Annexes “A” and “B” shall prevail over those of PART II to the extent of such conflict but no further.

Signature(s) (Owners)
 
[name of owner]
Signature(s) (Managers)

SEANERGY SHIPMANAGEMENT CORP.

PART II

1.
Definitions
1
 
In this Agreement save where the context otherwise requires,
2
 
the following words and expressions shall have the meanings
3
 
hereby assigned to them.
4
 
“Owners” means the party identified in Box 2.
5
 
“Managers” means the party identified in Box 3.
6
 
“Vessel” means the vessel or vessels details of which are set
7
 
out in Annex “A” attached hereto.
8
 
“Crew” means the Master, officers and ratings of the numbers,
9
 
rank and nationality specified by the Owners.
10
 
“Crew Support Costs” means all expenses of a general nature
11
 
which are not particularly referable to any individual vessel for
12
 
the time being managed by the Managers and which are incurred
13
 
by the Managers for the purpose of providing an efficient and
14
 
economic management service and, without prejudice to the
15
 
generality of the foregoing, shall include the cost of crew standby
16
 
pay, training schemes for officers and ratings, cadet training
17
 
schemes, sick pay, study pay, recruitment and interviews.
18
 
“Severance Costs” means the costs which the employers are
19
 
legally obliged to pay to or in respect of the Crew as a result of
20
 
the early termination of any employment contract for service on
21
 
the Vessel.
22
 
“Crew Insurances” means insurances against crew risks which
23
 
shall include but not be limited to death, sickness, repatriation,
24
 
injury, shipwreck unemployment indemnity and loss of personal
25
 
effects.
26
 
“Management Services” means the services specified in sub-
27
 
clauses 3.1 to 3.8 as indicated affirmatively in Boxes 5 to 12 and all other functions performed by the Managers under the terms of this Agreement.
28
 
“ISM Code” means the International Management Code for the
29
 
Safe Operation of Ships and for Pollution Prevention as adopted
30
 
by the International Maritime Organization (IMO) by resolution
31
 
A.741(18) or any subsequent amendment thereto.
32
 
“Seanergy Group” means Seanergy Maritime Holdings Corp.
33
 
group of companies and vessels
  
 
“STCW 95” means the International Convention on Standards
34
 
of Training, Certification and Watchkeeping for Seafarers, 1978,
  
 
as amended in 1995 or any subsequent amendment thereto or substitution hereto.
35
2.
Appointment of Managers
36
 
With effect from the day and year stated in Box 4 and continuing
37
 
unless and until terminated as provided herein, the Owners
38
 
hereby appoint the Managers and the Managers hereby agree
39
 
to act as the Managers of the Vessel.
40
3.
Basis of Agreement
41
 
Subject to the terms and conditions herein provided, during the
42
 
period of this Agreement, the Managers shall carry out
43
 
Management Services in respect of the Vessel as agents for
44
 
and on behalf of the Owners. The Managers shall have authority
45
 
to take such actions as they may from time to time in their absolute
46
 
discretion consider to be necessary to enable them to perform
47
 
this Agreement in accordance with sound ship management
48
 
practice including but not limited to compliance with all relevant rules and regulations.
49
 
3.1 Crew Management
 50
 
(only applicable if agreed according to Box 5)
51
 
The Managers shall provide suitably qualified Crew for the Vessel
52
 
as required by the Owners in accordance with the STCW 95
53
 
requirements, provision of which includes but is not limited to
54
 
the following functions:
55
 
(i)   selecting and engaging the Vessel’s Crew, including payroll
56
 
arrangements, pension administration, and insurances for
57
 
the Crew other than those mentioned in Clause 6:
58
 
(ii) ensuring that the applicable requirements of the law of the
59
 
flag of the Vessel are satisfied in respect of manning levels,
60
 
rank, qualification and certification of the Crew and
61
 
employment regulations including Crew’s tax, social
62
 
insurance, discipline and other requirements;
63
 
(iii) ensuring that all members of the Crew have passed a medical
64
 
examination with a qualified doctor certifying that they are fit
65
 
for the duties for which they are engaged and are in possession
 66
 
of valid medical certificates issued in accordance with
67
 
appropriate flag State requirements. In the absence of
68
 
applicable flag State requirements the medical certificate shall
69
 
be dated not more than three months prior to the respective
70
 
Crew members leaving their country of domicile and
71
 
maintained for the duration of their service on board the Vessel;
72
 
(iv) ensuring that the Crew shall have a command of the English
73
 
language of a sufficient standard to enable them to perform
74
 
their duties safely;
75
 
(v)  arranging transportation of the Crew, including repatriation;
76
 
(vi) training of the Crew and supervising their efficiency;
77
 
(vii) conducting union negotiations;
78
 
(viii) operating the Managers’ drug and alcohol policy unless
79
 
otherwise agreed.
80
3.2
Technical Management
81
 
(only applicable if agreed according to Box 6)
82
 
The Managers shall provide technical management which
83
 
includes, but is not limited to, the following functions:
84
 
(i)  provision of competent personnel to supervise the
85
 
maintenance and general efficiency of the Vessel;
86
 
(ii)arrangement and supervision of dry dockings, repairs,
87
 
modifications, alterations and the upkeep of the Vessel to the standards
88
 
required by the Owners provided that the Managers shall
89
 
be entitled to incur the necessary expenditure to ensure
90
 
that the Vessel will comply with the laws and regulations of the flag of the
91
 
Vessel and of the places where she trades, and all
92
 
requirements and recommendations of the classification
93
 
society and equipment manufacturers;
94
 
(iii) arrangement of the supply of necessary stores, spares and
  
 
lubricating oil;
96
 
(iv) appointment of surveyors and technical consultants as the
97
 
Managers may consider from time to time to be necessary;
  
 
(v) development, implementation and maintenance of a Safety
99
 
Management System (SMS) in accordance with the ISM
100
 
Code (see sub-clauses 4,2 and 5;3);
  
 
(vi) arrangement of periodic analysis of the bunker fuel, lubricating oils and chemicals by third parties (the costs being included in the Vessel’s running costs).
  
3.3
 Commercial Management
      102
 
(only applicable if agreed according to Box 7)
103
 
The Managers shall provide the commercial operation of the
104
 
Vessel, as required by the Owners, which includes, but is not
105
 
limited to, the following functions:
106
 
(i)   providing chartering services in accordance with the Owners’
107
 
instructions which include, but are not limited to, seeking
108
 
and negotiating employment for the Vessel and the conclusion
109
 
(including the execution thereof) of charter parties or other
110
 
contracts relating to the employment of the Vessel. If such a
111
 
contract exceeds the period stated in Box 13. consent thereto
112
 
in writing shall first be obtained from the Owners.
113
 
(ii) arranging of the proper payment to Owners or their nominees
114
 
of all hire and/or freight revenues or other moneys of
115
 
whatsoever nature to which Owners may be entitled arising
116
 
out of the employment of or otherwise in connection with the
117
 
Vessel.
118
 
(iii) providing voyage estimates and accounts and calculating of
119
 
hire, freights, demurrage and/or despatch moneys due from
120
 
or due to the charterers of the Vessel;
121
 
(iv) issuing of voyage instructions;
122
 
(v) appointing agents;
123
 
(vi) appointing stevedores;
124
 
(vii)arranging surveys associated with the commercial operation
125
 
of the Vessel.
126
3.4
Insurance Arrangements
127
 
(only applicable if agreed according to Box 8)
128
 
The Managers shall arrange insurances in accordance with
129
 
Clause 6, on such terms and conditions as the Owners shall
130
 
have instructed or agreed, in particular regarding conditions,
131
 
PART II

 
insured values, deductibles, limits of liability and franchises.
132
3.5
Accounting Services
133
 
(only applicable if agreed according to Box 9)
134
 
The Managers shall:
135
 
(i)   establish an accounting system which meets the
136
 
requirements of the Owners and provide regular accounting
137
 
services, supply regular reports and records,
138
 
(ii) maintain the records of all costs and expenditure incurred
139
 
as well as data necessary or proper for the settlement of
140
 
accounts between the parties.
141
3.6
Sale or Purchase of the Vessel
142
 
(only applicable if agreed according to Box 10)
143
 
The Managers shall, upon Owners’ instructions,
144
 
supervise the sale or purchase of the Vessel, including the
145
 
performance of any sale or purchase agreement, but not
146
 
negotiation of the same.
147
3.7
Provisions (only applicable if agreed according to Box 11)
148
 
The Managers shall arrange for the supply of provisions.
149
3.8
Bunkering (only applicable if agreed according to Box 12)
150
 
The Managers shall arrange for the provision of bunker fuel of the
151
 
quality specified by the Owners as required for the Vessel’s trade.
152
3.9
Operations
  
 
As required by the Owners, the Managers shall, as agents for the Owners, provide support on the following functions:
  
 
(i) Monitoring voyage instructions and liaising as appropriate with the Owners, the Owners’ brokers and charterers;
  
 
(ii) Appointment of agents; and
  
 
(iii) Arrangement of surveying of cargoes.
  
4.
Managers’ Obligations
153
4.1
The Managers undertake to use their best endeavours to
154
 
provide the agreed Management Services as agents for and on
155
 
behalf of the Owners in accordance with sound ship management
156
 
practice and to protect and promote the interests of the Owners in
157
 
all matters relating to the provision of services hereunder.
158
 
Provided, however, that the Managers in the performance of their
159
 
management responsibilities under this Agreement shall be entitled
160
 
to have regard to their overall responsibility in relation to other vessels
161
 
of the Seanergy Group as may from time to time be entrusted to their
162
 
management and in particular, but without prejudice to the generality
163
 
of the foregoing, the Managers shall be entitled to allocate available supplies,
164
 
manpower and services in such manner as in the prevailing
165
 
circumstances the Managers in their absolute discretion consider
166
 
to be fair and reasonable.
167
4.2
Where the Managers are providing Technical Management
168
 
in accordance with sub-clause 3.2, they shall procure that the
169
 
requirements of the law of the flag of the Vessel are satisfied and
170
 
they shall in particular be deemed to be the “Company” as defined
171
 
by the ISM Code, assuming the responsibility for the operation of
172
 
the Vessel and taking over the duties and responsibilities imposed
173
 
by the ISM Code and the ISPS Code when applicable.
174
5.
Owners’ Obligations
175
5.1
The Owners shall pay all sums due to the Managers punctually
176
 
in accordance with the terms of this Agreement.
177
5.2
Where the Managers are providing Technical Management
178
 
in accordance with sub-clause 3.2, the Owners shall:
179
 
(i)   procure that all officers and ratings supplied by them or on
180
 
their behalf comply with the requirements of STCW 95;
181
 
(ii)   instruct such officers and ratings to obey all reasonable orders
182
 
of the Managers in connection with the operation of the
183
 
Managers’ safety management system.
184
5.3
Where the Managers are not providing Technical Management
185
 
in accordance with sub-clause 3.2, the Owners shall procure that
186
 
the requirements of the law of the flag of the Vessel are satisfied
187
 
and that they, or such other entity as may be appointed by them
188
 
and identified to the Managers, shall be deemed to be the
189
 
“Company” as defined by the ISM Code assuming the responsibility
190
 
for the operation of the Vessel and taking over the duties and
191
 
responsibilities imposed by the ISM Code when applicable.
192
6.
Insurance Policies
193
 
The Owners shall procure, whether by instructing the Managers
194
 
under sub-clause 3.4 or otherwise, that throughout the period of
195
 
this Agreement:
196
6.1
at the Owners’ expense, the Vessel is insured for not less
197
 
than her sound market value or entered for her full gross tonnage,
198
 
as the case may be for:
199
 
(i)   usual hull and machinery marine risks (including crew
200
 
negligence) and excess liabilities;
201
 
(ii) protection and indemnity risks (including pollution risks and
202
 
Crew Insurances); and
203
 
(iii) war risks (including protection and indemnity and crew risks)
204
 
in accordance with the best practice of prudent owners of
205
 
vessels of a similar type to the Vessel, with first class insurance
206
 
companies, underwriters or associations (“the Owners’
207
 
Insurances”);
208
6.2
all premiums and calls on the Owners’ Insurances are paid
209
 
promptly by their due date,
210
6.3
the Owners’ Insurances name the Managers and, subject
211
 
to underwriters’ agreement, any third party designated by the
212
 
Managers as a joint assured, with full cover, with the Owners
213
 
obtaining cover in respect of each of the insurances specified in
214
 
sub-clause 6.1:
215
 
(i)   on terms whereby the Managers and any such third party
216
 
are liable in respect of premiums or calls arising in connection
217
 
with the Owners’ Insurances; or
218
 
(ii) if reasonably obtainable, on terms such that neither the
219
 
Managers nor any such third party shall be under any
220
 
liability in respect of premiums or calls arising in connection
221
 
with the Owners’ Insurances; or
222
 
(iii) on such other terms as may be agreed in writing.
223
 
Indicate alternative (i), (ii) or (iii) in Box 14. If Box 14 is left
224
 
blank then (i) applies.
225
6.4
written evidence is provided, to the reasonable satisfaction
226
 
of the Managers, of their compliance with their obligations under
227
 
Clause 6 within a reasonable time of the commencement of
228
 
the Agreement, and of each renewal date and, if specifically
229
 
requested, of each payment date of the Owners’ Insurances.
230
7.
Income Collected and Expenses Paid on Behalf of Owners
231
7.1
All moneys collected by the Managers under the terms of
232
 
this Agreement (other than moneys payable by the Owners to
233
 
the Managers) and any interest thereon shall be held to the
234
 
credit of the Owners in a separate bank account.
235
7.2
All expenses incurred by the Managers under the terms
236
 
of this Agreement on behalf of the Owners (including expenses
237
 
as provided in Clause 8) may be debited against the Owners
238
 
in the account referred to under sub-clause 7.1. but shall in any
239
 
event remain payable by the Owners to the Managers on
240
 
demand.
241
8.
Management Fee
242
8.1
The Owners shall pay to the Managers for their services
243
 
as Managers under this Agreement an annual management
244
 
fee as stated in Box 15 which shall be payable by equal
245
 
monthly instalments in advance, the first instalment
  
 
(pro rata if applicable) being
246
 
payable on the commencement of this Agreement (see Clause
247
 
2 and Box 4) and subsequent instalments being payable every
248
 
month. The management fee shall be payable to the Managers’ account advised by the Managers.
249
8.2
The management fee shall be subject to an annual review
250
 
on the anniversary date of the Agreement and the proposed
251
 
fee shall be presented in the annual budget referred to in sub-
252
 
Clause 9.1
253
8.3
The Managers shall, at no extra cost to the Owners, provide
254
 
their own office accommodation, office staff, facilities and
255
 
stationery. Without limiting the generality of Clause 7 the Owners
256
 
shall reimburse the Managers for postage and communication
257
 
expenses, travelling expenses, and other out of pocket
258
 
expenses properly incurred by the Managers in pursuance of
259
 
PART II

 
the Management Services.
  
 
Any days used by the Manager’s personnel travelling to or from or attending on the Vessel or otherwise used in connection with the Management Services shall be charged as per actual expenses.
260
8.4
In the event of the appointment of the Managers being
261
 
terminated by the Owners or the Managers in accordance with
262
 
the provisions of Clauses 17 and 18 other than by reason of
263
 
default by the Managers, or if the Vessel is lost, sold or otherwise
264
 
disposed of, the “management fee” payable to the Managers
265
 
according to the provisions of sub-clause 8.1. shall continue to
266
 
be payable for a further period of three calendar months as
267
 
from the termination date. In addition, provided that the
268
 
Managers provide Crew for the Vessel in accordance with sub-
269
 
clause 3.1:
270
 
(i)   the Owners shall continue to pay Crew Support Costs during
271
 
the said further period of three calendar months and
272
 
(ii) the Owners shall pay an equitable proportion of any
273
 
Severance Costs which may materialize, not exceeding
274
 
the amount stated in Box 16.
275
8.5
If the Owners decide to lay-up the Vessel whilst this
276
 
Agreement remains in force and such lay-up lasts for more
277
 
than three months, an appropriate reduction of the management
278
 
fee for the period exceeding three months until one month
279
 
before the Vessel is again put into service shall be mutually
280
 
agreed between the parties.
281
8.6
Unless otherwise agreed in writing all discounts and
282
 
commissions obtained by the Managers in the course of the
283
 
management of the Vessel shall be credited to the Owners.
284
 
9. Budgets and Management of Funds
285
9.1
The Managers shall present to the Owners annually a
286
 
budget for the following twelve months in such form as the
287
 
Owners require. The budget for the first year hereof is set out
288
 
in Annex “B” hereto. Subsequent
  
 
annual budgets shall be
289
 
prepared by the Managers and submitted to the Owners not
290
 
less than one month before January 1st of each calendar year
291
 
(see Clause 2 and Box 4).
292
9.2
The Owners shall indicate to the Managers their acceptance
293
 
and approval of the annual budget within one month of
294
 
presentation and in the absence of any such indication the
295
 
Managers shall be entitled to assume that the Owners have
296
 
accepted the proposed budget.
297
9.3
Following the agreement of the budget, the Managers shall
298
 
prepare and present to the Owners their estimate of the working
299
 
capital requirement of the Vessel and the Managers shall each
300
 
month up-date this estimate. Based thereon, the Managers shall
301
 
each month request the Owners in writing for the funds required
302
 
to run the Vessel for the ensuing month, including the payment
303
 
of any occasional or extraordinary item of expenditure, such as
304
 
emergency repair costs, additional insurance premiums, bunkers
305
 
or provisions. Such funds shall be received by the Managers
306
 
within ten running days after the receipt by the Owners of the
307
 
Managers’ written request and shall be held to the credit of the
308
 
Owners in a separate bank account.
309
9.4
The Managers shall produce a comparison between
310
 
budgeted and actual income and expenditure of the Vessel in
311
 
such form as required by the Owners monthly or at such other
312
 
intervals as mutually agreed.
313
9.5
Notwithstanding anything contained herein to the contrary,
314
 
the Managers shall in no circumstances be required to use or
315
 
commit their own funds to finance the provision of the
316
 
Management Services.
317
10.
Managers’ Right to Sub-Contract
318
 
The Managers shall not have the right to sub-contract any of
319
 
their obligations hereunder, including those mentioned in sub-
320
 
clause 3.1 without the prior written consent of the Owners which
321
 
shall not be unreasonably withheld. In the event of such a sub-
322
 
contract the Managers shall remain fully liable for the due
323
 
performance of their obligations under this Agreement.
324
11.
Responsibilities
325
11.1
Force Majeure - Neither the Owners nor the Managers
326
 
shall be under any liability for any failure to perform any of their
327
 
obligations hereunder by reason of any cause whatsoever of
328
 
any nature or kind beyond their reasonable control.
329
 
Neither party shall be liable for any loss, damage or delay due to any of the following force majeure events and/or conditions to the extent that the party invoking force majeure is prevented or hindered from performing any or all of their obligations under this Agreement, provided they have made all reasonable efforts to avoid, minimize or prevent the effect of such events and/or conditions:
  
 
(i)       acts of God;
  
 
(ii)      any Government requisition, control, intervention, requirement or interference;
  
 
(iii)     any circumstances arising out of war, threatened act of war or warlike operations, acts of terrorism, sabotage or piracy, or the consequences thereof;
  
 
(iv)     riots, civil commotion, blockades or embargoes;
  
 
(v)      epidemics;
  
 
(vi)     earthquakes, landslides, floods or other extraordinary weather conditions;
  
 
(vii)    strikes, lockouts or other industrial action, unless limited to the employees (which shall not include the Crew) of the party seeking to invoke force majeure;
  
 
(viii)   fire, accident, explosion except where caused by negligence of the party seeking to invoke force majeure; and
  
 
(ix)     any other similar cause beyond the reasonable control of either party.
  
11.2
Liability to Owners  - (i) Without prejudice to sub-clause
330
 
11.1, the Managers shall be under no liability whatsoever to the
331
 
Owners for any loss, damage, delay or expense of whatsoever
332
 
nature, whether direct or indirect, (including but not limited to
333
 
loss of profit arising out of or in connection with detention of or
334
 
delay to the Vessel) and howsoever arising in the course of
335
 
performance of the Management Services UNLESS same is
336
 
proved to have resulted solely from the negligence, gross
337
 
negligence or wilful default of the Managers or their employees,
338
 
or agents or sub-contractors employed by them in connection
339
 
with the Vessel, in which case (save where loss, damage, delay
340
 
or expense has resulted from the Managers’ personal act or
341
 
omission committed with the intent to cause same or recklessly
342
 
and with knowledge that such loss, damage, delay or expense
343
 
would probably result) the Managers’ liability for each incident
344
 
or series of incidents giving rise to a claim or claims shall never
345
 
exceed a total of ten times the annual management fee payable
346
 
hereunder.
347
 
(ii) Notwithstanding anything that may appear to the contrary in
348
 
this Agreement, the Managers shall not be liable for any of the
349
 
actions of the Crew, even if such actions are negligent, grossly
350
 
negligent or wilful., except only to the extent that they are shown
351
 
to have resulted from a failure by the Managers to discharge
352
 
their obligations under sub-clause 3.1, in which case their liability
353
 
shall be limited in accordance with the terms of this Clause 11.
354
11.3
Indemnity - Except to the extent and solely for the amount
355
 
therein set out that the Managers would be liable under sub-
356
 
clause 11.2, the Owners hereby undertake to keep the Managers
357
 
and their employees, agents and sub-contractors indemnified
358
 
and to hold them harmless against all actions, proceedings,
359
 
claims, demands or liabilities whatsoever or howsoever arising
360
 
which may be brought against them or incurred or suffered by
361
 
them arising out of or in connection with the performance of the
362
 
Agreement, and against and in respect of all costs, losses,
363
 
damages and expenses (including legal costs and expenses on
364
 
a full indemnity basis) which the Managers may suffer or incur
365
 
(either directly or indirectly) in the course of the performance of
366
 
this Agreement.
367
11.4
“Himalaya” - It is hereby expressly agreed that no
368
 
employee or agent of the Managers (including every sub-
369
 
contractor from time to time employed by the Managers) shall in
370
 
any circumstances whatsoever be under any liability whatsoever
371
 
to the Owners for any loss, damage or delay of whatsoever kind
372
 
arising or resulting directly or indirectly from any act, neglect or
373
 
default on his part while acting in the course of or in connection
374
 
with his employment and, without prejudice to the generality of
375
 
the foregoing provisions in this Clause 11. every exemption,
376
 
limitation, condition and liberty herein contained and every right,
377
 
exemption from liability, defence and immunity of whatsoever
378
 
nature applicable to the Managers or to which the Managers are
379
 
entitled hereunder shall also be available and shall extend to
380
 
protect every such employee or agent of the Managers acting
381
 
as aforesaid and for the purpose of all the foregoing provisions
382
 
of this Clause 11 the Managers are or shall be deemed to be
383
 
acting as agent or trustee on behalf of and for the benefit of all
384
 
persons who are or might be their servants or agents from time
385
 
 
to time (including sub-contractors as aforesaid) and all such
386
 
persons shall to this extent be or be deemed to be parties to this
387
 
Agreement.
388
     
12.
Documentation
389
 
Where the Managers are providing Technical Management in
390
 
accordance with sub-clause 3.2 and/or Crew Management in
391
 
accordance with sub-clause 3.1. they shall make available,
392
 
 
PART II

 
upon Owners’ request, all documentation and records related
393
 
to the Safety Management System (SMS) and/or the Crew
394
 
which the Managers need in order to demonstrate compliance
395
 
with the ISM Code and STCW 95 or to defend a claim against
396
 
a third party.
397
13.
General Administration
398
13.1
The Managers shall handle and settle all claims arising
399
 
out of the Management Services hereunder and keep the Owners
400
 
informed in a timely manner regarding any incident of which
  
 
the Managers become
401
 
aware which gives or may give rise to claims or disputes involving
402
 
third parties.
403
13.2
The Managers shall, as instructed by the Owners, bring
404
 
or defend actions, suits or proceedings in connection with matters
405
 
entrusted to the Managers according to this Agreement.
406
13.3
The Managers shall also have power to obtain legal or
407
 
technical or other outside expert advice in relation to the handling
408
 
and settlement of claims and disputes or all other matters
409
 
affecting the interests of the Owners in respect of the Vessel.
410
13.4
The Owners shall arrange for the provision of any
411
 
necessary guarantee bond or other security.
412
13.5
Any costs reasonably incurred by the Managers in
413
 
carrying out their obligations according to Clause 13 shall be
414
 
reimbursed by the Owners.
415
13.6
The Managers shall have power to obtain appropriate legal or technical or other outside expert advice in relation to the handling and settlement of claims in relation to Sub-clauses 13.1 and 13.2 and disputes and any other matters affecting the interests of the Owners in respect of the Vessel, unless the Owners instruct the Managers otherwise.
  
 
14. Auditing
416
 
The Managers shall at all times maintain and keep true and
417
 
correct accounts in respect of the Management Services in accordance with the relevant US GAAP Standards or such other standard as the parties may agree, including records of all costs and expenditure incurred, and shall make the same available for inspection
418
 
and auditing by the Owners at such times as may be mutually
419
 
agreed. On the termination, for whatever reasons, of this
420
 
Agreement, the Managers shall release to the Owners, if so
421
 
requested, the originals where possible, or otherwise certified
422
 
copies, of all such accounts and all documents specifically relating
423
 
to the Vessel and her operation.
424
 
The Managers shall make such accounts available for inspection and auditing by the Owners and/or their representatives in the Manager’s offices or by electronic means.
  
 
15.lnspection of Vessel
425
 
The Owners shall have the right at any time after giving
426
 
reasonable notice to the Managers to inspect the Vessel for any
427
 
reason they consider necessary.
428
 
16.Compliance with Laws and Regulations
429
 
The Managers will not do or permit to be done anything which
430
 
might cause any breach or infringement of the laws and
431
 
regulations of the Vessel’s flag, or of the places where she trades.
432
 
17.Duration of the Agreement
433
 
This Agreement shall come into effect on the day and year stated
434
 
in Box 4 and shall continue until the date stated in Box 17.
435
 
Thereafter it shall continue until terminated by either party giving
436
 
to the other notice in writing, in which event the Agreement shall
437
 
terminate upon the expiration of a period of one two months from the
438
 
date upon which such notice was given.
439
 
18.Termination
440
 
18.1 Owners’ default
441
 
(i)  The Managers shall be entitled to terminate the Agreement
442
 
with immediate effect by notice in writing if any moneys
443
 
payable by the Owners under this Agreement and/or the
444
 
Owners of any associated vessel, details of which are listed
445
 
in Annex “D”. shall not have been received in the Managers’
446
 
nominated account within ten running days of receipt by
450
 
the Owners of the Managers written request or if the Vessel
451
 
is repossessed by the Mortgagees.
452
 
(ii) If the Owners:
453
(a)
fail to meet their obligations under sub-clauses 5.2
454
 
and 5.3 of this Agreement for any reason within their
455
 
control, or
456
(b)
proceed with the employment of or continue to employ
457
 
the Vessel in the carriage of contraband, blockade
458




 
 
running, or in an unlawful trade, or on a voyage which
459
 
in the reasonable opinion of the Managers is unduly
460
 
hazardous or improper,
461
 
the Managers may give notice of the default to the Owners,
462
 
requiring them to remedy it as soon as practically possible.
463
 
In the event that the Owners fail to remedy it within a
464
 
reasonable time to the satisfaction of the Managers, the
465
 
Managers shall be entitled to terminate the Agreement
466
 
with immediate effect by notice in writing.
467
18.2
Managers’ Default
468
 
If the Managers fail to meet their obligations under Clauses 3
469
 
and 4 of this Agreement for any reason within the control of the
470
 
Managers, the Owners may give notice to the Managers of the
471
 
default, requiring them to remedy it as soon as practically
472
 
possible. In the event that the Managers fail to remedy it within a
473
 
reasonable time to the satisfaction of the Owners, the Owners
474
 
shall be entitled to terminate the Agreement with immediate effect
 475
 
by notice in writing.
476
18.3
Extraordinary Termination
477
 
This Agreement shall be deemed to be terminated in the case of
478
 
the sale of the Vessel (except where the vessel is sold and leased back to the Owners) or if the Vessel becomes a total loss or is
479
 
declared as a constructive or compromised or arranged total
480
 
loss or is requisitioned.
481
18.4
For the purpose of sub-clause 18.3 hereof
482
 
(i)  the date upon which the Vessel is to be treated as having
483
 
been sold or otherwise disposed of shall be the date on
484
 
which the Owners cease to be registered as Owners of
485
 
the Vessel;
486
 
(ii) the Vessel shall not be deemed to be lost unless either
487
 
she has become an actual total loss or agreement has
488
 
been reached with her underwriters in respect of her
489
 
constructive, compromised or arranged total loss or if such
490
 
agreement with her underwriters is not reached it is
491
 
adjudged by a competent tribunal that a constructive loss
492
 
of the Vessel has occurred.
493
18.5
This Agreement shall terminate forthwith in the event of
494
 
an order being made or resolution passed for the winding up,
495
 
dissolution, liquidation or bankruptcy of either party (otherwise
496
 
than for the purpose of reconstruction or amalgamation) or if a
497
 
receiver is appointed, or if it suspends payment, ceases to carry
498
 
on business or makes any special arrangement or composition
499
 
with its creditors.
500
18.6
The termination of this Agreement shall be without
501
 
prejudice to all rights accrued due between the parties prior to
502
 
the date of termination.
503
18.7
A change of control of either party shall not terminate this
504
 
Agreement.
505
19.
Law and Arbitration
506
 
19.1 This Agreement shall be governed by and construed in
507
 
accordance with English law and any dispute arising out of or
508
 
in connection with this Agreement shall be referred to arbitration
509
 
in London in accordance with the Arbitration Act 1996 or
510
 
any statutory modification or re-enactment thereof save to
511
 
the extent necessary to give effect to the provisions of this
512
 
Clause.
513
 
The arbitration shall be conducted in accordance with the
514
 
London Maritime Arbitrators Association (LMAA) Terms
515
 
current at the time when the arbitration proceedings are
516
 
commenced.
517
 
The reference shall be to three arbitrators. A party wishing
518
 
to refer a dispute to arbitration shall appoint its arbitrator
519
 
and send notice of such appointment in writing to the other
520
 
party requiring the other party to appoint its own arbitrator
521
 
within 14 calendar days of that notice and stating that it will
522
 
appoint its arbitrator as sole arbitrator unless the other party
523
 
appoints its own arbitrator and gives notice that it has done
524
 
so within the 14 days specified. If the other party does not
525
 
appoint its own arbitrator and give notice that it has done so
526
 
within the 14 days specified, the party referring a dispute to
527
 
arbitration may, without the requirement of any further prior
528
 


 
PART II

 
notice to the other party, appoint its arbitrator as sole
529
 
arbitrator and shall advise the other party accordingly. The
530
 
award of a sole arbitrator shall be binding on both parties
531
 
as if he had been appointed by agreement.
532
 
Nothing herein shall prevent the parties agreeing in writing
533
 
to vary these provisions to provide for the appointment of a
534
 
sole arbitrator.
535
 
In cases where neither the claim nor any counterclaim
536
 
exceeds the sum of USD50.000 (or such other sum as the
537
 
parties may agree) the arbitration shall be conducted in
538
 
accordance with the LMAA Small Claims Procedure current
539
 
at the time when the arbitration proceedings are commenced.
540
 
19.2 This Agreement shall be governed by and construed
541
 
in accordance with Title 9 of the United States Code and
542
 
the Maritime Law of the United States and any dispute
543
 
arising out of or in connection with this Agreement shall be
544
 
referred to three persons at New York, one to be appointed
545
 
by each of the parties hereto, and the third by the two so
546
 
chosen; their decision or that of any two of them shall be
547
 
final, and for the purposes of enforcing any award,
548
 
judgement may be entered on an award by any court of
549
 
competent jurisdiction. The proceedings shall be conducted
550
 
in accordance with the rules of the Society of Maritime
551
 
Arbitrators, Inc.
552
 
In cases where neither the claim nor any counterclaim
553
 
exceeds the sum of USD50,000 (or such other sum as the
554
 
parties may agree) the arbitration shall be conducted in
555
 
accordance with the Shortened Arbitration Procedure of the
556
 
Society of Maritime Arbitrators, Inc. current at the time when
557
 
the arbitration proceedings are commenced.
558
19.3
This Agreement shall be governed by and construed
559
 
in accordance with the laws of the place mutually agreed by
560
 
the parties and any dispute arising out of or in connection
561
 
with this Agreement shall be referred to arbitration at a
562
 
mutually agreed place, subject to the procedures applicable
563
 
there.
564
19.4
If Box 18 in Part I is not appropriately filled in, sub-
565
 
clause 19.1 of this Clause shall apply.
566

19.2 Notwithstanding Sub-clause 19.1 above, the parties may agree at any time to refer to mediation any difference and/or dispute arising out of or in connection with this Agreement.

i)In the case of a dispute in respect of which arbitration has been commenced under Sub-clause 19.1 above, the following shall apply:
 
ii)Either party may at any time and from time to time elect to refer the dispute or part of the dispute to mediation by service on the other party of a written notice (the “Mediation Notice”) calling on the other party to agree to mediation.
 
iii) The other party shall thereupon within 14 calendar days of receipt of the Mediation Notice confirm that they agree to mediation, in which case the parties shall thereafter agree a mediator within a further 14 calendar days, failing which on the application of either party a mediator will be appointed promptly by the Arbitration Tribunal (“the Tribunal”) or such person as the Tribunal may designate for that purpose. The mediation shall be conducted in such place and in accordance with such procedure and on such terms as the parties may agree or, in the event of disagreement, as may be set by the mediator.
 
iv) If the other party does not agree to mediate, that fact may be brought to the attention of the Tribunal and may be taken into account by the Tribunal when allocating the costs of the arbitration as between the parties.
 
(v) The mediation shall not affect the right of either party to seek such relief or take such steps as it considers necessary to protect its interest.
 
(vi) Either party may advise the Tribunal that they have agreed to mediation. The arbitration procedure shall continue during the conduct of the mediation but the Tribunal may take the mediation timetable into account when setting the timetable for steps in the arbitration.
 
(vii) Unless otherwise agreed or specified in the mediation terms, each party shall bear its own costs incurred in the mediation and the parties shall share equally the mediator’s costs and expenses.
 
(viii) The mediation process shall be without prejudice and confidential and no information or documents disclosed during it shall be revealed to the Tribunal except to the extent that they are disclosable under the law and procedure governing the arbitration.
 
(Note: The parties should be aware that the mediation process may not necessarily interrupt time limits.)

 
Note: 19.1. 19.2 and 19.3 are alternatives; indicate
567
 
alternative agreed in Box 18.
568
 
20.Notices
569
20.1
Any notice to be given by either party or their agents to the other
570
 
party shall be in writing and may be sent by fax, telex,
571
 
registered or recorded mail, email or by personal service.
572
20.2
The address of the Parties for service of such
573
 
communication shall be as stated in Boxes 19 and 20,
574
 
respectively.
575

21. Third Party Rights

Except to the extent provided in Sub-clauses 11.3 (Indemnity) and 11.4 (Himalaya), no third parties may enforce any term of this Agreement.
 
ANNEX “A” (DETAILS OF VESSEL OR VESSELS)

Date of Agreement:
 
Name of Vessel(s):

Particulars of Vessel(s):
Built:
IMO:
GRT:
NRT:
Length:
Breath:

ANNEX “B” (BUDGET)
Date of Agreement:

Managers Budget in USD for the first year with effect from the Commencement Date of this Agreement:


Exhibit 4.11

DATED

[name of owner]

-and-

Seanergy Shipmanagement Corp.


MANAGEMENT AGREEMENT
FOR the Motor Vessel "[name of vessel]"


THIS AGREEMENT, dated ______________, is made between:

A) [name of owner], a corporation incorporated in _______________________________ (hereinafter called the “Owner”);

-and-

B) Seanergy Shipmanagement 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 MH 96960 (hereinafter called the “Company”).

WHEREAS:


 (a)
The Owner is the ________ of a Capesize bulk carrier with the name “name of vessel” with IMO No. _______ registered under the ____________ flag (the “Vessel”); and


(b)
The Owner wishes to appoint the Company as the agent of the Owner to arrange and maintain certain services for the Vessel, on the terms and conditions set out herein.

WHEREBY IT IS AGREED as follows:

1.
Definitions

1.1          In this Agreement, except where the context otherwise requires:-
“Crew Insurances” means insurances against crew risks which shall include but not be limited to death, sickness, repatriation, injury, shipwreck, unemployment indemnity and loss of personal effects; and

“Services” means the services provided by the Company pursuant to Clauses 6, 7, 8 and 9.

1.2.
Unless the context otherwise requires, words in the singular include the plural and vice versa.

1.3
References to any document include the same as varied, supplemented or replaced from time to time.

1.4
References to any enactment include re-enactments, amendments and extensions thereof.

1.5.
Clause headings are for convenience of reference only and do not limit or otherwise affect the meaning thereof.

1.6
All the terms of this Agreement, whether so expressed or not, shall be binding upon the parties hereto and their respective successors and assigns.

2
Appointment of the Company & Fees

2.1
In consideration of the premises and the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

The Owner hereby appoints the Company as its agent for the provision of insurance, certain operation, technical and other services to the Owner (the “Services”), in each case as described in detail in this Agreement.

2.2
For the Services performed hereunder by the Company, the Owner shall pay to the Company a monthly fee of United States Dollars [  ] (US$[  ]).

3
Purpose, Authority and Basis of Agreement

3.1
Subject to the terms and conditions provided herein during the period of this Agreement the Company shall carry out the Services in respect of the Vessel as agent for and on behalf of the Owner. The Company (unless otherwise provided for herein) shall have authority to take such actions as it may from time to time in its discretion consider necessary to enable it to perform its obligations pursuant hereunder.
3.2
The Owner hereby ratifies, confirms and undertakes at all times to ratify and to confirm all lawful conduct of the Company, its employees, agents and subcontractors in connection with the provision of the Services pursuant to this Agreement.
4
Obligations of the Company

4.1
The Company undertakes in so far as applicable to its respective duties pursuant to this Agreement to use its reasonable commercial efforts to provide the Services and to protect and promote the interests of the Owner in all matters provided under this Agreement, however that without prejudice to the generality of the foregoing the Company shall not be answerable for the consequences of any decision or exercise of judgement taken or made in the exercise of its powers and taken or made honestly and in good faith.

4.2
The Company shall at all times use its reasonable commercial efforts to conform to and comply with the lawful directions, regulations and recommendations made by the Owner and in the absence of any specific directions, regulations and recommendations as aforesaid.

5
Obligations of the Owner

The Owner shall pay any moneys incurred by the Company in the provision of the Services pursuant to this Agreement.

6
Services

The Company shall provide and/or procure the provision of the Services as specified hereunder as agent in the name of the Owner or otherwise on its behalf and do all things which may be expedient or necessary for the provision of said Services as stated herein, and more particularly:

6.1
The Company shall arrange and maintain insurances and shall liaise between the brokers, Protection and Indemnity Clubs, underwriters, insurers and the Owner to provide such information as may be required to make any claim and the Company shall further provide for certain functions for the operation and technical management of the Vessel, in each case in accordance with the following provisions  and the provisions of Clauses 6, 7, 8 and 9, subject thereto on such other terms and conditions as the Company shall require, in particular regarding conditions, insured values, premiums and deductibles.

6.2
The Company shall not be entitled to appoint any third party to provide any of the Services provided by it without the prior written consent of the Owner, provided however that where such consent is obtained and appointment made, in each such case the Company shall continue to be responsible for the due performance of the Services concerned.

6.3
The Company shall have the express authority to negotiate, conclude and execute all forms of documentation, policies and agreements including but not limited to contracts and acknowledgements on behalf of the Owner in so far as is necessary for the provision by the Company of its Services.

7
Insurance

7.1
The Company shall procure that throughout the period of this Agreement, at the expense of the Owner, the Vessel is insured for not less than her sound market value or entered for her full gross tonnage, as the case may be for:


(a)
fire and usual hull and machinery marine risks (including crew negligence) and excess liabilities;


(b)
protection and indemnity risks (including pollution risks and crew insurances);


(c)
freight, defense and demurrage;


(d)
war risks (including protection and indemnity and crew risks); and


(e)
such other optional insurances as may be agreed by the Owner (such as piracy, kidnap and ransom, loss of hire);

in accordance with the best practice of a prudent owner of a ship of a similar type to the Vessel, with first class insurance companies, underwriters or associations which are members of the International Group of Protection and Indemnity Associations (the “Vessel’s Insurances”);

7.2
The Company shall procure that throughout the period of this Agreement, at the expense of the Owner, all premiums and calls on the Vessel’s Insurances are paid promptly;

7.3
The Company shall procure that throughout the period of this Agreement the Vessel's Insurances name the Company as owner and, subject to underwriters’ agreement, any third party designated by the Company as a joint assured or co-assured, with full cover, with the Owner procuring cover in respect of each of the insurances specified in sub-Clause 7.1;

7.4
The Company shall procure that written evidence is provided, to the reasonable satisfaction of the Owner, of the Company’s compliance with its obligations under Clause 7 within a reasonable time from the commencement of the Agreement, and/or of each renewal date and, if specifically requested, of each payment date of the Owner’s Insurances.

7.5
The Company shall arrange for brokers to place the Vessel’s Insurances as the Owner shall have instructed or agreed, in particular as regards values, deductibles and franchises. At each renewal the Company will liaise with brokers and the Owner:

 
(a)
as to any changes in insured values required; and

 
(b)
in respect of premiums, franchises and deductibles and any other changes for the new policy year.

7.6
The Company shall engage the services of their appointed insurance brokers to arrange such insurances.

7.7
The Company shall compile such statistics and enter into negotiations with such brokers, insurers, underwriters and P&I Club managers as they consider necessary or desirable in order to arrange for such insurances to be placed.

7.8
Once the Vessel's Insurances are placed the Company shall arrange for all cover notes or other certificates to be checked, for all debit notes to be paid as required and for all relevant credit notes to be issued.

7.9
The Company shall have the right to obtain confirmation direct from the brokers, underwriters, insurers and P&I Clubs through whom the Vessel's Insurances are arranged that all premiums, calls and contributions due have been paid and that insurances meet the Owner's obligations.

7.10
Unless otherwise indicated by the Owner, the Company shall provide such information as requested by the relevant brokers to enable such brokers to handle and/or procure the settling of all insurance average and salvage claims in connection with the Vessel.

8
Operation of the Vessel

The Company shall provide the operation of the Vessel as required by the Owner with respect to the following functions:

 
(a)
Monitoring voyage instructions and liaising as appropriate with the Owner, the Owner’s brokers, Owner’s commercial and technical manager and charterers;

 
(b)
Appointment of agents;

 
(c)
Arranging surveys of cargoes; and

 
(d)
Arranging bunker procurement.

9
Technical Services

The Company shall provide the technical management of the Vessel as required by the Owner with respect to the following functions:

 
(a)
Arranging and monitoring the supply of lubricating oils, chemicals and paints;

 
(b)
Arranging and supervising dry-dockings, special surveys, intermediate surveys, repairs, modifications to and the upkeep of the Vessel to the standards agreed with the Owner;

 
(c)
Arranging the supply of spare parts and stores;

 
(d)
Appointment of surveyors, technical consultants and superintendents as the Company may consider from time to time to be necessary and generally ensure that the Vessel will comply with all requirements and recommendations of her classification society and equipment manufacturers and the laws and regulations of her flag state; and

  (e)
Arranging for the collection of offers from different shipyards, the booking of a slot in the selected shipyard and monitor the realization of certain projects and/or upgrades.

10
Accounts and Management of Funds

10.1
Insofar as applicable to the Services, the Company shall operate accounting systems satisfactory to the Owner and provide regular services, reports and records in this regard and maintain records of all expenditure and cost together with information necessary and appropriate for the settlement of accounts between the parties hereto.

10.2
The Company shall at all times maintain and keep true and correct accounts and shall make the same available for inspection and auditing by the Owner. On the termination, for whatever reasons, of this Agreement, the Company shall release to the Owner, if so requested, the originals where possible, or otherwise certified copies, of all such accounts and all documents specifically relating to the Services.

11
Expenses

11.1
The Company shall, at no extra cost to the Owner, provide its office accommodation and office staff. The Owner will reimburse the Company for all reasonable running and/or out-of-pocket expenses, including but not limited to, telephone, fax, stationery and printing expenses. Any required travelling expenses in relation to this Agreement and the Services will be pre-approved by the Owner and the relevant expenses will be reimbursed to the Company.

12
Duration and Termination

The term of this Agreement shall commence from _________________________ and shall continue until it is terminated by either party giving to the other one (l) month prior notice in writing, or by mutual written agreement between the parties.

12.1
Owner's default

The Company shall be entitled to terminate its appointment under this Agreement with immediate effect by notice in writing if any monies payable by the Owner under this Agreement shall not have been received by the Company within ten (10) running days of receipt by the Owner of the Company’s written request.

12.2
Company's default

If the Company fails to meet its obligations under Clauses 2, 6, 7, 8, 9 and 10 of this Agreement for any reason within its control, the Owner may give notice to the Company of the default, requesting also to remedy it as soon as practically possible. In the event that the Company fails to remedy said default within a reasonable time to the satisfaction of the Owner, the Owner shall be entitled to terminate the Agreement with immediate effect by notice in writing.

12.3
Extraordinary Termination

This Agreement shall be deemed to be terminated in the case of the sale of the Vessel (excluding a sale under a sale and leaseback financing) or if the Vessel becomes a total loss or is declared as a constructive or compromised or arranged total loss or is requisitioned.

12.4
For the purpose of sub-clause 12.3 hereof:


(a)
the date upon which the Vessel is to be treated as having been sold or otherwise disposed of shall be the date on which the Owner ceases to be registered as owner of the Vessel;


(b)
the Vessel shall only be deemed lost where she has become an actual total loss or agreement has been reached with her underwriters in respect of her constructive, compromised or arranged total loss or if such agreement with her underwriters is not reached it is nevertheless adjudged by a competent tribunal that a constructive total toss of the Vessel has been occurred.

12.5
Either party hereto may by notice to the other party terminate forthwith the appointment if an order is made or resolution is passed for the winding up, dissolution, liquidation or bankruptcy of such party (otherwise than the purpose of reconstruction or amalgamation) if any party ceases to carry on business or makes any special arrangement or composition with its creditors.

12.6
The termination of this Agreement shall be without prejudice to all rights accrued   due between the parties prior to the date of termination.

13
Force Majeure

Neither the Owner nor the Company shall be under any liability for any failure to perform or delay in the performance of any of their obligations under this Agreement by reason of any cause whatsoever beyond their reasonable control.

14
Indemnities

14.1
Subject to any liability of the Company pursuant to Clause 14.2 hereto the Owner hereby ratifies and confirms, and undertakes at all to ratify and confirm, whatever may be done or caused to be done by the Company in the course of or in the provision of the Services and the Owner hereby undertakes to keep the Company and its respective employees and agents indemnified and to hold them harmless against all actions, proceedings, claims, demands or liabilities whatsoever or howsoever arising which may be brought against them or any one of them or incurred or suffered by them or any one of them arising out of or in connection with the performance of this Agreement, and against and in respect of all loss, damages, costs and expenses (including legal costs and expenses on a full indemnity basis) which the Company may suffer or incur (either directly or indirectly) in defending or settling the same.

14.2
The Company shall be under no liability whatsoever to the Owner for any loss, damage, delay or expense of whatsoever nature, whether direct or indirect, (including but not limited to loss of profit arising out of or in connection with detention of or delay to the Vessel) and howsoever arising in the course of the performance of the Services hereunder unless same is proved to have resulted solely from the negligence, gross negligence or willful default of the Company or its employees or agents or subcontractors employed by it in connection with the Vessel.

14.3
No employee, agent or subcontractor of the Company shall in any circumstances whatsoever be liable to the Owner for any loss, damage or delay arising or resulting directly or indirectly from any act, neglect or default on his part while acting in the course or in connection with his employment and without prejudice to the generality of the forgoing provisions of this Clause 14, every exemption, limitation, condition and liberty herein contained and every right, exemption from liability, defense and immunity of whatsoever nature applicable to and enjoyed by the Company or to which the said Company is entitled hereunder shall also be available and shall extend to protect every such employee, agent or subcontractor of the Company acting as aforesaid and for the purpose of all the foregoing provisions of this Clause 14 the Company is or shall be deemed to be acting as agents or trustee on behalf of and for the benefit of all persons who are or might be their servants or agents from time to time (including sub-contractors as aforesaid) and all such persons shall to this extent be or be deemed to be parties to this Agreement.

15
Confidentiality and Company's Documents

15.1
Save for the purpose of enforcing or carrying out as may be necessary the rights or obligations of the Company hereunder, the Company agrees to maintain and to use its best endeavors to procure that its officers and employees maintain confidence and secrecy in respect of all information relating to the Owner's business received by the Company directly or indirectly pursuant to this Agreement.

16
Notices and Other Matters

16.1
Every notice, demand or other communication under this Agreement shall:


(a)
be in writing, delivered personally or by registered or recorded first-class prepaid mail, facsimile or email;


(b)
be deemed to have been received, subject as otherwise provided in this Agreement, in the case of a telex at the time of dispatch with confirmed answerback of the addressee appearing at the beginning and end of the communication (provided that if the date of dispatch is not a business day in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day), in the case of a facsimile at the time of dispatch evidenced by a timed and dated transmittal confirmation (provided that if the date of dispatch is not a business day in the country of the addressee it shall be deemed to have been received at the opening of business on the next business day), in the case of an email at the time of dispatch and in the case of a letter when delivered personally or five (5) running days after it has been put into the post; and


(c)
be sent to the respective addresses hereto or to such other address, facsimile, email or telex number as is notified by the parties hereto to the other parties to this Agreement:

(i) in respect of the Owner to:

[name of owner]
[address, email address, facsimile and telephone number of owner]

(ii) in respect of the Company to:

SEANERGY SHIPMANAGEMENT CORP.
154 Vouliagmenis Avenue
166 74 Glyfada, Athens, Greece
Email: insurance@seanergy.gr
Tel.: +30 213 0181507
Fax: +30 2109638404

17
Law and Arbitration

17.1
This Agreement shall be governed by English Law and any dispute arising out of or in connection herewith shall be referred to arbitration in London.

17.2
Arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) rules current at the time of commencement of the arbitration.

17.3
Any referral made pursuant to this Clause 17 shall be to three (3) Arbitrators on the following basis: if a dispute arises between the parties then each shall appoint an Arbitrator and the two Arbitrators so appointed shall appoint a third.

17.4
Upon receipt notice of appointment of an Arbitrator by the first notifying party (who shall therein state that it shall appoint its own arbitrator as sole arbitrator if the other party does not appoint an Arbitrator in accordance herewith), the second party shall appoint its Arbitrator and give notice of such appointment within fourteen (14) running days, failing which the prior notifying party shall be entitled either to appoint its Arbitrator as Sole Arbitrator or appoint an Arbitrator on behalf of the second party who shall accept such appointment as if it had been made by itself.

17.5
If a party does not appoint its own Arbitrator and give due notice in accordance with sub-Clause 17.4 the party referring the dispute to arbitration may without requirement for further notice to such other party failing to so appoint make appointment in accordance with sub-Clause 17.4 and shall advise the other party accordingly and the award of a Sole Arbitrator or panel appointed in accordance with sub-Clause 17.4 shall be binding on all parties as if appointment had been by agreement.

17.6
Nothing in this Clause 17 shall prevent the parties agreeing in writing to vary these provisions to provide for appointment of a Sole Arbitrator or to consolidate arbitration proceedings hereunder where thought appropriate or desirable.

17.7
In cases where neither the claim nor any counterclaim exceeds the sum of USD$50,000 (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.

17.8
Any such Arbitration shall be in accordance with and subject to the Arbitration Act 1996 and any statutory amendment or modification thereto.

18
Miscellaneous

18.1
Subject to sub-Clause 18.2 this Agreement contains the entire agreement and understanding between the parties and supersedes ail prior negotiations, representations, warranties and other documents or matter related to any of the subject matter of this Agreement.

18.2
This Agreement may be amended by mutual agreement of parties hereto provided that any such amendment is evidenced by written amendment duly executed by both parties and following which any such amendment shall be  considered part of, appended to and read together with this Agreement.

18.3
This Agreement may be executed in one or more written counterparts each of which shall be deemed an original, but all of which together shall constitute one instrument.

18.4
All details of or pertaining to this Agreement shall be kept strictly private and confidential.

IN WITNESS WHEREOF the Owner and the Company have caused this Agreement to be duly executed as a deed the day and year first above written.

EXECUTED as a DEED
)
By
)
for and on behalf
)
[name of owner]
)
of the
    
)

in the presence of:
)
   
EXECUTED as a DEED
)
by
)
for and on behalf
)
SEANERGY SHIPMANAGEMENT CORP.
)
of the Republic of the Marshall Islands
)
in the presence of:
)


Exhibit 4.17
 
AMENDMENT NO. 5 TO COMMERCIAL MANAGEMENT AGREEMENT
 
This Amendment No. 5 (this “Amendment”) dated as of November 3, 2021, by and among SEANERGY MANAGEMENT CORP., a company incorporated in Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Island, Majuro, Marshall Islands, MH 96960, for its own behalf and as agent for and on behalf of the Shipowning Affiliates (the “Company”), and FIDELITY MARINE INC., a company incorporated in the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Island, Majuro Marshall Islands MH 96960 (hereinafter called the “Commercial Manager”) to the Commercial Management Agreement dated as of March 2, 2015, by and among the Company and the Commercial Manager as amended by an Amendment No. 1 dated as of September 11th, 2015, further amended by an Amendment No. 2 dated as of February 24th, 2016, further amended by an Amendment No. 3 dated as of February 1st, 2018 and further amended by an Amendment No. 4 dated as of June 28, 2018 (together referred to as the “Agreement”). Capitalized terms used herein without definition shall have the respective meanings ascribed thereto (or incorporated by reference) in the Agreement, which also contains rules of usage that apply to terms defined therein and herein.
 
RECITAL

WHEREAS, the Company and the Commercial Manager desire to enter into this Amendment No. 5 for the purpose of amending and restating Clause 2 of the Agreement.

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
 
Amended and Restated Clause 2.2 of the Agreement
 
Clause 2.2 of the Agreement is hereby amended and restated as follows:
 
“
 
2.2
For services performed hereunder by the Commercial Manager, the Company shall pay, or procure that the relevant member of the Group pays, to the Commercial Manager as a management fee (the “Fee”) comprising of: (i) an annualized fee of Euro one hundred twenty thousand (€120,000) net per year which will be paid in twelve equal monthly payments of Euro 10,000 net each (to be made on or about the last day of every month); and (ii) a commission fee of zero point fifteen percent (0.15%) calculated on the collected gross hire/ freight/ demurrage payable when the relevant hire/ freight/ demurrage are collected, provided that on an annual basis the total Fee under (i) and (ii) will never exceed United States Dollars four hundred thousand (USD400,000) net. The Fee hereunder shall be paid to the Commercial Manager to an account of the Commercial Manager advised in writing to the Company. ”
 
Except as provided hereinabove, all other terms and conditions of the Agreement shall remain unchanged and in full force and effect.
 
IN WITNESS WHEREOF, the parties hereinabove have caused this Amendment No. 5 to the Agreement to be signed in duplicate by their respective and duly authorized representatives as of the date first written hereinabove.
 
SEANERGY MANAGEMENT
  
FIDELITY MARINE INC.
CORP.
      
         
By:
/s/ Stamatios Tsantanis
  
By:
/s/Nikolaos Frantzeskakis
Name:
Stamatios Tsantanis
  
Name:
Nikolaos Frantzeskakis
Title:
Director/President
  
Title:
Sole Director
 

Exhibit 4.37

SIDE LETTER
 
To:
FELLOW SHIPPING CO.
 
Trust Company Complex
 
Ajeltake Road
 
Ajeltake Island
 
Majuro MH96960
 
Marshall Islands
   
 
and
   
 
PREMIER MARINE CO.
 
Trust Company Complex
 
Ajeltake Road
 
Ajeltake Island
 
Majuro MH96960
 
Marshall Islands
   
 
and
   
 
SEANERGY SHIPMANAGEMENT CORP.
 
Trust Company Complex
 
Ajeltake Road
 
Ajeltake Island
 
Majuro MH96960
 
Marshall Islands

11 January 2022
 
Dear Sirs
 
Facility agreement dated 11 September 2015 (as amended and/or supplemented by a supplemental agreement dated 3 June 2016, a supplemental letter agreement dated 29 July 2016, a supplemental letter agreement dated 7 March 2017, a supplemental letter agreement dated 25 September 2017, a supplemental letter agreement dated 30 April 2018 and a supplemental letter agreement dated 10 October 2018, as amended and/or restated by a deed of accession, amendment and restatement dated 22 November 2018 and as further amended and/or supplemented by a supplemental agreement dated 3 July 2019, a supplemental agreement dated 8 February 2021, the “Facility Agreement”) made between, amongst others, (i) Premier Marine Co. and Fellow Shipping Co. (the “Owner”) as joint and several borrowers (together, the “Borrowers”), (ii) Seanergy Maritime Holdings Corp. as guarantor and (iii) UniCredit Bank AG as original lender (the “Lender”) pursuant to which the Lender has made available to the Borrowers a facility of up to $52,704,790

We refer to the Facility Agreement.  Words and expressions defined in the Facility Agreement shall have the same meaning when used in this letter unless the context otherwise requires.
 
Following a request by the Borrowers, we have agreed to the appointment Seanergy Shipmanagement Corp., a company incorporated in the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands (the “Technical Manager”) as technical manager of m.v. “FELLOWSHIP” with IMO number 9522099 (the “Ship”) in place of V.Ships Limited with effect from 17 June 2021 (the “Effective Date”).  From the Effective Date, all references to the “Approved Manager” in the Facility Agreement and the other Finance Documents shall be construed as references to include the Technical Manager.
 
We hereby confirm our approval to these arrangements, subject to receipt of the following documents in form and substance as may be approved or required by us on or before the signature hereof:
 
(a)
a Manager’s Undertaking executed by the Technical Manager in respect of the Ship;
 
(b)
a copy of the management agreement executed by the Technical Manager in respect of the Ship certified as true and in effect by a director of the Owner;
 
(c)
a copy of the Technical Manager’s Document of Compliance issued by the authorities of the Republic of the Marshall Islands certified as true and in effect by a director of the Owner;
 
(d)
a copy of the Safety Management Certificate issued pursuant to the ISM Code in respect of the Ship certified as true and in effect by a director of the Owner;
 
(e)
a copy of the ISSC issued pursuant to the ISPS Code in respect of the Ship certified as true and in effect by a director of the Owner;
 
(f)
a certificate of incumbency issued by a director or officer of the Technical Manager confirming the names of the directors and/or officers of the Technical Manager;
 
(g)
a Manager’s Undertaking executed by V.Ships Limited in respect of the Ship; and
 
(h)
a copy of the management agreement executed by V.Ships Limited in respect of the Ship certified as true and in effect by a director of the Owner.
 
This letter 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 letter.
 
This letter and any non-contractual obligations arising out of or in connection with it shall be governed by, and construed in accordance with, English law and the courts of England shall have exclusive jurisdiction in relation to all matters which may arise out of or in connection with this letter and any non-contractual obligations arising out of or in connection with it.
 
Please confirm your agreement by signing the acknowledgement below.
 
Yours faithfully
 
/s/ Ute Haverkamp
/s/ Gotthardt-Senk
   
Ute Haverkamp
Gotthardt-Senk
for and on behalf of
  
UNICREDIT BANK AG
  

2
We hereby acknowledge receipt of the above letter and confirm our agreement to the terms hereof.
 
/s/ Stavros Gyftakis
  
/s/ Stavros Gyftakis

 

Stavros Gyftakis
  
Stavros Gyftakis
     
for and on behalf of
  
for and on behalf of
FELLOW SHIPPING CO.
  
PREMIER MARINE CO.

/s/ Stavros Gyftakis
 

 
Stavros Gyftakis
 
for and on behalf of
SEANERGY MARITIME HOLDINGS CORP.
 
Date: 11 Janaury 2022


3
Exhibit 4.42

On Demand Guarantee

dated this 8th day of March 2022, by

Seanergy Maritime Holdings Corp., of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Republic of the Marshall Islands
(hereinafter “Guarantor”),

in favor of

Uniper Global Commodities SE, Holzstrasse 6, 40221 Düsseldorf, Germany
(hereinafter “UGC”).

WHEREAS, Partner Marine Co., of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Republic of the Marshall Islands (the “Counterparty”), being a wholly owned subsidiary of the Guarantor, has entered into a novation agreement dated March 8, 2022 in relation to the charterparty dated September 14, 2018 entered into between UGC and Partner Shipping Co. Limited, of Malta for the time charter of the M/V Partnership (the “Vessel”) on the terms and conditions agreed therein (the “Contract”) (such charterparty, as the same may from time to time be modified, amended and supplemented, shall be referred hereinafter to as the “Contract”); and

WHEREAS, pursuant to the said novation agreement, the Counterparty has agreed to substitute the owners, Partner Shipping Co. Limited, under the Contract from March 9, 2022 replacing the owners and to be bound as owners under the Contract.

NOW THEREFORE, in consideration of the foregoing, Guarantor hereby covenants and agrees as follows:

1.
Guarantee: The Guarantor hereby irrevocably and unconditionally guarantees the timely performance of the obligation of the Counterparty to provide the use and hire of the Vessel to UGC in relation to the hire payable in advance by UGC in accordance with Clause 4 of the Contact (the “Obligation”). UGC acknowledges and agrees that the Guarantor shall only be obligated to pay money and shall have no obligation to perform otherwise under the Contract, including, without limitation, to sell, deliver, supply or transport any commodity.
 
The Guarantor’s liability under this Guarantee shall be limited to US$1,000,000 (United States Dollars one million) (the “Cap”).

2.
Payment Demand and Terms of Payment: If the Counterparty fails or refuses for whatever reason to fulfil the Obligation, UGC shall notify the Guarantor in writing of the manner in which the Counterparty has failed to perform and demand that payment be made by the Guarantor under this Guarantee (a “Payment Demand”).
 
Upon receipt of a Payment Demand, the Guarantor shall make payment in an amount not exceeding the lesser of (i) the Cap, and (ii) the amount of any hire paid in advance in accordance with Clause 4 of the Contact, in no event later than ten (10) German business days after the receipt of such Payment Demand, to the bank account specified in the Payment Demand.  Payment shall be made irrespective of any potential right of set-off, counterclaims or other defenses, together with all interest, attorneys’ fees and other reasonable and documented costs and expenses incurred by UGC in connection with the Counterparty’s failure to promptly, fully and faithfully perform its Obligation.
 
1
3.
Waivers: This is an unconditional and absolute on demand Guarantee (Garantie) and not merely a surety (Bürgschaft). Therefore Guarantor hereby waives (a) any right to assert any counterclaim or other defenses before payment and to exercise any right to set-off; (b) any right to require that any action or proceeding be brought against the Counterparty or any other person; and (c) to require that UGC seek enforcement of any other credit support or performance assurance securing the fulfillment of the Obligation, prior to any action against the Guarantor under the terms hereof.

No delay of UGC in the exercise of or failure to exercise any right hereunder shall operate as a waiver of such rights, a waiver of any other rights or a release of the Guarantor from any obligations hereunder.
 
4.
The Guarantor hereby consents to the renewal, compromise, extension, acceleration or other changes in the time of performance of or other changes in the terms of the Obligation of the Counterparty under the Contract, or any part thereof or any changes or any other modifications to the terms of the Contract.

5.
Assignment: The Guarantor shall not, without the prior written consent of UGC, assign to any entity its rights or obligations under this Guarantee. UGC may at any time with the prior written consent (not to be unreasonably withheld) of the Guarantor assign the whole or any part of its rights under this Guarantee to any person to whom the whole or any part of the rights of UGC under the Contract has been assigned.

6.
Subrogation: The Guarantor agrees that it shall not exercise any right which it may at any time have (a) to be indemnified by the Counterparty or (b) to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any right of UGC or of any other security taken in respect of the Counterparty’s Obligation.

7.
Termination: This Guarantee shall terminate on the expiration of the hire period under the Contract. UGC and the Guarantor acknowledge and agree that termination and cancellation of this Guarantee shall be considered earlier upon receipt by UGC of the Counterparty’s audited financial statements for the year ending December 31, 2022 and based on UGC’s internal credit assessment the creditworthiness of the Counterparty will be considered adequate to cancel this Guarantee.

8.
Representations and warranties: The Guarantor represents and warrants that:
 
(a) it is an entity duly organised and validly existing under the laws of the jurisdiction of its incorporation and has the corporate power and authority to execute, deliver and carry out the terms and provisions of this Guarantee;
(b) no authorisation, approval, consent or order of, or registration or filing with, any court or other governmental body having jurisdiction over the Guarantor is required on the part of the Guarantor for execution and delivery of this Guarantee; and
(c) this Guarantee, when executed and delivered, will constitute a valid and legally binding agreement of the Guarantor.

2
9.
Miscellaneous: This Guarantee shall be binding upon the Guarantor, its successors and assigns and inure to the benefit of and be enforceable by UGC, its successors and assigns.

This Guarantee and any other non-contractual obligations connected with it shall be governed by and interpreted in accordance with the laws of England.
 
No term or provision of this Guarantee, included this provision, shall be amended, modified, altered, waived or supplemented except in writing duly signed by the Guarantor and UGC.

/s/ Stamatios Tsantanis
/s/ Martin Rozendaal
 
/s/ Alexandre Antunes

 

 
Stamatios Tsantanis
Martin Rozendaal
 
Alexandre Antunes
   
For and on behalf of the
For and on behalf of
Guarantor
Uniper Global Commodities SE


3
Exhibit 4.52
 
Dated 22 April 2021

US$15,500,000

TERM LOAN FACILITY

GOOD OCEAN NAVIGATION CO. and
TRADERS SHIPPING CO.
as joint and several Borrowers
 
and
 
SEANERGY MARITIME HOLDINGS CORP.
as Guarantor
 
and
 
AEGEAN BALTIC BANK S.A.
as Arranger
 
and

AEGEAN BALTIC BANK S.A.
as Facility Agent
 
and

AEGEAN BALTIC BANK S.A.
as Security Agent
 
FACILITY AGREEMENT
 
for the purpose of providing additional liquidity to the Borrowers
for general working capital purposes secured
on m.v.’s “GOODSHIP” and “CAPE TRUST” (tbr “TRADERSHIP”) 


 
Index
  
Clause
  
Page
     
Section 1 Interpretation
2
1
Definitions and Interpretation
2
Section 2 The Facility
27
2
The Facility
27
3
Purpose
28
4
Conditions of Utilisation
28
Section 3 Utilisation
30
5
Utilisation
30
Section 4 Repayment, Prepayment and Cancellation
32
6
Repayment
32
7
Prepayment and Cancellation
33
Section 5 Costs of Utilisation
36
8
Interest
36
9
Interest Periods
37
10
Changes to the Calculation of Interest
38
11
Fees
39
Section 6 Additional Payment Obligations
41
12
Tax Gross Up and Indemnities
41
13
Increased Costs
45
14
Other Indemnities
46
15
Mitigation by the Finance Parties
49
16
Costs and Expenses
50
Section 7 Guarantee and Joint and Several LIability of Borrowers
51
17
Guarantee and Indemnity
51
18
Joint and Several Liability of the Borrowers
53
Section 8 Representations, Undertakings and Events of Default
56
19
Representations
56
20
Information Undertakings
62
21
Financial Covenants
66
22
General Undertakings
68
23
Insurance Undertakings
74
24
Ship Undertakings
79
25
Security Cover
85
26
Accounts and Application of Earnings
86
27
Events of Default
88
Section 9 Changes to Parties
94
28
Changes to the Lenders
94
29
Changes to the Transaction Obligors
99
Section 10 The Finance Parties
100
30
The Facility Agent, the Arranger and the Reference Banks
100
31
The Security Agent
111
32
Conduct of Business by the Finance Parties
126
33
Sharing among the Finance Parties
126
Section 11 Administration
128
34
Payment Mechanics
128
35
Set-Off
131
36
Bail-In
131
37
Notices
132

38
Calculations and Certificates
134
39
Partial Invalidity
134
40
Remedies and Waivers
134
41
Entire Agreement
134
42
Settlement or Discharge Conditional
135
43
Irrevocable Payment
135
44
Amendments and Waivers
135
45
Confidential Information
138
46
Confidentiality of Funding Rates and Reference Bank Quotations
142
47
Counterparts
144
Section 12 Governing Law and Enforcement
145
48
Governing Law
145
49
Enforcement
145

Schedules
  
     
Schedule 1 The Parties
146
 
Part A The Obligors
146
 
Part B The Original Lenders
147
 
Part C The Servicing Parties
148
Schedule 2 Conditions Precedent
149
 
Part A Conditions precedent to the initial Utilisation Request
149
 
Part B Conditions precedent to Utilisation
152
Schedule 3 Requests
154
 
Part A Utilisation Request
154
 
Part B Selection Notice
155
Schedule 4 Form of Transfer Certificate
156
Schedule 5 Form of Assignment Agreement
158
Schedule 6 Timetables
161
Schedule 7 Form of Compliance Certificate
162
     
Execution
  
     
Execution Pages
163

THIS AGREEMENT is made on 22 April 2021
 
PARTIES
 
(1)
GOOD OCEAN NAVIGATION CO., a corporation incorporated in the Republic of Liberia (with registration number C-121732) whose registered address is 80 Broad Street, Monrovia, Liberia as borrower (“Borrower A”)
 
(2)
TRADERS SHIPPING CO., a corporation incorporated in the Republic of the Marshall Islands (with registration number 107890) whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 as borrower (“Borrower B”)
 
(3)
SEANERGY MARITIME HOLDINGS CORP., a corporation incorporated in the Republic of the Marshall Islands (with registration number 27721) whose registered address is at the Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH 96960, Marshall Islands as guarantor (the “Guarantor”)
 
(4)
AEGEAN BALTIC BANK S.A. as mandated lead arranger (the “Arranger”)
 
(5)
THE FINANCIAL INSTITUTIONS listed in Part B of Schedule 1 (The Parties) as lenders (the “Original Lenders”)
 
(6)
AEGEAN BALTIC BANK S.A. as agent of the other Finance Parties (the “Facility Agent”)
 
(7)
AEGEAN BALTIC BANK S.A. as security agent for the Secured Parties (the “Security Agent”)
 
BACKGROUND
 
The Lenders have agreed to make available to the Borrowers a senior facility of up to $15,500,000 in two Tranches as follows:
 
(A)
Tranche A shall be in an amount not exceeding the lesser of (i) $7,500,000, (ii) 55 per cent. of the Initial Market Value of Ship A and (iii) 100 per cent of the Scrap Value of Ship A; and
 
(B)
Tranche B shall be in an amount not exceeding the lesser of (i) $8,000,000, (ii) 55 per cent. of the aggregate Initial Market Values of the Ships and (iii) 100 per cent of the aggregate Scrap Values of the Ships.
 
OPERATIVE PROVISIONS
 
SECTION 1

INTERPRETATION
 
1
DEFINITIONS AND INTERPRETATION
 
1.1
Definitions
 
In this Agreement:
 
“Account Bank” means Aegean Baltic Bank S.A. acting through its office at Megalou Alexandrou & 25th Martiou Street, 151 24 Maroussi, Greece or any replacement bank or other financial institution as may be approved by the Facility Agent acting with the authorisation of the Majority Lenders.
 
“Accounts” means the Earnings Accounts and the Retention Account.
 
“Account Security” means a document creating Security over any Account in agreed form.
 
“Advance” means a borrowing of a Tranche under this Agreement.
 
“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.
 
“Approved Brokers” means Evmar Marine Inc., Arthur J. Gallagher & Co. and 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, in respect of:
 

 (a)
Ship A, 1A Bulk carrier, BIS, BWM(E(s, f)), E0, ESP, HC(M), Holds(2,4,6,8) may be empty; and
 

 (b)
Ship B, 1A Bulk carrier HC(M) BWM(T) E0 ESP Holds(2,4,6,8)may be empty Recyclable TMON(oil lubricated),
 
in each case with the Approved Classification Society or the equivalent classification with another Approved Classification Society.
 
“Approved Classification Society” means, in relation to each Ship, DNV or any other classification society approved in writing by the Facility Agent acting with the authorisation of the Majority Lenders which is a member of the International Association of Classification Societies.
 
“Approved Commercial Manager” means, in relation to each Ship:
 

 (a)
Seanergy Management Corp., a corporation incorporated in the Republic of the Marshall Islands whose registered address is at the Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH 96960, Marshall Islands;
 

 (b)
Fidelity Marine Inc., a corporation incorporated in the Republic of the Marshall Islands whose registered address is at the Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH 96960, Marshall Islands
 
2

 (c)
any other company fully owned by the Guarantor on terms acceptable to the Lenders subject to executing a Manager’s Undertaking; or
 

 (d)
or any other person approved in writing by the Facility Agent acting with the authorisation of the Majority Lenders as the commercial manager of that Ship (such consent not to be unreasonably withheld or delayed).
 
“Approved Flag” means, in relation to:
 

 (a)
Ship A, the flag of Liberia; and
 

 (b)
Ship B, the flag of the Marshall Islands,
 
or such other flag and, if applicable, port of registry approved in writing by the Facility Agent acting with the authorisation of the Majority Lenders.
 
“Approved Manager” means the Approved Commercial Manager or the Approved Technical Manager.
 
“Approved Technical Manager” means, in relation to each Ship:
 

 (a)
V.Ships Greece Ltd. a corporation incorporated in Bermuda having a registered office at 3rd floor, Par-La-Ville Place, 14 Par-La-Ville Road, Hamilton HM 08, Bermuda;
 

 (b)
V.Ships Limited, a corporation incorporated and existing under the laws of Cyprus whose registered office is at Zenas Gunther, 16-18, Agia Triada, 3035 Limassol, Cyprus;
 

 (c)
Seanergy Shipmanagement Corp., a corporation incorporated in the Republic of the Marshall Islands whose registered address is at the Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH 96960, Marshall Islands;
 

 (d)
any other company fully owned by the Guarantor on terms acceptable to the Lenders subject to executing a Manager’s Undertaking; or
 

 (e)
or any other person approved in writing by the Facility Agent acting with the authorisation of the Majority Lenders as the technical manager of that Ship (such consent not to be unreasonably withheld or delayed).
 
“Approved Valuer” means Clarksons Platou, Fearnleys Shipbrokers A/S, Maersk Brokers KS, Simpson Spence & Young Valuation Services Ltd., Arrow Research Limited, Galbraiths Ltd., Lorentzen & Stemoco, Barry Rogliano Salles, Intermodal Shipbrokers Co., Allied Shipbroking Inc., Braemar ACM Valuations Limited, Golden Destiny SA and VesselsValue (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.
 
“Assignable Charter” means, in relation to a Ship, any Charter which has or is capable of having, by virtue of any optional extensions, a duration of more than 13 months.
 
“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.
 
3
“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, in relation to a Tranche the period from and including the date of this Agreement to and including the earlier of:
 

 (a)
in respect of:
 

 (i)
Tranche A, 5 May 2021; and
 

 (ii)
Tranche B, 30 June 2021; and
 

 (b)
the date on which the Commitment is fully borrowed, cancelled or terminated.
 
“Available Commitment” means a Lender’s Commitment minus:
 

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

 (b)
in relation to any proposed Utilisation, the amount of its participation in the Advance that is due to be made on or before the proposed Utilisation Date.
 
“Available Facility” means the aggregate for the time being of each Lender’s Available Commitment.
 
“Bail-In Action” means the exercise of any Write-down and Conversion Powers.
 
“Bail-In Legislation” means:
 

 (a)
in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 BRRD, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time;
 

 (b)
in relation to any state other than such an EEA Member Country and the United Kingdom, any analogous law or regulation from time to time which requires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation; and
 

 (c)
in relation to the United Kingdom, the UK Bail-In Legislation.
 
“Balloon Instalment” has the meaning given to it in Clause 6.1 (Repayment of Loan).
 
“Borrower” means Borrower A or Borrower B.
 
“Break Costs” means the amount (if any) by which:
 

 (a)
the interest which a Lender should have received for the period from the date of receipt of all or any part of its participation in the Loan or an Unpaid Sum to the last day of the current Interest Period in relation to the Loan, the relevant part of the Loan or that Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period
 
4
exceeds
 

 (b)
the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the Relevant Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.
 
“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for general business in Athens, London and New York.
 
“Charter” means, in relation to a Ship, any charter relating to that Ship, or other contract for its employment, whether or not already in existence (including, for the avoidance of doubt, any Assignable Charter).
 
“Charter Guarantee” means any guarantee, bond, letter of credit or other instrument (whether or not already issued) supporting a Charter.
 
“Charterer” means any reputable charterer, which shall enter into an Assignable Charter as charterer.
 
“Charterparty Assignment” means, in relation to a Ship, the assignment creating Security over the rights of the relevant Borrower under any Assignable Charter in respect of that Ship and 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 Borrowers 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 7 (Form of Compliance Certificate) or in any other form agreed between the Borrowers or, as applicable, 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:
 
5

 (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:
 

 (A)
is or becomes public information other than as a direct or indirect result of any breach by that Finance Party of Clause 45 (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 or Reference Bank Quotation.
 
“Confidentiality Undertaking” means a confidentiality undertaking in substantially the appropriate form recommended by the LMA from time to time or in any other form agreed between the Borrowers and the Facility Agent.
 
“Corresponding Debt” means any amount, other than any Parallel Debt, which an Obligor owes to a Secured Party under or in connection with the Finance Documents.
 
“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.
 
“Delivery Date” means the date on which Ship B is delivered to Borrower B pursuant to the terms of the MOA.
 
“Disruption Event” means either or both of:
 

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

 (b)
the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party or, if applicable, any Transaction Obligor preventing that, or any other, Party or, if applicable, any Transaction Obligor:
 
6

 (i)
from performing its payment obligations under the Finance Documents; or
 

 (ii)
from communicating with other Parties or, if applicable, any Transaction Obligor in accordance with the terms of the Finance Documents,
 
and which (in either such case) is not caused by, and is beyond the control of, the Party or, if applicable, any Transaction Obligor whose operations are disrupted.
 
“Document of Compliance” has the meaning given to it in the ISM Code.
 
“dollars” and “$” mean the lawful currency, for the time being, of the United States of America.
 
“Earnings” means, in relation to a Ship, all moneys whatsoever which are now, or later become, payable (actually or contingently) to a Borrower or the Security Agent and which arise out of or in connection with or relate to the use or operation of that Ship, including (but not limited to):
 

 (a)
the following, save to the extent that any of them is, with the prior written consent of the Facility Agent, pooled or shared with any other person:
 

 (i)
all freight, hire and passage moneys including, without limitation, all moneys payable under, arising out of or in connection with a Charter or a Charter Guarantee;
 

 (ii)
the proceeds of the exercise of any lien on sub-freights;
 

 (iii)
compensation payable to the relevant Borrower or the Security Agent in the event of requisition of that Ship for hire or use;
 

 (iv)
remuneration for salvage and towage services;
 

 (v)
demurrage and detention moneys;
 

 (vi)
without prejudice to the generality of sub-paragraph (i) above, damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of that Ship;
 

 (vii)
all moneys which are at any time payable under any Insurances in relation to loss of hire;
 

 (viii)
all monies which are at any time payable to the relevant Borrower in relation to general average contribution; and
 

 (b)
if and whenever a Ship is employed on terms whereby any moneys falling within sub-paragraphs (i) to (viii) of paragraph (a) above are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to that Ship.
 
“Earnings Account” means, in relation to a Borrower:
 
7

 (a)
an account in the name of that Borrower with the Account Bank designated “[Good Ocean Navigation Co.][Traders Shipping Co.] - Earnings Account”;
 

 (b)
any other account in the name of that Borrower with the Account Bank which may, with the prior written consent of the Facility Agent, be opened in the place of the account referred to in paragraph (a) above, irrespective of the number or designation of such replacement account; or
 

 (c)
any sub-account of any account referred to in paragraphs (a) or (b) above.
 
“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 a Ship or from a 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 any Ship and which involves a collision between any Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which a Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or a Ship and/or any Transaction Obligor and/or any operator or manager of a Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or
 

 (c)
any other incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, water, land or soils (including the seabed) or surface water otherwise than from a Ship and in connection with which a Ship is actually or potentially liable to be arrested and/or where any Transaction Obligor and/or any operator or manager of a Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action.
 
“Environmental Law” means any present or future law relating to pollution or protection of human health or the environment, to conditions in the workplace, to the carriage, generation, handling, storage, use, release or spillage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material.
 
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.
 
“Event of Default” means any event or circumstance specified as such in Clause 27 (Events of Default).
 
“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 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.
 
“Finance Document” means:
 

 (a)
this Agreement;
 

 (b)
the Utilisation Request;
 

 (c)
any Security Document;
 

 (d)
any Manager’s Undertaking (which does not include an assignment of insurances);
 

 (e)
any other document which is executed for the purpose of establishing any priority or subordination arrangement in relation to the Secured Liabilities; or
 

 (f)
any other document designated as such by the Facility Agent and the Borrowers.
 
“Finance Party” means the Facility Agent, the Security Agent, the Arranger or a Lender.
 
9
“Financial Indebtedness” means any indebtedness for or in relation to:
 

 (a)
moneys borrowed;
 

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

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

 (d)
the amount of any liability in relation to any lease or hire purchase contract which would, in accordance with GAAP, be treated as a balance sheet liability;
 

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

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

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

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

 (i)
the amount of any liability in relation to any guarantee or indemnity for any of the items referred to in paragraphs (a) to (h) above.
 
“Funding Rate” means any individual rate notified by a Lender to the Facility Agent pursuant to sub-paragraph (ii) of paragraph (a) of Clause 10.4 (Cost of funds).
 
“GAAP” means generally accepted accounting principles in the US or IFRS.
 
“General Assignment” means, in relation to a Ship, the general assignment creating Security over (inter alia) the Earnings, the Insurances and any Requisition Compensation in agreed form.
 
“Group” means the Guarantor and its Subsidiaries at any given time (which are consolidated for the purposes of its Financial Statements) and “member of the Group” shall be construed accordingly.
 
“Holding Company” means, in relation to a person, any other person in relation to which it is a Subsidiary.
 
“IFRS” means international accounting standards within the meaning of the IAS Regulation 1606/2002 (as may be amended and/or updated from time to time) to the extent applicable to the relevant financial statements.
 
“Indemnified Person” has the meaning given to it in Clause 14.2 (Other indemnities).
 
10
“Initial Market Value” means, in relation to a Ship, the Market Value of that Ship determined by two (or as applicable three) valuations referred to in paragraph 3 of Part B of Schedule 2 (Conditions precedent).
 
“Insurances” means, in relation to a Ship:
 

 (a)
all policies and contracts of insurance, including entries of that Ship in any protection and indemnity or war risks association, effected in relation to that Ship, the Earnings or otherwise in relation to that Ship whether before, on or after the date of this Agreement; and
 

 (b)
all rights and other assets relating to, or derived from, any of such policies, contracts or entries, including any rights to a return of premium and any rights in relation to any claim whether or not the relevant policy, contract of insurance or entry has expired on or before the date of this Agreement.
 
“Interest Payment Date” has the meaning given to it in paragraph (a) of Clause 8.2 (Payment of interest).
 
“Interest Period” means, in relation to the Loan or any part of the Loan, each period determined in accordance with Clause 9 (Interest Periods) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 8.3 (Default interest).
 
“Interpolated Screen Rate” means, in relation to the Loan or any part of the Loan, the rate (rounded to the same number of decimal places as the two relevant Screen Rates) which results from interpolating on a linear basis between:
 

 (a)
the applicable Screen Rate for the longest period (for which that Screen Rate is available) which is less than the relevant Interest Period of the Loan or that part of the Loan; and
 

 (b)
the applicable Screen Rate for the shortest period (for which that Screen Rate is available) which exceeds the relevant Interest Period of the Loan or that part of the Loan,
 
each as of the Specified Time for dollars.
 
“ISM Code” means the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention (including the guidelines on its implementation), adopted by the International Maritime Organisation, as the same may be amended or supplemented from time to time.
 
“ISPS Code” means the International Ship and Port Facility Security (ISPS) Code as adopted by the International Maritime Organization’s (IMO) Diplomatic Conference of December 2002, as the same may be amended or supplemented from time to time.
 
“ISSC” means an International Ship Security Certificate issued under the ISPS Code.
 
“Lender” means:
 

 (a)
any Original Lender; and
 
11

 (b)
any bank, financial institution, trust, fund or other entity which has become a Party in accordance with Clause 28 (Changes to the Lenders),
 
which in each case has not ceased to be a Party in accordance with this Agreement.
 
“LIBOR” means, in relation to the Loan or any part of the Loan:
 

 (a)
the applicable Screen Rate as of the Specified Time for dollars and for a period equal in length to the Interest Period of the Loan or that part of the Loan; or
 

 (b)
as otherwise determined pursuant to Clause 10.1 (Unavailability of Screen Rate),
 
and if, in either case, that rate is less than zero, LIBOR shall be deemed to be zero.
 
“LMA” means the Loan Market Association 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 an Advance, a Tranche, any part of a Tranche or any other part of the Loan as the context may require.
 
“Major Casualty” means, in relation to a Ship, any casualty to that Ship in relation to which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $450,000 or the equivalent in any other currency.
 
“Majority Lenders” means:
 

 (a)
if no Advance has yet been made, a Lender or Lenders whose Commitments aggregate more than 67 per cent. of the Total Commitments; or
 

 (b)
at any other time, a Lender or Lenders whose participations in the Loan aggregate more than 67 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 67 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, in relation to a Ship 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 that Ship and the relevant Borrower to the rights of the Finance Parties and, if the relevant Approved Manager is Seanergy Shipmanagement corp. or any other company fully owned by the Guarantor, including an assignment of insurances in respect of that Ship from such Approved Manager in favour of the Security Agent, in agreed form.
 
“Margin” means four per cent. (4%) per annum.
 
“Market Value” means, in relation to a Ship or any other vessel, at any date, an amount determined by the Facility Agent as being an amount equal to the market value of that Ship or vessel shown by taking the average of two valuations (unless one of the two valuations exceeds the other valuation by more than 15%, in which case a third valuation shall be obtained and the market value of that Ship or vessel will be shown as the average of all three valuations) each prepared:
 
12

 (a)
as at a date not more than 10 days previously;
 

 (b)
by an Approved Valuer selected by the Borrowers;
 

 (c)
with or without physical inspection of the relevant Ship or vessel (as the Facility Agent may require); and
 

 (d)
on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, free of any Charter.
 
“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 Transaction Obligor; 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.
 
“Minimum Liquidity Amount” has the meaning given to it in Clause 21.3 (Minimum Liquidity in Earnings Accounts).
 
“MOA” means the memorandum of agreement in respect of Ship B dated 12 February 2021 and made between the Sellers and Borrower B as buyers, as amended by an addendum no. 1 thereto dated 17 February 2021 and as from time to time further amended or supplemented in accordance with the terms of this Agreement.
 
“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.
 
13
“Mortgage” means, in relation to a Ship, the first priority or, as the case may be, preferred Approved Flag ship mortgage on that Ship (together with, if applicable, the deed of covenants collateral thereto) in agreed form.
 
“Obligor” means a Borrower or the Guarantor.
 
“Original Jurisdiction” means, in relation to an Obligor, the jurisdiction under whose laws that Obligor is incorporated as at the date of this Agreement.
 
“Overseas Regulations” means the Overseas Companies Regulations 2009 (SI 2009/1801).
 
“Parallel Debt” means any amount which an Obligor owes to the Security Agent under Clause 31.2 (Parallel Debt (Covenant to pay the Security Agent)) or under that clause as incorporated by reference or in full in any other Finance Document.
 
“Participating Member State” means any member state of the European Union that has the euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.
 
“Party” means a party to this Agreement.
 
“Permitted Charter” means, in relation to a Ship, 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, 13 months plus a 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 that 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; and
 

 (b)
any Financial Indebtedness that is subordinated to all Financial Indebtedness incurred under the Finance Documents.
 
“Permitted Security” means:
 

 (a)
the Security created by the Finance Documents;
 

 (b)
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;
 

 (c)
liens for salvage;
 
14

 (d)
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
 

 (e)
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 24.16 (Restrictions on chartering, appointment of managers etc.),
 
provided such lien does not secure amounts more than 30 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 a Ship or any interest in it being seized, sold, forfeited or lost).
 
“Potential Event of Default” means any event or circumstance specified in Clause 27 (Events of Default) which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.
 
“Prohibited Person” means any person (whether designated by name or by reason of being included in a class of persons) against whom Sanctions are directed.
 
“Protected Party” has the meaning given to it in Clause 12.1 (Definitions).
 
“Quotation Day” means, in relation to any period for which an interest rate is to be determined, two Business Days before the first day of that period unless market practice differs in the Relevant Interbank Market in which case the Quotation Day will be determined by the Facility Agent in accordance with market practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days).
 
“Receiver” means a receiver or receiver and manager or administrative receiver of the whole or any part of the Security Assets.
 
“Reference Bank Quotation” means any quotation supplied to the Facility Agent by a Reference Bank.
 
“Reference Bank Rate” means the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Facility Agent at its request by the Reference Banks:
 

 (a)
if:
 

 (i)
the Reference Bank is a contributor to the Screen Rate; and
 

 (ii)
it consists of a single figure,
 
15
as the rate (applied to the relevant Reference Bank and the relevant currency and period) which contributors to the Screen Rate are asked to submit to the relevant administrator; or
 

 (b)
in any other case, as the rate at which the relevant Reference Bank could fund itself in dollars for the relevant period with reference to the unsecured wholesale funding market.
 
“Reference Banks” means the principal London offices of any entities as may be appointed by the Facility Agent in consultation with the Borrowers.
 
“Related Fund” in relation to a fund (the “first fund”), means a fund which is managed or advised by the same investment manager or investment adviser as the first fund or, if it is managed by a different investment manager or investment adviser, a fund whose investment manager or investment adviser is an Affiliate of the investment manager or investment adviser of the first fund.
 
“Relevant Interbank Market” means the London interbank market.
 
“Relevant Jurisdiction” means, in relation to a Transaction Obligor:
 

 (a)
its 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 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.
 
“Repayment Date” means each date on which a Repayment Instalment is required to be paid under Clause 6.1 (Repayment of Loan).
 
“Repayment Instalment” has the meaning given to it in Clause 6.1 (Repayment of Loan).
 
“Repeating Representation” means each of the representations set out in Clause 19 (Representations) (except Clause 19.3(b) (Share capital and ownership), ( Clause 19.11 (No filing or stamp taxes) and Clause 19.12 (Deduction of Tax)) and any representation of any Transaction Obligor made in any other Finance Document that is expressed to be a “Repeating Representation” or is otherwise expressed to be repeated.
 
“Replacement Benchmark” means a benchmark rate which is:
 

 (a)
formally designated, nominated or recommended as the replacement for a Screen Rate by:
 
16

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

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

 (b)
in the opinion of the Majority Lenders and the Borrowers, generally accepted in the international or any relevant domestic syndicated loan markets as the appropriate successor to a Screen Rate; or
 

 (c)
in the opinion of the Majority Lenders and the Borrowers, an appropriate successor to a Screen Rate.
 
“Representative” means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian.
 
“Requisition” means, in relation to a Ship:
 

 (a)
any expropriation, confiscation, requisition (excluding a requisition for hire or use which does not involve a requisition for title) or acquisition of that Ship, whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected (whether de jure or de facto) by any government or official authority or by any person or persons claiming to be or to represent a government or official authority; and
 

 (b)
any capture or seizure of that Ship (including any hijacking or theft) by any person whatsoever.
 
“Requisition Compensation” includes all compensation or other moneys payable to a Borrower by reason of any Requisition or any arrest or detention of a Ship in the exercise or purported exercise of any lien or claim.
 
“Resolution Authority” means any body which has authority to exercise any Write-down and Conversion Powers.
 
“Retention Account” means:
 

 (a)
an account in the name of the Borrowers with the Account Bank designated “Good Ocean Navigation Co. and Traders Shipping Co. - Retention Account”;
 

 (b)
any other account in the name of the Borrowers 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.
 
“Safety Management Certificate” has the meaning given to it in the ISM Code.
 
17
“Safety Management System” has the meaning given to it in the ISM Code.
 
“Sanctions” means any sanctions, embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment, exporting, financing or making assets available (or other activities similar to or connected with any of the foregoing):
 

 (a)
imposed by law or regulation of the United Kingdom, the Council of the European Union, the United Nations or its Security Council or the United States of America regardless of whether the same is or is not binding on any Transaction Obligor;  or
 

 (b)
otherwise imposed by any law or regulation binding on a Transaction Obligor or to which a Transaction Obligor is subject (which shall include without limitation, any extra-territorial sanctions imposed by law or regulation of the United States of America).
 
“Scrap Value” means, in relation to a Ship, that Ship’s lightweight tonnage (as this is evidenced by its Trim & Stability booklet) multiplied by the scrap price for dry cargo vessels quoted on the relevant page of the latest publication of Clarkson Shipping Intelligence Weekly at the Utilisation Date of the Tranche which finances that Ship.
 
“Screen Rate” means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for dollars for the relevant period displayed (before any correction, recalculation or republication by the administrator) on page LIBOR01 of the Thomson Reuters screen (or any replacement Thomson Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Thomson Reuters.  If such page or service ceases to be available, the Facility Agent may specify another page or service displaying the relevant rate after consultation with the Borrowers.
 
“Screen Rate Contingency Period” means 10 Business 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 Majority Lenders, and the Borrowers materially changed;
 
(b)
 
(i)
 

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

 (B)
information is published in any order, decree, notice, petition or filing, however described, or filed with a court, tribunal, exchange, regulatory authority or similar administrative, regulatory or judicial body which reasonably confirms that the administrator of that Screen Rate is insolvent,
 
provided that, in each case, at that time, there is no successor administrator to continue to provide that Screen Rate;
 
18

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

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

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

 (v)
the supervisor of the administrator of that Screen Rate makes a public announcement or publishes information:
 

 (A)
stating that that Screen Rate is no longer or, as of a specified future date will no longer be, representative of the underlying market or economic reality that it is intended to measure and that representativeness will not be restored (as determined by such supervisor); and
 

 (B)
with awareness that any such announcement or publication will engage certain triggers for fallback provisions in contracts which may be activated by any such pre-cessation announcement or publication;
 

 (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 Majority Lenders and the Borrower) temporary; or
 

 (ii)
that Screen Rate is calculated in accordance with any such policy or arrangement for a period no less than the Screen Rate Contingency Period; or
 

 (d)
in the opinion of the Majority Lenders and the Borrowers, that Screen Rate is otherwise no longer appropriate for the purposes of calculating interest under this Agreement.
 
“Secured Liabilities” means all 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.
 
19
“Security Cover Ratio” means, at any relevant time, the aggregate of (i) the Market Values of the Ships then subject to a Mortgage and (ii) the net realisable value of any additional security previously provided under Clause 25 (Security Cover), expressed as a percentage of the Loan.
 
“Security Document” means:
 

 (a)
the Mortgage;
 

 (b)
the General Assignment;
 

 (c)
any Charterparty Assignment;
 

 (d)
any Account Security;
 

 (e)
any Manager’s Undertaking (which includes an assignment of insurances);
 

 (f)
any other document (whether or not it creates Security) which is executed as security for the Secured Liabilities; or
 

 (g)
any other document designated as such by the Facility Agent and the Borrower.
 
“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.
 
20
“Selection Notice” means a notice substantially in the form set out in Part B of Schedule 3 (Requests) given in accordance with Clause 9 (Interest Periods).
 
“Sellers” means Asahi Marine (Panama), S.A. of the Republic of Panama.
 
“Servicing Party” means the Facility Agent or the Security Agent.
 
“Ship” means Ship A or Ship B.
 
“Ship A” means the 2005-built capesize bulk carrier of approximately 177,500 dwt, named “GOODSHIP”, having IMO number 9311476 and registered in the name of Borrower A under an Approved Flag.
 
“Ship B” means the 2006-built capesize bulk carrier of approximately 176,900 dwt, named “CAPE TRUST”, having IMO number 9310135 currently owned by the Sellers, to be purchased by Borrower B in accordance with the terms of the MOA and be registered in its ownership with the name “TRADERDSHIP” under an Approved Flag.
 
“Specified Time” means a day or time determined in accordance with Schedule 6 (Timetables).
 
“Subsidiary” means a subsidiary within the meaning of section 1159 of the Companies Act 2006.
 
“Tax” means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).
 
“Tax Credit” has the meaning given to it in Clause 12.1 (Definitions).
 
“Tax Deduction” has the meaning given to it in Clause 12.1 (Definitions).
 
“Tax Payment” has the meaning given to it in Clause 12.1 (Definitions).
 
“Technical Management Agreement” means, in relation to a Ship, the agreement entered into between the relevant Borrower and the Approved Technical Manager regarding the technical management of that Ship.
 
“Termination Date” means, in relation to a Tranche, the date falling on the earlier of (i) date falling 54 Months after the Utilisation Date in respect of that Tranche and (ii) 30 December 2025.
 
“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 $15,500,000 at the date of this Agreement.
 
“Total Loss” means, in relation to a Ship:
 

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

 (b)
any Requisition of that Ship unless that Ship is returned to the full control of the relevant Borrower within 30 days of such Requisition.
 
21
“Total Loss Date” means, in relation to the Total Loss of a Ship:
 

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

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

 (i)
the date on which a notice of abandonment is given (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 relevant Borrower with that Ship’s insurers in which the insurers agree to treat that Ship as a total loss; and
 

 (c)
in the case of any other type of Total Loss, the date (or the most likely date) on which it appears to the Facility Agent that the event constituting the total loss occurred.
 
“Transaction Document” means:
 

 (a)
a Finance Document;
 

 (b)
any Charter;
 

 (c)
the MOA; and
 

 (d)
any other document designated as such by the Facility Agent and the Borrowers.
 
“Transaction Obligor” means an Obligor, any Approved Manager who is a member of the Group or any other member of the Group who executes a Transaction Document.
 
“Transaction Security” means the Security created or evidenced or expressed to be created or evidenced under the Security Documents.
 
“Tranche” means Tranche A or Tranche B.
 
“Tranche A” means a part of the Loan to be made available to the Borrowers in the amount provided in Clause  5.3(b)(i) (Currency and amount), secured on (inter alia) Ship A or, as the context may require, the amount outstanding thereunder.
 
“Tranche B” means a part of the Loan to be made available to the Borrowers in the amount provided in Clause 5.3(b)(ii) (Currency and amount), secured on (inter alia) Ship B or, as the context may require, the amount outstanding thereunder.
 
“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 Borrowers.
 
“Transfer Date” means, in relation to an assignment or a transfer, the later of:
 

 (a)
the proposed Transfer Date specified in the relevant Assignment Agreement or Transfer Certificate; and
 
22

 (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).
 
“UK Establishment” means a UK establishment as defined in the Overseas Regulations.
 
“Unpaid Sum” means any sum due and payable but unpaid by a Transaction Obligor under the Finance Documents.
 
“US” means the United States of America.
 
“US Tax Obligor” means:
 

 (a)
a person which is resident for tax purposes in the US; or
 

 (b)
a person some or all of whose payments under the Finance Documents are from sources within the US for US federal income tax purposes.
 
“Utilisation” means the utilisation of the Facility.
 
“Utilisation Date” means the date of the Utilisation of a Tranche, being the date on which the Advance under that Tranche is to be made.
 
“Utilisation Request” means a notice substantially in the form set out in Part A of Schedule 3 (Requests).
 
“VAT” means:
 

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

 (b)
any other tax of a similar nature, whether imposed in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in paragraph (a) above, or imposed elsewhere.
 
“Write-down and Conversion Powers” means:
 

 (a)
in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule;
 

 (b)
in relation to any other applicable Bail-In Legislation, other than the UK Bail-In Legislation:
 

 (i)
any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers; and
 
23

 (ii)
any similar or analogous powers under that Bail-In Legislation; and
 

 (c)
in relation to any UK Bail-In Legislation any powers under that UK Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that UK Bail-In Legislation that are related to or ancillary to any of those powers.
 
1.2
Construction
 
(a)
Unless a contrary indication appears, a reference in this Agreement to:
 

 (i)
the “Account Bank”, the “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 “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, replaced, extended or restated;
 

 (vii)
a “group of Lenders” includes all the Lenders;
 

 (viii)
“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;
 

 (ix)
“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;
 
24

 (x)
“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;
 

 (xi)
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);
 

 (xii)
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;
 

 (xiii)
a provision of law is a reference to that provision as amended or re-enacted from time to time;
 

 (xiv)
a time of day is a reference to London time;
 

 (xv)
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;
 

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

 (xvii)
“including” and “in particular” (and other similar expressions) shall be construed as not limiting any general words or expressions in connection with which they are used.
 
(b)
The determination of the extent to which a rate is “for a period equal in length” to an Interest Period shall disregard any inconsistency arising from the last day of that Interest Period being determined pursuant to the terms of this Agreement.
 
(c)
Section, Clause and Schedule headings are for ease of reference only and are not to be used for the purposes of construction or interpretation of the Finance Documents.
 
(d)
Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under, or in connection with, any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.
 
(e)
A Potential Event of Default is “continuing” if it has not been remedied or waived and an Event of Default is “continuing” if it has not been waived.
 
1.3
Construction of insurance terms
 
In this Agreement:
 
“approved” means, for the purposes of Clause 23 (Insurance Undertakings), approved in writing by the Facility Agent.
 
“excess risks” means, in respect of a Ship, the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of that Ship in consequence of its insured value being less than the value at which that Ship is assessed for the purpose of such claims.
 
25
“obligatory insurances” means all insurances effected, or which any Borrower is obliged to effect, under Clause 23 (Insurance Undertakings) or any other provision of this Agreement or of another Finance Document.
 
“policy” includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms.
 
“protection and indemnity risks” means the usual risks covered by a protection and indemnity association managed in London, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 6 of the International Hull Clauses (1/11/02) (1/11/03), clause 8 of the Institute Time Clauses (Hulls) (1/10/83) (1/11/95) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision.
 
“war risks” includes the risk of mines and all risks excluded by  clauses 29, 30 or 31 of the International Hull Clauses (1/11/02), clauses 29 or 30 of the International Hull Clauses (1/11/03), clauses 24, 25 or 26 of the Institute Time Clauses (Hulls) (1/11/95) or clauses 23, 24 or 25 of the Institute Time Clauses (Hulls) (1/10/83) or any equivalent provision.
 
1.4
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 eacg Borrower and the Facility Agent); or
 
(b)
in any other form agreed in writing between each Borrower and the Facility Agent acting with the authorisation of the Majority Lenders or, where Clause 44.2 (All Lender matters) applies, all the Lenders.
 
1.5
Third party rights
 
(a)
Unless expressly provided to the contrary in a Finance Document, a person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 (the “Third Parties Act”) to enforce or to enjoy the benefit of any term of this Agreement.
 
(b)
Subject to Clause 44.3 (Other exceptions) but otherwise notwithstanding any term of any Finance Document, the consent of any person who is not a Party is not required to rescind or vary this Agreement at any time.
 
(c)
Any Receiver, Delegate, Affiliate or any other person described in paragraph (d) of Clause 14.2 (Other indemnities), paragraph (b) of Clause 30.11 (Exclusion of liability), Clause 30.21 (Role of Reference Banks), Clause 30.22 (Third Party Reference Banks) or paragraph (b) of Clause 31.11 (Exclusion of liability) may, subject to this Clause 1.5 (Third party rights) and the Third Parties Act, rely on any Clause of this Agreement which expressly confers rights on it.
 
26
SECTION 2

THE FACILITY
 
2
THE FACILITY
 
2.1
The Facility
 
Subject to the terms of this Agreement, the Lenders make available to the Borrowers in two Tranches a dollar term loan facility in an aggregate amount not exceeding the Total Commitments in two Tranches.
 
2.2
Finance Parties’ rights and obligations
 
(a)
The obligations of each Finance Party under the Finance Documents are several.  Failure by a Finance Party to perform its obligations under the Finance Documents does not affect the obligations of any other Party under the Finance Documents.  No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.
 
(b)
The rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Finance Party from a Transaction Obligor is a separate and independent debt in respect of which a Finance Party shall be entitled to enforce its rights in accordance with paragraph (c) below.  The rights of each Finance Party include any debt owing to that Finance Party under the Finance Documents and, for the avoidance of doubt, any part of the Loan or any other amount owed by a Transaction Obligor which relates to a Finance Party’s participation in the Facility or its role under a Finance Document (including any such amount payable to the Facility Agent on its behalf) is a debt owing to that Finance Party by that Transaction Obligor.
 
(c)
A Finance Party may, except as specifically provided in the Finance Documents, separately enforce its rights under or in connection with the Finance Documents.
 
2.3
Borrowers’ Agent
 
(a)
Each Borrower by its execution of this Agreement irrevocably appoints the 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 Utilisation Requests), to make such agreements and to effect the relevant amendments, supplements and variations capable of being given, made or effected by any Borrower notwithstanding that they may affect any Borrower, without further reference to or the consent of that Borrower; and
 

 (ii)
each Finance Party to give any notice, demand or other communication to that Borrower pursuant to the Finance Documents to the Guarantor,
 
and in each case the Borrowers shall be bound as though the Borrowers themselves had given the notices and instructions (including, without limitation, any Utilisation Requests) or executed or made the agreements or effected the amendments, supplements or variations, or received the relevant notice, demand or other communication.
 
27
(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 a Borrower or in connection with any Finance Document (whether or not known to any Borrower) shall be binding for all purposes on that Borrower as if that Borrower had expressly made, given or concurred with it.  In the event of any conflict between any notices or other communications of the Guarantor and any Borrower, those of the Guarantor shall prevail.
 
3
PURPOSE
 
3.1
Purpose
 
The Borrowers shall apply all amounts borrowed by it under the Facility only for the purpose stated in the preamble (Background) to this Agreement.
 
3.2
Monitoring
 
No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.
 
4
CONDITIONS OF UTILISATION
 
4.1
Initial conditions precedent
 
The Borrowers may not deliver a Utilisation Request unless the Facility Agent has received all of the documents and other evidence listed in Part A of Schedule 2 (Conditions Precedent) in form and substance satisfactory to the Facility Agent.
 
4.2
Further conditions precedent
 
The Lenders will only be obliged to comply with Clause 5.4 (Lenders’ participation) if:
 
(a)
on the date of each Utilisation Request and on the proposed Utilisation Date and before the Advance is made available:
 

 (i)
no Default is continuing or would result from the utilization of the proposed Advance;
 

 (ii)
the Repeating Representations to be made by each Transaction Obligor are true; and
 

 (iii)
there has been no material adverse change in the business, management, condition (financial or otherwise), results of operations, state of affairs, operation, performance, prospects or properties of any Borrower and/or the Guarantor; and
 
(b)
the Facility Agent has received on or before each Utilisation Date, or is satisfied it will receive when the Advance is made available, all of the documents and other evidence listed in Part B of Schedule 2 (Conditions Precedent) in form and substance satisfactory to the Facility Agent.
 
4.3
Notification of satisfaction of conditions precedent
 
(a)
The Facility Agent shall notify the Borrowers and the Lenders promptly upon being satisfied as to the satisfaction of the conditions precedent referred to in Clause 4.1 (Initial conditions precedent) and Clause 4.2 (Further conditions precedent).
 
28
(b)
Other than to the extent that the Majority Lenders notify the Facility Agent in writing to the contrary before the Facility Agent gives the notification described in paragraph (a) above, the Lenders authorise (but do not require) the Facility Agent to give that notification.  The Facility Agent shall not be liable for any damages, costs or losses whatsoever as a result of giving any such notification.
 
4.4
Waiver of conditions precedent
 
If the Majority Lenders, at their discretion, permit an Advance to be borrowed before any of the conditions precedent referred to in Clause 4.1 (Initial conditions precedent) or Clause 4.2 (Further conditions precedent) has been satisfied, the Borrowers shall ensure that that condition is satisfied within five Business Days after the relevant Utilisation Date or such later date as the Facility Agent, acting with the authorisation of the Majority Lenders, may agree in writing with the Borrowers.
 
29
SECTION 3

UTILISATION
 
5
UTILISATION
 
5.1
Delivery of the Utilisation Request
 
(a)
The Borrowers may utilise a Tranche by delivery to the Facility Agent of a duly completed Utilisation Request not later than the Specified Time.
 
(b)
The Borrowers may not deliver more than one Utilisation Request in respect of each Tranche.
 
(c)
The Borrowers may not deliver a Utilisation Request if, as a result of the proposed Utilisation, more than one Advance under a Tranche would have been made.
 
5.2
Completion of the Utilisation Request
 
(a)
Each Utilisation Request is irrevocable and will not be regarded as having been duly completed unless:
 

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

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

 (iii)
all applicable deductible items (if any) have been completed; and
 

 (iv)
the proposed Interest Period complies with Clause 9 (Interest Periods).
 
(b)
Only one Advance may be requested in each Utilisation Request.
 
5.3
Currency and amount
 
(a)
The currency specified in a Utilisation Request must be dollars.
 
(b)
The amount of a proposed Advance must be an amount which does not exceed the lesser of:
 

 (i)
in respect of Tranche A, (i) $7,500,000, (ii) 55 per cent. of the Initial Market Value of Ship A and (iii) 100 per cent of the Scrap Value of Ship A; and
 

 (ii)
in respect of Tranche B, (i) $8,000,000, (ii) 55 per cent. of the aggregate Initial Market Values of the Ships and (iii) 100 per cent of the aggregate Scrap Values of the Ships.
 
(c)
The amount of a proposed Advance must be an amount which is not more than the Available Facility.
 
(d)
The amount of the Advances shall not exceed the Total Commitments.
 
5.4
Lenders’ participation
 
(a)
If the conditions set out in this Agreement have been met, each Lender shall make its participation in each Advance available by each Utilisation Date through its Facility Office.
 
30
(b)
The amount of each Lender’s participation in each Advance will be equal to the proportion borne by its Available Commitment to the Available Facility immediately before making that Advance.
 
(c)
The Facility Agent shall notify each Lender of the amount of each Advance and the amount of its participation in that Advance by the Specified Time.
 
5.5
Cancellation of Commitments
 
The Commitments in respect of a Tranche which are unutilised at the end of the Availability Period in respect of that Tranche shall then be cancelled.
 
5.6
Retentions and payment to third parties
 
The Borrowers irrevocably authorise the Facility Agent:
 
(a)
to deduct from the proceeds of the Advance any fees then payable to the Finance Parties in accordance with Clause 11 (Fees), any solicitors fees and disbursements together with any applicable VAT and any other items listed as deductible items in the relevant Utilisation Request and to apply them in payment of the items to which they relate; and
 
(b)
on each Utilisation Date, to pay to, or for the account of, the Borrowers the balance (after any deduction made in accordance with paragraph (a) above) of the amounts which the Facility Agent receives from the Lenders in respect of that Advance.  That payment of the Advance under each Tranche shall be made in like funds as the Facility Agent received from the Lenders to the account which the Borrowers specify in the relevant Utilisation Request.
 
5.7
Disbursement of Advance to third party
 
Payment by the Facility Agent under Clause 5.6 (Retentions and payment to third parties) to a person other than the Borrowers shall constitute the making of the relevant Advance and the Borrowers shall at that time become indebted, as principal and direct obligors, to each Lender in an amount equal to that Lender’s participation in that Advance.
 
5.8
Prepositioning of funds
 
If, in respect of the Utilisation of the Advance under Tranche B, the Lenders, at the request of the Borrowers and on terms acceptable to all the Lenders and in their absolute discretion, preposition funds with the Sellers, each Obligor:
 
(a)
agrees to pay interest on the amount of the funds so prepositioned at the rate described in Clause 8.1 (Calculation of interest) and interest shall be paid together with the first payment of interest on that Advance after the Utilisation Date in respect of it or, if such Utilisation Date does not occur, within three Business Days of demand by the Facility Agent; and
 
(b)
shall, without duplication, indemnify each Finance Party against any costs, loss or liability it may incur in connection with such arrangement.
 
31
SECTION 4

REPAYMENT, PREPAYMENT AND CANCELLATION
 
6
REPAYMENT
 
6.1
Repayment of Loan
 
The Borrowers shall repay:
 
(a)
Tranche A by 18 equal consecutive quarterly instalments, each in the amount of $200,000 , the first instalment being payable on the date falling three (3) Months after the Utilisation Date in respect of Tranche A, each subsequent instalment being payable in three monthly intervals thereafter and the last instalment, together with a balloon instalment in the amount of $3,900,000 (the “Tranche A Balloon Instalment”) being payable on the applicable Termination Date, and each such instalment, including the Balloon Instalment, shall be a “Tranche A Repayment Instalment”; and
 
(b)
Tranche B by 18 equal consecutive quarterly instalments, each in the amount of $200,000 , the first instalment being payable on the date falling three (3) Months after the Utilisation Date in respect of Tranche B, each subsequent instalment being payable in three monthly intervals and the last instalment, together with a balloon instalment in the amount of $4,400,000 (the “Tranche B Balloon Instalment” and together with the Tranche A Balloon Instalment, the “Balloon Instalments” and each a “Balloon Instalment” ) being payable on the applicable Termination Date, and each such instalment, including the Tranche B Balloon Instalment, shall be a “Tranche B Repayment Instalment” and together with the “Tranche A Repayment Instalments”, the “Repayment Instalments” and each a “Repayment Instalment”.
 
6.2
Effect of cancellation and prepayment on scheduled repayments
 
(a)
If the Borrowers cancel the whole or any part of any Available Commitment in accordance with Clause 7.5 (Right of repayment and cancellation in relation to a single Lender) or if the Available Commitment of any Lender is cancelled under Clause 7.1 (Illegality), then the amount of the Repayment Instalments falling after that cancellation will reduce pro rata by the amount of the Available Commitments so cancelled.
 
(b)
If the whole or any part of any Available Commitment is cancelled in accordance with Clause 7.2 (Voluntary or Automatic cancellation) or if the whole or part of any Commitment is cancelled pursuant to Clause 5.5 (Cancellation of Commitments), then the amount of the Repayment Instalments for each Repayment Date falling after that cancellation will reduce 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 7.5 (Right of repayment and cancellation in relation to a single Lender) or Clause 7.1 (Illegality), then the amount of the Repayment Instalments for each Repayment Date falling after that repayment or prepayment will reduce pro rata by the amount of the Loan repaid or prepaid.
 
(d)
If any part of the Loan is prepaid in accordance with Clause 7.3 (Voluntary prepayment of Loan), then the prepayment amount shall be applied pro rata between the two Tranches and the amount of the Repayment Instalments of each Tranche for each Repayment Date falling after that prepayment will reduce pro rata by the amount of the Loan repaid or prepaid (or in such other manner as the Facility Agent may agree to (at its discretion)).
 
32
(e)
If any part of the Loan is prepaid in accordance with Clause 7.4 (Mandatory prepayment on sale or Total Loss), the prepayment amount shall be applied towards full prepayment of the Tranche which financed the Ship that is sold or becomes a Total Loss and any remaining amount following such prepayment will reduce the Repayment Instalments of the other Tranche pro rata.
 
6.3
Termination Date
 
On the final Termination Date, the Borrowers shall additionally pay to the Facility Agent for the account of the Finance Parties all other sums then accrued and owing under the Finance Documents.
 
6.4
Reborrowing
 
The Borrowers may not reborrow any part of the Facility which is repaid.
 
7
PREPAYMENT AND CANCELLATION
 
7.1
Illegality
 
If it becomes unlawful in any applicable jurisdiction for a Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain its participation in the Advance or the Loan or it becomes unlawful for any Affiliate of a Lender for that Lender to do so:
 
(a)
that Lender shall promptly notify the Facility Agent upon becoming aware of that event;
 
(b)
upon the Facility Agent notifying the Borrowers, the Available Commitment of that Lender will be immediately cancelled; and
 
(c)
the Borrowers shall prepay that Lender’s participation in the Loan on the last day of the Interest Period for the Loan occurring after the Facility Agent has notified the Borrowers or, if earlier, the date specified by the Lender in the notice delivered to the Facility Agent (being no earlier than the last day of any applicable grace period permitted by law) and that Lender’s corresponding Commitment shall be cancelled in the amount of the participation prepaid.
 
7.2
Voluntary and automatic cancellation
 
(a)
The Borrowers may, if they give the Facility Agent not less than 10 Business Day’s (or such shorter period as the Majority Lenders may agree) prior notice, cancel the whole or any part of the Available Facility.
 
(b)
The unutilised Commitment (if any) of each Lender shall be automatically cancelled at close of business on the date on which the Advance is made available.
 
7.3
Voluntary prepayment of Loan
 
Subject to Clause 11.4 (Prepayment fee), the Borrowers may, if the give the Facility Agent not less than 10 Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice, prepay the whole or any part of the Loan (but, if in part, being an amount that reduces the amount of the Loan by a minimum amount of $200,000 or a multiple of that amount).
 
33
7.4
Mandatory prepayment on sale or Total Loss
 
(a)
If a Ship is sold (without prejudice to paragraph (a) of Clause 22.12 (Disposals)) or becomes a Total Loss, the Borrowers shall prepay the Relevant Amount, together with accrued interest, and all other amounts accrued under the Finance Documents.  Such repayment shall be made:
 

 (i)
in the case of a sale of a Ship, on or before the date on which the sale is completed by delivery of that Ship to the buyer; or
 

 (ii)
in the case of a Total Loss, on the earlier of (A) the date falling 180 days after the Total Loss Date and (B) the date of receipt by the Security Agent of the proceeds of insurance relating to such Total Loss.
 
(b)
In this Clause 7.4 (Mandatory prepayment on sale or Total Loss), “Relevant Amount” means an amount equal to the higher of:
 

 (i)
the outstanding amount of the Tranche which financed the Ship that is sold or becomes a Total Loss; or
 

 (ii)
an amount which, after the application of the prepayment to be made pursuant to this 7.4 (Mandatory prepayment on sale or Total Loss) results in the Security Cover Ratio being at least equal to the higher of (A) the minimum Security Cover Ratio required to be maintained pursuant to Clause 25.1 (Minimum required security cover) and (B) Security Cover Ratio in effect immediately prior to such sale or Total Loss.
 
7.5
Right of repayment and cancellation in relation to a single Lender
 
(a)
If:
 

 (i)
any sum payable to any Lender by a Transaction Obligor is required to be increased under paragraph (c) of Clause 12.2 (Tax gross-up) or under that clause as incorporated by reference or in full in any other Finance Document; or
 

 (ii)
any Lender claims indemnification from the Borrowers under Clause 12.3 (Tax indemnity) or Clause 13.1 (Increased costs),
 
the Borrowers 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 Borrowers have given notice of cancellation under paragraph (a) above in relation to a Lender (or, if earlier, the date specified by the Borrowers in that notice), the Borrowers shall repay that Lender’s participation in the Loan.
 
7.6
Restrictions
 
(a)
Any notice of cancellation or prepayment given by any Party under this Clause 7 (Prepayment and Cancellation) shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to be made and the amount of that cancellation or prepayment.
 
34
(b)
Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any Break Costs and Clause 11.4 (Prepayment fee), without premium or penalty.
 
(c)
The Borrowers may not reborrow any part of the Facility which is prepaid.
 
(d)
The Borrowers 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 Borrowers or the affected Lenders.
 
(g)
If all or part of any Lender’s participation in the Loan is repaid or prepaid, an amount of that Lender’s Commitment (equal to the amount of the participation which is repaid or prepaid) will be deemed to be cancelled on the date of repayment or prepayment.
 
7.7
Application of prepayments
 
Any prepayment of any part of the Loan (other than a prepayment pursuant to Clause 7.1 (Illegality)) or Clause 7.5 (Right of repayment and cancellation in relation to a single Lender) shall be applied pro rata to each Lender’s participation in that part of the Loan.
 
35
SECTION 5

COSTS OF UTILISATION
 
8
INTEREST
 
8.1
Calculation of interest
 
The rate of interest on the Loan or any part of the Loan for each Interest Period is the percentage rate per annum which is the aggregate of:
 
(a)
the Margin; and
 
(b)
LIBOR.
 
8.2
Payment of interest
 
(a)
The Borrowers shall pay accrued interest on the Loan or any part of the Loan on the last day of each Interest Period (each an “Interest Payment Date”).
 
(b)
If an Interest Period is longer than three Months, the Borrowers 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.
 
8.3
Default interest
 
(a)
If a Transaction Obligor fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the Unpaid Sum from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to paragraph (b) below, is two (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 two (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.
 
36
8.4
Notification of rates of interest
 
(a)
The Facility Agent shall promptly notify the Lenders and the Borrowers of the determination of a rate of interest under this Agreement.
 
(b)
The Facility Agent shall promptly notify the Borrowers of each Funding Rate relating to the Loan, any part of the Loan or any Unpaid Sum.
 
9
INTEREST PERIODS
 
9.1
Selection of Interest Periods
 
(a)
The Borrowers may select the Interest Period for the Loan in the Utilisation Request for the first Advance under each Tranche.  Subject to paragraph (f) below and Clause 9.2 (Changes to Interest Periods), the Borrowers may select each subsequent Interest Period in respect of the Loan in a Selection Notice.
 
(b)
Each Selection Notice is irrevocable and must be delivered to the Facility Agent by the Borrowers not later than the Specified Time.
 
(c)
If the Borrowers fail to select an Interest Period in a Utilisation Request or fails to deliver a Selection Notice to the Facility Agent in accordance with paragraphs (a) and (b) above, the relevant Interest Period will, subject to paragraph (f) below and Clause 9.2 (Changes to Interest Periods), be three (3) Months.
 
(d)
Subject to this Clause 9 (Interest Periods), the Borrowers may select an Interest Period of one (1), three (3) or six (6) Months or any other period agreed between the Borrowers and the Facility Agent (acting on the instructions of all the Lenders).
 
(e)
An Interest Period in respect of Tranche or any part of a Tranche shall not extend beyond the Termination Date in respect of such Tranche.
 
(f)
In respect of a Repayment Instalment, the Borrowers may request in the relevant Selection Notice that an Interest Period for a part of the Loan equal to such Repayment Instalment shall end on the Repayment Date relating to it and, subject to paragraph (d) above, select a longer Interest Period for the remaining part of the Loan.
 
(g)
The first Interest Period for a Tranche shall start on the Utilisation Date in respect of that Tranche and each subsequent Interest Period shall start on the last day of the preceding Interest Period.
 
(h)
Except for the purposes of paragraph (f) above and Clause 9.2 (Changes to Interest Periods), each Tranche shall have one Interest Period only at any time.
 
9.2
Changes to Interest Periods
 
(a)
In respect of a Repayment Instalment, prior to determining the interest rate for the Loan, the Facility Agent may establish an Interest Period for a part of the Loan equal to such Repayment Instalment to end on the Repayment Date relating to it and the remaining part of the Loan shall have the Interest Period selected in the relevant Selection Notice, subject to paragraph (d) of Clause 9.1 (Selection of Interest Periods).
 
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(b)
If the Facility Agent makes any change to an Interest Period referred to in this Clause 9.2 (Changes to Interest Periods), it shall promptly notify the Borrowers and the Lenders.
 
9.3
Non-Business Days
 
If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).
 
10
CHANGES TO THE CALCULATION OF INTEREST
 
10.1
Unavailability of Screen Rate
 
(a)
Interpolated Screen Rate:  If no Screen Rate is available for LIBOR for the Interest Period of the Loan or any part of the Loan, the applicable LIBOR shall be the Interpolated Screen Rate for a period equal in length to the Interest Period of the Loan or that part of the Loan.
 
(b)
Reference Bank Rate:  If no Screen Rate is available for LIBOR for:
 

 (i)
dollars; or
 

 (ii)
the Interest Period of the Loan or any part of the Loan and it is not possible to calculate the Interpolated Screen Rate,
 
the applicable LIBOR shall be the Reference Bank Rate as of the Specified Time and for a period equal in length to the Interest Period of the Loan or that part of the Loan.
 
(c)
Cost of funds:  If paragraph (b) above applies but no Reference Bank Rate is available for dollars or the relevant Interest Period there shall be no LIBOR for the Loan or that part of the Loan (as applicable) and Clause 10.4 (Cost of funds) shall apply to the Loan or that part of the Loan for that Interest Period.
 
10.2
Calculation of Reference Bank Rate
 
(a)
Subject to paragraph (b) below, if LIBOR is to be determined on the basis of a Reference Bank Rate but a Reference Bank does not supply a quotation by the Specified Time, the Reference Bank Rate shall be calculated on the basis of the quotations of the remaining Reference Banks.
 
(b)
If at or about noon on the Quotation Day none or only one of the Reference Banks supplies a quotation, there shall be no Reference Bank Rate for the relevant Interest Period.
 
10.3
Market disruption
 
If before close of business in London on the Quotation Day for the relevant Interest Period the Facility Agent receives notification from a Lender or Lenders (whose participations in the Loan or the relevant part of the Loan exceed 20 per cent. of the Loan or the relevant part of the Loan as appropriate) that the cost to it of funding its participation in the Loan or that part of the Loan from whatever source it may reasonably select would be in excess of LIBOR then Clause 10.4 (Cost of funds) shall apply to the Loan or that part of the Loan (as applicable) for the relevant Interest Period.
 
38
10.4
Cost of funds
 
(a)
If this Clause 10.4 (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 before interest is due to be paid in respect of that Interest Period) to be that which expresses as a percentage rate per annum the cost to the relevant Lender of funding its participation in the Loan or that part of the Loan from whatever source it may reasonably select.
 
(b)
If this Clause 10.4 (Cost of funds) applies and the Facility Agent or the Borrowers so require, the Facility Agent and the Borrowers shall enter into negotiations (for a period of not more than thirty (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 44.4 (Replacement of Screen Rate), any substitute or alternative basis agreed pursuant to paragraph (b) above shall, with the prior consent of all the Lenders and the Borrowers, be binding on all Parties.
 
(d)
If paragraph (e) below does not apply and any rate notified to the Facility Agent under sub-paragraph (ii) of paragraph (a) above is less than zero, the relevant rate shall be deemed to be zero.
 
(e)
If this Clause 10.4 (Cost of funds) applies pursuant to Clause 10.3 (Market disruption) and a Lender’s Funding Rate is less than LIBOR the cost to that Lender of funding its participation in the Loan or the relevant part of the Loan for that Interest Period shall be deemed, for the purposes of paragraph (a) above, to be LIBOR.
 
(f)
If this Clause 10.4 (Cost of funds) applies but any Lender does not supply a quotation by the time specified in sub-paragraph (ii) of paragraph (a) above the rate of interest shall be calculated on the basis of the quotations of the remaining Lenders.
 
10.5
Break Costs
 
(a)
The Borrowers shall, within three Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of the Loan or Unpaid Sum being paid by the Borrowers on a day other than the last day of an Interest Period for the Loan, the relevant part of the Loan or that Unpaid Sum.
 
(b)
Each Lender shall, as soon as reasonably practicable after a demand by the Facility Agent, provide a certificate confirming the amount of its Break Costs for any Interest Period in which they accrue.
 
11
FEES
 
11.1
Up-front fee
 
The Borrowers shall pay to the Facility Agent a non-refundable up-front fee of $155,000 (representing 1 per cent. of the Total Commitments) in two equal instalments of $77,500 each, the first one being payable on or prior to the date of this Agreement and the second one being payable on the earlier of (i) the first Utilisation Date and (ii) the last day of the Availability Period. For the avoidance of doubt, such fee shall be paid irrespective of whether the Loan or any part of the Loan is cancelled or utilised.
 
39
11.2
Commitment fee
 
(a)
The Borrowers shall pay to the Facility Agent (for the account of each Lender) a non-refundable fee computed at the rate of 1 per cent. per annum on that Lender’s Available Commitment from time to time for the Availability Period.
 
(b)
The accrued commitment fee is payable on the last day of each successive period of three Months which ends during the Availability Period, on the last day of the Availability Period and, if cancelled, on the cancelled amount of the relevant Lender’s Commitment at the time the cancellation is effective.
 
11.3
Facility Agent fee
 
The Borrowers shall pay to the Facility Agent (for its own account) a non-refundable agency fee in the amount of $5,000 payable on the first day of each successive period of three Months, such three-Month periods commencing from the day on which an assignment or transfer by the Original Lender is completed pursuant to Clause 28.1 (Assignments and transfers by the Lenders), and throughout the Security Period so long as the Original Lender is not the only Lender under this Agreement.
 
11.4
Prepayment Fee
 
(a)
If the Borrowers prepay a part or the whole of a Tranche within twelve Months following the Utilisation Date of that Tranche (other than in accordance with Clause 7.4 (Mandatory prepayment on sale or Total Loss)), subject to paragraph (b) below, the Borrowers shall pay to the Facility Agent (for the account of the Lenders) on the date of such prepayment,  a prepayment fee equal to one per cent. (1%) of the outstanding amount of the relevant Tranche (before the prepayment is made).
 
(b)
No prepayment fee shall be payable under paragraph (a) above if the Borrowers prepay the whole of the Loan due to an assignment or novation of the Lenders’ rights and obligations to a  trust or fund in accordance with Clause 28.1 (Assignments and transfers by the Lenders).
 
40
SECTION 6

ADDITIONAL PAYMENT OBLIGATIONS
 
12
TAX GROSS UP AND INDEMNITIES
 
12.1
Definitions
 
(a)
In this Agreement:
 
“Protected Party” means a Finance Party which is or will be subject to any liability, or required to make any payment, for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document.
 
“Tax Credit” means a credit against, relief or remission for, or repayment of any Tax.
 
“Tax Deduction” means a deduction or withholding for or on account of Tax from a payment under a Finance Document, other than a FATCA Deduction.
 
“Tax Payment” means either the increase in a payment made by an Obligor to a Finance Party under Clause 12.2 (Tax gross-up) or a payment under Clause 12.3 (Tax indemnity).
 
(b)
Unless a contrary indication appears, in this Clause 12 (Tax Gross Up and Indemnities) reference to “determines” or “determined” means a determination made in the absolute discretion of the person making the determination.
 
12.2
Tax gross-up
 
(a)
Each Obligor shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law.
 
(b)
The Borrowers shall promptly upon becoming aware that an Obligor must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Facility Agent accordingly.  Similarly, a Lender shall notify the Facility Agent on becoming so aware in respect of a payment payable to that Lender.  If the Facility Agent receives such notification from a Lender it shall notify the Borrowers and that Obligor.
 
(c)
If a Tax Deduction is required by law to be made by an Obligor, the amount of the payment due from that Obligor under the relevant Finance Document 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.
 
41
12.3
Tax indemnity
 
(a)
The Obligors shall (within three (3) Business Days of demand by the Facility Agent) pay to a Protected Party an amount equal to the loss, liability or cost which that Protected Party determines will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of a Finance Document.
 
(b)
Paragraph (a) above shall not apply:
 

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

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

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

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

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

 (B)
relates to a FATCA Deduction required to be made by a Party.
 
(c)
A Protected Party making, or intending to make, a claim under paragraph (a) above shall promptly notify the Facility Agent of the event which will give, or has given, rise to the claim, following which the Facility Agent shall notify the Obligors.
 
(d)
A Protected Party shall, on receiving a payment from an Obligor under this Clause 12.3 (Tax indemnity), notify the Facility Agent.
 
12.4
Tax Credit
 
If an Obligor makes a Tax Payment and the relevant Finance Party determines that:
 
(a)
a Tax Credit is attributable to an increased payment of which that Tax Payment forms part, to that Tax Payment or to a Tax Deduction in consequence of which that Tax Payment was received; and
 
(b)
that Finance Party has obtained and utilised that Tax Credit,
 
the Finance Party shall pay an amount to the Obligor which that Finance Party determines will leave it (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been required to be made by the Obligor.
 
42
12.5
Stamp taxes
 
The Obligors shall pay and, within three (3) Business Days of demand, indemnify each Secured Party against any cost, loss or liability which that Secured Party incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document.
 
12.6
VAT
 
(a)
All amounts expressed to be payable under a Finance Document by any Party to a Finance Party which (in whole or in part) constitute the consideration for any supply for VAT purposes are deemed to be exclusive of any VAT which is chargeable on that supply, and accordingly, subject to paragraph (b) below, if VAT is or becomes chargeable on any supply made by any Finance Party to any Party under a Finance Document and such Finance Party is required to account to the relevant tax authority for the VAT, that Party must pay to such Finance Party (in addition to and at the same time as paying any other consideration for such supply) an amount equal to the amount of the VAT (and such Finance Party must promptly provide an appropriate VAT invoice to that Party).
 
(b)
If VAT is or becomes chargeable on any supply made by any Finance Party (the “Supplier”) to any other Finance Party (the “Recipient”) under a Finance Document, and any Party other than the Recipient (the “Relevant Party”) is required by the terms of any Finance Document to pay an amount equal to the consideration for that supply to the Supplier (rather than being required to reimburse or indemnify the Recipient in respect of that consideration):
 

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

 (ii)
(where the Recipient is the person required to account to the relevant tax authority for the VAT) the Relevant Party must promptly, following demand from the Recipient, pay to the Recipient an amount equal to the VAT chargeable on that supply but only to the extent that the Recipient reasonably determines that it is not entitled to credit or repayment from the relevant tax authority in respect of that VAT.
 
(c)
Where a Finance Document requires any Party to reimburse or indemnify a Finance Party for any cost or expense, that Party shall reimburse or indemnify (as the case may be) such Finance Party for the full amount of such cost or expense, including such part of it as represents VAT, save to the extent that such Finance Party reasonably determines that it is entitled to credit or repayment in respect of such VAT from the relevant tax authority.
 
(d)
Any reference in this Clause 12.6 (VAT) to any Party shall, at any time when that Party is treated as a member of a group or unity (or fiscal unity) for VAT purposes, include (where appropriate and unless the context otherwise requires) a reference to the person who is treated at that time as making the supply, or (as appropriate) receiving the supply, under the grouping rules provided for in Article 11 of Council Directive 2006/112/EC (or as implemented by the relevant member state of the European Union) so that a reference to a Party shall be construed as a reference to that Party or the relevant group or unity (or fiscal unity) of which that Party is a member for VAT purposes at the relevant time or the relevant representative member (or representative or head) of that group or unity at the relevant time (as the case may be).
 
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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.
 
12.7
FATCA Information
 
(a)
Subject to paragraph (c) below, each Party shall, within ten Business Days of a reasonable request by another Party:
 

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

 (A)
a FATCA Exempt Party; or
 

 (B)
not a FATCA Exempt Party; and
 

 (ii)
supply to that other Party such forms, documentation and other information relating to its status under FATCA as that other Party reasonably requests for the purposes of that other Party’s compliance with FATCA; and
 

 (iii)
supply to that other Party such forms, documentation and other information relating to its status as that other Party reasonably requests for the purposes of that other Party’s compliance with any other law, regulation, or exchange of information regime.
 
(b)
If a Party confirms to another Party pursuant to sub-paragraph (i) of paragraph (a) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.
 
(c)
Paragraph (a) above shall not oblige any Finance Party to do anything and sub-paragraph (iii) of paragraph (a) above shall not oblige any other Party to do anything which would or might in its reasonable opinion constitute a breach of:
 

 (i)
any law or regulation;
 

 (ii)
any fiduciary duty; or
 

 (iii)
any duty of confidentiality.
 
(d)
If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with sub-paragraphs (i) or (ii) of paragraph (a) above (including, for the avoidance of doubt, where paragraph (c) above applies), then such Party shall be treated for the purposes of the Finance Documents (and payments under them)  as if it is not a FATCA Exempt Party until such time as the Party in question provides the requested confirmation, forms, documentation or other information.
 
12.8
FATCA Deduction
 
(a)
Each Party may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.
 
44
(b)
Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction), notify the Party to whom it is making the payment and, in addition, shall notify each Obligor and the Facility Agent and the Facility Agent shall notify the other Finance Parties.
 
13
INCREASED COSTS
 
13.1
Increased costs
 
(a)
Subject to Clause 13.3 (Exceptions), the Borrowers shall, within three Business Days of a demand by the Facility Agent, pay for the account of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of:
 

 (i)
the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation; or
 

 (ii)
compliance with any law or regulation made,
 

 (iii)
in each case after the date of this Agreement; or
 

 (iv)
the implementation, application of or compliance with Basel III or CRD IV or any law or regulation that implements or applies Basel III or CRD IV.
 
(b)
In this Agreement:
 

 (i)
“Basel III” means:
 

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

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

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

 (ii)
“CRD IV” means:
 

 (A)
Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending regulation (EU) No. 648/2012, as amended by Regulation (EU) 2019/876;
 
45

 (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.
 
13.2
Increased cost claims
 
(a)
A Finance Party intending to make a claim pursuant to Clause 13.1 (Increased costs) shall notify the Facility Agent of the event giving rise to the claim, following which the Facility Agent shall promptly notify the Borrowers.
 
(b)
Each Finance Party shall, as soon as practicable after a demand by the Facility Agent, provide a certificate confirming the amount of its Increased Costs.
 
13.3
Exceptions
 
Clause 13.1 (Increased costs) does not apply to the extent any Increased Cost is:
 
(a)
attributable to a Tax Deduction required by law to be made by an Obligor;
 
(b)
attributable to a FATCA Deduction required to be made by a Party;
 
(c)
compensated for by Clause 12.3 (Tax indemnity) (or would have been compensated for under Clause 12.3 (Tax indemnity) but was not so compensated solely because any of the exclusions in paragraph (b) of Clause 12.3 (Tax indemnity) applied);
 
(d)
compensated for by any payment made pursuant to Clause 14.3 (Mandatory Cost); or
 
(e)
attributable to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation.
 
14
OTHER INDEMNITIES
 
14.1
Currency indemnity
 
(a)
If any sum due from an Obligor under the Finance Documents (a “Sum”), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the “First Currency”) in which that Sum is payable into another currency (the “Second Currency”) for the purpose of:
 
46

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

 (ii)
obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,
 
that Obligor shall, as an independent obligation, on demand, indemnify each Secured Party to which that Sum is due against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (B) the rate or rates of exchange available to that person at the time of its receipt of that Sum.
 
(b)
Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.
 
14.2
Other indemnities
 
(a)
Each Obligor shall, on demand, indemnify each Secured Party against any cost, loss or liability incurred by it as a result of:
 

 (i)
the occurrence of any Event of Default;
 

 (ii)
a failure by a Transaction Obligor to pay any amount due under a Finance Document on its due date, including without limitation, any cost, loss or liability arising as a result of Clause 33 (Sharing among the Finance Parties);
 

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

 (iv)
the Loan (or part of the Loan) not being prepaid in accordance with a notice of prepayment given by the Borrowers.
 
(b)
Each Obligor shall, on demand, indemnify each Finance Party, each Affiliate of a Finance Party and each officer or employee of a Finance Party or its Affiliate (each such person for the purposes of this Clause 14.2 (Other indemnities) an “Indemnified Person”), against any cost, loss or liability  incurred by that Indemnified Person pursuant to or in connection with any litigation, arbitration or administrative proceedings or regulatory enquiry, in connection with or arising out of the entry into and the transactions contemplated by the Finance Documents, having the benefit of any Security constituted by the Finance Documents or which relates to the condition or operation of, or any incident occurring in relation to, any Ship unless such cost, loss or liability is caused by the gross negligence or wilful misconduct of that Indemnified Person.
 
(c)
Without limiting, but subject to any limitations set out in paragraph (b) above, the indemnity in paragraph (b) above shall cover any cost, loss or liability incurred by each Indemnified Person in any jurisdiction:
 
47

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

 (ii)
in connection with any Environmental Claim.
 
(d)
Any Affiliate or any officer or employee of a Finance Party or of any of its Affiliates may rely on this Clause 14.2 (Other indemnities) subject to Clause 1.5 (Third party rights) and the provisions of the Third Parties Act.
 
14.3
Mandatory Cost
 
Each Borrower shall, on demand by the Facility Agent, pay to the Facility Agent for the account of the relevant Lender, such amount which any Lender certifies in a notice to the Facility Agent to be its good faith determination of the amount necessary to compensate it for complying with:
 
(a)
in the case of a Lender lending from a Facility Office in a Participating Member State, the minimum reserve requirements (or other requirements having the same or similar purpose) of the European Central Bank (or any other authority or agency which replaces all or any of its functions) in respect of loans made from that Facility Office; and
 
(b)
in the case of any Lender lending from a Facility Office in the United Kingdom, any reserve asset, special deposit or liquidity requirements (or other requirements having the same or similar purpose) of the Bank of England (or any other governmental authority or agency) and/or paying any fees to the Financial Conduct Authority and/or the Prudential Regulation Authority (or any other governmental authority or agency which replaces all or any of their functions),
 
which, in each case, is referable to that Lender’s participation in the Loan.
 
14.4
Indemnity to the Facility Agent
 
Each Obligor shall, on demand, indemnify the Facility Agent against:
 
(a)
any cost, loss or liability incurred by the Facility Agent (acting reasonably) as a result of:
 

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

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

 (iii)
instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under the Finance Documents; and
 
(b)
any cost, loss or liability incurred by the Facility Agent (otherwise than by reason of the Facility Agent’s gross negligence or wilful misconduct) or, in the case of any cost, loss or liability pursuant to Clause 34.11 (Disruption to Payment Systems etc.) notwithstanding the Facility Agent’s negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Facility Agent in acting as Facility Agent under the Finance Documents.
 
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14.5
Indemnity to the Security Agent
 
(a)
Each Obligor shall, on demand, indemnify the Security Agent and every Receiver and Delegate against any cost, loss or liability incurred by any of them:
 

 (i)
in relation to or as a result of:
 

 (A)
any failure by a Borrower to comply with its obligations under Clause 16 (Costs and Expenses);
 

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

 (C)
the taking, holding, protection or enforcement of the Finance Documents and the Transaction Security;
 

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

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

 (F)
any action by any Transaction Obligor which vitiates, reduces the value of, or is otherwise prejudicial to, the Transaction Security; and
 

 (G)
instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under the Finance Documents,
 

 (ii)
acting as Security Agent, Receiver or Delegate under the Finance Documents or which otherwise relates to any of the Security Property or the performance of the terms of this Agreement or the other Finance Documents (otherwise, in each case, than by reason of the relevant Security Agent’s, Receiver’s or Delegate’s gross negligence or wilful misconduct).
 
(b)
The Security Agent and every Receiver and Delegate may, in priority to any payment to the Secured Parties, indemnify itself out of the Security Assets in respect of, and pay and retain, all sums necessary to give effect to the indemnity in this Clause 14.5 (Indemnity to the Security Agent) and shall have a lien on the Transaction Security and the proceeds of the enforcement of the Transaction Security for all monies payable to it.
 
15
MITIGATION BY THE FINANCE PARTIES
 
15.1
Mitigation
 
(a)
Each Finance Party shall, in consultation with the Borrowers, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of Clause 7.1 (Illegality), Clause 12 (Tax Gross Up and Indemnities), Clause 13 (Increased Costs) or paragraph (a) of Clause 14.3 (Mandatory Cost).
 
(b)
Paragraph (a) above does not in any way limit the obligations of any Transaction Obligor under the Finance Documents.
 
49
15.2
Limitation of liability
 
(a)
Each Obligor shall, on demand, indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under Clause 15.1 (Mitigation).
 
(b)
A Finance Party is not obliged to take any steps under Clause 15.1 (Mitigation) if either:
 

 (i)
a Default has occurred and is continuing; or
 

 (ii)
in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it.
 
16
COSTS AND EXPENSES
 
16.1
Transaction expenses
 
The Obligors shall, on demand, pay the Facility Agent, the Security Agent and the Arranger the amount of all costs and expenses (including legal fees) 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.
 
16.2
Amendment costs
 
If:
 
(a)
a Transaction Obligor requests an amendment, waiver or consent; or
 
(b)
an amendment is required pursuant to Clause 34.9 (Change of currency) or as contemplated in Clause 44.4 (Replacement of Screen Rate); o; 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) incurred by each Secured Party in responding to, evaluating, negotiating or complying with that request or requirement.
 
16.3
Enforcement and preservation costs
 
The Obligors shall, on demand, pay to each Secured Party the amount of all costs and expenses (including legal fees) incurred by that Secured Party in connection with the enforcement of, or the preservation of any rights under, any Finance Document or the Transaction Security and with any proceedings instituted by or against that Secured Party as a consequence of it entering into a Finance Document, taking or holding the Transaction Security, or enforcing those rights.
 
50
SECTION 7

GUARANTEE AND JOINT AND SEVERAL LIABILITY OF BORROWERS
 
17
GUARANTEE AND INDEMNITY
 
17.1
Guarantee and indemnity
 
The Guarantor irrevocably and unconditionally:
 
(a)
guarantees to each Finance Party punctual performance by each Obligor other than the Guarantor of all such other Obligor’s obligations under the Finance Documents;
 
(b)
undertakes with each Finance Party that whenever an 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 an 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.
 
17.2
Continuing guarantee
 
This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by any Obligor under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part.
 
17.3
Reinstatement
 
If any discharge, release or arrangement (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) is made by a 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.
 
17.4
Waiver 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:
 
(a)
any time, waiver or consent granted to, or composition with, any Obligor or other person;
 
51
(b)
the release of any other 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 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 an Obligor or any other person;
 
(e)
any amendment, novation, supplement, extension, restatement (however fundamental and whether or not more onerous) or replacement of any Finance Document or any other document or security including, without limitation, any change in the purpose of, any extension of or any increase in any facility or the addition of any new facility under any Finance Document or other document or security;
 
(f)
any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security; or
 
(g)
any insolvency or similar proceedings.
 
17.5
Immediate 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.
 
17.6
Appropriations
 
Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full, each 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).
 
17.7
Deferral of Guarantor’s rights
 
All rights which the Guarantor at any time has (whether in respect of this guarantee, a mortgage or any other transaction) against a Borrower, any other 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):
 
52
(a)
to be indemnified by an Obligor;
 
(b)
to claim any contribution from any third party providing security for, or any other guarantor of, any Obligor’s obligations under the Finance Documents;
 
(c)
to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the 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 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 Obligor; and/or
 
(f)
to claim or prove as a creditor of any 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 Obligors under or in connection with the Finance Documents to be repaid in full on trust for the Secured Parties and shall promptly pay or transfer the same to the Facility Agent or as the Facility Agent may direct for application in accordance with Clause 34 (Payment Mechanics).
 
17.8
Additional security
 
This guarantee and any other Security given by the Guarantor is in addition to and is not in any way prejudiced by, and shall not prejudice, any other guarantee or Security or any other right of recourse now or subsequently held by any Secured Party or any right of set-off or netting or right to combine accounts in connection with the Finance Documents.
 
17.9
Applicability of provisions of Guarantee to other Security
 
Clauses 17.2 (Continuing guarantee), 17.3 (Reinstatement), 17.4 (Waiver of defences), 17.5 (Immediate recourse), 17.6 (Appropriations), 17.7 (Deferral of 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.
 
18
JOINT AND SEVERAL LIABILITY OF THE BORROWERS
 
18.1
Joint and several liability
 
All liabilities and obligations of the Borrowers under this Agreement shall, whether expressed to be so or not, be joint and several.
 
18.2
Waiver of defences
 
The liabilities and obligations of a Borrower shall not be impaired by:
 
53
(a)
this Agreement being or later becoming void, unenforceable or illegal as regards any other Borrower;
 
(b)
any Lender or the Security Agent entering into any rescheduling, refinancing or other arrangement of any kind with any other Borrower;
 
(c)
any Lender or the Security Agent releasing any other Borrower or any Security created by a Finance Document; or
 
(d)
any time, waiver or consent granted to, or composition with any other Borrower or other person;
 
(e)
the release of any other Borrower or any other person under the terms of any composition or arrangement with any creditor of any member of the Group;
 
(f)
the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any other Borrower or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;
 
(g)
any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of any other Borrower or any other person;
 
(h)
any amendment, novation, supplement, extension, restatement (however fundamental, and whether or not more onerous) or replacement of a Finance Document or any other document or security including, without limitation, any change in the purpose of, any extension of or any increase in any facility or the addition of any new facility under any Finance Document or other document or security;
 
(i)
any unenforceability, illegality or invalidity of any obligation or any person under any Finance Document or any other document or security; or
 
(j)
any insolvency or similar proceedings.
 
18.3
Principal Debtor
 
Each Borrower declares that it is and will, throughout the Security Period, remain a principal debtor for all amounts owing under this Agreement and the Finance Documents and no Borrower shall, in any circumstances, be construed to be a surety for the obligations of any other Borrower under this Agreement.
 
18.4
Borrower restrictions
 
(a)
Subject to paragraph (b) below, during the Security Period no Borrower shall:
 

 (i)
claim any amount which may be due to it from any other Borrower whether in respect of a payment made under, or matter arising out of, this Agreement or any Finance Document, or any matter unconnected with this Agreement or any Finance Document; or
 

 (ii)
take or enforce any form of security from any other Borrower for such an amount, or in any way seek to have recourse in respect of such an amount against any asset of any other Borrower; or
 
54

 (iii)
set off such an amount against any sum due from it to the other Borrower; or
 

 (iv)
prove or claim for such an amount in any liquidation, administration, arrangement or similar procedure involving any other Borrower; or
 

 (v)
exercise or assert any combination of the foregoing.
 
(b)
If during the Security Period, the Facility Agent, by notice to a Borrower, requires it to take any action referred to in paragraph (a) above in relation to any other Borrower, that Borrower shall take that action as soon as practicable after receiving the Facility Agent’s notice.
 
18.5
Deferral of Borrowers’ rights
 
Until all amounts which may be or become payable by the Borrowers under or in connection with the Finance Documents have been irrevocably paid in full and unless the Facility Agent otherwise directs, no Borrower will exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents:
 
(a)
to be indemnified by any other Borrower; or
 
(b)
to claim any contribution from any other Borrower in relation to any payment made by it under the Finance Documents.
 
55
SECTION 8

REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT
 
19
REPRESENTATIONS
 
19.1
General
 
Each Obligor makes the representations and warranties set out in this Clause 19 (Representations) to each Finance Party on the date of this Agreement.
 
19.2
Status
 
(a)
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.
 
19.3
Share capital and ownership
 
(a)
Each Borrower is authorised to issue 500 registered shares without par value, all of which shares have been issued in registered form and are fully paid and non-assessable.
 
(b)
The Guarantor is authorised to issue 525,000,000 shares consisting of 500,000,000 registered shares of common stock with a par value of US$0.0001 each and 25,000,000 registered shares of preferred stock with a par value of US$0.0001 each, out of which 156,215,613 registered shares of common stock and no registered shares of preferred stock have been issued fully paid and 31,254,995 warrants are outstanding to purchase an aggregate of 17,579,839 registered shares of common stock.
 
(c)
The legal title to and beneficial interest in the shares in each Borrower is held by the Guarantor free of any Security (other than Permitted Security) or any other claim.
 
(d)
None of the shares in either Borrower is subject to any option to purchase, pre-emption rights or similar rights.
 
19.4
Binding obligations
 
The obligations expressed to be assumed by it in each Transaction Document to which it is a party are legal, valid, binding and enforceable obligations.
 
19.5
Validity, effectiveness and ranking of Security
 
(a)
Each Finance Document to which it is a party does now or, as the case may be, will upon execution and delivery and, where applicable, registration as provided for in that Finance Document, 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.
 
56
(c)
The Transaction Security granted by it to the Security Agent or any other Secured Party has or will when created or intended to be created have first ranking priority or such other 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.
 
19.6
Non-conflict with other obligations
 
The entry into and performance by it of, and the transactions contemplated by, each Transaction Document to which it is a party do not and will not conflict with:
 
(a)
its law or regulation applicable to it;
 
(b)
the constitutional documents of any member of the Group; or
 
(c)
any agreement or instrument binding upon it or constitute a default or termination event (however described) under any such agreement or instrument.
 
19.7
Power and authority
 
(a)
It has the power to enter into, perform and deliver, and has taken all necessary action to authorise:
 
(i)
its entry into, performance and delivery of, each Transaction Document to which it is or will be a party and the transactions contemplated by those Transaction Documents; and
 
(ii)
in the case of each Borrower (and in respect of Borrower B, on the Delivery Date), its registration of the Ship owned or to be owned by it under the applicable Approved Flag.
 
(b)
No limit on its powers will be exceeded as a result of the borrowing, granting of security or giving of guarantees or indemnities contemplated by the Transaction Documents to which it is a party.
 
19.8
Validity and admissibility in evidence
 
All Authorisations required or desirable:
 
(a)
to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Transaction Documents to which it is a party; and
 
(b)
to make the Transaction Documents to which it is a party admissible in evidence in its Relevant Jurisdictions,
 
have been obtained or effected and are in full force and effect.
 
19.9
Governing law and enforcement
 
(a)
The choice of governing law of each Transaction Document to which it is a party will be recognised and enforced in its Relevant Jurisdictions.
 
57
(b)
Any judgment obtained in relation to a Transaction Document to which it is a party in the jurisdiction of the governing law of that Transaction Document will be recognised and enforced in its Relevant Jurisdictions.
 
19.10
Insolvency
 
No:
 
(a)
corporate action, legal proceeding or other procedure or step described in paragraph (a) of Clause 27.8 (Insolvency proceedings); or
 
(b)
creditors’ process described in Clause 27.9 (Creditors’ process),
 
has been taken or, to its knowledge, threatened in relation to any Transaction Obligor; and none of the circumstances described in Clause 27.7 (Insolvency) applies to any Transaction Obligor.
 
19.11
No filing or stamp taxes
 
Under the laws of its Relevant Jurisdictions it is not necessary that the Finance Documents to which it is a party be registered, filed, recorded, notarised or enrolled with any court or other authority in that jurisdiction or that any stamp, registration, notarial or similar Taxes or fees be paid on or in relation to the Finance Documents to which it is a party or the transactions contemplated by those Finance Documents, except for the registration of each Mortgage with the relevant ship registry which registration will be made promptly on the date of that Mortgage.
 
19.12
Deduction of Tax
 
It is not required to make any Tax Deduction from any payment it may make under any Finance Document to which it is a party.
 
19.13
No default
 
(a)
On the date of this Agreement and on each Utilisation Date, no Event of Default is continuing or might reasonably be expected to result from the making of a 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 to which its assets are subject.
 
19.14
No misleading information
 
(a)
Any factual information provided by any Transaction Obligor for the purposes of this Agreement was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated.
 
(b)
The financial projections contained in any such information have been prepared on the basis of recent historical information and on the basis of reasonable assumptions.
 
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(c)
Nothing has occurred or been omitted from any such information and no information has been given or withheld that results in any such information being untrue or misleading in any material respect.
 
19.15
Financial Statements
 
(a)
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).
 
(b)
Its most recent financial statements delivered pursuant to Clause 20.2 (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 present (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).
 
(c)
Since the date of the most recent financial statements delivered pursuant to Clause 20.2 (Financial statements) there has been no material adverse change in its business, assets or financial condition (or the business or consolidated financial condition of the Group, in the case of the Guarantor).
 
19.16
Pari passu ranking
 
Its payment obligations under the Finance Documents to which it is a party rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.
 
19.17
No proceedings pending or threatened
 
(a)
No litigation, arbitration or administrative proceedings or investigations (including proceedings or investigations relating to any alleged or actual breach of the ISM Code or of the ISPS Code) of or before any court, arbitral body or agency which, if adversely determined, might reasonably be expected to have a Material Adverse Effect have (to the best of its knowledge and belief (having made due and careful enquiry)) been started or threatened against it or any other Transaction Obligor 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.
 
19.18
Validity and completeness of the Deed of Release and MOA
 
(a)
The MOA constitutes legal, valid, binding and enforceable obligations of Borrower B and the Sellers respectively.
 
(b)
The copy of the MOA delivered to the Facility Agent before the date of this Agreement is a true and complete copy.
 
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(c)
No material amendments or additions to the MOA have been agreed (other than in accordance with the terms of this Agreement) nor have any rights under the MOA been waived (and for the avoidance of doubt, but without limitation, any amendment in relation to the parties, the purchase price and any amount payable under the MOA, the time of their payment and the governing law is considered material).
 
19.19
No rebates etc.
 
There is no agreement or understanding to allow or pay any rebate, premium, inducement, commission, discount or other benefit or payment (however described) to Borrower B, the Sellers or a third party in connection with the purchase by Borrower B of Ship B, other than as disclosed to the Facility Agent in writing on or before the date of this Agreement.
 
19.20
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.
 
(c)
There has been no change to the factual information provided pursuant to paragraph (a) above in relation to any valuation between the date such information was provided and the date of that valuation which, in either case, renders that information untrue or misleading in any material respect.
 
19.21
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.
 
19.22
No Charter
 
Save as disclosed to the Facility Agent prior to the date of this Agreement, no Ship is subject to any Charter other than a Permitted Charter.
 
19.23
Compliance with Environmental Laws
 
All Environmental Laws relating to the ownership, operation and management of each 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.
 
19.24
No Environmental Claim
 
No Environmental Claim has been made or threatened against any member of the Group or any Ship which might reasonably be expected to have a Material Adverse Effect.
 
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19.25
No Environmental Incident
 
No Environmental Incident has occurred and no person has claimed that an Environmental Incident has occurred.
 
19.26
ISM and ISPS Code compliance
 
All requirements of the ISM Code and the ISPS Code as they relate to each Borrower, the Approved Manager and each Ship have been complied with.
 
19.27
Taxes paid
 
(a)
It is not 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 with respect to Taxes.
 
19.28
Financial Indebtedness
 
No Borrower has any Financial Indebtedness outstanding other than Permitted Financial Indebtedness.
 
19.29
Overseas companies
 
No Obligor has delivered particulars, whether in its name stated in the Finance Documents or any other name, of any UK Establishment to the Registrar of Companies as required under the Overseas Regulations or, if it has so registered, it has provided to the Facility Agent sufficient details to enable an accurate search against it to be undertaken by the Lenders at the Companies Registry.
 
19.30
Good title to assets
 
It and each other Transaction Obligor has good, valid and marketable title to, or valid leases or licences of, and all appropriate Authorisations to use, the assets necessary to carry on its business as presently conducted.
 
19.31
Ownership
 
(a)
Borrower A is the sole legal and beneficial owner of Ship A, the Earnings and the Insurances.
 
(b)
With effect on and from the Delivery Date, Borrower B will be the sole legal and beneficial owner of Ship B, its Earnings and its Insurances.
 
(c)
With effect on and from the date of its creation or intended creation, each 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.
 
(d)
The constitutional documents of each Obligor do not and could not restrict or inhibit any transfer of the shares of the Borrowers on creation or enforcement of the security conferred by the Security Documents.
 
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19.32
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 the Hellenic Republic and it has no “establishment” (as that term is used in Article 2(10) of the Regulation) in any other jurisdiction.
 
19.33
Place of business
 
No Transaction Obligor has a place of business in any country other than the Hellenic Republic and its head office functions are carried out in the case of an Obligor at the address set opposite its name in Part A of Schedule 1.
 
19.34
No employee or pension arrangements
 
No Borrower has any employees or any liabilities under any pension scheme.
 
19.35
Sanctions
 
(a)
No Transaction Obligor:
 

 (i)
is a Prohibited Person;
 

 (ii)
is owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person;
 

 (iii)
owns or controls a Prohibited Person; or
 

 (iv)
has a Prohibited Person serving as a director, officer or, to the best of its knowledge, employee.
 
(b)
No proceeds of any Advance or the Loan shall be made available, directly or indirectly, to or for the benefit of a Prohibited Person nor shall they be otherwise directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions.
 
19.36
US Tax Obligor
 
No Transaction Obligor is a US Tax Obligor.
 
19.37
Repetition
 
The Repeating Representations are deemed to be made by each Obligor by reference to the facts and circumstances then existing on the date of each Utilisation Request and the first day of each Interest Period.
 
20
INFORMATION UNDERTAKINGS
 
20.1
General
 
The undertakings in this Clause 20 (Information Undertakings) remain in force throughout the Security Period unless the Facility Agent, acting with the authorisation of the Majority Lenders (or, where specified, all the Lenders), may otherwise permit.
 
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20.2
Financial statements
 
The Obligors shall supply to the Facility Agent in sufficient copies for all the Lenders:
 
(a)
as soon as they become available, but in any event within 180 days after the end of each financial year of the Guarantor (commencing with the financial year ending on 31 December 2021), the Guarantor’s annual audited consolidated financial statements for that financial year;
 
(b)
as soon as they become available, but in any event within 90 days after the end of each quarter of the Guarantor’s financial year (commencing with the quarter ending on 30 June 2021), the Guarantor’s quarterly condensed unaudited consolidated financial statements for that financial quarter; and
 
(c)
as soon as they become available, but in any event within 180 days after the end of each financial year of each Borrower (commencing with the financial year ending on 31 December 2021), the company prepared financial statements of the Borrowers for that financial year, signed by the Guarantor’s chief financial officer.
 
20.3
Compliance Certificate
 
The Guarantor shall supply to the Facility Agent annually together with its annual audited financial statements delivered pursuant to Clause 20.2(a) (Financial statements) a Compliance Certificate signed by an officer of the Guarantor setting out (in reasonable detail) computations as to compliance with Clause 21.1 (Financial Covenants of the Guarantor)  as at the date as at which those financial statements were drawn up.
 
20.4
Requirements as to financial statements
 
(a)
Each set of financial statements delivered by each Obligor pursuant to Clause 20.2 (Financial statements) shall be certified by an officer of the 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.
 
(b)
The Obligors shall procure that each set of financial statements delivered pursuant to Clause 20.2 (Financial statements) is prepared using GAAP.
 
20.5
DAC6
 
(a)
In this Clause 20.5 (DAC6), “DAC6” means the Council Directive of 25 May 2018 (2018/822/EU)
amending Directive 2011/16/EU or any replacement legislation applicable in the United Kingdom.

(b)
The Borrowers shall supply to the Facility Agent (in sufficient copies for all the Lenders, if the Facility Agent so requests):


(i)
promptly upon the making of such analysis or the obtaining of such advice, any analysis made or advice obtained on whether any transaction contemplated by the Transaction Documents or any transaction carried out (or to be carried out) in connection with any transaction contemplated by the Transaction Documents contains a hallmark as set out in Annex IV of DAC6; and
 

 (ii)
promptly upon the making of such reporting and to the extent permitted by applicable law and regulation, any reporting made to any governmental or taxation authority by or on behalf of any member of the Group or by any adviser to such member of the Group in relation to DAC6 or any law or regulation which implements DAC6 and any unique identification number issued by any governmental or taxation authority to which any such report has been made (if available).
 
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20.6
Information: miscellaneous
 
Each Obligor shall and shall procure that each other Transaction Obligor shall supply to the Facility Agent (in sufficient copies for all the Lenders, if the Facility Agent so requests):
 
(a)
all documents dispatched by the Borrowers 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 Transaction Obligor, 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 Transaction Obligor 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)
each Ship, goods transported on each Ship, its Earnings, its Insurances or the MOA;
 

 (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 Transaction Obligor,
 
as any Finance Party (through the Facility Agent) may reasonably request; and
 
(f)
promptly, such further information and/or documents as any Finance Party (through the Facility Agent) may reasonably request so as to enable such Finance Party to comply with any laws applicable to it or as may be required by any regulatory authority.
 
20.7
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, each Borrower shall supply to the Facility Agent a certificate signed by one of its directors and/or officers on its behalf certifying that no Default is continuing (or if a Default is continuing, specifying the Default and the steps, if any, being taken to remedy it).
 
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20.8
Use of websites
 
(a)
Each Obligor may satisfy its obligation under the Finance Documents to which it is a party to deliver any information in relation to those Lenders (the “Website Lenders”) which accept this method of communication by posting this information onto an electronic website designated by the Borrowers and the Facility Agent (the “Designated Website”) if:
 

 (i)
the Facility Agent expressly agrees (after consultation with each of the Lenders) that it will accept communication of the information by this method;
 

 (ii)
both the relevant Obligor and the Facility Agent are aware of the address of and any relevant password specifications for the Designated Website; and
 

 (iii)
the information is in a format previously agreed between the relevant Obligor and the Facility Agent.
 
If any Lender (a “Paper Form Lender”) does not agree to the delivery of information electronically then the Facility Agent shall notify the Obligors accordingly and each Obligor shall supply the information to the Facility Agent (in sufficient copies for each Paper Form Lender) in paper form.  In any event each Obligor shall supply the Facility Agent with at least one copy in paper form of any information required to be provided by it.
 
(b)
The Facility Agent shall supply each Website Lender with the address of and any relevant password specifications for the Designated Website following designation of that website by the Obligors or any of them and the Facility Agent.
 
(c)
An Obligor shall promptly upon becoming aware of its occurrence notify the Facility Agent if:
 

 (i)
the Designated Website cannot be accessed due to technical failure;
 

 (ii)
the password specifications for the Designated Website change;
 

 (iii)
any new information which is required to be provided under this Agreement is posted onto the Designated Website;
 

 (iv)
any existing information which has been provided under this Agreement and posted onto the Designated Website is amended; or
 

 (v)
if that Obligor becomes aware that the Designated Website or any information posted onto the Designated Website is or has been infected by any electronic virus or similar software.
 
If an Obligor notifies the Facility Agent under sub-paragraph (i) or (v) of paragraph (c) above, all information to be provided by the Obligors under this Agreement after the date of that notice shall be supplied in paper form unless and until the Facility Agent and each Website Lender is satisfied that the circumstances giving rise to the notifications 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.
 
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20.9
“Know your customer” checks
 
(a)
If:
 

 (i)
the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;
 

 (ii)
any change in the status of a Transaction Obligor (or, where applicable, of a Holding Company of a Transaction Obligor) (including, without limitation, a change of ownership of a Transaction Obligor or, where applicable, 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.
 
21
FINANCIAL COVENANTS
 
21.1
Financial Covenants of the Guarantor
 
(a)
Except as the Lenders may otherwise permit in writing (such permission not to be unreasonably delayed), the Guarantor shall ensure that at all times:
 

 (i)
it shall maintain Cash (which, without limitation, shall include the Minimum Liquidity Amount in each Earnings Account and any contractually committed but undrawn parts of the Notes) in an amount not less than the product of (i) the number of Fleet Vessels and (ii) $500,000; and
 

 (ii)
the Leverage Ratio shall not exceed 85 per cent.
 
(b)
For the purposes of this Clause 21.1 (Financial covenants of the Guarantor):
 
“Accounting Period” means each consecutive 3-month period, during the Security Period ending on 31 December, 31 March, 30 June and 30 September of each financial year.
 
“Cash” shall have the meaning given to such term in the Latest Financial Statements (for the avoidance of doubt, including cash equivalents, restricted cash and term deposits).
 
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“Fleet Market Value” means, in relation to the Fleet Vessels, as at the date of calculation, the aggregate Market Value thereof as most recently determined.
 
“Fleet Vessels” means the vessels from time to time owned by the members of the Group and “Fleet Vessel” means any of them.
 
“Latest Financial Statements” means, as at the date of calculation or, as the case may be, in respect of an Accounting Period, the annual audited or quarterly unaudited (as the case may be), consolidated financial statements the Guarantor is obliged to deliver to the Facility Agent pursuant to Clause 20.2 (Financial statements).
 
“Leverage Ratio” means, as at the date of calculation, the ratio (expressed as a percentage) of Net Debt to Market Value Adjusted Total Assets less Cash.
 
“Market Value Adjusted Other Assets” means, as at the date of calculation, the Fleet Market Value plus the book value (less depreciation and amortization computed in accordance with the Latest Financial Statements on a consolidated basis of all non-current assets of the Group (which, without limitation, shall exclude all Fleet Vessels)), as stated in the Latest Financial Statements.
 
“Market Value Adjusted Total Assets” means, as at the date of calculation, the aggregate of the Market Value Adjusted Other Assets and the Total Current Assets.
 
“Net Debt” means, as at the date of calculation, the Total Debt less any drawn amounts of the Notes less Cash, in each case as stated in the Latest Financial Statements.
 
“Notes” means, as at the date of calculation, the aggregate outstanding amount of certain notes issued or to be issued by the Guarantor to certain of its shareholders and held or to be held by those shareholders in exchange for loan made by those shareholders to the Guarantor which have been or are to be, on-lent to the Borrowers and other members of the Group to assist them with their working capital requirements.
 
“Total Current Assets” means, the aggregate of the cash and marketable securities, trade and other receivables from persons (other than persons being members of the Group) plus inventories, prepaid expenses, voyage expenses and other current assets realisable within 1 year such amount to be determined on a consolidated basis less any discounts, allowances and activated goodwill, in each case as shown in the Latest Financial Statements.
 
“Total Debt” means, as at the date of calculation, the current portion of long-term debt, net of deferred finance costs and the long-term debt, net of current portion and deferred finance costs of the Group as shown in the Latest Financial Statements and any current Notes.
 
21.2
Testing
 
The financial covenants set out in this Clause 21 (Financial Covenants) shall be tested annually by reference to the audited annual financial statements of the  Guarantor delivered pursuant to Clause 20.2 (Financial statements) and the relevant Compliance Certificate.
 
21.3
Minimum Liquidity in Earnings Accounts
 
On the Utilisation Date of each Tranche, the Borrower whose Ship is financed by that Tranche shall deposit in its Earnings Account an amount of not less than $300,000 (the “Minimum Liquidity Amount”) which shall be maintained in such account at all times thereafter during the Security Period.
 
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22
GENERAL UNDERTAKINGS
 
22.1
General
 
The undertakings in this Clause 22 (General Undertakings) remain in force throughout the Security Period except as the Facility Agent, acting with the authorisation of the Majority Lenders (or, where specified, all the Lenders) may otherwise permit.
 
22.2
Authorisations
 
Each Obligor shall, and shall procure that each other Transaction Obligor will, promptly:
 
(a)
obtain, comply with and do all that is necessary to maintain in full force and effect; and
 
(b)
supply certified copies to the Facility Agent of,
 
any Authorisation required under any law or regulation of a Relevant Jurisdiction or the state of the Approved Flag at any time of each Ship to enable it to:
 

 (i)
perform its obligations under the Transaction Documents to which it is a party;
 

 (ii)
ensure the legality, validity, enforceability or admissibility in evidence in any Relevant Jurisdiction and in the state of the Approved Flag at any time of each Ship of any Transaction Document to which it is a party; and
 

 (iii)
own and operate each Ship (in the case of the Borrowers).
 
22.3
Compliance with laws
 
Each Obligor shall, and shall procure that each other Transaction Obligor will, comply in all respects with all laws and regulations to which it may be subject, if failure so to comply has or is reasonably likely to have a Material Adverse Effect.
 
22.4
Environmental compliance
 
Each Obligor shall, and shall procure that each other Transaction Obligor will:
 
(a)
comply with all Environmental Laws;
 
(b)
obtain, maintain and ensure compliance with all requisite Environmental Approvals;
 
(c)
implement procedures to monitor compliance with and to prevent liability under any Environmental Law,
 
where failure to do so has or is reasonably likely to have a Material Adverse Effect.
 
22.5
Environmental Claims
 
Each Obligor shall, and shall procure that each other Transaction Obligor will, (through the Guarantor), promptly upon becoming aware of the same, inform the Facility Agent in writing of:
 
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(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.
 
22.6
Taxation
 
(a)
Each Obligor shall, and shall procure that each other Transaction Obligor will, pay and discharge all Taxes imposed upon it or its assets within the time period allowed without incurring penalties unless and only to the extent that:
 

 (i)
such payment is being contested in good faith;
 

 (ii)
adequate reserves are maintained for those Taxes and the costs required to contest them and both have been disclosed in its latest financial statements delivered to the Facility Agent under Clause 20.2 (Financial statements); and
 

 (iii)
such payment can be lawfully withheld.
 
(b)
No Obligor shall, and the Obligors shall procure that no other Transaction Obligor will, change its residence for Tax purposes.
 
22.7
Overseas companies
 
Each Obligor shall, and shall procure that each other Transaction Obligor will, promptly inform the Facility Agent if it delivers to the Registrar particulars required under the Overseas Regulations of any UK Establishment and it shall comply with any directions given to it by the Facility Agent regarding the recording of any Transaction Security on the register which it is required to maintain under The Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009.
 
22.8
No change to centre of main interests
 
No Obligor shall change the location of its centre of main interest (as that term is used in Article 3(1) of the Regulation) from that stated in relation to it in Clause 19.32 (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.
 
22.9
Pari passu ranking
 
Each Obligor shall, and shall procure that each other Transaction Obligor will, ensure that at all times any unsecured and unsubordinated claims of a Finance Party against it under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors except those creditors whose claims are mandatorily preferred by laws of general application to companies.
 
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22.10
Title
 
(a)
Borrower A shall hold the legal title to, and own the entire beneficial interest in the Earnings and the Insurances in respect of Ship A.
 
(b)
Borrower B shall hold the legal title to, and own the entire beneficial interest in:
 

 (i)
the MOA; and
 

 (ii)
with effect from the Delivery Date, the Earnings and the Insurances in respect of Ship B.
 
(c)
Each Obligor shall hold the legal title to, and own the entire beneficial interest in with effect on and from its creation or intended creation, any assets the subject of any Transaction Security created or intended to be created by that Obligor.
 
22.11
Negative pledge
 
(a)
No Borrower shall create or permit to subsist any Security over any of its assets.
 
(b)
No Borrower shall:
 

 (i)
sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased to or re-acquired by a Transaction Obligor;
 

 (ii)
sell, transfer or otherwise dispose of any of its receivables on recourse terms;
 

 (iii)
enter into any arrangement under which money or the benefit of a bank or other account may be applied, set-off or made subject to a combination of accounts; or
 

 (iv)
enter into any other preferential arrangement having a similar effect,
 
in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset.
 
(c)
Paragraphs (a) and (b) above do not apply to any Permitted Security.
 
22.12
Disposals
 
(a)
No Borrower shall enter into a single transaction or a series of transactions (whether related or not) and whether voluntary or involuntary to sell, lease, transfer or otherwise dispose of any asset (including without limitation any Ship, its Earnings or its Insurances).
 
(b)
The Guarantor shall not enter into a single transaction or a series of transactions (whether related or not) and whether voluntary/or involuntary to sell, transfer or otherwise dispose of all or substantially all of its assets.
 
(c)
Paragraph (a) above does not apply to any Charter as all Charters are subject to Clause 24.16 (Restrictions on chartering, appointment of managers etc.).
 
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22.13
Merger
 
No Obligor shall enter into any amalgamation, demerger, merger, consolidation, plan of arrangement or scheme of arrangement or corporate reconstruction.
 
22.14
Change of business
 
(a)
The Guarantor shall procure that no substantial change is made to the general nature of the business of the Guarantor from that carried on at the date of this Agreement.
 
(b)
No Borrower shall engage in any business other than the ownership and operation of the Ship owned by it.
 
22.15
Financial Indebtedness
 
No Borrower shall incur or permit to be outstanding any Financial Indebtedness except Permitted Financial Indebtedness.
 
22.16
Expenditure
 
No Borrower shall incur any expenditure, except for expenditure reasonably incurred in the ordinary course of owning, operating, maintaining and repairing its Ship.
 
22.17
Share capital
 
No Borrower shall (unless that Borrower has obtained the prior written consent of the Facility Agent (such consent not to be unreasonably withheld or delayed)):
 
(a)
purchase, cancel, redeem or retire any of its shares;
 
(b)
increase or reduce the number of shares that it is authorised to issue or change the par value of such shares or create any new class of shares;
 
(c)
issue any further shares; or
 
(d)
appoint any further directors or officers of that Borrower.
 
22.18
Dividends
 
Unless prior approval has been given by the Facility Agent, no Obligor shall, following the occurrence of an Event of Default which is continuing or where any of the following would result in the occurrence of an Event of Default:
 
(a)
declare, make or pay any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (whether in cash or in kind) on or in respect of its shares or share capital, as the case may be (or any class of its shares or share capital, as the case may be);
 
(b)
repay or distribute any dividend or share premium reserve;
 
(c)
pay any management, advisory or other fee to or to the order of any of its shareholders; or
 
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(d)
redeem, repurchase, defease, retire or repay any of its shares or share capital, as the case may be, or resolve to do so.
 
22.19
Other transactions
 
No Borrower shall:
 
(a)
be the creditor in respect of any loan or any form of credit to any person other than another Transaction Obligor or any member of the Group and where such loan or form of credit is Permitted Financial Indebtedness;
 
(b)
give or allow to be outstanding any guarantee or indemnity to or for the benefit of any person in respect of any obligation of any other person or enter into any document under which any Borrower assumes any liability of any other person other than: (a) any guarantee or indemnity given under the Finance Documents and (b) in its ordinary course of business;
 
(c)
enter into any material agreement other than:
 

 (i)
the Transaction Documents; and
 

 (ii)
any other agreement expressly allowed under any other term of this Agreement;
 
(d)
enter into any transaction on terms which are, in any respect, less favourable to the relevant Borrower than those which it could obtain in a bargain made at arms’ length; or
 
(e)
acquire any shares or other securities.
 
22.20
Unlawfulness, invalidity and ranking; Security imperilled
 
No Obligor shall, and the Obligors shall procure that no other Transaction Obligor will, do (or fail to do) or cause or permit another person to do (or omit to do) anything which is likely to:
 
(a)
make it unlawful for a Transaction Obligor to perform any of its obligations under the Transaction Documents;
 
(b)
cause any obligation of a Transaction Obligor under the Transaction Documents to cease to be legal, valid, binding or enforceable;
 
(c)
cause any Transaction Document to cease to be in full force and effect;
 
(d)
cause any Transaction Security to rank after, or lose its priority to, any other Security; and
 
(e)
imperil or jeopardise the Transaction Security.
 
22.21
Further assurance
 
(a)
Each Obligor shall, and shall procure that each other Transaction Obligor will, promptly, and in any event within the time period specified by the Security Agent do all such acts (including procuring or arranging any registration, notarisation or authentication or the giving of any notice) or execute or procure execution of all such documents (including assignments, transfers, mortgages, charges, notices, instructions, acknowledgments, proxies and powers of attorney), as the Security Agent may specify (and in such form as the Security Agent may require in favour of the Security Agent or its nominee(s)):
 
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 (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, take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Security conferred or intended to be conferred on the Security Agent or the Secured Parties by or pursuant to the Finance Documents.
 
(c)
At the same time as an Obligor delivers to the Security Agent any document executed by itself or another Transaction Obligor pursuant to this Clause 22.21 (Further assurance), that Obligor shall deliver, or shall procure that such other Transaction Obligor will deliver, to the Security Agent reasonable evidence that that Obligor’s or Transaction Obligor’s execution of such document has been duly authorised by it.
 
22.22
NASDAQ listing
 
The Guarantor shall maintain its listing on the NASDAQ Stock Exchange or any other stock exchange acceptable to the Facility Agent.
 
22.23
No variation, release etc. of MOA
 
Borrower B shall not, whether by a document, by conduct, by acquiescence or in any other way:
 
(a)
vary the MOA in a material manner (and for the avoidance of doubt, but without limitation, any amendment in relation to the parties, the purchase price and any amount payable under the MOA, the time of their payment and the governing law is considered material); or
 
(b)
release, waive, suspend, subordinate or permit to be lost or impaired any interest or right of any kind which Borrower B has at any time to, in or in connection with, the MOA or in relation to any matter arising out of or in connection with the MOA.
 
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22.24
Provision of information relating to MOA
 
Without prejudice to Clause 20.6 (Information: miscellaneous) Borrower B shall:
 
(a)
promptly inform the Facility Agent if any breach of the MOA occurs or a serious risk of such a breach arises and of any other event or matter affecting the MOA which has or is reasonably likely to have a Material Adverse Effect; and
 
(b)
upon the reasonable request of the Facility Agent, keep the Facility Agent informed as to any notice of readiness of delivery of Ship B.
 
22.25
No assignment etc. of MOA
 
Borrower B shall not assign, novate, transfer or dispose of any of its rights or obligations under the MOA.
 
23
INSURANCE UNDERTAKINGS
 
23.1
General
 
The undertakings in this Clause 23 (Insurance Undertakings) remain in force from, in respect of (a) Ship A, the Utilisation Date of Tranche A and (b) Ship B, the Delivery Date, and in each case throughout the rest of the Security Period except as the Facility Agent, acting with the authorisation of the Majority Lenders (or, where specified, all the Lenders) may otherwise permit.
 
23.2
Maintenance of obligatory insurances
 
Each Borrower shall keep the Ship owned by it insured at its expense against:
 
(a)
fire and usual marine risks (including hull and machinery and excess risks);
 
(b)
war risks;
 
(c)
protection and indemnity risks (including freight, demurrage and defence cover); and
 
(d)
any other risks against which the Facility Agent acting on the instructions of the Majority Lenders considers, having regard to practices and other circumstances prevailing at the relevant time, it would be reasonable for that Borrower to insure and which are specified by the Facility Agent by notice to that Borrower.
 
23.3
Terms of obligatory insurances
 
Each Borrower shall effect the insurances in relation to the Ship owned by it:
 
(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) one hundred and twenty per cent. (120%) of the Tranche which finances its Ship and (ii) the Market Value of that Ship (and for the avoidance of doubt, no increased value insurance cover shall be taken into account in relation to this paragraph (b));
 
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(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 $1,000,000,000);
 
(d)
in the case of protection and indemnity risks, in respect of the full tonnage of the Ship owned by it;
 
(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.
 
23.4
Further protections for the Finance Parties
 
In addition to the terms set out in Clause 23.3 (Terms of obligatory insurances), each Borrower shall procure that the obligatory insurances shall:
 
(a)
subject always to paragraph (b), name that Borrower as the sole named insured unless the interest of every other named insured is limited:
 

 (i)
in respect of any obligatory insurances for hull and machinery and war risks;
 

 (A)
to any provable out-of-pocket expenses that it has incurred and which form part of any recoverable claim on underwriters; and
 

 (B)
to any third party liability claims where cover for such claims is provided by the policy (and then only in respect of discharge of any claims made against it); and
 

 (ii)
in respect of any obligatory insurances for protection and indemnity risks, to any recoveries it is entitled to make by way of reimbursement following discharge of any third party liability claims made specifically against it;
 
and every other named insured has undertaken in writing to the Security Agent (in such form as it requires) that any deductible shall be apportioned between that Borrower and every other named insured in proportion to the gross claims made or paid by each of them and that it shall do all things necessary and provide all documents, evidence and information to enable the Security Agent to collect or recover any moneys which at any time become payable in respect of the obligatory insurances;
 
(b)
whenever the Facility Agent requires, name (or be amended to name) the Security Agent as additional named insured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Security Agent, but without the Security Agent being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;
 
(c)
name the Security Agent as loss payee with such directions for payment as the Facility Agent may specify;
 
(d)
provide that all payments by or on behalf of the insurers under the obligatory insurances to the Security Agent shall be made without set off, counterclaim or deductions or condition whatsoever;
 
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(e)
provide that the obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Security Agent or any other Finance Party; and
 
(f)
provide that the Security Agent may make proof of loss if that Borrower fails to do so.
 
23.5
Renewal of obligatory insurances
 
Each Borrower shall:
 
(a)
at least 21 days before the expiry of any obligatory insurance effected by it:
 

 (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 it proposes to renew that obligatory insurance and of the proposed terms of renewal; and
 

 (ii)
obtain the Facility Agents’ approval to the matters referred to in sub-paragraph (i) above;
 
(b)
at least 14 days before the expiry of any obligatory insurance, renew that obligatory insurance in accordance with the Facility Agent’s approval pursuant to paragraph (a) above; and
 
(c)
procure that the Approved Brokers and/or the approved war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Facility Agent in writing of the terms and conditions of the renewal.
 
23.6
Copies of policies; letters of undertaking
 
The Borrowers 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 or 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 23.4 (Further protections for the Finance Parties);
 

 (ii)
they will hold such policies, and the benefit of such insurances, to the order of the Security Agent in accordance with such loss payable clause;
 

 (iii)
they will advise the Security Agent immediately of any material change to the terms of the obligatory insurances;
 

 (iv)
they will, if they have not received notice of renewal instructions from the relevant 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;
 
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 (vi)
they will not set off against any sum recoverable in respect of a claim relating to the Ship owned by that Borrower under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of that Ship or otherwise, they waive any lien on the policies, or any sums received under them, which they might have in respect of such premiums or other amounts and they will not cancel such obligatory insurances by reason of non-payment of such premiums or other amounts; and
 

 (vii)
they will arrange for a separate policy to be issued in respect of the Ship owned by that Borrower forthwith upon being so requested by the Facility Agent.
 
23.7
Copies of certificates of entry
 
Each Borrower shall ensure that any protection and indemnity and/or war risks associations in which the Ship owned by it is entered provide the Security Agent with:
 
(a)
a copy of the certificate of entry for that Ship;
 
(b)
a letter or letters of undertaking in such form as may be required by the Facility Agent acting on the instructions of Majority Lenders; and
 
(c)
a 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 owned by it.
 
23.8
Deposit of original policies
 
Each Borrower shall ensure that all policies relating to obligatory insurances effected by it are deposited with the Approved Brokers through which the insurances are effected or renewed.
 
23.9
Payment of premiums
 
Each Borrower shall punctually pay all premiums or other sums payable in respect of the obligatory insurances effected by it and produce all relevant receipts when so required by the Facility Agent or the Security Agent.
 
23.10
Guarantees
 
Each Borrower shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.
 
23.11
Compliance with terms of insurances
 
(a)
No Borrower shall 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, each Borrower shall:
 

 (i)
take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances, and (without limiting the obligation contained in sub-paragraph (iii) of paragraph (b) of Clause 23.6 (Copies of policies; letters of undertaking)) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Facility Agent has not given its prior approval;
 
77

 (ii)
not make any changes relating to the classification or classification society or manager or operator of the Ship owned by it approved by the underwriters of the obligatory insurances; and
 

 (iii)
not employ the Ship owned by it, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.
 
23.12
Alteration to terms of insurances
 
No 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 (unless that Borrower has obtained the prior written consent of the Facility Agent (such consent not to be unreasonably withheld)).
 
23.13
Settlement of claims
 
Each Borrower shall:
 
(a)
not settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty; and
 
(b)
do all things necessary and provide all documents, evidence and information to enable the Security Agent to collect or recover any moneys which at any time become payable in respect of the obligatory insurances.
 
23.14
Provision of copies of communications
 
Each Borrower shall provide at the request of the Security Agent, at the time of each such communication, with copies of all written communications (other than communications of an entirely routine nature) between that Borrower and:
 
(a)
the Approved Brokers;
 
(b)
the approved protection and indemnity and/or war risks associations; and
 
(c)
the approved insurance companies and/or underwriters,
 
which relate directly or indirectly to:
 

 (i)
that Borrower’s obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and
 

 (ii)
any credit arrangements made between that Borrower and any of the persons referred to in paragraphs (a) or (b) above relating wholly or partly to the effecting or maintenance of the obligatory insurances.
 
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23.15
Provision of information
 
Each Borrower shall promptly provide the Facility Agent (or any persons which it may designate) with any information which the Facility Agent (or any such designated person) reasonably requests for the purpose of:
 
(a)
obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or
 
(b)
effecting, maintaining or renewing any such insurances as are referred to in Clause 23.16 (Mortgagee’s interest and additional perils insurances) or dealing with or considering any matters relating to any such insurances,
 
and the Borrowers shall, forthwith upon demand, indemnify the Security Agent in respect of all fees and other expenses incurred by or for the account of the Security Agent in connection with any such report as is referred to in paragraph (a) above.
 
23.16
Mortgagee’s interest and additional perils insurances
 
(a)
The Security Agent shall be entitled from time to time to effect, maintain and renew a mortgagee’s interest marine insurance in an amount not less than one hundred and twenty per cent. (120%) of the Loan and a mortgagee’s interest additional perils insurance in an amount not less than one hundred and ten per cent. (110%) of the Loan, each on such terms, through such insurers and generally in such manner as the Security Agent acting on the instructions of the Majority Lenders may from time to time consider appropriate.
 
(b)
The Borrowers shall upon demand fully indemnify the Security Agent in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any insurance referred to in paragraph (a) above or dealing with, or considering, any matter arising out of any such insurance.
 
24
SHIP UNDERTAKINGS
 
24.1
General
 
The undertakings in this Clause 24 (Ship Undertakings) remain in force from (a) in respect of Ship A, the Utilisation Date of Tranche A and (b) in respect of Ship B, the Delivery Date, and in each case 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 (such permission not to be unreasonably withheld or delayed in the case of paragraphs (c) and (d) of Clause 24.16 (Restrictions on chartering, appointment of managers etc.)).
 
24.2
Ship’s names and registration
 
Each Borrower shall:
 
(a)
keep the Ship owned by it 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 owned by it; and
 
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(d)
not change the name of the Ship owned by it,
 
provided that any change of flag of that Ship shall be subject to:
 

 (i)
that Ship remaining subject to Security securing the Secured Liabilities created by a first priority or preferred ship mortgage on that Ship and, if appropriate, a first priority deed of covenant collateral to that mortgage (or equivalent first priority Security) on substantially the same terms as the Mortgage 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.
 
24.3
Repair and classification
 
Each Borrower shall keep the Ship owned by it in a good and safe condition and state of repair:
 
(a)
consistent with first class ship ownership and management practice; and
 
(b)
so as to maintain the Approved Classification free of overdue recommendations and conditions affecting that Ship’s class.
 
24.4
Classification society undertaking
 
Each Borrower, in respect of the Ship owned by it, shall instruct the relevant 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 that 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 that Borrower and that 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:
 

 (i)
receives notification from that Borrower or any person that that 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 that Ship’s class under the rules or terms and conditions of that Borrower or that Ship’s membership of the Approved Classification Society;
 
(d)
following receipt of a written request from the Security Agent:
 

 (i)
to confirm that that 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
 
80

 (ii)
to confirm that that 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.
 
24.5
Modifications
 
Unless with the prior written consent from the Facility Agent (such consent not to be unreasonably withheld or delayed), no Borrower shall make any modification or repairs to, or replacement of the Ship owned by it or equipment installed on it which would or might materially alter the structure, type or performance characteristics of that Ship or materially reduce its value.
 
24.6
Removal and installation of parts
 
(a)
Subject to paragraph (b) below, no Borrower shall remove any material part of the Ship owned by it, or any item of equipment installed on that Ship unless:
 

 (i)
the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed;
 

 (ii)
the replacement part or item is free from any Security in favour of any person other than the Security Agent; and
 

 (iii)
the replacement part or item becomes, on installation on that Ship, the property of the relevant Borrower and subject to the security constituted by the Mortgage.
 
(b)
A Borrower may install equipment owned by a third party if the equipment can be removed without any risk of damage to the Ship owned by that Borrower.
 
24.7
Surveys
 
Each Borrower shall submit the Ship owned by it regularly to all periodic or other surveys which may be required for classification purposes and, if so required by the Facility Agent acting on the instructions of the Majority Lenders, provide the Facility Agent, with copies of all survey reports.
 
24.8
Inspection
 
Each Borrower shall permit the Security Agent (acting through surveyors or other persons appointed by it for that purpose) to board the Ship owned by it at all reasonable times and upon reasonable notice and without interfering with that Ship’s normal course of trading to inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections.
 
24.9
Prevention of and release from arrest
 
(a)
Each Borrower shall, in relation to the Ship owned by it, promptly discharge:
 
81

 (i)
all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against that Ship, its Earnings or its Insurances;
 

 (ii)
all Taxes, dues and other amounts charged in respect of that Ship, its Earnings or its Insurances; and
 

 (iii)
all other outgoings whatsoever in respect of that Ship, its Earnings or its Insurances.
 
(b)
Each Borrower shall immediately upon receiving notice of the arrest of the Ship owned by it or of its detention in exercise or purported exercise of any lien or claim, take all steps necessary to procure its release by providing bail or otherwise as the circumstances may require.
 
24.10
Compliance with laws etc.
 
Each Borrower shall:
 
(a)
comply, or procure compliance with all laws or regulations:
 

 (i)
relating to its business generally; and
 

 (ii)
relating to the Ship owned by it, its ownership, employment, operation, management and registration,
 
including, but not limited to, the ISM Code, the ISPS Code, all Environmental Laws, all Sanctions and the laws of the Approved Flag;
 
(b)
obtain, comply with and do all that is necessary to maintain in full force and effect any Environmental Approvals; and
 
(c)
without limiting paragraph (a) above, not employ the Ship owned by it nor allow its employment, operation or management in any manner contrary to any law or regulation including but not limited to the ISM Code, the ISPS Code, all Environmental Laws and Sanctions (or which would be contrary to Sanctions if Sanctions were binding on each Transaction Obligor).
 
24.11
ISPS Code
 
Without limiting paragraph (a) of Clause 24.10 (Compliance with laws etc.), each Borrower shall:
 
(a)
procure that the Ship owned by it and the company responsible for that Ship’s compliance with the ISPS Code comply with the ISPS Code; and
 
(b)
maintain an ISSC for the Ship owned by it; and
 
(c)
notify the Facility Agent immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC.
 
24.12
Sanctions and Ship trading
 
Without limiting Clause 24.10 (Compliance with laws etc.), each Borrower shall procure:
 
(a)
that the Ship owned by it shall not be used by or for the benefit of a Prohibited Person;
 
82
(b)
that the Ship owned by it shall not be used in trading in any manner contrary to Sanctions (or which could be contrary to Sanctions if Sanctions were binding on each Transaction Obligor);
 
(c)
that the Ship owned by it shall not be traded in any manner which would trigger the operation of any sanctions limitation or exclusion clause (or similar) in the Insurances; and
 
(d)
that each charterparty in respect of the Ship owned by it shall contain, for the benefit of the relevant Borrower, language which gives effect to the provisions of paragraph (c) of Clause 24.10 (Compliance with laws etc.) as regards Sanctions and of this Clause 24.12 (Sanctions and Ship trading) and which permits refusal of employment or voyage orders if compliance would result in a breach of Sanctions (or which would result in a breach of Sanctions if Sanctions were binding on each Transaction Obligor).
 
24.13
Trading in war zones
 
(a)
No Borrower shall cause or permit the Ship owned by it to enter or trade to any zone which is declared a war zone by any government or by that Ship’s war risks insurers or which is otherwise excluded from the scope of coverage of the obligatory insurances unless:
 
(b)
the prior written consent of the Security Agent acting on the instructions of the Majority Lenders has been given; and
 
(c)
the relevant Borrower has (at its expense) effected any special, additional or modified insurance cover which the Security Agent acting on the instructions of the Majority Lenders may require.
 
24.14
Provision of information
 
Without prejudice to Clause 20.6 (Information: miscellaneous) each Borrower shall, in respect of the Ship owned by it, promptly provide the Facility Agent with any information which it requests regarding:
 
(a)
that Ship, its employment, position and engagements;
 
(b)
the Earnings and payments and amounts due to its master and crew;
 
(c)
any expenditure incurred, or likely to be incurred, in connection with the operation, maintenance or repair of the Ship owned by it and any payments made by it in respect of that Ship;
 
(d)
any towages and salvages; and
 
(e)
its compliance, the Approved Manager’s compliance and the compliance of that Ship with the ISM Code and the ISPS Code,
 
and, upon the Facility Agent’s request, promptly provide copies of any current Charter relating to that Ship, of any current guarantee of any such Charter, that Ship’s Safety Management Certificate and any relevant Document of Compliance.
 
24.15
Notification of certain events
 
Each Borrower shall, in respect of the Ship owned by it, immediately notify the Facility Agent by email, confirmed forthwith by letter, of:
 
83
(a)
any casualty to that Ship which is or is likely to be or to become a Major Casualty;
 
(b)
any occurrence as a result of which that Ship has become or is, by the passing of time or otherwise, likely to become a Total Loss;
 
(c)
any requisition of that Ship for hire;
 
(d)
any requirement or recommendation made in relation to that Ship by any insurer or classification society or by any competent authority which is not immediately complied with;
 
(e)
any arrest or detention of that Ship or any exercise or purported exercise of any lien on that Ship or its Earnings;
 
(f)
any intended dry docking of that Ship;
 
(g)
any Environmental Claim made against that Borrower or in connection with that Ship, or any Environmental Incident;
 
(h)
any claim for breach of the ISM Code or the ISPS Code being made against that Borrower, the relevant Approved Manager or otherwise in connection with that Ship; or
 
(i)
any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code or the ISPS Code not being complied with,
 
and each Borrower shall keep the Facility Agent advised in writing on a regular basis and in such detail as the Facility Agent shall require as to that Borrower’s, the relevant Approved Manager’s or any other person’s response to any of those events or matters.
 
24.16
Restrictions on chartering, appointment of managers etc.
 
No Borrower shall, in relation to the Ship owned by it:
 
(a)
let that Ship on demise charter for any period;
 
(b)
enter into any time, voyage or consecutive voyage charter in respect of that Ship other than a Permitted Charter;
 
(c)
materially amend, supplement or terminate the relevant Management Agreement (and for the avoidance of doubt, but without limitation, any amendment in relation to the parties, the management fees, the time of payment and the governing law of a Management Agreement is considered material);
 
(d)
appoint a manager of that Ship other than the applicable Approved Commercial Manager and the applicable Approved Technical Manager;
 
(e)
de activate or lay up that Ship; or
 
(f)
put that Ship into the possession of any person for the purpose of work being done upon it in an amount exceeding or likely to exceed $450,000 (or the equivalent in any other currency) unless that person has first given to the Security Agent and in terms satisfactory to it a written undertaking not to exercise any lien on that Ship or its Earnings for the cost of such work or for any other reason.
 
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24.17
Notice of Mortgage
 
Each Borrower shall keep the Mortgage registered against the Ship owned by it as a valid first priority or preferred (as the case may be) mortgage, carry on board that Ship a certified copy of that Mortgage and place and maintain in a conspicuous place in the navigation room and the master’s cabin of that Ship a framed printed notice stating that that Ship is mortgaged by the relevant Borrower to the Security Agent.
 
24.18
Sharing of Earnings
 
No Borrower, other than between the Borrowers, shall enter into any agreement or arrangement for the sharing of any Earnings.
 
24.19
Notification of compliance
 
Each Borrower shall promptly provide the Facility Agent from time to time with evidence (in such form as the Facility Agent requires) that it is complying with this Clause 24 (Ship Undertakings).
 
24.20
Charterparty Assignment
 
If a Borrower enters into an Assignable Charter in respect of the Ship owned by it (subject to obtaining the prior consent of the Facility Agent in accordance with Clause 24.16(b)) that Borrower shall, at the request of the Facility Agent:
 
(b)
execute a Charterparty Assignment in respect of that Assignable Charter and serve notice of that Charterparty Assignment on the relevant Charterer and any charter guarantor and shall use reasonable commercial efforts to procure that that Charterer and that charter guarantor acknowledges such notice in such form as the Facility Agent may approve or require; and
 
(c)
deliver to the Facility Agent such other documents in connection with that Charterparty Assignment as the Facility Agent may reasonably require (including, without limitation, documents equivalent to those referred to in paragraphs 1.2, 1.3, 1.4, 1.5, 2.1 and 6 of Part A of Schedule 2 (Conditions Precedent) in relation to that Borrower and that Assignable Charter).
 
25
SECURITY COVER
 
25.1
Minimum required security cover
 
Clause 25.2 (Provision of additional security; prepayment) applies if, from the first Utilisation Date and at all time thereafter during the Security Period, the Facility Agent notifies the Borrowers that the Security Cover Ratio is below one hundred and thirty per cent. (130%).
 
25.2
Provision of additional security; prepayment
 
(a)
If the Facility Agent serves a notice on the Borrowers under Clause 25.1 (Minimum required security cover), the Borrowers shall, on or before the date falling 14 Business Days after the date on which the Facility Agent’s notice is served (or at such later date as may be agreed to by the Facility Agent) (the “Prepayment Date”), prepay such part of the Loan as shall eliminate the shortfall.
 
(b)
The Borrowers may, instead of making a prepayment as described in paragraph (a) above, provide, or ensure that a third party has provided, additional security which, in the opinion of the Facility Agent acting on the instructions of the Majority Lenders:
 
85

 (i)
has a net realisable value at least equal to the shortfall; and
 

 (ii)
is documented in such terms as the Facility Agent may approve or require,
 
before the Prepayment Date; and conditional upon such security being provided in such manner, it shall satisfy such prepayment obligation.
 
25.3
Value of additional vessel security
 
The net realisable value of any additional security which is provided under Clause 25.2 (Provision of additional security; prepayment) and which consists of Security over a vessel shall be the Market Value of the vessel concerned.
 
25.4
Valuations binding
 
Any valuation under this Clause 25 (Security Cover) shall be binding and conclusive as regards the Borrowers.
 
25.5
Provision of information
 
(a)
The Borrowers shall promptly provide the Facility Agent and any shipbroker acting under this Clause 25 (Security Cover) with any information which the Facility Agent or the shipbroker may request for the purposes of the valuation.
 
(b)
If the Borrowers fail to provide the information referred to in paragraph (a) above by the date specified in the request, the valuation may be made on any basis and assumptions which the shipbroker or the Facility Agent considers prudent.
 
25.6
Prepayment mechanism
 
Any prepayment pursuant to Clause 25.2 (Provision of additional security; prepayment) shall be made in accordance with the relevant provisions of Clause 7 (Prepayment and Cancellation) and shall be treated as a voluntary prepayment pursuant to Clause 7.3 (Voluntary prepayment of Loan).
 
25.7
Provision of valuations
 
The Borrowers shall provide (at their own cost) the Facility Agent with a set of two (or, as applicable, three) valuations of each Ship subject to a Mortgage (in addition to the valuation to be provided for the purposes of the Utilisation) and any other vessel over which additional Security has been created in accordance with Clause 25.2 (Provision of additional security; prepayment), each from an Approved Valuer, to enable the Facility Agent to determine the Market Value of each Ship and any such other at least once per year throughout the Security Period (commencing from the year on which the Utilisation has taken place) and at any other time as may be requested by the Facility Agent.
 
26
ACCOUNTS AND APPLICATION OF EARNINGS
 
26.1
Accounts
 
No Borrower may, without the prior consent of the Facility Agent, maintain any bank account other than its Earnings Accounts and the Retention Account.
 
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26.2
Payment of Earnings
 
(a)
Each Borrower shall ensure that subject only to the provisions of the General Assignment, all the Earnings in respect of the Ship owned by it are paid in to its Earnings Accounts.
 
(b)
The credit balance on each Earnings Account shall be freely available to the relevant Borrower Provided that the Borrowers are in compliance with Clause 21.3 (Minimum Liquidity in Earnings Accounts) and subject to (i) no Event of Default having occurred and being continuing at the relevant time and (ii) no notice on the occurrence of such Event of Default having been delivered to the Borrowers.
 
26.3
Monthly retentions
 
(a)
The Borrowers shall ensure that on the date falling thirty (30) days after the Utilisation Date of each Tranche and on Monthly intervals thereafter, (unless such dates do not fall on a Business Day, in which case, on the next Business Day) there is transferred to the Retention Account out of the Earnings received in the Earnings Accounts during the preceding calendar month:
 

 (i)
one-third of the amount of each Repayment Instalment (other than any Balloon Instalment) falling due under Clause 6.1 (Repayment of Loan) on the next Repayment Date; and
 

 (ii)
the relevant fraction of the aggregate amount of interest on the Loan which is payable on the next due date for payment of interest on the Loan under this Agreement.
 
(b)
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.
 
26.4
Shortfall in Earnings
 
If the credit balance on the Earnings Accounts is insufficient in any calendar month for the required amount to be transferred to the Retention Account under Clause 26.3 (Monthly retentions), the Borrowers shall make up the amount of the insufficiency on demand from the Facility Agent.
 
26.5
Application of retentions
 
(a)
The Security Agent has sole signing rights in relation to the Retention Account.
 
(b)
Until an Event of Default occurs, 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 34.2 (Distributions by the Facility Agent) so much of the then balance on the Retention Account as equals:
 
87

 (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 Borrowers’ liability for that Repayment Instalment or that interest as the case may be.
 
26.6
Interest accrued on Retention Account or Earnings Accounts
 
Any credit balance on the Earnings Accounts and the Retention Account shall bear interest at the rate from time to time offered by the Account Bank to its customers for dollars deposits of similar amounts and, in respect of the Retention Account, for periods similar to those for which such balances appear to the Account Bank likely to remain on the Retention Account.
 
26.7
Release of accrued interest
 
Interest accruing under Clause 26.6 (Interest accrued on Retention Account or Earnings Accounts) shall be credited to the Retention Account or, as the case may be, the Earnings Accounts, and, to the extent not transferred, or as the case may be, applied previously pursuant to Clause 26.3 (Monthly retentions) or Clause 26.5 (Application of retentions), shall be released to the Borrowers.
 
26.8
Location of Accounts
 
The Borrowers shall promptly:
 
(a)
comply with any requirement of the Facility Agent as to the location or relocation of the Earnings Accounts and the Retention Account (or any 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 Accounts and the Retention Account.
 
26.9
Interest on deposits
 
If any of the Borrowers or any Affiliate(s) of the Borrowers maintain in an account held with the Facility Agent any time deposit(s) free of Security fixed for a period matching the then current Interest Period in respect of each Tranche and not exceeding the amount by which the Facility Agent (in its capacity as Lender) participates in the Loan, such time deposits shall bear interest at a rate equal to the aggregate of (a) 0.75 per cent. per annum and (b) LIBOR for that Interest Period.
 
27
EVENTS OF DEFAULT
 
27.1
General
 
Each of the events or circumstances set out in this Clause 27 (Events of Default) is an Event of Default except for Clause 27.19 (Acceleration) and Clause 27.20 (Enforcement of security).
 
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27.2
Non-payment
 
A Transaction Obligor does not pay on the due date any amount payable pursuant to a Finance Document at the place at and in the currency in which it is expressed to be payable unless:
 
(a)
its failure to pay is caused by:
 

 (i)
administrative or technical error; or
 

 (ii)
a Disruption Event; and
 
(b)
payment is made within 3 Business Days of its due date.
 
27.3
Specific obligations
 
A breach occurs of Clause 4.4 (Waiver of conditions precedent), Clause 21 (Financial Covenants), Clause 22 (General Undertakings), Clause 23.2 (Maintenance of obligatory insurances), Clause 23.3 (Terms of obligatory insurances), Clause 23.5 (Renewal of obligatory insurances), Clause 24.12 (Sanctions and Ship Trading) or Clause 25 (Security Cover).
 
27.4
Other obligations
 
(a)
A Transaction Obligor does not comply with any provision of the Finance Documents (other than those referred to in Clause 27.2 (Non-payment) and Clause 27.3 (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 five (5) Business Days of the Facility Agent giving notice to the Borrowers or (if earlier) any Transaction Obligor becoming aware of the failure to comply.
 
27.5
Misrepresentation
 
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.
 
27.6
Cross default
 
(a)
Any Financial Indebtedness of any Transaction Obligor is not paid when due nor within any originally applicable grace period.
 
(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).
 
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(e)
No Event of Default will occur under this Clause 27.6 (Cross default) in respect of a person other than a Borrower if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within paragraphs (a) to (d) above is less than in relation to the Guarantor $5,000,000 (or its equivalent in any other currency).
 
27.7
Insolvency
 
(a)
A 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 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.  If a moratorium occurs, the ending of the moratorium will not remedy any Event of Default caused by that moratorium.
 
(d)
No Event of Default will occur under this Clause 27.7 (Insolvency) if any of the events described in paragraphs (a)-(c) above occurs in respect of an Approved Manager and the relevant Borrower replaces such Approved Manager by another Approved Manager and delivers to the Facility Agent the documents referred to at paragraph 2.3 of Part B of Schedule 2 (Conditions precedent) within 10 Business Days from the date of such occurrence.
 
27.8
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, liquidation, dissolution, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of any Transaction Obligor 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;
 

 (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, administrative receiver, compulsory manager or other similar officer in respect of any Transaction Obligor or any of its respective assets; or
 

 (iv)
enforcement of any Security over any assets of any Transaction Obligor,
 
or any analogous procedure or step is taken in any jurisdiction.
 
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(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.
 
(c)
No Event of Default will occur under this Clause 27.8 (Insolvency Proceedings) if any of the events described in paragraph (a) above occurs in respect of an Approved Manager and the relevant Borrower replaces such Approved Manager by another Approved Manager and delivers to the Facility Agent the documents referred to at paragraph 2.3 of Part B of Schedule 2 (Conditions precedent) within 10 Business Days from the date of such occurrence.
 
27.9
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 (other than an arrest or detention of a Ship referred to in Clause 27.14 (Arrest)).
 
27.10
Ownership of the Obligors
 
(a)
A Borrower is not or ceases to be a 100 per cent. Subsidiary of the Guarantor without the Facility Agent’s consent (such consent not to be unreasonably withheld).
 
(b)
Persons other than those disclosed to the Facility Agent as part of the “Know your customer” checks gain control of the Guarantor.
 
(c)
For the purpose of paragraph (b) above “control” means:
 

 (i)
the power (whether by way of ownership of shares, partnership units, proxy, contract, agency or otherwise) to:
 

 (ii)
cast, or control the casting of, more than 50 per cent. of the maximum number of votes that might be cast at a general meeting of the Guarantor; or
 

 (iii)
appoint or remove all, or the majority, of the directors or other equivalent officers of the Guarantor; or
 

 (iv)
give directions with respect to the operating and financial policies of the Guarantor with which the directors or other equivalent officers of the Guarantor are obliged to comply; and/or
 

 (v)
the holding beneficially of more than 50 per cent. of the issued shares of the Guarantor (excluding any part of that issued shares that carries no right to participate beyond a specified amount in a distribution of either profits or capital).
 
27.11
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.
 
(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.
 
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(d)
Any Transaction Security proves to have ranked after, or loses its priority to, any other Security.
 
27.12
Security imperilled
 
Any Security created or intended to be created by a Finance Document is in any way imperilled or in jeopardy.
 
27.13
Cessation of business
 
Any Transaction Obligor suspends or ceases to carry on (or threatens to suspend or cease to carry on) all or a material part of its business.
 
27.14
Arrest
 
Any arrest of a Ship or its detention in the exercise or the purported exercise of any lien or claim unless it is redelivered to the full control of the relevant Borrower within 14 days of such arrest or detention.
 
27.15
Expropriation
 
The authority or ability of any Transaction Obligor 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 Transaction Obligor or any of its assets, unless such Transaction Obligor upon receiving notice of such event procures the release of the relevant assets and such assets are redelivered to the full control of that Transaction Obligor within 10 days of such event, other than:
 
(a)
an arrest or detention of a Ship referred to in Clause 27.14 (Arrest); or
 
(b)
any Requisition.
 
27.16
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.
 
27.17
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:
 
(a)
has a Material Adverse Effect; or
 
(b)
is reasonably likely to have a Material Adverse Effect, unless in such case (i) the relevant member of the Group has taken active measures to dispute such proceedings or disputes and such proceedings or disputes are dismissed or withdrawn within 14 days of being made or presented or (ii) the combined value of such proceedings or disputes in respect of such member of the Group (other than a Borrower) does not exceed $1,000,000 (or its equivalent in any other currency) in aggregate.
 
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27.18
Material adverse change
 
Any event or circumstance occurs which has or is reasonably likely to have a Material Adverse Effect.
 
27.19
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 Borrowers:
 

 (i)
cancel the Total Commitments, 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,
 
and the Facility Agent may serve notices under sub-paragraphs (i), (ii) and (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 27.20 (Enforcement of security) if no such notice is served or simultaneously with or at any time after the service of any of such notice.
 
27.20
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 27.19 (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
 
28
CHANGES TO THE LENDERS
 
28.1
Assignments and transfers by the Lenders
 
Subject to this Clause 28 (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”).
 
28.2
Conditions of assignment or transfer
 
(a)
A 10-day prior notice to the Borrowers is required (but no consent from the Borrowers or any Transaction Obligor) for an assignment or transfer by a Lender pursuant to Clause 28.1 (Assignments and transfers by the Lenders).
 
(b)
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.
 
(c)
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 Borrowers or any other Transaction Obligor had against the Existing Lender.
 
(d)
A transfer will only be effective if the procedure set out in Clause 28.5 (Procedure for transfer) is complied with.
 
(e)
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),
 
94
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 (e) shall not apply in respect of an assignment or transfer made in the ordinary course of the primary syndication of the Facility.
 
(f)
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.
 
28.3
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 two thousand five hundred Dollars ($2,500).
 
28.4
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.
 
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(c)
Nothing in any Finance Document obliges an Existing Lender to:
 

 (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 28 (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.
 
28.5
Procedure for transfer
 
(a)
Subject to the conditions set out in Clause 28.2 (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)
Subject to Clause 28.9 (Pro rata interest settlement), 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 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 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”.
 
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28.6
Procedure for assignment
 
(a)
Subject to the conditions set out in Clause 28.2 (Conditions of assignment or transfer) an assignment may be effected in accordance with paragraph (c) below when the Facility Agent 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)
Subject to Clause 28.9 (Pro rata interest settlement), 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 28.6 (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 28.5 (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 28.2 (Conditions of assignment or transfer).
 
28.7
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 Borrowers a copy of that Transfer Certificate or Assignment Agreement.
 
28.8
Security over Lenders’ rights
 
In addition to the other rights provided to Lenders under this Clause 28 (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
 
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(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,
 
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.
 
28.9
Pro rata interest settlement
 
(a)
If the Facility Agent has notified the Lenders that it is able to distribute interest payments on a “pro rata basis” to Existing Lenders and New Lenders then (in respect of any transfer pursuant to Clause 28.5 (Procedure for transfer) or any assignment pursuant to Clause 28.6 (Procedure for assignment) the Transfer Date of which, in each case, is after the date of such notification and is not on the last day of an Interest Period):
 

 (i)
any interest or fees in respect of the relevant participation which are expressed to accrue by reference to the lapse of time shall continue to accrue in favour of the Existing Lender up to but excluding the Transfer Date (“Accrued Amounts”) and shall become due and payable to the Existing Lender (without further interest accruing on them) on the last day of the current Interest Period (or, if the Interest Period is longer than six Months, on the next of the dates which falls at six Monthly intervals after the first day of that Interest Period); and
 

 (ii)
The rights assigned or transferred by the Existing Lender will not include the right to the Accrued Amounts, so that, for the avoidance of doubt:
 

 (A)
when the Accrued Amounts become payable, those Accrued Amounts will be payable to the Existing Lender; and
 

 (B)
the amount payable to the New Lender on that date will be the amount which would, but for the application of this Clause 28.9 (Pro rata interest settlement), have been payable to it on that date, but after deduction of the Accrued Amounts.
 
(b)
In this Clause 28.9 (Pro rata interest settlement) references to “Interest Period” shall be construed to include a reference to any other period for accrual of fees.
 
(c)
An Existing Lender which retains the right to the Accrued Amounts pursuant to this Clause 28.9 (Pro rata interest settlement) but which does not have a Commitment shall be deemed not to be a Lender for the purposes of ascertaining whether the agreement of any specified group of Lenders has been obtained to approve any request for a consent, waiver, amendment or other vote of Lenders under the Finance Documents.
 
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29
CHANGES TO THE TRANSACTION OBLIGORS
 
29.1
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.
 
29.2
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)
the Majority 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 29.2 (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.
 
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SECTION 10

THE FINANCE PARTIES
 
30
THE FACILITY AGENT, THE ARRANGER AND THE REFERENCE BANKS
 
30.1
Appointment of the Facility Agent
 
(a)
Each of the Arranger and the Lenders appoints the Facility Agent to act as its agent under and in connection with the Finance Documents.
 
(b)
Each of the Arranger and 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.
 
30.2
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 44 (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 30.2 (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.
 
30.3
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 28.7 (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 or any fee payable to a Finance Party (other than the Facility Agent, the Arranger or the Security Agent) under this Agreement, it shall promptly notify the other Finance Parties.
 
(g)
The Facility Agent shall provide to the Borrowers within five (5) Business Days of a request by the Borrowers (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).
 
30.4
Role of the Arranger
 
Except as specifically provided in the Finance Documents, the Arranger has no obligations of any kind to any other Party under or in connection with any Finance Document.
 
30.5
No fiduciary duties
 
(a)
Nothing in any Finance Document constitutes the Facility Agent or the Arranger as a trustee or fiduciary of any other person.
 
(b)
Neither the Facility Agent nor the 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.
 
30.6
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 34.5 (Application of receipts; partial payments).
 
30.7
Business with the Group
 
The Facility Agent and the 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.
 
30.8
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 other Finance Parties) that:
 

 (i)
no Default has occurred (unless it has actual knowledge of a Default arising under Clause 27.2 (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 Borrowers (other than a Utilisation Request or a Selection Notice) 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,
 
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unless such error or such loss was directly caused by the Facility Agent’s gross negligence or wilful misconduct.
 
(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 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.
 
30.9
Responsibility for documentation
 
Neither the Facility Agent nor the 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 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; or
 
(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.
 
30.10
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.
 
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30.11
Exclusion of liability
 
(a)
Without limiting paragraph (b) below (and without prejudice to paragraph (e) of Clause 34.11 (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:
 

 (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 sub-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 Arranger to carry out:
 

 (i)
any “know your customer” or other checks in relation to any person; or
 
105

 (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 Facility Agent and the 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 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.
 
30.12
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 34.11 (Disruption to Payment Systems etc.) notwithstanding the Facility Agent’s negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Facility Agent) in acting as Facility Agent under the Finance Documents (unless the Facility Agent has been reimbursed by a Transaction Obligor pursuant to a Finance Document).
 
(b)
Subject to paragraph (c) below, the Borrowers 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.
 
30.13
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 thirty (30) days’ notice to the other Finance Parties and the Borrowers, 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 twenty (20) days after notice of resignation was given, the retiring Facility Agent may appoint a successor Facility Agent.
 
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(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 Facility Agent to become a party to this Agreement as Facility Agent) agree with the proposed successor Facility Agent amendments to this Clause 30 (The Facility Agent, the Arranger and the Reference Banks) 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 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 Borrowers shall, within three (3) 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 30 (The Facility Agent, the Arranger and the Reference Banks) 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 Borrowers (or any other Transaction Obligor) is not required for an assignment or transfer of rights and/or obligations by the Facility Agent.
 
30.14
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.
 
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(c)
Notwithstanding any other provision of any Finance Document to the contrary, neither the Facility Agent nor the 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.
 
30.15
Relationship with the other Finance Parties
 
(a)
Subject to Clause 28.9 (Pro rata interest settlement), 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 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 37.5 (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 37.2 (Addresses) and sub-paragraph (ii) of paragraph (a) of Clause 37.5 (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.
 
30.16
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 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 Transaction Obligor;
 
108
(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.
 
30.17
Facility Agent’s management time
 
If a Default has occurred and is continuing, any amount payable to the Facility Agent under Clause 14.4 (Indemnity to the Facility Agent), Clause 16 (Costs and Expenses) and Clause 30.12 (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 Borrowers and the other Finance Parties, and is in addition to any fee paid or payable to the Facility Agent under Clause 11 (Fees). The Facility Agent shall as soon as reasonably practicable notify the Borrowers in writing of any extraordinary management time which the Facility Agent is envisaging to spend.
 
30.18
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.
 
30.19
Reliance and engagement letters
 
Each Secured Party confirms that each of the 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 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.
 
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30.20
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 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 any Borrowers 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.
 
30.21
Role of Reference Banks
 
(a)
No Reference Bank is under any obligation to provide a quotation or any other information to the Facility Agent.
 
(b)
No Reference Bank will be liable for any action taken by it under or in connection with any Finance Document, or for any Reference Bank Quotation, unless directly caused by its gross negligence or wilful misconduct.
 
(c)
No Party (other than the relevant Reference Bank) may take any proceedings against any officer, employee or agent of any Reference Bank in respect of any claim it might have against that Reference Bank or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document, or to any Reference Bank Quotation, and any officer, employee or agent of each Reference Bank may rely on this Clause 30.21 (Role of Reference Banks) subject to Clause 1.5 (Third party rights) and the provisions of the Third Parties Act.
 
30.22
Third Party Reference Banks
 
A Reference Bank which is not a Party may rely on Clause 30.21 (Role of Reference Banks), Clause 44.3 (Other exceptions) and Clause 46 (Confidentiality of Funding Rates and Reference Bank Quotations) subject to Clause 1.5 (Third party rights) and the provisions of the Third Parties Act.
 
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31
THE SECURITY AGENT
 
31.1
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 31 (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.
 
31.2
Parallel Debt (Covenant to pay the Security Agent)
 
(a)
Each Obligor irrevocably and unconditionally undertakes to pay to the Security Agent its Parallel Debt which shall be amounts equal to, and in the currency or currencies of, its 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 the purposes of this Clause 31.2 (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 31.2 (Parallel Debt (Covenant to pay the Security Agent)) to the extent permitted by applicable law, shall be applied in accordance with Clause 34.5 (Application of receipts; partial payments).
 
(f)
This Clause 31.2 (Parallel Debt (Covenant to pay the Security Agent)) shall apply, with any necessary modifications, to each Finance Document.
 
31.3
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.
 
31.4
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 31.28 (Application of receipts);
 

 (B)
Clause 31.29 (Permitted Deductions); and
 

 (C)
Clause 31.30 (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 44 (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 31.4 (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.
 
31.5
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).
 
31.6
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.
 
31.7
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.
 
31.8
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 any Borrowers (other than a Utilisation Request or a Selection Notice) 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.
 
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(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 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.
 
31.9
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 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; or
 
(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.
 
31.10
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.
 
31.11
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 sub-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. 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.
 
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31.12
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 and every Delegate, 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, Receiver’s or Delegate’s gross negligence or wilful misconduct) in acting as Security Agent, Receiver or Delegate under the Finance Documents (unless the Security Agent, Receiver or Delegate has been reimbursed by a Transaction Obligor pursuant to a Finance Document).
 
(b)
Subject to paragraph (c) below, the Borrowers 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.
 
31.13
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 Borrowers, 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 Borrowers 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.
 
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(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 31.25 (Winding up of trust) and paragraph (d) above) but shall remain entitled to the benefit of Clause 14.5 (Indemnity to the Security Agent) and this Clause 31 (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 Borrowers (or any other Transaction Obligor) is not required for an assignment or transfer of rights and/or obligations by the Security Agent.
 
31.14
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.
 
31.15
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 Transaction Obligor;
 
(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;
 
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(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.
 
31.16
Security Agent’s management time
 
(a)
If a Default has occurred which is continuing, any amount payable to the Security Agent under Clause 14.5 (Indemnity to the Security Agent), Clause 16 (Costs and Expenses) and Clause 31.12 (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 Borrowers and the other Finance Parties, and is in addition to any fee paid or payable to the Security Agent under Clause 11 (Fees). The Security Agent shall as soon as reasonably practicable notify the Borrowers in writing of any extraordinary management time which the Security Agent is envisaging to spend.
 
(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 Borrowers 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 Borrowers agreeing that it is otherwise appropriate in the circumstances,
 
the Borrowers 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 Borrowers 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 Borrowers 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.
 
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31.17
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.
 
31.18
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.
 
31.19
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,
 
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.
 
121
31.20
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.
 
31.21
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.
 
31.22
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 Borrowers 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.
 
31.23
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.
 
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31.24
Releases
 
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.
 
31.25
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 31.13 (Resignation of the Security Agent) shall release, without recourse or warranty, all of its rights under each Security Document.
 
31.26
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.
 
31.27
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.
 
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31.28
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 31.2 (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 31 (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 31 (The Security Agent)), in the following order of priority:
 
(a)
in discharging any sums owing to the Security Agent (in its capacity as such) other than pursuant to Clause 31.2 (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 34.5 (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.
 
31.29
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).
 
31.30
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 31.28 (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.
 
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31.31
Investment of proceeds
 
Prior to the payment of the proceeds of the Recoveries to the Facility Agent for application in accordance with Clause 31.28 (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 31.28 (Application of receipts).
 
31.32
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.
 
31.33
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.
 
31.34
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.
 
31.35
Application and consideration
 
In consideration for the covenants given to the Security Agent by each Obligor in relation to Clause 31.2 (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 31 (The Security Agent).
 
31.36
Full freedom to enter into transactions
 
Without prejudice to Clause 31.7 (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:
 
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(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 Borrowers 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.
 
32
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.
 
33
SHARING AMONG THE FINANCE PARTIES
 
33.1
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 34 (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 34 (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
 
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(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 34.5 (Application of receipts; partial payments).
 
33.2
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 34.5 (Application of receipts; partial payments) towards the obligations of that Transaction Obligor to the Sharing Finance Parties.
 
33.3
Recovering Finance Party’s rights
 
On a distribution by the Facility Agent under Clause 33.2 (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.
 
33.4
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.
 
33.5
Exceptions
 
(a)
This Clause 33 (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
 
34
PAYMENT MECHANICS
 
34.1
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 and with such bank as the Facility Agent, in each case, specifies.
 
34.2
Distributions by the Facility Agent
 
Each payment received by the Facility Agent under the Finance Documents for another Party shall, subject to Clause 34.3 (Distributions to a Transaction Obligor) and Clause 34.4 (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 (5) 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 an Advance, to such account of such person as may be specified by the Borrowers in the relevant Utilisation Request.
 
34.3
Distributions to a Transaction Obligor
 
The Facility Agent may (with the consent of the Transaction Obligor or in accordance with Clause 35 (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.
 
34.4
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 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.
 
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(c)
If the Facility Agent has notified the Lenders that it is willing to make available amounts for the account of the Borrowers 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 Borrowers of that Lender’s identity and the Borrowers 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 Borrowers 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.
 
34.5
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;
 

 (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.
 
34.6
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.
 
34.7
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).
 
129
(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.
 
34.8
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.
 
34.9
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 Interbank Market and otherwise to reflect the change in currency.
 
34.10
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.
 
34.11
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 Borrowers that a Disruption Event has occurred:
 
(a)
the Facility Agent may, and shall if requested to do so by the Borrowers, consult with the Borrowers with a view to agreeing with the Borrowers such changes to the operation or administration of the Facility as the Facility Agent may deem necessary in the circumstances;
 
130
(b)
the Facility Agent shall not be obliged to consult with the Borrowers 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 Borrowers 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 44 (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 34.11 (Disruption to Payment Systems etc.); and
 
(f)
the Facility Agent shall notify the Finance Parties of all changes agreed pursuant to paragraph (d) above.
 
35
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.
 
36
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;
 

 (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.
 
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37
NOTICES
 
37.1
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 email or letter.
 
37.2
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 each 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.
 
37.3
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 37.2 (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).
 
(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 Borrowers in accordance with this Clause will be deemed to have been made or delivered to each of the Transaction Obligors.
 
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(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.
 
37.4
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 37.2 (Addresses) or changing its own address or fax number, the Facility Agent shall notify the other Parties.
 
37.5
Electronic communication
 
(a)
Any communication to be made between any two Parties 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 between any two Parties 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 or document made or 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 document 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 a document being made available in accordance with this Clause 37.5 (Electronic communication).
 
37.6
English language
 
(a)
Any notice given under or in connection with any Finance Document must be in English.
 
(b)
All other documents provided under or in connection with any Finance Document must be:
 

 (i)
in English; or
 
133

 (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.
 
38
CALCULATIONS AND CERTIFICATES
 
38.1
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.
 
38.2
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 or fraud, conclusive evidence of the matters to which it relates.
 
38.3
Day count convention
 
Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated 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 Interbank Market differs, in accordance with that market practice.
 
39
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.
 
40
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.  The rights and remedies provided in each Finance Document are cumulative and not exclusive of any rights or remedies provided by law.
 
No variation or amendment of a Finance Document shall be valid unless in writing and signed by or on behalf of all the relevant Finance Parties in accordance with the provisions of Clause 44 (Amendments and waivers).
 
41
ENTIRE AGREEMENT
 
(a)
This Agreement, in conjunction with the other Finance Documents, constitutes the entire agreement between the Parties and supersedes all previous agreements, understandings and arrangements between them, whether in writing or oral, in respect of its subject matter.
 
134
(b)
Each Obligor acknowledges that it has not entered into this Agreement or any other Finance Document in reliance on, and shall have no remedies in respect of, any representation or warranty that is not expressly set out in this Agreement or in any other Finance Document.
 
42
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.
 
43
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.
 
44
AMENDMENTS AND WAIVERS
 
44.1
Required consents
 
(a)
Subject to Clause 44.2 (All Lender matters) and Clause 44.3 (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 44 (Amendments and Waivers).
 
(c)
Without prejudice to the generality of Clause 30.8 (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.
 
(d)
Paragraph (c) of Clause 28.9 (Pro rata interest settlement) shall apply to this Clause 44 (Amendments and Waivers).
 
44.2
All Lender matters
 
Subject to Clause 44.4 (Replacement of Screen Rate), 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;
 
135
(d)
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;
 
(e)
a change to any Transaction Obligor other than in accordance with Clause 29 (Changes to the Transaction Obligors);
 
(f)
any provision which expressly requires the consent of all the Lenders;
 
(g)
this Clause 44 (Amendments and Waivers);
 
(h)
any change to the preamble (Background), Clause 2 (The Facility), Clause 3 (Purpose), Clause 5 (Utilisation), Clause 6.2 (Effect of cancellation and prepayment on scheduled repayments), Clause 7.4 (Mandatory prepayment on sale or Total Loss), Clause 8 (Interest), Clause 26 (Accounts and Application of Earnings), Clause 28 (Changes to the Lenders), Clause 33 (Sharing among the Finance Parties), Clause 48 (Governing Law) or Clause 49 (Enforcement);
 
(i)
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);
 
(j)
(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);
 

 (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);
 
(k)
the release of the guarantee and indemnity granted under Clause 17 (Guarantee and Indemnity) or of any Transaction Security 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.
 
44.3
Other exceptions
 
An amendment or waiver which relates to the rights or obligations of a Servicing Party, the Arranger or a Reference Bank (each in their capacity as such) may not be effected without the consent of that Servicing Party, the Arranger or that Reference Bank, as the case may be.
 
136
44.4
Replacement of Screen Rate
 
(a)
Subject to Clause 44.3 (Other exceptions), if a Screen Rate Replacement Event has occurred in relation to the Screen Rate for dollars, any amendment or waiver which relates to:
 

 (i)
providing for the use of a Replacement Benchmark in relation to that currency in place of that Screen Rate; and
 
(ii)

 (A)
aligning any provision of any Finance Document to the use of that Replacement Benchmark;
 

 (B)
enabling that Replacement Benchmark to be used for the calculation of interest under this Agreement (including, without limitation, any consequential changes required to enable that Replacement Benchmark to be used for the purposes of this Agreement);
 

 (C)
implementing market conventions applicable to that Replacement Benchmark;
 

 (D)
providing for appropriate fallback (and market disruption) provisions for that Replacement Benchmark; or
 

 (E)
adjusting the pricing to reduce or eliminate, to the extent reasonably practicable, any transfer of economic value from one Party to another as a result of the application of that Replacement Benchmark (and if any adjustment or method for calculating any adjustment has been formally designated, nominated or recommended by the Relevant Nominating Body, the adjustment shall be determined on the basis of that designation, nomination or recommendation),
 
may be made with the consent of the Facility Agent (acting on the instructions of the Lenders) and the Borrowers.
 
(b)
If, as at 30 September 2022 (or such later date as the Facility Agent may agree to), this Agreement provides that the rate of interest for the Loan in dollars is to be determined by reference to the Screen Rate for LIBOR:
 

 (i)
a Screen Rate Replacement Event shall be deemed to have occurred on that date in relation to the Screen Rate for dollars; and
 

 (ii)
the Facility Agent, (acting on the instructions of the Lenders) and the Borrowers shall enter into negotiations in good faith with a view to agreeing the use of a Replacement Benchmark in relation to dollars in place of that Screen Rate from and including a date no later than 31 March 2023 (or such later date as the Facility Agent may agree to).
 
(c)
If any Lender fails to respond to a request for an amendment or waiver described in paragraph (a) above, or for any other vote of Lenders in relation to, paragraphs (a) or (b) above within three  Business Days (or such longer time period in relation to any request which the Borrowers and the Facility Agent may agree) of that request being made:
 

 (i)
its Commitment or its participation in the Loan (as the case may be) shall not be included for the purpose of calculating the Total Commitments or the amount of the Loan (as applicable) when ascertaining whether any relevant percentage of Total Commitments or the aggregate of participations in the Loan (as applicable) has been obtained to approve that request; and
 
137

 (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.]
 
44.5
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.
 
45
CONFIDENTIAL INFORMATION
 
45.1
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 45.2 (Disclosure of Confidential Information) and Clause 45.4 (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.
 
45.2
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 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;
 
138

 (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 30.15 (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 28.8 (Security over Lenders’ rights);
 

 (viii)
who is a Party, a member of the Group or any related entity of a Transaction Obligor;
 

 (ix)
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
 

 (x)
with the consent of the Borrower;
 
in each case, such Confidential Information as that Finance Party shall consider appropriate if:
 

 (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-paragraph (iv) 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;
 
139
(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 Borrowers 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.
 
45.3
DAC6
 
Nothing in any Finance Document shall prevent disclosure of any Confidential Information or  other matter to the extent that preventing that disclosure would otherwise cause any transaction contemplated by the Finance Documents or any transaction carried out in connection with any transaction contemplated by the Finance Documents to become an arrangement described in Part II A 1 of Annex IV of Directive 2011/16/EU.
 
45.4
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 48 (Governing Law);
 

 (vi)
the names of the Facility Agent and the Arranger;
 

 (vii)
date of each amendment and restatement of this Agreement;
 

 (viii)
amount of Total Commitments;
 

 (ix)
currency of the Facility;
 
140

 (x)
type of Facility;
 

 (xi)
ranking of Facility;
 

 (xii)
Termination Date for Facility;
 

 (xiii)
changes to any of the information previously supplied pursuant to sub-paragraphs (i) to (xii) above; and
 

 (xiv)
such other information agreed between such Finance Party and the Borrowers,
 
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.
 
45.5
Entire agreement
 
This Clause 45 (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.
 
45.6
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.
 
45.7
Notification of disclosure
 
Each of the Finance Parties agrees (to the extent permitted by law and regulation) to inform the Borrower:
 
141
(a)
of the circumstances of any disclosure of Confidential Information made pursuant to sub-paragraph (v) of paragraph (b) of Clause 45.2 (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 45 (Confidential Information).
 
45.8
Continuing obligations
 
The obligations in this Clause 45 (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.
 
46
CONFIDENTIALITY OF FUNDING RATES AND REFERENCE BANK QUOTATIONS
 
46.1
Confidentiality and disclosure
 
(a)
The Facility Agent and each Obligor agree to keep each Funding Rate (and, in the case of the Facility Agent, each Reference Bank Quotation) confidential and not to disclose it to anyone, save to the extent permitted by paragraphs (b), (c) and (d) below.
 
(b)
The Facility Agent may disclose:
 

 (i)
any Funding Rate (but not, for the avoidance of doubt, any Reference Bank Quotation) to the Borrowers pursuant to Clause 8.4 (Notification of rates of interest); and
 

 (ii)
any Funding Rate or any Reference Bank Quotation 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 or Reference Bank, as the case may be.
 
(c)
The Facility Agent may disclose any Funding Rate or any Reference Bank Quotation, 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 or Reference Bank Quotation 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 obligations to maintain the confidentiality of that Funding Rate or Reference Bank Quotation or is otherwise bound by requirements of confidentiality in relation to it;
 
142

 (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 or Reference Bank Quotation 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 or Reference Bank Quotation 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 or Reference Bank, as the case may be.
 
(d)
The Facility Agent’s obligations in this Clause 46 (Confidentiality of Funding Rates and Reference Bank Quotations) relating to Reference Bank Quotations are without prejudice to its obligations to make notifications under Clause 8.4 (Notification of rates of interest) provided that (other than pursuant to sub-paragraph (i) of paragraph (b) above) the Facility Agent shall not include the details of any individual Reference Bank Quotation as part of any such notification.
 
46.2
Related obligations
 
(a)
The Facility Agent and each Obligor acknowledge that each Funding Rate (and, in the case of the Facility Agent, each Reference Bank Quotation) 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 or, in the case of the Facility Agent, any Reference Bank Quotation 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 or Reference Bank, as the case may be:
 

 (i)
of the circumstances of any disclosure made pursuant to sub-paragraph (ii) of paragraph (c) of Clause 46.1 (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 46 (Confidentiality of Funding Rates and Reference Bank Quotations).
 
46.3
No Event of Default
 
No Event of Default will occur under Clause 27.4 (Other obligations) by reason only of an Obligor’s failure to comply with this Clause 46 (Confidentiality of Funding Rates and Reference Bank Quotations).
 
143
47
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.
 
144
SECTION 12

GOVERNING LAW AND ENFORCEMENT
 
48
GOVERNING LAW
 
This Agreement and any non-contractual obligations arising out of or in connection with it are governed by English law.
 
49
ENFORCEMENT
 
49.1
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 49.1 (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.
 
49.2
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 Messrs E. J. C. Album Solicitors, presently at 47 Lyndale Avenue, London NW2 2QB, England (attention: Mr Edward Album, tel: +44 20 7794 6080, +44 20 7431 2942 and +44 7980 798659 and email: ejca@mitgr.com) 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 Borrowers (on behalf of all the Obligors) must immediately (and in any event within five (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.
 
145
SCHEDULE 1

THE PARTIES
 
PART A

THE OBLIGORS
 
Name of Borrowers
Place of Incorporation
Registration number (or equivalent, if any)
  
Address for Communication
Good Ocean Navigation Co.
Liberia
C-121732
  
c/o 154 Vouliagmenis Avenue, 166 74 Glyfada, Greece
 
Attention: Stamatios Tsantanis/ Stavros Gyftakis
 
Email sgyftakis@seanergy.gr
finance@seanergy.gr
 
Tel.: +30 213 0181507
Traders Shipping Co.
Marshall Islands
107890
  
c/o 154 Vouliagmenis Avenue, 166 74 Glyfada, Greece
 
Attention: Stamatios Tsantanis/ Stavros Gyftakis
 
Email sgyftakis@seanergy.gr
finance@seanergy.gr
Tel.: +30 213 0181507
Name of Guarantor
Place of Incorporation
Registration number (or equivalent, if any)
  
Address for Communication
Seanergy Maritime Holdings Corp.
Marshall Islands
27721
  
154 Vouliagmenis Avenue, 166 74 Glyfada, Greece
 
Attention: Stamatios Tsantanis/ Stavros Gyftakis
 
Email: sgyftakis@seanergy.gr
finance@seanergy.gr
Tel.: +30 213 0181507

146
PART B

THE ORIGINAL LENDERS
 
Name of Original Lender
Commitment
Address for Communication
Aegean Baltic Bank S.A.
US$15,500,000
Megalou Alexandrou
& 25th Martiou Street
151 24 Maroussi
Greece
 
Fax No: +30 210 623 4192/3
 
E-mail:
business.dvlp@ab-bank.com

147
PART C

THE SERVICING PARTIES
 
Name of Facility Agent
Address for Communication
Aegean Baltic Bank S.A.
Megalou Alexandrou
& 25th Martiou Street
151 24 Maroussi
Greece
 
Fax No: +30 210 623 4192/3
 
E-mail:
business.dvlp@ab-bank.com


Name of Security Agent
Address for Communication


Aegean Baltic Bank S.A.
Megalou Alexandrou
& 25th Martiou Street
151 24 Maroussi
Greece
 
Fax No: +30 210 623 4192/3
 
E-mail:
business.dvlp@ab-bank.com

148
SCHEDULE 2

CONDITIONS PRECEDENT
 
PART A

CONDITIONS PRECEDENT TO THE INITIAL UTILISATION REQUEST
 
1
Transaction Obligors
 
1.1
A copy of the constitutional documents of each Transaction Obligor, including (without limitation), in the case of each Borrower, its current articles of incorporation, certificate of incorporation and by-laws.
 
1.2
A copy of a resolution of the board of directors of each Transaction Obligor:
 
(a)
approving the terms of, and the transactions contemplated by, the Finance Documents to which it is a party and resolving that it execute the Finance Documents to which it is a party;
 
(b)
authorising a specified person or persons to execute the Finance Documents to which it is a party on its behalf; and
 
(c)
authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices (including, if relevant, each Utilisation Request and each Selection Notice) to be signed and/or despatched by it under, or in connection with, the Finance Documents to which it is a party.
 
1.3
An original of the power of attorney of any Transaction Obligor authorising a specified person or persons to execute the Finance Documents to which it is a party.
 
1.4
A specimen of the signature of each person authorised by the resolution referred to in paragraph 1.2 above.
 
1.5
A copy of a resolution signed by the holder of the issued shares in each Borrower, approving the terms of, and the transactions contemplated by, the Finance Documents to which that Borrower is a party.
 
1.6
A certificate of each Obligor (signed by a director and/or officer) confirming that borrowing or guaranteeing, as appropriate, the Total Commitments would not cause any borrowing, guaranteeing or similar limit binding on that Obligor to be exceeded.
 
1.7
A certificate of each Transaction Obligor that is incorporated outside the UK (signed by a director and/or officer) certifying either that (i) it has not delivered particulars of any UK Establishment to the Registrar of Companies as required under the Overseas Regulations or (ii) it has a UK Establishment and specifying the name and registered number under which it is registered with the Registrar of Companies.
 
1.8
A certificate of an authorised signatory of the relevant Transaction Obligor certifying that each copy document relating to it specified in this Part A of Schedule 2 (Conditions Precedent) is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement.
 
149
1.9
A certificate of good standing in respect of each Borrower issued by the authorities of its Original Jurisdiction dated no more than one month prior to the date of this Agreement.
 
2
Other Documents
 
2.1
Copies of any Assignable Charter and such documentary evidence as the Facility Agent and its legal advisers may reasonably require in relation to the due authorisation and execution by the relevant Borrower and the Charterer of such Assignable Charter.
 
3
Finance Documents
 
3.1
A duly executed original of any Finance Document not otherwise referred to in this Schedule 2 (Conditions Precedent).
 
3.2
A duly executed original of any other document required to be delivered by each Finance Document if not otherwise referred to this Schedule 2 (Conditions Precedent).
 
4
Security
 
A duly executed original of each Account Security (and of each document to be delivered under it).
 
5
MOA and escrow arrangements
 
5.1
A certified true and complete copy of the MOA (and any other document issued under or in connection with it).
 
5.2
If applicable, an escrow agreement in respect of the payment of the balance of the purchase price of Ship B and any other amount payable pursuant to the terms of the MOA, duly executed by the parties thereto (and any other document issued under or in connection with it).
 
6
Legal opinions
 
6.1
A legal opinion of Watson Farley & Williams, legal advisers to the Arranger, the Facility Agent and the Security Agent in England, substantially in the form distributed to the Original Lenders before signing this Agreement.
 
6.2
A legal opinion of Watson Farley & Williams, legal advisers to the Arranger, the Facility Agent and the Security Agent in Greece, substantially in the form distributed to the Original Lenders before signing this Agreement.
 
6.3
If a Transaction Obligor is incorporated in a jurisdiction other than England and Wales, a legal opinion of the legal advisers to the Arranger, the Facility Agent and the Security Agent in the relevant jurisdiction, substantially in the form distributed to the Original Lenders before signing this Agreement.
 
7
Other documents and evidence
 
7.1
Evidence that any process agent referred to in Clause 49.2 (Service of process), if not an Obligor, has accepted its appointment.
 
7.2
A copy of any other Authorisation or other document, opinion or assurance which the Facility Agent considers to be necessary or desirable (if it has notified the Borrowers accordingly) in connection with the entry into and performance of the transactions contemplated by any Transaction Document or for the validity and enforceability of any Transaction Document.
 
150
7.3
The executed original mandates or other documents required in connection with the opening or operation of the Accounts.
 
7.4
Evidence that the fees, costs and expenses then due from the Borrowers pursuant to Clause 11 (Fees) and Clause 16 (Costs and Expenses) have been paid or will be paid by the relevant Utilisation Date.
 
7.5
Such evidence as the Facility Agent may require for the Finance Parties to be able to satisfy each of their “know your customer”, anti-money laundering or similar identification procedures in relation to the transactions contemplated by the Finance Documents.
 
151
PART B

CONDITIONS PRECEDENT TO UTILISATION
 
In this Part B of Schedule 2 (Conditions Precedent):
 
(a)
“Relevant Borrower” means the Borrower who owns or will own the Relevant Ship.
 
(b)
“Relevant Ship” means the Ship which is financed by the Tranche utilised on the relevant Utilisation Date.
 
1
Borrowers
 
A certificate of an authorised signatory of the Relevant Borrower certifying that each copy document which it is required to provide under this Part B of Schedule 2 (Conditions Precedent) is correct, complete and in full force and effect as at the relevant Utilisation Date.
 
2
Ship and other security
 
2.1
A duly executed original of the Mortgage, the General Assignment and any Charterparty Assignment in respect of the Relevant Ship and of each document to be delivered under or pursuant to each of them together with documentary evidence that the Mortgage in respect of the Relevant Ship has been duly registered as a valid first preferred ship mortgage in accordance with the laws of the jurisdiction of the applicable Approved Flag.
 
2.2
Documentary evidence that the Relevant Ship:
 
(a)
(if the Relevant Ship is Ship B), has been delivered by the Sellers to Borrower B in accordance with the terms of the MOA and all amounts due by Borrower B under the MOA have been duly paid;
 
(b)
is definitively and permanently registered in the name of the Relevant Borrower under the Approved Flag.
 
(c)
is in the absolute and unencumbered ownership of the Relevant Borrower save as contemplated by the Finance Documents;
 
(d)
maintains the Approved Classification with the relevant Approved Classification Society free of all overdue recommendations and/or overdue material notations of that Approved Classification Society; and
 
(e)
is insured in accordance with the provisions of this Agreement and all requirements in this Agreement in respect of insurances have been complied with.
 
2.3
Documents establishing that the Relevant Ship will, as from the relevant Utilisation Date or (as applicable) the Delivery Date, be managed commercially by the relevant Approved Commercial Manager and managed technically by the relevant Approved Technical Manager on terms acceptable to the Facility Agent acting with the authorisation of all of the Lenders, together with:
 
(a)
a Manager’s Undertaking for each of the relevant Approved Technical Manager and the relevant Approved Commercial Manager; and
 
152
(b)
copies of that Approved Manager’s Document of Compliance and of the Relevant Ship’s Safety Management Certificate (together with any other details of the applicable Safety Management System which the Facility Agent requires) and of any other documents required under the ISM Code and the ISPS Code in relation to the Relevant Ship including without limitation an ISSC.
 
2.4
An opinion from an independent insurance consultant acceptable to the Facility Agent on such matters relating to the Insurances as the Facility Agent may require.
 
3
Valuations
 
Two (or, as applicable, three) valuations of the Relevant Ship, addressed to the Facility Agent on behalf of the Finance Parties, stated to be for the purposes of this Agreement and dated not earlier than 10 days before the relevant Utilisation Date from an Approved Valuer which show the Initial Market Value of the Relevant Ship.
 
4
Minimum Liquidity
 
Evidence that the Minimum Liquidity Amount is standing to the credit of the Earnings Account of the Relevant Borrower.
 
5
Legal opinions
 
Legal opinions of the legal advisers to the Arranger, the Facility Agent and the Security Agent in the jurisdiction of the Approved Flag of the Relevant Ship and such other relevant jurisdictions as the Facility Agent may require.
 
6
Other documents and evidence
 
6.1
Evidence that the fees, costs and expenses then due from the Borrowers pursuant to Clause 11 (Fees) and Clause 16 (Costs and Expenses) have been paid or will be paid by the relevant Utilisation Date.
 
6.2
Copies of the Trim and Stability Booklet of and the trading certificates of the Relevant Ship.
 
153
SCHEDULE 3

REQUESTS
 
PART A

UTILISATION REQUEST
 
From:     Good Ocean Navigation Co.
Traders Shipping Co.

To:         Aegean Baltic Bank S.A.
Dated: [●]
Dear Sirs
 
Good Ocean Navigation Co. and Traders Shipping Co. – $15,500,000 Facility Agreement dated [●] (the “Agreement”)

1
We refer to the Agreement.  This is the Utilisation Request.  Terms defined in the Agreement have the same meaning in this Utilisation Request unless given a different meaning in this Utilisation Request.
 
2
We wish to borrow the Advance under Tranche [A][B] on the following terms:
 

 Proposed Utilisation Date: [●] (or, if that is not a Business Day, the next Business Day)


Amount:
[●] or, if less, the Available Facility

Interest Period: [●]
 
3
[You are authorised and requested to deduct from the Advance prior to funds being remitted the following amounts set out against the following items:
 

 Deductible Items $

Up-front Fee
 

 Net proceeds of Advance _____________]
 
4
We confirm that each condition specified in Clause 4.1 (Initial conditions precedent) and Clause 4.2 (Further conditions precedent) of the Agreement as they relate to the Advance to which this Utilisation Request refers is satisfied on the date of this Utilisation Request.
 
5
The [net] proceeds of this Advance should be credited to [account].
 
6
This Utilisation Request is irrevocable.
 
Yours faithfully

[●]
authorised signatory for
GOOD OCEAN NAVIGATION CO.
TRADERS SHIPPING CO.

154
PART B

SELECTION NOTICE
 
From:     Good Ocean Navigation Co.
Traders Shipping Co.

To:         Aegean Baltic Bank S.A.
 
Dated: [●]
 
Dear Sirs
 
Good Ocean Navigation Co. and Traders Shipping Co. - $15,500,000 Facility Agreement dated [●] (the “Agreement”)

1
We refer to the Agreement.  This is a Selection Notice.  Terms defined in the Agreement have the same meaning in this Selection Notice unless given a different meaning in this Selection Notice.
 
2
We request [that the next Interest Period for the Loan be [●]] OR [an Interest Period for a part of the Loan in an amount equal to [●] (which is the amount of the Repayment Instalment next due) ending on [●] (which is the Repayment Date relating to that Repayment Instalment) and that the Interest Period for the remaining part of the Loan shall be [●]]
 
3
This Selection Notice is irrevocable.
 
Yours faithfully
 
[●]
authorised signatory for
GOOD OCEAN NAVIGATION CO.
TRADERS SHIPPING CO.

155
SCHEDULE 4

FORM OF TRANSFER CERTIFICATE
 
To:          Aegean Baltic Bank S.A. as Facility Agent
 
From:          [The Existing Lender] (the “Existing Lender”) and [The New Lender] (the “New Lender”)
 
Dated: [●]
 
Dear Sirs
 
Good Ocean Navigation Co. and Traders Shipping Co. – $15,500,000 Facility Agreement dated [●] (the “Agreement”)

1
We refer to the Agreement.  This is a Transfer Certificate.  Terms defined in the Agreement have the same meaning in this Transfer Certificate unless given a different meaning in this Transfer Certificate.
 
2
We refer to Clause 28.5 (Procedure for transfer) of the Agreement:
 
(a)
The Existing Lender and the New Lender agree to the Existing Lender transferring to the New Lender by novation all of the Existing Lender’s rights and obligations under the Agreement and the other Finance Documents which relate to that portion of the Existing Lender’s Commitment and participation in the Loan under the Agreement as specified in the Schedule in accordance with Clause 28.5 (Procedure for transfer) of the Agreement.
 
(b)
The proposed Transfer Date is [●].
 
(c)
The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of Clause 37.2 (Addresses) of the Agreement are set out in the Schedule.
 
3
The New Lender expressly acknowledges the limitations on the Existing Lender’s obligations set out in paragraph (c) of Clause 28.4 (Limitation of responsibility of Existing Lenders) of the Agreement.
 
4
This Transfer Certificate 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 Transfer Certificate.
 
5
This Transfer Certificate and any non-contractual obligations arising out of or in connection with it are is governed by English law.
 
6
This Transfer Certificate has been entered into on the date stated at the beginning of this Transfer Certificate.
 
Note: The execution of this Transfer Certificate may not transfer a proportionate share of the Existing Lender’s interest in the Transaction Security in all jurisdictions.  It is the responsibility of the New Lender to ascertain whether any other documents or other formalities are required to perfect a transfer of such a share in the Existing Lender’s Transaction Security in any jurisdiction and, if so, to arrange for execution of those documents and completion of those formalities.
 
156
THE SCHEDULE
 
Commitment/rights and obligations to be transferred
 
[insert relevant details]
 
[Facility Office address, fax number and attention details
 
for notices and account details for payments.]

[Existing Lender] [New Lender]

By: [●]
By: [●]

This Transfer Certificate is accepted by the Facility Agent and the Transfer Date is confirmed as [●].
 
[Facility Agent]
 
By: [●]
 
157
SCHEDULE 5

FORM OF ASSIGNMENT AGREEMENT
 
To:        Aegean Baltic Bank S.A. as Facility Agent and Good Ocean Navigation Co.  and Traders Shipping Co. as Borrowers, for and on behalf of each Transaction Obligor

From:     [the Existing Lender] (the “Existing Lender”) and [the New Lender] (the “New Lender”)
 
Dated: [●]
 
Dear Sirs
 
Good Ocean Navigation Co. and Traders Shipping Co. - $15,500,000 Facility Agreement dated [●] (the “Agreement”)

1
We refer to the Agreement.  This is an Assignment Agreement.  Terms defined in the Agreement have the same meaning in this Assignment Agreement unless given a different meaning in this Assignment Agreement.
 
2
We refer to Clause 28.6 (Procedure for assignment) of the Agreement:
 
(a)
The Existing Lender assigns absolutely to the New Lender all the rights of the Existing Lender under the Agreement, the other Finance Documents and in respect of the Transaction Security which correspond to that portion of the Existing Lender’s Commitment and participations in the Loan under the Agreement as specified in the Schedule.
 
(b)
The Existing Lender is released from all the obligations of the Existing Lender which correspond to that portion of the Existing Lender’s Commitments and participations in the Loan under the Agreement specified in the Schedule.
 
(c)
The New Lender becomes a Party as a Lender and is bound by obligations equivalent to those from which the Existing Lender is released under paragraph (b) above.
 
(d)
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 Borrowers or any other Transaction Obligor had against the Existing Lender.
 
3
The proposed Transfer Date is [●].
 
4
On the Transfer Date the New Lender becomes Party to the Finance Documents as a Lender.
 
5
The Facility Office and address, fax, number and attention details for notices of the New Lender for the purposes of Clause 37.2 (Addresses) of the Agreement are set out in the Schedule.
 
6
The New Lender expressly acknowledges the limitations on the Existing Lender’s obligations set out in paragraph (c) of Clause 28.4 (Limitation of responsibility of Existing Lenders) of the Agreement.
 
7
This Assignment Agreement acts as notice to the Facility Agent (on behalf of each Finance Party) and, upon delivery in accordance with Clause 28.7 (Copy of Transfer Certificate or Assignment Agreement to Borrower) of the Agreement, to the Borrowers (on behalf of each Transaction Obligor) of the assignment referred to in this Assignment Agreement.
 
158
8
This Assignment 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 Assignment Agreement.
 
9
This Assignment Agreement and any non-contractual obligations arising out of or in connection with it are governed by English law.
 
10
This Assignment Agreement has been entered into on the date stated at the beginning of this Assignment Agreement.
 
Note: The execution of this Assignment Agreement may not transfer a proportionate share of the Existing Lender’s interest in the Transaction Security in all jurisdictions.  It is the responsibility of the New Lender to ascertain whether any other documents or other formalities are required to perfect a transfer of such a share in the Existing Lender’s Transaction Security in any jurisdiction and, if so, to arrange for execution of those documents and completion of those formalities.
 
159
THE SCHEDULE
 
Commitment rights and obligations to be transferred by assignment, release and accession
 
[insert relevant details]
 
[Facility office address, fax number and attention details for notices
and account details for payments]
 
[Existing Lender] [New Lender]

By: [●]
By: [●]
 
This Assignment Agreement is accepted by the Facility Agent and the Transfer Date is confirmed as [●].
 
Signature of this Assignment Agreement by the Facility Agent constitutes confirmation by the Facility Agent of receipt of notice of the assignment referred to herein, which notice the Facility Agent receives on behalf of each Finance Party.
 
[Facility Agent]
 
By:
 
160
SCHEDULE 6

TIMETABLES
 
Delivery of the duly completed Utilisation Request (Clause 5.1 (Delivery of the Utilisation Request)) or a Selection Notice (Clause 9.1 (Selection of Interest Periods))
Two (2) Business Days before the intended Utilisation Date (Clause 5.1 (Delivery of the Utilisation Request)) or the expiry of the preceding Interest Period (Clause 9.1 (Selection of Interest Periods))



Facility Agent notifies the Lenders of the Advance in accordance with Clause 5.4 (Lenders’ participation)
One (1) Business Days before the intended Utilisation Date.



LIBOR is fixed
Quotation Day as of 11:00 am London time



Reference Bank Rate calculated by reference to available quotations in accordance with Clause 10.2 (Calculation of Reference Bank Rate)
Noon on the Quotation Day

161
SCHEDULE 7

FORM OF COMPLIANCE CERTIFICATE
 
To:         Aegean Baltic Bank S.A. as Facility Agent
 
From:     Seanergy Maritime Holdings Corp.
Dated: [●]
 
Dear Sirs
 
Good Ocean Navigation Co. and Traders Shipping Co. - $15,500,000 Facility Agreement dated [●] 2020 (the “Agreement”)
 
1
We refer to the Agreement.  This is a Compliance Certificate.  Terms defined in the Agreement have the same meaning when used in this Compliance Certificate unless given a different meaning in this Compliance Certificate.
 
2
We confirm that:
 
(a)
the Cash is $[●]; and
 
(b)
the Leverage Ratio is [●] per cent.
 
3
We confirm that no Default is continuing.
 
Signed:


Officer of
SEANERGY MARITIME HOLDINGS CORP.

162
EXECUTION PAGES
 
BORROWERS

SIGNED by Stavros Gyftakis
)
duly authorised as an attorney-in-fact
)
for and on behalf of
)
GOOD OCEAN NAVIGATION CO.
) /s/ Stavros Gyftakis
in the presence of:
)
Witness’ signature: /s/ Vasiliki Angeletaki
)
Witness’ name: Vasiliki Angeletaki
)
Witness’ address: Watson Farley & Williams Greece
)
 
348 Syngrou Avenue
 
17674 Kallithea
 
Athens - Greece
Occupation: Attorney-at-Law

SIGNED by Stavros Gyftakis
)
duly authorised as an attorney-in-fact
)
for and on behalf of
)
TRADERS SHIPPING CO.
) /s/ Stavros Gyftakis
in the presence of:
)
Witness’ signature: /s/ Vasiliki Angeletaki
)
Witness’ name:  Vasiliki Angeletaki
)
Witness’ address: Watson Farley & Williams Greece
)
 
348 Syngrou Avenue
 
17674 Kallithea
 
Athens - Greece
Occupation: Attorney-at-Law

GUARANTOR

SIGNED by Stavros Gyftakis
)
duly authorised as an attorney-in-fact
)
for and on behalf of
)
SEANERGY MARITIME HOLDINGS CORP.
) /s/ Stavros Gyftakis
in the presence of:
)
Witness’ signature: /s/ Vasiliki Angeletaki
)
Witness’ name: Attorney-at-Law
)
Witness’ address: Watson Farley & Williams Greece
)
 
348 Syngrou Avenue
 
17674 Kallithea
 
Athens - Greece
Occupation: Attorney-at-Law

163
ORIGINAL LENDERS

SIGNED by Electra Ch. Manolopoulou, Panagiotis P. Nikitarakos
)
duly authorised
) /s/ Electra Ch. Manolopoulou
for and on behalf of
) Senior Relationship Manager
AEGEAN BALTIC BANK S.A.
) /s/ Panagiotis P. Nikitarakos
in the presence of:
)
Witness’ signature: /s/ Vasiliki Angeletaki
)
Witness’ name:Vasiliki Angeletaki
)
Witness’ address: Watson Farley & Williams Greece
)
 
348 Syngrou Avenue
 
17674 Kallithea
 
Athens - Greece
Occupation: Attorney-at-Law

ARRANGER

SIGNED by Electra Ch. Manolopoulou, Panagiotis P. Nikitarakos
)
duly authorised
) /s/ Electra Ch. Manolopoulou
for and on behalf of
) Senior Relationship Manager
AEGEAN BALTIC BANK S.A.
) /s/ Panagiotis P. Nikitarakos
in the presence of:
)
Witness’ signature: /s/ Vasiliki Angeletaki
)
Witness’ name: Vasiliki Angeletaki
)
Witness’ address: Watson Farley & Williams Greece
)
 
348 Syngrou Avenue
 
17674 Kallithea
 
Athens - Greece
Occupation: Attorney-at-Law

FACILITY AGENT

SIGNED by Electra Ch. Manolopoulou, Panagiotis P. Nikitarakos
)
duly authorised
) /s/ Electra Ch. Manolopoulou
for and on behalf of
) Senior Relationship Manager
AEGEAN BALTIC BANK S.A.
) /s/ Panagiotis P. Nikitarakos
in the presence of:
)
Witness’ signature: /s/ Vasiliki Angeletaki
)
Witness’ name: Vasiliki Angeletaki
)
Witness’ address: Watson Farley & Williams Greece
)
 
348 Syngrou Avenue
 
17674 Kallithea
 
Athens - Greece
Occupation: Attorney-at-Law

164
SECURITY AGENT

SIGNED by Electra Ch. Manolopoulou, Panagiotis P. Nikitarakos
)
duly authorised
) /s/ Electra Ch. Manolopoulou
for and on behalf of
) Senior Relationship Manager
AEGEAN BALTIC BANK S.A.
) /s/ Panagiotis P. Nikitarakos
in the presence of:
)
Witness’ signature: /s/ Vasiliki Angeletaki
)
Witness’ name: Vasiliki Angeletaki
)
Witness’ address: Watson Farley & Williams Greece
)
 
348 Syngrou Avenue
 
17674 Kallithea
 
Athens - Greece
Occupation: Attorney-at-Law


165
Exhibit 4.53

BAREBOAT CHARTER AGREEMENT “FLAGSHIP” (IMO NO. 9514224)

Dated as of 11 May 2021

Between

CARGILL INTERNATIONAL SA
as Owner,

and

FLAG MARINE CO.
as Charterer

TABLE OF CONTENTS
Page

1.
CONDITION PRECEDENT
5
2.
TIME CHARTER
5
3.
CHARTER TERM
5
4.
DELIVERY; REDELIVERY
6
5.
CHARTER HIRE
12
6.
USE; OPERATIONS
 13
7.
MAINTENANCE AND OPERATION
 17
8.
ALTERATIONS
 20
9.
INSURANCE-GENERAL
 22
10.
LIENS
 26
11.
MORTGAGES; FINANCING; SUBORDINATION
 27
12.
END OF CHARTER AND OTHER OPTIONS
 28
13.
REPRESENTATIONS AND WARRANTIES; OWNER COVENANTS
 34
14.
ASSIGNMENT; SUB-BAREBOAT CHARTER
 35
15.
LOGO AND VESSEL NAMES
 35
16.
NOTICES
 36
17.
DEFAULTS; REMEDIES
 37
18.
INDEMNIFICATION, WITHHOLDING AND CERTAIN AGREEMENTS
 42
     
19.
INCOME TAX
 46
20.
LAW AND JURISDICTION
 46
21.
SALVAGE
 47
22.
WAR
 47
23.
ASSIGNMENT OF INSURANCES
 48
24.
CHANGE OF OWNERSHIP
 48
25.
WAIVER
49
26.
NO REMEDY EXCLUSIVE
49
27.
ENTIRE AGREEMENT; AMENDMENT
49
28.
COUNTERPARTS
49
29.
SEVERABILITY
49
30.
CAPTIONS
49
31.
BINDING EFFECT
50
32.
INTERPRETATION
50

2
Exhibits
Exhibit A - Basic Charter Hire
Exhibit A-1 - Loss Value and Purchase Price Schedule
Exhibit B – Notice of Assignment of Insurances
Exhibit C – Agreed form of Time Charter

3
BAREBOAT CHARTER AGREEMENT “FLAGSHIP” (IMO NO. 9514224).

This Bareboat Charter Agreement “FLAGSHIP” (IMO No. 9514224) (the “Charter”) is made the 11th  day  of  May  2021  by  and  between  Cargill  International  SA,  a company incorporated pursuant to the laws of Switzerland having its registered address at Esplanade de Pont-Rouge 4, 1212 Grand-Lancy, Switzerland (the “Owner”), and Flag Marine Co. a company incorporated pursuant to the laws of the Republic of the Marshall Islands having its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands (the “Charterer“).
 
(The Owner and the Charterer, each a “Party” and together, the “Parties”)

RECITALS

WHEREAS, the Charterer (as seller, “Seller”), Seanergy Maritime Holdings Corp. a company incorporated pursuant to the laws of the Republic of the Marshall Islands having its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands (as guarantor, “Guarantor”) and the Owner (as buyer) have entered into a memorandum of agreement dated 7 May 2021 (as amended, modified and supplemented from time to time, the “MOA”) whereby the Buyer has agreed to purchase the Vessel from the Seller under the terms and conditions set forth therein and pursuant to which the Buyer shall nominate CFT Investment 1 LLC (the “Head Owner”) (as the nominee of the Owner).

WHEREAS, the Owner and the Head Owner, have entered into an Agreement to Acquire and Charter for the m/v “FLAGSHIP” (as amended, supplemented or otherwise modified from time to time) dated as of 7 May 2021 whereby the Head Owner has agreed to acquire the Vessel and bareboat charter the Vessel to the Owner and the Owner has agreed to cause title to the Vessel to be transferred directly to the Head Owner.
 
WHEREAS, the Owner, the Head Owner, the Time Charterer (as defined below) and the Charterer have entered into a multipartite agreement dated as of 11 May 2021 (as amended,  supplemented  or   otherwise   modified   from   time   to   time,   the   “Multipartite Agreement”) whereby, inter alia, the Charterer agrees that this Charter shall be subordinated to the Head Owner’s interests under the Bareboat Charter (as defined below).

WHEREAS, immediately subsequent to delivery of the Vessel under this Charter, the Vessel will be duly documented in the name of the Head Owner as owner thereof under the laws and flag of the Republic of the Marshall Islands (the “Flag State”) under Official No. 9408.

WHEREAS, the Head Owner has agreed to bareboat charter the Vessel to the Owner after its delivery on terms agreed between them (the “Bareboat Charter”) on the date of this Charter.

WHEREAS, upon delivery of the Vessel to the Owner under the Bareboat Charter, the Owner and the Charterer desire for the Owner to sub-bareboat charter the Vessel to the Charterer to be used to carry bulk cargoes.

WHEREAS, the Owner and the Charterer desire for the Charterer to let the Vessel out on hire under a time charter dated as of 11 May 2021 in the form appended at Exhibit C hereto (as amended, supplemented or otherwise modified from time to time, the “Time Charter”) to the Owner as time charterer (in such capacity, the “Time Charterer”) upon taking delivery of the Vessel hereunder, the Time Charter to be of equal duration to this Charter.
 
4
WHEREAS, as security for the due and punctual performance of, inter alia, the Charterer’s obligations under, inter alia, this Charter, the Guarantor has guaranteed, inter alia, the obligations of the Charterer under, inter alia, this Charter pursuant to a guarantee dated 6 May 2021 in favour of the Owner and the Time Charterer (as may be amended, supplemented or otherwise modified from time to time, the “Guarantee”) (the Guarantee and any Additional Security (as defined in Section 17(b)(vii) of this Charter), the “Charter Security”).
 
NOW THEREFORE, in consideration of the mutual promises, covenants and conditions contained in this Charter, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Owner and the Charterer agree as follows:
 

 1.
Condition Precedent
 
It shall be a condition precedent to this Charter that the Head Owner shall have accepted and taken delivery of the Vessel under the MOA, and that the Owner shall have accepted and taken delivery of the Vessel under the Bareboat Charter failing which any and all obligations this Charter of either Party toward the other shall be null and void and of no effect.
 

 2.
Time Charter.
 
It is hereby agreed between the Parties that, upon the Owner’s confirmation to the Charterer of the delivery of the Vessel to the Owner under the Bareboat Charter, and the delivery of the Vessel under this Charter, the Charterer and the Time Charterer automatically (without further action by either the Charterer or the Time Charterer) shall be deemed to have entered into the Time Charter.


 3.
Charter Term.


(a)
Subject to the terms and conditions of this Charter, the Owner hereby charters and demises to the Charterer and the Charterer hereby hires, and takes on demise, from the Owner, the Vessel. Except as otherwise provided in this Charter, the term of this Charter (the “Charter Term”) shall continue from (x) the date of delivery of the Vessel to the Head Owner as nominee of the Seller, delivery by the Head Owner to the Owner under the Bareboat Charter and delivery by the Owner to the Charterer under this Charter in accordance with the terms of Section 4(a) (the date of such occurrence being in this Charter called the “Delivery Date”) up to and through (y) the date falling sixty (60) months following the Delivery Date.
 

 (b)
There shall be no extension of this Charter beyond the initial sixty (60) month term described in Section 3(a).

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 4.
Delivery; Redelivery.
 

 (a)
Delivery.
 
(i)          Delivery of the Vessel under this Charter will take place simultaneously with delivery of the Vessel by the Head Owner to the Owner under the Bareboat Charter. For the avoidance of doubt, the Owner shall not be liable for any delay in delivery of the Vessel. Delivery of the Vessel to the Owner by the Head Owner under the Bareboat Charter shall be deemed to constitute (A) full performance by the Owner of its obligations to deliver the Vessel to the Charterer under this Charter (including, without limitation, in relation to the condition and/or class of the Vessel at delivery) and (B) acceptance by the Charterer of the same. The Vessel shall be delivered to the Charterer with all documentation relating to the operation of the Vessel and its equipment that the Owner receives from the Seller pursuant to the MOA and/or from the Head Owner pursuant to the Bareboat Charter, including, to the extent received by the Owner pursuant to the MOA, technical and operating manuals, construction drawings, specifications, repair records, classification reports, regulatory inspection records and approvals (collectively, the “Technical Documents”). During the Charter Term, the Charterer shall be entitled to possession of the Technical Documents; provided, however, that the Owner and its designees shall be allowed reasonable access to and may make copies of the Technical Documents upon three (3) Business Days’ prior written notice to the Charterer.

(ii)         The Owner has been assigned all of the rights and interests that the Owner (as buyer) has or may have with respect to the Vessel under the MOA (the “Assigned Interests”). The Owner hereby assigns to the Charterer such rights and interests as the Owner may have in the Assigned Interests and such assignment shall be co-extensive with the Charter Term. The Charterer shall use due diligence to assert and enforce all such rights and interests. Upon termination or expiration of this Charter (unless the Charterer acquires the Vessel pursuant to the terms and conditions of Section 12 of this Charter or, as the case may be, the Charterer (or, as the case may further be, the Charterer’s nominee) acquires the Vessel pursuant to the terms and conditions of clause 5.1 of the Multipartite Agreement), the Charterer shall be deemed to have automatically re-assigned all its rights and interests in the Assigned Interests to the Owner. The Charterer hereby re-assigns to the Owner any amounts payable to the Charterer by or for the account of the Seller (as a result of the assignment made in the second sentence of this Section 4(a) (ii)), all of which amounts shall be paid to the Owner, provided that any sums the Charterer shall have paid or agreed to pay third parties for correcting the damage, defects or deficiencies in the Vessel shall be excluded from such re-assignment and such sums shall be paid to the Charterer and the Charterer shall use such sums solely to pay such third parties for correcting the damage, defects or deficiencies in the Vessel.
 
(iii)        Without prejudice to Sections 4(d) and 4(e)(i), on the Delivery Date, the Vessel shall be in class without conditions or recommendations and shall be classed with DNV (“Classification Society”). During the Charter Term, the Vessel shall remain classed with the Classification Society or, with the prior written consent of the Owner, which consent shall not be withheld or delayed unreasonably, another classification society that is a member of the International Association of Classification Societies, and in the event that the Owner gives such written consent, as and from the date of the change in classification society all references to ‘Classification Society’ in this Charter shall be read and construed as meaning the Vessel’s new classification society as consented to by the Owner in such written consent.

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(iv)      THE OWNER HEREBY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, BUT NOT LIMITED TO, TITLE OR THE DESIGN, CONDITION, MERCHANTABILITY, SEAWORTHINESS OF OR THE QUALITY OF THE MATERIAL, EQUIPMENT, OR WORKMANSHIP IN THE VESSEL, AS TO ITS FITNESS FOR A PARTICULAR PURPOSE OR ANY PARTICULAR TRADE, OR AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AND THE OWNER FURTHER DISCLAIMS ALL OTHER LIABILITIES (AT COMMON LAW OR IN CONTRACT OR IN ADMIRALTY OR TORT OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, STRICT LIABILITY OR NEGLIGENCE IN ANY DEGREE). THE VESSEL IS DELIVERED BY THE OWNER TO THE CHARTERER “AS IS, WHERE IS” AND WITH ALL FAULTS.


 (b)
Redelivery. The provisions respecting redelivery of the Vessel as set forth in Sections 4(c), 4(d)(ii), 4(e), 4 (f), 4(g), and 4(h) shall not be applicable in the event that the Charterer acquires the Vessel pursuant to the terms and conditions of Section 12(a) or 12(b), as the case may be, and/or clause 5 of the Multipartite Agreement.
 

 (c)
The Charterer shall, at its own cost and expense, following the termination of this Charter in accordance with Section 17(b)(i), redeliver the Vessel to the Owner at a location designated by the Owner and being reasonably acceptable to the Charterer. Such location shall be an easily accessible location, recognised as a safe port within the following ranges dropping last outward sea pilot or passing:
 
Singapore / Japan range, with intention delivery port in Japan or South Korea or Philippines in the Charterer’s option
 
with such location never to be within a Prohibited Country and always within International Navigation Limits.
 
The Charterer shall redeliver all Technical Documents to the Owner with the Vessel. The Charterer shall also provide to the Owner prior to redelivery evidence of the most recent drydocking, inspection and related repairs required by this Charter, together with written confirmation by the Charterer that to the best of its knowledge and belief there has been no subsequent damage, grounding, collision or other similar material event subsequent to such drydocking (or providing the details of any of such events that may have occurred).

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Commencing upon a determination pursuant to Section 17 that the Vessel will be redelivered, and through the completion of redelivery, the Charterer will allow for and assist in making the Vessel available for inspection at ports of call thereafter by potentially interested purchasers or charterers of the Vessel, as requested by the Owner. Any such inspection shall be without interference with or delay of the Vessel’s operations and without interference with the Vessel’s crew.


 (d)
Survey, Inventory and Inspection.

(i)          On, or in the Owner’s option, prior to, the Delivery Date, the Charterer, at its own cost and expense, shall do a survey of the Vessel and its inventory. The Owner agrees to accept such survey (the “On-hire Survey”) as the benchmark for the condition of the Vessel and the amount of inventory on the Vessel at the commencement of the Charter Term. The Charterer hereby unconditionally agrees that the Vessel’s condition will be acceptable to it in all respects and in accordance with the terms of this Charter and the Charterer will have no claim against the Owner whatsoever in respect of any defects, damage or deficiencies and/or other items and/or matters resulting in and/or which are the subject of any recommendation or condition of class (“Deficiencies”) or otherwise identified during the UWI (as defined in Section 4(d)(iv) below) (which, for the purposes of the On-hire Survey, the Parties shall ignore) or otherwise identified during any UWI (as defined in Section 4) during and/or after the Charter Term and/or following purchase of the Vessel by the Charterer. If requested by the Owner, and at the Charterer’s expense, an underwater survey may be performed as part of the On-hire Survey unless an UWI has been performed by the Charterer before the delivery of the Vessel from the Original Seller. Purchase of bunkers and fuel oil on board the Vessel at the time of delivery under the Time Charter will be made in accordance with the terms of the Time Charter.
 
(ii)         Following the termination of this Charter in accordance with Section 17(b) (i), the Owner shall appoint an independent marine surveyor, who is reasonably acceptable to the Charterer, for the purpose of determining and agreeing in writing the condition of the Vessel at the time of redelivery under this Charter (the “Off-hire Survey”) as well as a plan to implement any correction of any deficiencies construed by the surveyor to exceed normal wear and tear. The expenses for the independent surveyor for such survey shall be paid by the Charterer. Such survey will include, but not be limited to, an inventory of all consumables, stores, spare parts and equipment on board the Vessel and ashore; a monetary valuation of such inventory; a general condition survey of the Vessel including photographic or videotape records; an inspection of class records; and an inspection of maintenance records. If requested by the Owner, and at the Charterer’s own cost and expense, an underwater survey may be performed as part of the Off-hire Survey.
 
(iii)        The On-hire Survey report and the Off-hire Survey report (if any), when agreed, shall be deemed to be incorporated into this Charter by reference.

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(iv)        At the request of the Owner, the Charterer shall at its own cost and expense arrange for an underwater inspection of the Vessel (the “UWI”) to be performed by a diver approved by the Classification Society before, on or after (in the Owner’s option) the Delivery Date at a place at which conditions are suitable for such underwater inspection (as determined by the Owner or the Classification Society), provided that the underwater inspection of the Vessel carried out under the MOA prior to the Delivery Date shall be considered to be the UWI to the extent and for the purposes of this Charter. The UWI shall be carried out in the presence of a Classification Society surveyor arranged for by the Charterer and acceptable to the Owner and paid for by the Charterer. The Owner’s and the Head Owner’s representative(s) shall have the right to be present at the UWI as observer(s) only without interfering with the work or decisions of the Classification Society surveyor. The extent of the UWI and the conditions under which it is performed shall be to the satisfaction of the Classification Society. Any Deficiencies discovered during the UWI shall be rectified by the Charterer pursuant to Section 7(b). If the Vessel’s rudder, propeller, bottom or other underwater parts are found broken, damaged or defective (but excluding any fouling or marine growth) during the UWI and such breakage, damage or defects do not constitute Deficiencies, the Charterer shall at the Charterer’s own cost and expense promptly remedy such breakage, damage or defect to the Owner’s and the Head Owner’s satisfaction (such satisfaction in the sole discretion of the Owner and the Head Owner) but without unreasonably interfering with the Time Charterer’s use or operation of the Vessel. If any fouling of and/or marine growth on the Vessel’s rudder, propeller, bottom or other underwater parts is discovered during the UWI, and the extent of such fouling and/or marine growth is greater than would reasonably be expected to have accumulated on a hull of similar type, size and age to the Vessel’s hull up to the date of the UWI, the Charterer shall, at the Charterer’s own cost and expense but without unreasonably interfering with the Time Charterer’s use or operation of the Vessel, promptly (and in all events at the next drydocking of the Vessel or such earlier date as required by the Classification Society and/or United States Coast Guard (as applicable and as the case may be)) clean such fouling and/or marine growth to the Owner’s and the Head Owner’s reasonable satisfaction.


 (e)
Redelivery – Condition.
 
(i)          The Charterer agrees that on redelivery of the Vessel, the Vessel, its tackle, apparel, equipment and other appurtenances shall be clean, suitable, and in the same or as good order and condition and class as when delivered, fair wear and tear excepted, not affecting class excepted, and in all respects shall be seaworthy. For the avoidance of doubt, any Deficiencies shall be rectified and made good in all respects by the Charterer as required by the Classification Society and in any event prior to the date of redelivery of the Vessel by the Charterer to the Owner and the Vessel shall be redelivered to the Owner in class without any recommendation or condition of class. The Charterer further agrees that on redelivery of the Vessel (A) the Vessel will be re-delivered cargo free with holds and storage places cargo-free, clean and swept ready to load cargo, (B) the Vessel shall be capable of carrying the highest possible quality cargo according to class and Vessel specifications, (C) all food storage and preparation areas will be cleaned, sanitized, dry and ready for immediate operation, and (D) the Vessel shall be capable of operating for its intended use as a vessel of its type, size and age and subject to any subsequent alterations as provided by Section 8.

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(ii)         The Charterer agrees that upon redelivery of the Vessel (A) the Vessel shall have all valid trading, class and class related certificates in place and up to date, which shall have not less than six (6) months’ validity remaining (B) there shall be not less than six (6) months remaining prior to the next special survey and dry docking of the Vessel as required by the Classification Society, such six (6) month period being without any consideration to any extension granted by the Classification Society, and (C) the Vessel shall have installed thereon all spares required by the Classification Society and by all regulatory authorities having jurisdiction over the Vessel. The Charterer further agrees that in the event of the redelivery of the Vessel by the Charterer to the Owner, it is understood and agreed that the Vessel shall be redelivered after having successfully completed a ten (10) year special survey and her latest scheduled intermediate survey following such ten (10) year special survey prior to such redelivery with her ballast water treatment system installed and maintained in full compliance with the requirements of the Flag State the Classification Society, any other applicable classification societies and/or certifying authorities, and/or any regulatory or governmental agencies or authorities having jurisdiction over the Vessel and its equipment (or the area where the Vessel is operating from time to time), including, if applicable, the United States Coast Guard. The Charterer further agrees that upon redelivery, the Vessel shall be in full compliance with all applicable rules and regulations (including those of the International Maritime Organization (“IMO”)), including (but not limited to) all applicable sulfur emissions requirements, with which the vessels uninterrupted worldwide trading are required to comply at the time of redelivery.

(iii)       Without prejudice to the remedies available to the Owner pursuant to Section 17(b), the Charterer further agrees that upon redelivery of the Vessel by the Charterer to the Owner following the termination of this Charter in accordance with Section 17(b)(i), the Charterer shall fully indemnify the Owner against, and reimburse the Owner for, and the Charterer shall pay no later than thirty (30) days after the Owner’s demand, the Owner for any and all costs incurred by the Owner (including, if applicable, the resolution of any Deficiencies) in connection with (A) the Vessel’s ten (10) year special survey and her latest scheduled intermediate survey following such ten (10) year special survey; (B) the Vessel’s ballast water treatment system to the extent that it does not comply with the requirements specified under Section 4(e)(ii) above; (C) the Approved ESD to the extent that the same have been installed on board the Vessel in accordance with the requirements of the Time Charter; and (D) the Vessel not being in full compliance with the other requirements under Section 4(e)(ii) above.
 
(iv)        The Charterer agrees that upon re-delivery, the functional and operating integrity of all machinery and equipment of the Vessel shall be verified and approved by an independent marine surveyor designated by the Owner.

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 (f)
Redelivery – Certificates. The Charterer agrees that upon redelivery the Vessel will meet the complete requirements of, and be certificated at, RightShip 3-star level or equivalent replacement thereof (if available).
 

 (g)
Redelivery – Access. Following the termination of this Charter in accordance with Section 17(b) (i) and during the last six (6) months of the Charter Term, the Charterer shall permit access to the Vessel at reasonable times to the Owner and to persons designated by the Owner, and shall permit the inspection of the Vessel by such persons.
 

 (h)
Redelivery Inventory. The Charterer shall redeliver the Vessel with the same amount of unbroached provisions, paints, oils, ropes, spare parts and equipment, and other unused consumable stores as are on board and ashore at the commencement of the Charter Term as determined pursuant to the inventory conducted as part of the On-hire Survey. In the event consumable stores are greater at redelivery than at delivery, the Charterer may remove the excess. Notwithstanding any term or condition of the Time Charter, all bunkers and fuel oil onboard the Vessel at the time of redelivery shall remain the property of the Owner. Title to lubricants on board the Vessel at the time of redelivery shall be deemed to transfer to the Owner at the time of redelivery and the Owner shall not be obliged to pay for such lubricants.
 

 (i)
Documentation. The Parties agree that on the Delivery Date, the Vessel shall be duly documented and registered in the name of the Head Owner as owner thereof under the laws and flag of the Flag State. The Owner shall be responsible for such registration and the Charterer shall promptly provide all assistance required by the Owner for the purposes of such registration. The Charterer shall be responsible for naming the Vessel and for paying for initial Flag State documentation and maintaining such due documentation throughout the Charter Term, at the Charterer’s own cost and expense, provided, the Owner agrees that the Owner will reasonably cooperate with the Charterer in establishing and maintaining such Flag State documentation. The Charterer shall also pay all the Flag State fees associated with initial documentation and any annual Flag State fees required to maintain documentation or the Head Owner’s foreign maritime entity status. The Charterer shall not suffer or permit anything to be done which might injuriously affect the entitlement of the Vessel to be documented under the laws and regulations of the Flag State.

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 5.
Charter Hire.


(a)
Charter Hire.
 
(i)          Basic Charter Hire. The Charterer shall pay to the Owner charter hire for the Vessel during the Charter Term (“Basic Charter Hire”) at the applicable rate per day set forth in Exhibit A hereto on (y) each Charter Hire Payment Date; and (z) any other date as provided for under this Charter.

(ii)        Additional Hire. All amounts (other than Basic Charter Hire) to be paid by the Charterer to the Owner under this Charter, and all indemnities, fees, costs and other expenses whatsoever incurred by: (A) the Owner under, or in connection with, the Transaction Documents (or any of them) and the transactions contemplated thereby; and (B) by the Head Owner under, or in connection with, this Charter, the Bareboat Charter, the Multipartite Agreement and the transactions contemplated thereby, shall be deemed “Additional Hire”. Basic Charter Hire and Additional Hire are collectively called “Charter Hire”. For the purposes of this Charter, “Transaction Documents” means, together, this Charter, the Multipartite Agreement, the MOA and the Guarantee.

(iii)        Partial Months. If the Charterer is required by the terms of this Charter to pay Charter Hire to the Owner on a date other than a Charter Hire Payment Date defined in Section 5(a)(iv) below, the Charter Hire payable for the period from the immediately preceding Charter Hire Payment Date through such date shall be payable at a daily rate equal to the applicable annual Charter Hire rate for such period divided by three hundred and sixty-five (365) days and multiplied by the actual number of days for which Charter Hire is payable.

(iv)        Charter Hire Payments. Payments of Charter Hire shall be paid in United States currency to such account and in such manner as may be designated in writing by the Owner from time to time. Basic Charter Hire shall be paid monthly in arrears on the day numerically corresponding to the day of the Delivery Date occurring in each month during the Charter Term following the month in which the Delivery Date occurs (each, a “Charter Hire Payment Date”); and provided further that if the Charter Hire Payment Date does not fall on a day on which banks are open for business in London, New York, Athens and Geneva (a “Business Day”), the applicable Charter Hire Payment Date shall be the next following Business Day (unless that day would be in the next calendar month, in which case it shall fall on the preceding Business Day).

(v)         Default Interest. In the event that any Basic Charter Hire or Additional Hire payable by the Charterer is not paid on the due date thereof, interest shall accrue on such unpaid amount from and including the date that falls two (2) days after the due date of the unpaid amount to and excluding the date of payment thereof at the Default Rate (as defined below). Any such accrued interest shall be Additional Hire and shall be payable upon demand.

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 (b)
Hell or High Water Charter Obligation. This Charter may not be cancelled or terminated, except in accordance with the express provisions of this Charter and the Multipartite Agreement, for any reason whatsoever. The Charterer shall have no right to be released, relieved or discharged from any obligation or liability under this Charter except as set forth in explicit provisions of this Charter. Except as hereinafter provided, the Charterer’s obligation to pay Charter Hire under this Charter shall be absolute during the term of this Charter irrespective of any contingency whatsoever, including, but not limited to (i) any set-off, counterclaim, recoupment, defense or other right which either Party may have against the other; (ii) any failure of the Vessel to meet the required condition of delivery under the MOA or any failure of the Vessel to meet any operational standards set forth in the MOA; (iii) any damage to, destruction or taking of the Vessel, any requisition of use, any inability of the Vessel to trade in any particular trade, any temporary unavailability of the Vessel by reason of any damage to the Vessel, any lay-up of the Vessel, any failure of the Vessel to be duly documented in the Flag State, or any defect in the Owner’s title to the Vessel; (iv) any failure on the part of any Party, whether with or without fault on its part, in performing or complying with any of the terms or covenants under this Charter; (v) any insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding by or against the Charterer or the Guarantor or any other person; (vi) any invalidity or unenforceability, or lack of due authorization of or defect in the execution, of this Charter; (vii) any War Risks; (viii) any event of force majeure or frustration; and (ix) any other reason whatsoever. Nothing contained in this Section 5(b) shall be deemed to hinder or prevent the Charterer from pursuing any claim the Charterer may have against the Owner for damages for the Owner’s breach of its express obligations under this Charter.
 
For the purposes of this Charter:

“Default Rate” shall mean, for any day, a rate of interest per annum equal to the lesser of (i) nine per cent. (9%) and (ii) the maximum rate permitted by applicable law.


 6.
Use; Operations


(a)
Subject to the provisions of Section 6(e), the Charterer may operate the Vessel worldwide, provided: (i) the Charterer shall only use the Vessel in the territorial waters of nations which recognize the rights of vessels registered in the Flag State; (ii) the Vessel shall be used only in locations where the Vessel’s operating specifications allow it to operate safely; (iii) the Vessel shall be employed only in lawful activities under the laws of the United States and any authority having jurisdiction over the Vessel; and (iv) the Vessel shall always be operated within its technical capacities and certification, manufacturer’s warranties, and within the limits of its insurance coverage


(b)
The Charterer (i) shall comply with and satisfy (and to the extent required, obtain, maintain, renew and have on board certificates evidencing its compliance with) all provisions of any applicable law, treaty, convention, regulation, proclamation, rule or order applicable to the Vessel, its use, operation, maintenance, repair or condition, including, but not limited to, all applicable IMO rules and regulations, including (but not limited to) all applicable sulfur emissions requirements, and any financial responsibilities imposed on the Charterer or the Vessel with respect to pollution by any state or nation or political subdivision thereof and (ii) shall maintain all certificates or other evidence of financial responsibility and a vessel spill response plan required under United States law approved by the relevant authority and evidence of their approval by the appropriate United States government entity (including, but not limited to, the United States Coast Guard) as may otherwise be required by any such law, treaty, convention, regulation, proclamation, rule or order with respect to the operations and trading in which the Vessel is from time to time engaged.

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 (c)
The Charterer (including by its Vessel managers) shall have sole responsibility as owner (and, as the case may be, demise owner) and as technical and commercial operator of the Vessel under all Environmental Laws and under certificates of financial responsibility and vessel spill response plans.
 

 (d)
Without prejudice to the generality of Section 6(b) above, the Charterer and the Vessel shall comply with all Environmental Laws including but not limited to the requirements of the IMO, the Flag State and the United States Coast Guard (as amended from time to time). The Charterer shall promptly implement any corrective actions required by the Flag State (or other governmental agencies or regulatory authorities having jurisdiction over the Vessel) as a result of non-compliance with any Environmental Law.
 

 (e)
The Charterer covenants and agrees that the Vessel will not (i) be chartered (or sub-chartered) to a Prohibited Person unless authorized under a specific or general license issued by the U.S. Treasury Department Office of Foreign Assets Control (“OFAC”), (ii) make voyages to or from any Prohibited Country unless authorized under a specific or general license issued by OFAC, or  (iii) be allowed to carry any cargo from or destined to a Prohibited Country unless authorized under a specific or general license issued by OFAC.


(f)
The Charterer covenants and agrees that it will conduct its businesses and manage its properties (including, but not limited to, operation of the Vessel) in compliance with all applicable anti- money laundering and anti-corruption laws, rules and regulations.


(g)
Energy Saving Devices
 
(i)          For the avoidance of doubt, the Parties agree that following its installation on the Vessel in accordance with the Time Charter, the Approved ESD shall, for all purposes of this Charter and the Multipartite Agreement, be deemed to be a Non-Severable Modification (as such term is defined in Section 8 (e)(i)).

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(ii)        If the Charterer exercises its early purchase option under Section 12(b) or if the Owner, by written notice to the Charterer, declares the Charterer in default under this Charter pursuant to Section 17 and the Event of Default in question is an Event of Default under the Bareboat Charter, and the Charterer is entitled to purchase the Vessel pursuant to the terms of clause 5 of the Multipartite Agreement and the Vessel is to be acquired by the Charterer pursuant to such terms, the Charterer shall, as a condition of such acquisition, reimburse to the Owner any unamortized costs of the Approved ESD as at the date on which the Vessel is acquired by the Charterer pursuant to clause 109 of the Time Charter.

For the purposes of this Charter:

“Approved ESD” means the energy saving devices that the Owner will notify to the Charterer.
 
“Environment” means humans, animals, plants and all other living organisms including the ecological systems of which they form part and the following media:
 
(a)
air (including, without limitation, air within natural or man-made structures, whether above or below ground);
 
(b)
water (including, without limitation, territorial, coastal and inland waters, water under or within land and water in drains and sewers); and
 
(c)
land (including, without limitation, land under water).
 
“Environmental Approval” means any present or future permit, ruling, variance or other authorisation required under Environmental Law.
 
“Environmental Claim” means any claim, proceeding, formal notice or investigation by any governmental, judicial or regulatory authority or any other person which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law and, for this purpose, “claim” includes a claim for damages, compensation, contribution, injury, fines, losses and penalties or any other payment of any kind, including in relation to clean-up and removal, whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset.
 
“Environmental Incident” means:
 
(a)
any release, emission, spill or discharge into the Vessel or into or upon the air, sea, land or soils (including the seabed) or surface water of Environmentally Sensitive Material within or from the Vessel; or
 
(b)
any incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, sea, land or soils (including the seabed) or surface water from a vessel other than 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 the Owner and/or the Head Owner and/or the Charterer and/or any operator or manager of the Vessel is at fault or otherwise liable to any legal or administrative action; or

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(c)
any other incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, sea, land or soils (including the seabed) or surface water otherwise than from the Vessel and in connection with which the Vessel is actually or potentially liable to be arrested and/or where the Owner and/or the Head Owner and/or the Charterer 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, other than in accordance with an Environmental Approval.
 
“Environmental Laws” mean any present or future laws or regulations relating to pollution or protection of human health or the Environment (including, without limitation, the International Convention for the Prevention of Pollution from Ships of 1973 as modified by the Protocol of 1978, as amended (“MARPOL”), the United States Oil Pollution Act of 1990, as amended, the United States Comprehensive Environmental Responses, Compensation and Liability Act, as amended and any comparable United States federal laws or laws of individual states of the United States of America), 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, leakage, spillage or discharge 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.

“Prohibited Country” means (a) any state, country or jurisdiction which is subject to any United Nations Security Council Resolution, European Union Decision, United States or United Kingdom or other applicable law which would have the effect of prohibiting the sale, lease, charter, or voyage of the Vessel to or from such country or otherwise cause the Head Owner, the Owner or the Charterer, to be in contravention of any applicable law to which such party is subject; (b) any country to which voyages are not covered under the insurances required to be maintained by the Charterer in this Charter; or (c) any country which the Owner determines now or in the future due to a change in law or circumstances that voyages to such country would materially prejudice the Owner’s and / or the Head Owner’s ability to repossess the Vessel, or enforce the remedies or realize the benefit of the liens and rights established under this Charter. The Owner hereby designates Cuba, Iran, Syria, Sudan and North Korea as Prohibited Countries, as of the date of this Charter.

“Prohibited Person” means any individual or entity: (a) with whom the Head Owner or the Owner is prohibited or restricted in engaging in transactions or exporting goods or services to under applicable law; (b) who is a resident of, or organized under the laws of or doing business in any Prohibited Country; (c) who is designated on any United Nations Security Council Resolution or any European Union or United States or United Kingdom list, order, or other published designation of terrorists, narcotics traffickers, proliferators of weapons of mass destruction or other lists of barred or restricted entities or individuals including without limitation the U.S. Treasury Specially Designated Nationals List.

“Relevant Law” means (a) any law, decree, constitution, regulation, requirement, rule, authorisation, judgment, injunction or other directive of a Government Authority; or (b) any treaty, pact or other agreement to which any Government Authority is a signatory or party; or
(c) any judicial or administrative interpretation with binding characteristics, in each case, which is applicable to the Vessel, the Owner, the Charterer, and / or the area where the Vessel is operating from time to time, as the case may be.

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“Sanctions” means any sanctions administered or enforced by OFAC, the United Nations Security Council, the European Union, HM Treasury’s Office for Financial Sanctions Implementation or other relevant sanctions authority.


 7.
Maintenance and Operation.
 

 (a)
Charterer’s Control and Expenses. During the Charter Term, the Charterer shall have exclusive control of the Vessel and shall be solely responsible for the maintenance and operation of the Vessel and, subject to the terms of this Charter, shall operate, navigate, man and victual the Vessel at its own cost and expense. The Charterer shall pay all charges and expenses of every kind and nature whatsoever incident to the use and operation of the Vessel under this Charter throughout the Charter Term. Such costs and expenses shall include, but not be limited to, those relating to (w) customs duties, bonds, work permits, fees, licenses, clearances, pilotage fees, wharfage fees, canal fees and costs, or similar charges incurred in connection with the importation, exportation, operation or navigation of the Vessel by the Charterer, (x) maintaining all the Vessel’s trading certificates necessary for its operations and all other certificates required by the Flag State (or other governmental agencies or regulatory authorities having jurisdiction over the Vessel (or the area where the Vessel is operating from time to time) including, if applicable, the United States Coast Guard), (y) maintaining the Vessel, the Vessel’s machinery, appurtenances and spare parts in the condition required under Section 7(b) and the requirements of any applicable classification societies and other regulatory agencies having authority over the Vessel, and (z) supervision, management, victualing (including catering), supplies, parts service companies, port charges, dockage, drydocking and wharfage, fuelling and lubrication.


(b)
Maintenance and Repairs. During the Charter Term, the Charterer, at its own cost and expense, will maintain the Vessel as necessary to keep the Vessel in class, clean, painted and in good running order, repair and condition in accordance with good commercial practices, and in any event, in a manner that a prudent ship owner of vessels similar in age, type and trade to the Vessel would do, so that the Vessel shall be, insofar as due diligence can make it so, tight, staunch, strong and well and sufficiently tackled, apparelled, furnished, equipped and in every respect seaworthy and in as good condition as when delivered under this Charter, ordinary wear and tear excepted. In addition, the Charterer shall, at the earlier of the next dry docking of the Vessel or such earlier date as required by the Classification Society and / or the United States Coast Guard (as applicable and as the case may be) and at its own cost and expense, take all actions necessary to correct any Deficiencies.

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For the avoidance of doubt and notwithstanding any other term of this Charter, any and all costs and/or expenses whatsoever associated with satisfying and/or remedying any conditions or recommendations of class shall always be for the Charterer’s account, and shall be paid by the Charterer. During the Charter Term, the Charterer will provide and pay for all such repairs, replacement parts, labor and materials as shall be necessary to keep and maintain the Vessel in such condition. The Charterer additionally will maintain the Vessel’s machinery in compliance with the requirements of any classification societies or regulatory agencies having authority over the Vessel and its equipment. Upon the written request of the Owner, the Charterer will inform the Owner of the location of the maintenance records for the Vessel which are not kept on the Vessel. The Charterer will notify the Owner and the Head Owner immediately of any accident involving the Vessel estimated to require repairs the cost of which will exceed United States Dollars Five Hundred Thousand (US$500,000). The Charterer shall also notify the Owner in advance of any drydocking of the Vessel required by any classification society (or societies, as the case may be) or regulatory agency (or agencies, as the case may be) having jurisdiction over the Vessel. The Owner may, at its sole risk and expense (but at the Charterer’s sole risk and expense if an Event of Default shall have occurred and be continuing) designate up to two persons to be present at any such drydocking, and the Charterer shall cooperate with the Owner to provide such persons reasonable access to the Vessel while in drydock. The Charterer agrees to deliver to the Owner and the Head Owner annually at the Charterer’s own cost and expense a certificate issued by the Classification Society confirming the Vessel remains in class.


 (c)
Reports and Rights of Inspections. The Charterer will keep proper books of record and account in which full and correct entries will be made of all dealings or transactions of, or in relation to, the business and affairs of the Charterer respecting the Vessel in accordance with U.S. Generally Accepted Accounting Principles (“US GAAP”) consistently applied and on a consistent basis, and will furnish to the Owner or cause to be furnished to the Owner:

(i)          Financial Statements of Guarantor and the Charterer. The Charterer will cause the Guarantor to deliver the consolidated profit and loss statements, reconciliation of retained earnings statements and consolidated statements of funds flow of the Guarantor and its consolidated subsidiaries, including the Charterer. The Charterer agrees to furnish to the Owner (x) within one hundred and eighty (180) days after the close of each fiscal year, beginning with the close of the fiscal year 2021, the year-end audited consolidated financial statements of the Guarantor including balance sheet and related profit and loss and surplus statements certified by its auditors; (y) within ninety (90) days after the close of each fiscal half year, the unaudited semi-annual financial statements of the Guarantor containing profit and loss statements and a balance sheet and certified by the Responsible Officer, subject to year-end audits for the Guarantor by the Guarantor’s auditors and for the Charterer by the Charterer’s auditors; and (z) such other financial or other information as the Owner may from time to time reasonably request relating to the financial condition of the Guarantor and the Charterer. Such financial statements shall be prepared in accordance with US GAAP, consistently applied on a consistent basis. For the purposes of this Section 7(c) (i), “Responsible Officer” shall mean an officer, the chief financial officer, treasurer, assistant treasurer or controller of the Guarantor.
 
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(ii)         Inspection Rights – Vessel. Without unreasonably interfering with the trading, use and operation of the Vessel by the Charterer and on reasonable prior notice, the Owner or any persons designated by the Owner shall have the right at any reasonable time, but will be under no obligation, to inspect (and make extracts from) all records maintained by the Classification Society respecting the Vessel and to inspect the Vessel to ascertain its condition, to satisfy itself that the Vessel is being properly maintained and repaired, and to otherwise confirm that the Charterer is in compliance with this Charter; provided, that prior to any such inspection the persons inspecting the Vessel shall execute a release of the Charterer, releasing the Charterer from liability for any personal claims arising during such inspection of the Vessel. The cost of such inspection shall be borne by the Owner if no Event of Default shall have occurred and be continuing, and otherwise such cost shall be borne by the Charterer.
 
(iii)        Inspection Rights – Generally. The Charterer will, upon request, furnish to the Owner such information as the Owner may reasonably request with respect to the condition, maintenance or insurance of the Vessel and / or its employment, position, use or operation and copies of any certificates or other documents relating to the Vessel or its condition or operation required to be in force under any applicable law or regulation, including, but not limited to copies of classification certificates and any certificates issued by the Flag State, and will permit the Owner or its representatives at any reasonable time or times during normal business hours to inspect, audit and examine the books or records of the Vessel or of the Charterer relating to the condition, maintenance or insurance of the Vessel and to take extracts therefrom. The cost of any such inspection, audit, examination or copying shall be borne by the Owner if no Event of Default shall have occurred and be continuing, and otherwise such cost shall be borne by the Charterer.


 (d)
Lay-up. The Charterer shall be responsible for laying the Vessel up in a safe and acceptable condition and location during such a time as the Vessel is not employed or seeking employment. During any such lay-up period, the Charterer shall ensure that the Vessel is adequately supervised and manned at all times. The costs and expenses in any way related to such lay-up or any reactivation shall be paid by the Charterer.

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 8.
Alterations.

  (a)
Structural Modifications. The Charterer will not make any material structural or other changes (other than the installation of the Approved ESD, which installation shall be in accordance with the Time Charter) in the Vessel (a “Modification”) without the prior written consent of the Head Owner and the Owner, which consent of the Owner shall not be unreasonably withheld; provided that such Modification does not in the Owner’s reasonable opinion diminish (i) the fair market value of the Vessel or (ii) the useful economic life of the Vessel. No repairs or maintenance to the Vessel required by Section 7(b) above or 8(d) below shall constitute a Modification for the purposes of this Section 8. For the avoidance of doubt, all Modifications will be made at the expense of the Charterer.


(b)
Alterations and Restoration. Subject to the maintenance provisions of this Charter, the Charterer may at any time alter or remove items of equipment, or may fit additional items of equipment required to render the Vessel available for a customer’s purpose; provided the Charterer absorbs the cost and time of such alterations and the Charterer restores prior to redelivery of the Vessel any items so altered or removed as the case may be. Such changes shall not be made without the appropriate approval of the Classification Society and certifying authorities.


(c)
Replacements. The Charterer shall from time to time during the Charter Term, at its own cost and expense, replace such items of equipment on the Vessel as shall be so damaged or worn as to be unfit for use. Any replacement items of equipment, to the extent they replace items of equipment owned by the Owner or the Head Owner, shall without further action become property of the Owner or the Head Owner, as the case may be.


(d)
Required Modifications. Subject to Section 8(g) below, the Charterer, at its own cost and expense, shall make all Modifications required from time to time by: (A) any applicable law; (B) any governmental agency having jurisdiction over the Vessel and / or its equipment (or the area where the Vessel is operating from time to time), including, if applicable, the United States Coast Guard; or (C) the Classification Society (or any other applicable classification societies and/or certifying authorities).


(e)
Title to Modifications. Title to each Modification shall vest as follows:
 
(i)          in the case of each Modification which cannot be readily removed from the Vessel without causing material diminishment to the value, utility or remaining useful life of the Vessel (a “Non-Severable Modification”) whether or not the Owner shall have provided or arranged financing (in whole or in part) of the cost of such Modification, the Head Owner shall, without further act, effective on the date such Modification shall have been incorporated into the Vessel, acquire title to such Non-Severable Modification;

(ii)        in the case of each Modification which can be readily removed from the Vessel without causing material diminishment to the value, utility or remaining useful life of the Vessel (a “Severable Modification”) that is not required by applicable law or required by any governmental agency having jurisdiction over the Vessel or required by the Classification Society, the Charterer shall retain title to such Severable Modification;

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(iii)        in the case of Severable Modifications required by applicable law or required by any governmental agency having jurisdiction over the Vessel or required by the Classification Society, title to such Modifications shall immediately vest in the Head Owner at no cost to the Head Owner and without further action by the Charterer; provided, however, that the Charterer shall take such actions as may be reasonably required by the Owner and/or the Head Owner to evidence the transfer of title.

Immediately upon title to a Modification vesting in the Head Owner pursuant to subparagraphs (i) or (iii) of this Section 8(e), such Modification shall, without further act, become subject to this Charter and be deemed part of the Vessel for all purposes of this Charter. Modifications, title to which remains in the Charterer pursuant to subparagraph (ii) of this Section 8(e), shall not be deemed a part of the Vessel.
 

 (f)
Removal of Property. Subject to compliance, in all material respects, with applicable law and so long as no Event of Default shall have occurred and be continuing, the Charterer may remove any Severable Modification to which the Head Owner does not have title, and any other property to which the Charterer shall have title as provided in this Section 8, provided that the Charterer, at its own cost and expense and prior to the end of the Charter Term, shall repair any damage to the Vessel (or any part thereof) caused by such removal.


(g)
Contest of Requirements of Law. If, with respect to requirement of applicable law or governmental agency having jurisdiction over the Vessel or requirement of the Classification Society (i) the Charterer is contesting diligently and in good faith by appropriate proceedings such requirement or (ii) compliance with such requirement shall have been excused or exempted by a valid non- conforming use permit, waiver, extension or forbearance exempting the Charterer from such requirement or (iii) the Charterer shall be making a good faith effort and shall be diligently taking the appropriate steps to comply with such requirement, then the failure by the Charterer to comply with such requirement shall not constitute an Event of Default under this Charter; provided, however, that such contest or non-compliance does not involve (A) any danger of criminal liability being imposed on the Head Owner and/or the Owner or (B) any material risk of (1) the imminent arrest or sale of, or the creation of any lien (other than a Permitted Lien) on, the Vessel or (2) material civil liability being imposed on the Owner and/or the Head Owner. The Charterer agrees to give prompt written notice to the Owner in detail sufficient to enable the Owner and the Head Owner to ascertain whether such contest may have any material adverse effect of the type described in the above proviso.

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 9.
Insurance-General.
 
Subject to Section 23, below, the Charterer shall, at its own cost and expense, keep the Vessel insured against hull and machinery risks, protection and indemnity risks, pollution risks and War Risks, in the forms and in the amounts (including deductibles) and with underwriters, companies or clubs, as are reasonably acceptable to the Owner and the Head Owner during the Charter Term or, where applicable, in such minimum amounts (including deductibles) as specified in this Charter. The Vessel’s hull and machinery insurance will be in an amount not less than the greater of (x) the full commercial value of the Vessel and (y) the Loss Value (as set forth in Exhibit A-1 hereto) then in effect. The Charterer shall also keep the Vessel entered into a Protection and Indemnity Club (“P&I Club”) that is a member of the International Association of Protection and Indemnity Clubs under standard P&I Club rules. Pollution liability coverage shall be not less than United States Dollars One Billion (US$1,000,000,000). The Owner and the Head Owner shall also each be a co-assured of the P&I Club in respect of the Vessel, and the Charterer agrees to pay or reimburse the Owner and the Head Owner, respectively, the costs of such entry, including any premium, club calls or assessments in connection therewith. In addition, the Charterer shall reimburse the Owner for the placing of innocent owner’s insurance, in form and in amount (including deductibles) and with underwriters, companies or clubs, as are reasonably acceptable to the Owner and/or the Head Owner (for the avoidance of doubt, such innocent owner’s insurance to name both the Owner and the Head Owner) during the Charter Term. If the Owner or the Head Owner places innocent owner’s insurance in accordance with the foregoing, the Charterer agrees to pay or reimburse the Owner or the Head Owner, as applicable, the costs thereof, upon receipt of a demand therefor accompanied by copies of the relevant invoices or other similar evidence of such costs.
 

 (a)
Form of Insurance; Indemnity. All insurance required under this Section shall be in such form and with such underwriters, companies or clubs as the Owner and the Head Owner shall reasonably approve. All insurance contracts shall (i) provide that the insurer’s right of subrogation against the Owner and/or the Head Owner shall be waived; (ii) provide that such insurance shall be primary and without right of contribution from any other insurance which is carried by the Owner and/or the Head Owner; and (iii) be issued by underwriters or insurers with an A.M. Best Co. insurance rating upon issuance of the policy of “A-” (or higher), which underwriters or insurers may not be an affiliate of the Owner or the Charterer or any sub-bareboat charterer. The Owner (and if applicable, the Owner’s bank as mortgagee of the Vessel) and the Head Owner (and if applicable the Head Owner’s bank as mortgagee of the Vessel), in the case of protection and indemnity coverage, shall be named as members, joint members or named additional insureds (as applicable) on all insurance required under this Section, but where commercially available without liability for premiums; and the Owner (and if applicable, the Owner’s bank as mortgagee of the Vessel) and the Head Owner (and if applicable the Head Owner’s bank as mortgagee of the Vessel) in respect of hull and machinery insurance, shall be named as additional named assured and the loss payee(s); provided, however, that unless an Event of Default shall have occurred and be continuing, the underwriters may pay any claims under such hull and machinery insurance not in excess of United States Dollars One Million (US$1,000,000) directly to the Charterer for the repair of the Vessel.

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All policies shall provide that the Owner (and if applicable, the Owner’s bank as mortgagee of the Vessel) and the Head Owner (and if applicable the Head Owner’s bank as mortgagee of the Vessel) and the Charterer will be given at least fourteen (14) days’ notice of cancellation, non-renewal or material alteration, or such shorter notice period (if any) as may be available under relevant market or standard insurance practice and/or terms, where such practice and/or terms do not provide for cancellation with such minimum fourteen (14) days’ notice. Deductibles up to a maximum of United States Dollars Five Hundred Thousand (US$500,000) are permitted without the prior written consent of the Owner. Any deductibles under such policies shall always be for the account of the Charterer. The Charterer agrees to indemnify and hold harmless the Owner and/or the Head Owner (and if applicable the Head Owner’s bank as mortgagee of the Vessel) from and against any liability imposed on or incurred by the Owner and/or the Head Owner (and if applicable the Head Owner’s bank as mortgagee of the Vessel) for any premiums, club calls or assessments with respect to any insurance required under this Section. For the avoidance of doubt, the Charterer’s indemnification obligations under Section 18 shall, subject to Section 18, include (i) all Claims (as defined below) and (ii) any Claim made against the Head Owner and / or by the underwriters of the insurance required under this Charter pursuant to rights of subrogation.
 

 (b)
Proof of Insurance. The Charterer shall furnish the Owner and the Head Owner on the Delivery Date and, at such other times on request as soon as practically possible, and in any event at least annually, with copies of certificates of insurance (certificates of entry for Protection and Indemnity) evidencing all insurance policies and showing the Owner and the Head Owner as members or joint members on the Protection and Indemnity Insurance and the Owner and the Head Owner as loss payees (as set forth in the Attachments to Exhibit B hereto) on the hull & machinery coverage and cover notes or other documents evidencing the creation, renewal, amount and payment of the insurance maintained on the Vessel and for which period the insurance premiums are paid.


(c)
Forced Insurance. In the event the Charterer fails to procure and maintain insurance in accordance with this Section 9, the Owner and/or the Head Owner may, but shall not be obligated to, effect and maintain the insurance or entries in a P&I Club as required in this Charter and to pay the premiums therefor and, upon the Owner’s giving written notice and all relevant supporting invoices to the Charterer of the amounts of premiums and costs so incurred by either the Owner and/or the Head Owner, the Charterer shall reimburse the Owner and/or the Head Owner, as applicable, for such amounts, together with interest thereon from the date of payment by the Owner and/or the Head Owner to the date of reimbursement, at the Default Rate, not later than fifteen (15) days after such notice.

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 (d)
Termination Due To Loss. This Charter shall be terminated due to a total or constructive total loss or an agreed, arranged or compromised total loss of the Vessel under the hull and machinery policy as determined by underwriters (“Total Loss”), and Charter Hire pursuant to Section 5 shall be payable until the date on which underwriters make a determination that the event occurred which gave rise to the Total Loss (the “Loss Termination Date”). Termination shall occur only upon payment of all amounts due under Section 9(e) below.
 

 (e)
Payments in Event of Total Loss. In the event of Total Loss of the Vessel, the Owner, in lieu of any and all other claims and damages, shall receive from the Charterer, and the Charterer shall pay to the Owner, an amount equal to the sum of (i) any accrued and unpaid Charter Hire payable in accordance with Section 5 calculated through and, if applicable, including, the Loss Termination Date; (ii) the Loss Value of the Vessel as of the date on Exhibit A-1 hereto that immediately precedes the Loss Termination Date (or, if the Loss Termination Date is a Charter Hire Payment Date, the Loss Value of the Vessel as of such Loss Termination Date as set out in Exhibit A-1); provided, however, if the event that gives rise to a Total Loss of the Vessel occurs prior to the first date listed on Exhibit A-1, the Loss Value shall be the amount listed for the first date on such Exhibit A-1, (iii) interest on the amount referred to in Section 9(e)(ii) above from the Loss Termination Date until the date such amount is actually paid to, and received by, the Owner at the Total Loss Rate, and (iv) any Additional Hire then due and owing. The Charterer’s obligation to pay amounts set forth in (i), (ii), (iii) and (iv) above (the “Total Loss Payment”) shall be absolute and shall be due to the Owner upon the earlier of the Charterer’s receipt of insurance proceeds and one hundred and ten (110)) days following the Loss Termination Date. The Owner may, subject to the Charterer’s consent, which consent shall not be unreasonably withheld, and at the Owner’s own expense, place additional total loss only coverage. Any proceeds paid under such additional total loss only insurance shall be paid directly by insurers to the Owner and shall not be included in the calculation set forth above. The Charterer may place, at the Charterer’s own cost and expense and as a separate policy from any insurances otherwise placed (or to be placed) in accordance with this Charter, Increased Value insurance (subject to the Owner’s prior consent, and subject to such Increased Value insurance in no way prejudicing in any way whatsoever the recovery by the Head Owner and/or the Owner of any amount that would otherwise be payable under any other insurances placed in accordance with this Charter), the proceeds of which shall be paid directly by insurers to the Charterer and shall not be included in the calculation set forth above.

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The Owner agrees that to the extent that the Charterer pays the Total Loss Payment from its own funds the full net proceeds on a Total Loss of the insurances in respect of the Vessel and placed by the Charterer shall be for the account of and shall be paid or released to the Charterer.

For purposes of this Charter:
 
“Total Loss Rate” shall mean, for any day, a rate of interest per annum equal to the lesser of (i) six per cent. (6%) and (ii) the maximum rate permitted by applicable law.


 (f)
Limitation of Liability. Nothing in this Charter shall be construed or held to deprive the Owner, Head Owner the Charterer or the Vessel of any right to claim limitation of liability against third parties (other than the Head Owner) provided by any applicable statute of any jurisdiction.
 

 (g)
Wreck Removal. In the event the Vessel becomes a wreck or obstruction to navigation, the Charterer shall, if required by applicable law, remove such wreck or obstruction and shall indemnify the Owner and the Head Owner against any sums whatsoever which the Owner and the Head Owner shall become liable to pay or shall pay in consequence of the Vessel becoming a wreck or obstruction to navigation.
 

 (h)
Requisition. In the event that the Vessel shall be requisitioned for hire, or otherwise taken by any governmental agency on the basis of a bareboat or time charter (other than a requisition of title or a taking which constitutes a Total Loss), during the Charter Term, the Charterer will continue to pay Charter Hire and will collect and retain the compensation, reimbursements or awards for such requisition, or other taking of the Vessel received. If the Owner receives the compensation, reimbursements or awards, then, provided no Event of Default shall have occurred and be continuing, the Owner agrees that it will turn over forthwith to the Charterer all compensation, reimbursements or awards for such requisition or other taking of the Vessel received by the Owner. For the avoidance of doubt, if the Owner receives the compensation, reimbursements or awards and an Event of Default shall have occurred and be continuing, then the compensation, reimbursements or awards shall be applied in accordance with Section 17.

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 10.
Liens.
 
(a)       Neither the Charterer nor any of its employees shall have any right, power or authority to create, incur or permit to be imposed upon the Vessel any lien whatsoever during the Charter Term, except for (i) crew’s wages (including the master of theVessel), or wages of stevedores when employed directly by the Charterer, any sub- charterer or the master or agent of the Vessel, (ii) damages arising out of maritime tort, (ii) general average and salvage (including contract salvage), (iv) liens for taxes not yet due (provided that the Charterer has established appropriate reserves for the payment of such taxes), (v) other maritime liens arising in the ordinary course of the Charterer’s business provided, such other maritime liens shall be permitted only to the extent such amounts are not more than twenty five (25) days past due unless such amounts are being contested in good faith by appropriate legal proceedings diligently pursued and for which appropriate reserves are established, and (vi) any mortgage executed by the Owner and/or the Head Owner (collectively, “Permitted Liens”). The Charterer shall carry a copy of this Charter with the Vessel’s papers, and on demand will exhibit the same to any person having business with the Vessel which might give rise to any lien thereon, other than liens for crew’s wages, general average and salvage. The Charterer will place and keep prominently displayed in the chart room and the captain’s cabin on the Vessel in a conspicuous place, a notice, framed under glass, printed in plain type of such size that the paragraph of reading material shall cover a reasonable space acceptable to the Owner reading as follows:
 
“THIS VESSEL IS OWNED BY CFT INVESTMENTS 1 LLC AND IS UNDER CHARTER TO CARGILL INTERNATIONAL SA PURSUANT TO THE  TERMS  OF  THE  BAREBOAT  CHARTER  AGREEMENT   DATED   May, 11 2021 (AS AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, THE “CHARTER”) AND IS UNDER SUB-CHARTER TO FLAG MARINE CO. PURSUANT TO THE TERMS OF THE SUB-CHARTER DATED May, 11 2021 (AS AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, THE “SUB-CHARTER”). UNDER THE TERMS OF THE CHARTER, WHICH IS A FINANCING CHARTER PURSUANT TO A SUPPLEMENT TO BAREBOAT CHARTER AGREEMENT DATED AS OF May, 11 2021          (NEW YORK TIME) UNDER THE MARITIME LAWS OF THE REPUBLIC OF THE MARSHALL ISLANDS, AND THE SUB-CHARTER, NEITHER THE HEAD CHARTERER, THE SUB- CHARTERER NOR ANY OTHER SUB-CHARTERER, NOR THE MASTER, NOR ANY OTHER PERSON HAS THE RIGHT, POWER OR AUTHORITY TO CREATE, INCUR OR PERMIT TO BE PLACED OR IMPOSED UPON THIS VESSEL ANY LIEN WHATSOEVER OTHER THAN PERMITTED LIENS AS DEFINED IN THE CHARTER.”
 
(b)      With respect to any claims and demands made by any person against the Owner or the Head Owner or the Vessel, except if the claim or demand has been brought about as a result of an action or omission of the Owner or the Head Owner (as the case may be), the Charterer hereby agrees as follows:

(i)          the Charterer shall warrant and defend title to and possession of the Vessel and every part thereof;

(ii)        the Charterer shall pay and discharge, and forthwith remove or cause to be removed, any lien (other than a Permitted Lien) which shall be filed against or otherwise attach to the Vessel; provided, however, that, subject to subsection (c) of this Section, the Charterer need not pay and discharge or remove any lien that is being contested by the Charterer in good faith by appropriate legal proceedings being diligently pursued, and with respect to which the Charterer has posted an appropriate bond with a good and sufficient surety, or has deposited in escrow with the Owner cash in the amount claimed by the holder of such lien, to secure the payment thereof.

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(c)  Notwithstanding the foregoing provisions of this Section 10, if a libel shall be filed against the Vessel, or if the Vessel shall be seized, arrested, levied upon and taken into custody or detained in any proceeding in any court or tribunal or by any government or under colour of authority, the Charterer shall forthwith give notice of such arrest and taking or detention to the Owner and the Head Owner and (except in connection with any taking or requisition of the title or use of the Vessel by any governmental authority or as a result of wilful misconduct or gross negligence of the Owner) cause the Vessel to be released therefrom within forty five (45) days from the date of such seizure, arrest or detention, or within such lesser time as may be necessary to avoid prejudice to the interests of the Owner or the Head Owner with respect to the Vessel. Without limiting the Charterer’s obligations under Section 18 of this Charter, the Charterer shall hold harmless, defend and indemnify the Owner, the Head Owner and the Vessel from and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, judgments, costs and expenses, including attorneys’ fees, of whatsoever kind and nature, imposed on, incurred by or claimed against the Owner, the Head Owner or the Vessel, in any way relating to or arising out of the assertion of a lien against the Vessel, including, without limitation, a Permitted Lien (but excluding any lien claimed by any person claiming the same by, through or under the Owner (including as a result of the willful misconduct or gross negligence of the Owner of the Head Owner)).
 

 11.
Mortgages; Financing; Subordination.
 
(a)       The Charterer hereby agrees that should the Owner and/or the Head Owner wish to mortgage the Vessel or assign this Charter in connection with any financing arrangements of the Owner and/or the Head Owner, the Charterer shall agree to post notices of the mortgage and of this Charter as reasonably required, execute such documents reasonably acknowledging the terms and existence of the mortgage, and the assignment of charter, and otherwise cooperate reasonably with the Owner and/or the Head Owner and any mortgagee in respect of such financing. Any such mortgage shall provide that the Charterer shall have the right of quiet enjoyment in its use of the Vessel so long as no Event of Default has occurred and is continuing under this Charter and that such mortgage shall not impede (if applicable) any purchase option of the Charterer under the Multipartite Agreement (which will be confirmed in a separate letter of quiet enjoyment in favour of the Charterer, which letter of quiet enjoyment shall be in form and substance reasonably satisfactory to Head Owner and any such mortgagee), and that notice of any event of default under such mortgage shall be promptly given to the Charterer. Any reasonable and documented costs and expenses associated with such activity will be borne by the Owner. Any mortgagee of the Vessel shall be qualified under applicable law and regulations to hold a mortgage on the Vessel without jeopardizing the Vessel’s registration with the Flag State. Any additional insurance costs arising from or related to any mortgage placed on the Vessel by the Owner and/or the Head Owner shall be the responsibility of the Owner.

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(b)      The Charterer hereby agrees that its right to use the Vessel and other rights related thereto, shall, in all respects, be subject, subordinate and junior to the lien of any preferred mortgage or other security agreement created by the Owner and/or the Head Owner, and to the rights of the holder thereof, whether executed heretofore or hereafter (subject to the Charterer’s rights of quiet enjoyment under this Section 11 and its further rights set forth in Sections 12 and 14). After notice of default in payment or performance under any such mortgage or security agreement, subject always to the Charterer’s continued right of quiet enjoyment in its use of the Vessel, the Charterer may perform or pay Charter Hire for the Vessel to the holder of such security, and the same, to the extent of such payment, shall constitute payment of Charter Hire as if it had been made to the Owner.

(c)       The Owner agrees and confirms that, so long as no Event of Default under this Charter has occurred and is continuing, the Charterer shall have exclusive possession, control, and quiet enjoyment in its use of the Vessel during the Charter Term, subject to the conditions of this Charter, without hindrance or molestation by the Owner, or any other person claiming by, through or under the Owner.


 12.
End of Charter and Other Options.
 

 (a)
On the last day of the Charter Term, unless an Event of Default or a failure to pay the whole or part of any Charter Hire on the due date thereof shall have occurred and be continuing, the Charterer shall purchase the Vessel for (v) the respective Purchase Price as set forth below in Section 12 (d); (w) Basic Charter Hire due through and including the date of purchase; (x) any applicable taxes (other than any taxes based upon or measured by the income of the Owner); (y) expenses of sale (including the Owner’s and the Head Owner’s reasonable counsel fees); and (z) any Additional Hire then due under this Charter.


(b)
Subject to the terms and conditions of this Section 12, upon written notice from the Charterer to the Owner (with a copy to the Head Owner) setting forth the Charter Hire Payment Date on which the Charterer wishes to purchase the Vessel and pay to the Owner the Purchase Option Payment Amount (as such term is defined below) (the “Purchase Option Notice”) (such Purchase Option Notice to be given not less than ninety (90) days prior to the Charter Hire Payment Date during the Charter Term on which the Charterer wishes to purchase the Vessel), the Charterer shall have the option to, unless an Event of Default or a failure to pay the whole or part of any Charter Hire on the due date thereof shall have occurred and be continuing, purchase the Vessel on the Charter Hire Payment Date set forth in the Purchase Option Notice for (s) the Purchase Price as set forth below in Section 12 (d) plus (w) Charter Hire due through and including the date of purchase, (t) any applicable taxes (other than any taxes based upon or measured by the net income (however denominated) of the Owner), (u) expenses of sale (including the Owner’s and the Head Owner’s reasonable counsel fees), (v) the amount due under clause 108 (Washout clause) of the Time Charter, (w) any amount due to the Owner under clause 109 of the Time Charter, (x) either (i) plus any Arrangements Credit (as defined in Section 12(j)), or (ii) less any Arrangements Debit (as defined in Section 12(j)); (y) the Asset Upside Amount (as defined in Section 12(h)(i)) and (z) the Early Redelivery Compensation (as defined in Section 12(k)), if applicable. The aggregate total of (s), (t), (u), (v), (w), (x), (y) and (z), the “Purchase Option Payment Amount”.

28

 (c)
Not less than one hundred and seventy (170) days prior to the end of the Charter Term, the Charterer shall provide the Owner with irrevocable written confirmation of its purchase of the Vessel pursuant to Section 12(b). Should the Charterer fail to provide such confirmation or a notice pursuant to Section 12(b), the Charterer shall be obliged to purchase the Vessel in accordance with Section 12(a).


(d)
If the Charterer:
 
 
(i)
is obliged under this Charter to purchase the Vessel on the last day of the Charter Term pursuant to Section 12(a); or
 

 (ii)
elects to purchase the Vessel pursuant to Section 12(b),

the purchase price of the Vessel at the relevant time (being, in the case of Section 12(d)(i), the end of the Charter Term, and, in the case of Section 12(d)(ii), the Charter Hire Payment Date on which the Charterer purchases the Vessel in accordance with Section 12(b)) (the “Purchase Price”) shall be as is set forth in the “Purchase Price” column of Exhibit A-1 of this Charter for the relevant time.
 

 (e)
ANY SALE OF THE VESSEL TO THE CHARTERER (OR AS THE CHARTERER MAY DIRECT, A NOMINEE) PURSUANT TO THIS SECTION 12 SHALL BE MADE WITHOUT ANY WARRANTIES BY THE OWNER OR THE HEAD OWNER WHATSOEVER, EITHER EXPRESS OR IMPLIED, EXCEPT THAT THE OWNER, OR, AS THE CASE MAY BE, THE HEAD OWNER, SHALL WARRANT THAT THE VESSEL IS FREE AND CLEAR OF ANY LIENS OR ENCUMBRANCES CREATED BY OR THROUGH THE OWNER, OR, AS THE CASE MAY BE, THE HEAD OWNER AND ITS PREDECESSORS IN TITLE EXCEPT FOR THE SELLER OR THE CHARTERER (OR ANY SUBSIDIARY OR AFFILIATE THEREOF) AND THAT THE OWNER, OR, AS THE CASE MAY BE, THE HEAD OWNER, IS TRANSFERRING WHATEVER TITLE IT ORIGINALLY RECEIVED. WITHOUT LIMITING THE FOREGOING, ANY SUCH SALE SHALL BE ON AN “AS IS, WHERE IS” BASIS WITH NO WARRANTIES, EITHER EXPRESS OR IMPLIED, AS TO TITLE (EXCEPT AS SET FORTH IN THE PREVIOUS SENTENCE) OR THE DESIGN, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, SEAWORTHINESS OR CONDITION OF THE VESSEL, OR ELIGIBILITY OF THE VESSEL TO ENGAGE IN ANY PARTICULAR TRADE. ALL SUCH WARRANTIES SHALL BE EXPRESSLY WAIVED BY THE CHARTERER (AND, AS THE CASE MAY BE, ITS NOMINEE) AT THE TIME OF SUCH SALE. ALL SALES, USE AND OTHER TAXES WHICH MAY BECOME DUE AS A RESULT OF THE SALE SHALL BE FOR THE SOLE ACCOUNT OF THE CHARTERER. UPON ITS RECEIPT IN GOOD COLLECTED FUNDS OF THE AMOUNT PAYABLE PURSUANT TO SECTION 12(a) OR, AS THE CASE MAY BE, SECTION 12(B), THE OWNER AGREES, AT THE CHARTERER’S SOLE COST AND EXPENSE, TO EXECUTE AND DELIVER PROMPTLY (OR, AS THE CASE MAY BE, PROCURE THAT THE HEAD OWNER EXECUTES AND DELIVERS) TO THE CHARTERER OR THE CHARTERER’S NOMINEE ANY AND ALL DOCUMENTS REQUIRED BY THE LAW OF THE FLAG STATE FOR THE PURPOSE OF RE-REGISTERING THE VESSEL IN THE NAME OF THE CHARTERER (OR AS THE CHARTERER MAY DIRECT, ITS NOMINEE), INCLUDING, WITHOUT LIMITATION, A BILL OF SALE COVERING THE VESSEL IN FAVOR OF THE CHARTERER (OR AS THE CHARTERER MAY DIRECT, A NOMINEE) TRANSFERRING WHATEVER TITLE THE OWNER, OR, AS THE CASE MAY BE, THE HEAD OWNER, HAS, WITHOUT ANY REPRESENTATION OR WARRANTY WHATSOEVER EXCEPT AS SET OUT IN THIS SECTION 12(E).

29

 (f)
For the purposes of establishing the Market Value (as such term is defined in Section 12(g) below) of the Vessel:
 

 (A)
if the Charterer is obliged to purchase the Vessel in accordance with Section 12(a), then, no later than ninety (90) days prior to the last day of the Charter Term;
 

 (B)
if the Charterer exercises its early purchase option under Section 12(b), then no later than five (5) days after the date on which the Owner receives the Purchase Option Notice exercising the option under Section 12(b); or
 

 (C)
if the Owner, by written notice to the Charterer, declares the Charterer in default under this Charter pursuant to Section 17 and the Event of Default in question is a Relevant Event of Default (as defined below), and the Charterer is entitled to purchase the Vessel pursuant to the terms of clause 5.1 of the Multipartite Agreement and the Vessel is to be acquired by the Charterer pursuant to such terms, then no later than five (5) Business Days following the date on which the Owner receives the copy of the Default Notice (as such term is defined in the Multipartite Agreement), 

the Charterer and the Owner shall appoint a “Panel of Approved Brokers” in accordance with this Section 12(f):

30

 (i)
Each of the Charterer and the Owner shall appoint an Approved Broker (as such term is defined below) to be included on the Panel of Approved Brokers, and the Approved Brokers so appointed by the Charterer and the Owner (each an “Appointed Broker”) shall jointly select a third Approved Broker (the “Third Broker”).


(ii)
In the event that either the Charterer or the Owner fails to appoint an Approved Broker on or before the date: in the case of (A) above, seventy (70) days prior to the last day of the Charter Term; or, in the case of (B) above, ten (10) days after the date on which the Owner receives the Purchase Option Notice; or in the case of (C) above, four(4) Business Days following the date on which the Owner receives the copy of the Default Notice (as such term is defined in the Multipartite Agreement), the Panel of Approved Brokers shall be comprised solely of the Approved Broker appointed by the Charterer or the Owner (as the case may be).


(iii)
Subject to Section 12(f)(iv), each of the Charterer and the Owner shall bear the costs and expenses of their respective Appointed Broker, and the costs and expenses of the Third Broker shall be borne equally by the Charterer and the Owner.


(iv)
If the Panel of Approved Brokers is constituted of a single Approved Broker in accordance with Section 12(f)(ii) above, the costs and expenses of the valuation made by such Approved Broker shall be shared equally between the Charterer and the Owner.

  (g)
Subject to Section 12(f)(ii), each of the Charterer and the Owner shall instruct their respective Appointed Broker, and the Charterer and the Owner shall jointly instruct the Third Broker, to consider the market value of the Vessel:
 
(A) if the Panel of Approved Brokers has been appointed pursuant to Section 12 (f)(A) on the date thirty (30) days prior to the last day of the Charter Term based on the then actual condition of the Vessel, on an arm’s length basis and free of charters, and the average of the said valuations shall be the “Market Value” (as such term is used in this Section 12) and

(B) if the Panel of Approved Brokers has been appointed pursuant to Section 12(f)(B) on the date twenty (20) days after the date of the Purchase Option Notice, based on the then actual condition of the Vessel, on an arm’s length basis and free of charters, and the average of the said valuations shall be the “Market Value” (as such term is used in this Section 12).
 
(C) if the Panel of Approved Brokers has been appointed pursuant to Section 12(f)(C), on the date seven (7) Business Days after the date on which the Owner receives the copy of the Default Notice (as such term is defined in the Multipartite Agreement) based on the then actual condition of the Vessel, on an arm’s length basis and free of charters, and the average of the said valuations shall be the “Market Value” (as such term is used in this Section 12).

31

 (h)
In the event that the Market Value is greater than the Floor Price as set forth in the “Floor Price” Column of Exhibit A-1 of this Charter on:
 
(i) first Charter Hire Payment Date following the date of the Purchase Option Notice if the Charterer exercises its option under Section 12(b)); or
 
(ii) the last day of the Charter Term if the Charterer does not exercise its option under Section 12 (a);
 
(iii) the date falling ten (10) Business Days after the date on which the Owner receives the copy of the Default Notice (as such term is defined in the Multipartite Agreement), where if the Owner, by written notice to the Charterer, has declared the Charterer in default under this Charter pursuant to Section 17 and the Event of Default in question is a Relevant Event of Default (as defined below), and the Charterer is entitled to purchase the Vessel pursuant to the terms of clause 5.1 of the Multipartite Agreement and the Vessel is to be acquired by the Charterer pursuant to such terms, then the Charterer shall be obliged to pay to the Owner an amount equal to fifteen per cent (15%) of the positive difference between the Market Value and the Floor Price on, as applicable,
 
(A)  first Charter Hire Payment Date following the date of the Purchase Option Notice if the Charterer exercises its option under Section 12(b)); or
 
(B)  the last day of the Charter Term if the Charterer does not exercise its option under Section 12 (a); or
 
(C) the date falling ten (10) Business Days after the date on which the Owner receives the copy of the Default Notice (as such term is defined in the Multipartite Agreement), where if the Owner, by written notice to the Charterer, has declared the Charterer in default under this Charter pursuant to Section 17 and the Event of Default in question is a Relevant Event of Default (as defined below), and the Charterer is entitled to purchase the Vessel pursuant to the terms of clause 5.1 of the Multipartite Agreement and the Vessel is to be acquired by the Charterer pursuant to such terms,

(the “Asset Upside Amount”). The Asset Upside Amount shall become due and be paid concurrently with the amounts payable by the Charterer to the Owner pursuant to Section 12(a) or, as the case may be, Section 12(b), above, including, but not limited to, the Purchase Price, or to the Head Owner pursuant to clause 5.1 of the Multipartite Agreement. For the avoidance of doubt, the Asset Upside Amount shall be calculated without regard to any Arrangements Credit or Arrangements Debit (as each term is defined in Section 12(f)) or to any amount due under the Time Charter.
 

 (i)
For the purposes of this Section 12, the “Approved Brokers” shall be deemed to mean:
 

 (1)
Arrow Shipbroking Group;


(2)
Braemar ACM Shipbroking;

32

 (3)
Clarksons Platou;
 

 (4)
Howe Robinson & Co. Ltd.;
 

 (5)
Galbraith’s Limited;
 

 (6)
Simpson, Spence and Young; and
 

 (7)
such other internationally recognised shipbrokers as may be mutually agreeable to both the Charterer and the Owner,  

(and each of the Approved Brokers, an “Approved Broker”).


 (j)
If the Charterer exercises its early purchase option under Section 12(b) or if the Owner, by written notice to the Charterer, declares the Charterer in default under this Charter pursuant to Section 17 and the Event of Default in question is an Event of Default under the Bareboat Charter, and the Charterer is entitled to purchase the Vessel pursuant to the terms of clause 5 of the Multipartite Agreement and the Vessel is to be acquired by the Charterer pursuant to such terms, no later than three (3) Business Days before the date of transfer of ownership of the Vessel to the Charterer, the Owner shall notify the Charterer of such amount as the Owner certifies that, as a result of the exercise by the Charterer of its early purchase option under Section 12(b) or the exercise by the Charterer of its option in accordance with clause 5 of the Multipartite Agreement, the Owner shall either be: (i) in credit (“Arrangements Credit”) or (ii) in debit (“Arrangements Debit”), as a result (including all the Owner’s losses, damages, liabilities, expenses and costs incurred by the Owner in association therewith) of terminating, reversing or unwinding any hedging arrangements in respect of interest rate arrangements (including, but not limited to any interest rate swap, fixing or other arrangements) with any other persons (including, but not limited to, the Head Owner).


(k)
If the Charterer exercises its early purchase option under Section 12(b) or if the Owner, by written notice to the Charterer, declares the Charterer in default under this Charter pursuant to Section 17 and the Event of Default in question is an Event of Default under the Bareboat Charter, and the Charterer is entitled to purchase the Vessel pursuant to the terms of clause 5 of the Multipartite Agreement and the Vessel is to be acquired by the Charterer pursuant to such terms, the Vessel shall not be transferred to the Charterer before the Vessel completes a voyage in the redelivery range set out in Section 4(c), unless the Charterer and the Owner agree to complete a voyage to an area that is not less favorable than the redelivery range set out in Section 4(c) or, failing such agreement, the Charterer pays to the Owner a compensation covering costs, expenses and loss of hire in connection with repositioning the Vessel from the actual place of delivery to the redelivery range set out in Section 4(c) (the “Early Redelivery Compensation”).
 

 (l)
Unless and until all the applicable foregoing payments and performance set forth in this Section 12 have been made and/or performed in full by the Charterer, the Charterer’s obligations under this Charter, including, without limitation, the obligation to pay Charter Hire for the Vessel, shall continue in full force and effect.

33

 13.
Representations and Warranties; Owner Covenants.


(a)
Charterer’s Representations. The Charterer represents, warrants, covenants, and agrees to and with the Owner that: (i) the Charterer is a company duly organized, validly existing, and in good standing under the laws of the Republic of the Marshall Islands, has the requisite power and authority to own its property and assets and to enter into and carry out the transactions contemplated by, and to execute, deliver and perform under, this Charter, and is duly qualified in each jurisdiction where the nature of its operations requires such qualification, (ii) the execution, delivery, and performance of this Charter are within the Charterer’s power, have been duly authorized by all necessary limited liability company action, do not contravene the Charterer’s certificate of organization or regulations, or similar documents, or violate any judgment, order or decree applicable to the Charterer, and do not contravene any law, any order of any court or other agency of government, or any agreement or instrument or contractual restriction binding on or affecting any of its property, or constitute a default thereunder, (iii) this Charter constitutes the legal, valid and binding obligation of the Charterer enforceable against the Charterer in accordance with its terms, (iv) neither the Charterer nor any of its affiliates, or, to its knowledge, any of its directors, officers, agents or representatives is an individual or entity currently subject to Sanctions or is located, organized or a resident of a country or territory that is the subject of Sanctions, and (v) it will not, directly or indirectly, lend, contribute or otherwise make available funds to any person or entity (1) to fund any activities of or business with any person or entity subject to Sanctions, or (2) fund any activities or business in any country or territory that, at the time of such funding, is the subject of Sanctions, unless, in each instance, it is authorized under a specific or general license issued by OFAC.


(b)
Owner’s Representations and Covenants. The Owner represents, warrants, covenants, and agrees to and with the Charterer that (i) the Owner is a company organized, existing, and in good standing under the laws of Switzerland, (ii) the Owner has the requisite limited liability company power and authority to hold title to the Vessel and to enter into and carry out the transactions contemplated and to execute, deliver and perform under this Charter; (iii) the execution, delivery, and performance of this Charter do not contravene the provisions of the certificate of organization or regulations, or similar documents, of the Owner, or violate any judgment, order or decree applicable to the Owner or result in any violation of, or conflict with, or constitute a default under, or subject the Vessel to any lien of, any indenture, contract, agreement or other instrument applicable to the Owner, (iv) this Charter constitutes the legal, valid and binding obligation of the Owner enforceable against the Owner in accordance with its terms, and (v) the Owner will not create or permit to exist, any lien or encumbrance on or against the Vessel that arises out of the express action or omission of the Owner, other than a mortgage permitted under Section 11.

34

 14.
Assignment; Sub-bareboat charter.
 
(a)       The Charterer does not have the right to, and shall not, assign, pledge, or hypothecate this Charter (by operation of law or otherwise), in whole or in part, or any interest in this Charter, or any right, duty or obligation under this Charter (collectively, an “Assignment”) without the prior written consent of the Owner, which consent is subject to the consent of the Head Owner, and any such consent is in the Owner’s and the Head Owner’s absolute discretion, and any purported Assignment without the Owner’s and the Head Owner’s prior written consent shall be void and unenforceable against the Owner and the Head Owner. The Owner will exercise reasonable endeavours to obtain such consent from the Head Owner. The Charterer shall remain primarily liable under this Charter and the Guarantor will remain primarily liable under the Guarantee in the event of any permitted Assignment, which will in no event be considered a novation of this Charter unless the Owner expressly agrees to the contrary in writing.
 
(b)      Notwithstanding the foregoing, the Charterer agrees that it shall not further sub- bareboat or sub-time charter or otherwise let or charter the Vessel to any person without the prior written consent of the Owner and the Head Owner, except under the Time Charter. In the case of any permitted sub-bareboat charter of the Vessel, such sub- bareboat charter (i) shall state it is subject and subordinate to the rights and interests of the Owner under this Charter and the rights and interests of the Head Owner under the Bareboat Charter, (ii) shall not contain any terms and conditions which would prevent the Charterer from fulfilling its obligations under this Charter, (iii) shall include an express prohibition against any further sub-bareboat charters without the prior written consent of the Owner and the Head Owner, and (iv) shall contain an acknowledgement by the sub-bareboat charterer stating that it acknowledges the existence of this Charter and the Bareboat Charter and their priority over all of the terms of the sub-bareboat charter.
 

 15.
Logo and Vessel Names.
 
The Owner agrees that the Charterer may display the Charterer’s logo and the Charterer’s designated name on the Vessel during the Charter Term. If the Owner retains ownership of the Vessel after the Charter Term, it agrees not to display the Charterer’s logo. If the Owner sells the Vessel after the Charter Term it will require the purchaser to agree not to use the Charterer’s name or logo in connection with the Vessel. Nothing in this Section 15 diminishes and/or releases the Charterer from its obligations under this Charter (including without limitation under the Charterer’s obligations under Section 12).
 
35

 16.
Notices.
 
All notices and other communications required under this Charter shall be given by email, by personal delivery or by international courier service, to each Party at its address stated below or such other address as it may declare from time to time pursuant to this notice provision. Any such notice or communication shall be deemed effective on the date of delivery, if by personal delivery, or on the second Business Day after deposit with an international courier service (all delivery fees prepaid) if sent by international courier service. If sent by email or other electronic means, notices shall be effective upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return email or other written acknowledgement), provided, that if such notice or communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient.
 
All notices and other communications to be sent to the Owner shall be sent by the Charterer as follows, unless the Owner shall give notice to the contrary:
 
Address:

Cargill International SA
Esplanade de Pont-Rouge 4
1212 Grand-Lancy
Switzerland

(Mailing address: Cargill International SA, P.O. Box 1415, 1211 Geneva 26,
Switzerland)
Attn: Ann Shazell and Bernd Bachmann
Tel: +41-22-703-2111
email: Ann_shazell@cargill.com
Bernd_Bachmann@cargill.com
gnva-otd-bareboat@Cargill.com
-gnva-admin-OTLawyers@Cargill.com

All notices and other communications to be sent to the Charterer shall be sent by the Owner as follows, unless the Charterer shall give notice to the contrary:
 
 
Address:
Flag Marine Co.
 
c/o Seanergy Management Corp.

154 Vouliagmenis Avenue,

16674 Glyfada, Athens, Greece

Attention: Mr. Stavros Gyftakis
 
 
Tel. No :
+30 2108913520


Email:
legal@seanergy.gr finance@seanergy.gr

36

 17.
Defaults; Remedies
 

 (a)
Events of Default. Any one or more of the following is an Event of Default (“Event of Default”) by the Charterer:
 
(i)          the Charterer shall fail to: pay the whole or part of any Basic Charter Hire specified in Section 5 on the due date thereof and such failure shall continue for five (5) Business Days following the due date thereof;

(ii)         the Charterer shall fail to pay the whole or any part of the Loss Value of the Vessel and/or the Asset Upside Amount (as the case may be) in accordance with the terms and conditions of this Charter and any such failure shall continue for three (3) Business Days following the due date thereof;
 
(iii)        the Charterer shall fail to carry and maintain insurance on or with respect to the Vessel in accordance with the provisions of Section 9;

(iv)        the Charterer shall fail to perform or comply with the covenants contained in Sections 4(i), 6(a) (with the exception of Section 6(a)(ii)), 10(c) (except in connection with any seizure, arrest or detention of the Vessel that arises out of wilful misconduct or gross negligence on the part of the Owner) or 14(a);

(v)         the Charterer shall fail to perform or comply in any material respect with any other covenant, condition, or agreement to be performed or observed by it under this Charter or the Multipartite Agreement, and the Charterer shall fail to cure such failure to perform or comply within ten (10) Business Days after the Owner shall have demanded in writing the cure thereof;
 
(vi)        any material representation or warranty made by the Charterer in this Charter or under the Multipartite Agreement or by the Guarantor in the Guarantee shall prove to have been incorrect in any material respect as of the date on which made, or any material statement, report, schedule, notice, certificate or other writing furnished by the Charterer or, as the case may be, the Guarantor to the Owner in connection with this Charter or under the Multipartite Agreement or the Guarantee, as the case may be, shall prove to have been incorrect in any material respect as of the date on which the facts set forth therein are stated or certified, and, if in the reasonable opinion of the Owner such is capable of being cured, the Charterer or the Guarantor shall fail to cure such defect within seven (7) Business Days after the Owner shall have demanded in writing the cure thereof;
 
(vii)       the Charterer, and/or the Guarantor shall become insolvent or bankrupt or shall cease paying or providing for the payment of its debts generally; the Charterer and/or the Guarantor shall be dissolved, shall be adjudged a bankrupt by a court of competent jurisdiction, shall make a general assignment of all or substantially all of its assets for the benefit of its creditors, or shall lose its charter by forfeiture or otherwise; or a petition for an arrangement or for reorganization of the Charterer and /or the Guarantor under the bankruptcy laws of the relevant jurisdiction shall be filed by the Charterer and/or the Guarantor, or such petition shall be filed by creditors and the same shall be approved by a court of competent jurisdiction;

37
(viii)      an arrangement or reorganization of the Charterer and/or of the Guarantor under the bankruptcy laws of the relevant jurisdiction shall be approved by a court, whether proposed by a creditor, a stockholder or any other party or person whatsoever; or a receiver or receivers of any kind whatsoever, whether appointed in admiralty, bankruptcy, common law or equity proceedings, shall be appointed by a decree of a court of competent jurisdiction with respect to the Vessel or all or substantially all of the property of the Charterer and/or the Guarantor;

(ix)        (A) the Guarantor shall fail to pay when due the whole or any part of any amount payable by it under the Guarantee; or (B) the Guarantor shall fail to perform or comply in any material respect with any other covenant, condition or agreement to be performed or observed by it under the Guarantee; or (C) the Guarantor shall repudiate the Guarantee; or (D) a breach by the Guarantor of the Guarantee shall occur;

(x)          the Charterer fails to provide Additional Security (as defined at Section 17(b)(vii) below) within five (5) Business Days of the Owner’s request;
 
(xi)        any Charter Security and/or Additional Security ceases to be in full force and effect or ceases to be legal, valid, binding, enforceable, or effective or is alleged by a party to it (other than the Owner) to be ineffective;
 
(xii)       the Charterer shall (A) enter into any transaction of merger or consolidation (unless the Charterer is the surviving entity thereof), (B) sell or transfer all, substantially all or any substantial portion of its assets to any other person or enter into a leveraged buyout, (C) dissolve, liquidate or cease or suspend the conduct of business, or cease to maintain its existence, or (D) change the form of organization of its business and such change either adversely affects the rights of the Owner or has the effect of modifying, lessening, impairing or altering in any away adverse to the Owner the duties and obligations of the Charterer under this Charter;
 
(xiii)      a default shall occur with respect to any Debt owed by the Charterer or the Guarantor (as the case may be) to the Owner or any of its affiliates or to any third person in excess of United States Dollars Five Million (US$5,000,000), for which the Charterer or the Guarantor (as the case may be) fails to make any payment when due exceeding United States Dollars Five Million (US$5,000,000) or to perform any obligation thereunder, which default is not cured within any applicable grace period, and in any event within no more than twenty (20) Business Days;
 
(xiv)     without prejudice to Section 14(a) of this Charter, the Charterer shall assign and/or purport to assign any and/or all of its rights and/or interests in or arising under this Charter without having first received the prior written consent of the Owner in accordance with Section 14(a) of this Charter;

(xv)      the Charterer or the Guarantor (as the case may be) shall fail to pay for more than thirty (30) days after it is due, any final, non-appealable judgment in excess of United States Dollars One Million (US$1,000,000)entered against the Charterer or the Guarantor (as the case may be) by any court having jurisdiction over the Charterer or the Guarantor (as the case may be) or the property of the Charterer or the Guarantor (as the case may be); and

38
(xvi)      the Charterer fails to pay to the Owner any amount due under clause 108 (Washout clause) of the Time Charter.

For the purposes of this Section 17(a):

“Debt” means as to any person at any time (without duplication): (i) all obligations of such person for borrowed money, (ii) all obligations of such person evidenced by bonds, notes, debentures, or other similar instruments, (iii) all obligations of such person to pay the deferred purchase price of property or services, except trade accounts payable of such person arising in the ordinary course of business which are not past due by more than ninety (90) days, (iv) all obligations of such person under any lease which, in conformity with US GAAP, is required to be capitalized for balance sheet purposes, (v) all obligations of such person under guaranties, endorsements (other than for collection or deposit in the ordinary course of business), assumptions or other contingent obligations, in respect of, or to purchase or otherwise acquire, any obligation or indebtedness of any other person, or any other obligation, contingent or otherwise, of such person directly or indirectly protecting the holder of any obligation or indebtedness of any other person against loss (whether by partnership arrangements, agreements to keep-well, to purchase assets, goods, securities, or services, to take-or-pay or otherwise), (vi) all obligations secured by a lien existing on property owned by such person, whether or not the obligations secured thereby have been assumed by such person or are non- recourse to the credit of such person, (vii) all reimbursement obligations of such person (whether contingent or otherwise) in respect of letters of credit, bankers’ acceptances, surety or other bonds and similar instruments, (viii) all liabilities of such person in respect of unfunded vested benefits under any employee benefit plan, and (ix) any other liability of such person that is classified as debt under US GAAP.


 (b)
Remedies. At any time that an Event of Default has occurred and is continuing, the Owner, by written notice to the Charterer, may declare the Charterer in default under this Charter, in which case the Owner shall be entitled to pursue all remedies available at law or in equity or in admiralty, including, without limitation, the following remedies:

(i)          By notice to the Charterer, the Owner may terminate this Charter, whereupon the Charterer will redeliver the Vessel to the Owner within ten (10) Business Days of receipt of such notice in accordance with the provisions of Sections 4(b)-4(i) above.
 
(ii)         The Owner or the Head Owner may re-take the Vessel wherever found, whether upon the high seas or at any port, harbour or other place and irrespective of whether the Charterer, any sub-charterer or any other person is in possession of the Vessel, all without prior demand and without legal process, the Charterer HEREBY WAIVING ANY AND ALL RIGHTS TO PRIOR NOTICE AND A JUDICIAL HEARING WITH RESPECT TO THE REPOSSESSION OF THE VESSEL BY THE OWNER, and for that purpose the Owner or the Head Owner or their respective agents may enter upon any dock, pier or other premises where the Vessel is and may take possession thereof, without the Owner or its agent incurring any liability by reason of such re-taking, whether for the restoration of damage to property caused by such re- taking or for damages of any kind for any reason to the Charterer or any person claiming under the Charterer.
 
39
(iii)        Recover from the Charterer, in addition to any Basic Charter Hire or Additional Hire due up to the date of default, the Loss Value amount calculated as of the Charter Hire Payment Date preceding the date that the event which resulted in the Event of Default occurred, as liquidated damages for loss of a bargain and not as a penalty.
 
(iv)       The Owner or the Head Owner may sell or otherwise dispose of the Vessel at public auction or by private sale, without prior notice to the Charterer, at such time or times and upon such terms as the Owner or the Head Owner (as applicable) may determine, for cash or credit, at such price as the Owner or the Head Owner shall deem fair, with the Vessel in its then condition or following any commercially reasonable preparation, or otherwise dispose of, hold, use, lay-up, operate, charter to others the Vessel, in a commercially reasonable manner, all free and clear of any rights of the Charterer, including any right of redemption, and without any duty to account to the Charterer with respect to such action or inaction or for any proceeds with respect hereto; any disposition or holding of the Vessel shall not be deemed a retention by the Owner in satisfaction of the Charterer’s obligations under this Charter. Nothing contained in this Charter shall require the Owner to sell or charter the Vessel at any time or take any action in mitigation of the Owner’s damages.

(v)         The Owner may, but shall not be required to, proceed by appropriate action for collection from the Charterer of all costs and expenses, including attorneys’ fees, court costs, and other expenses, incurred by the Owner in connection with the enforcement of this Charter and the exercise of remedies under this Charter. Further, in addition to any other amounts to which the Owner may be entitled, the Charterer shall be liable for all costs and expenses incurred by the Owner, which shall include all insurance premiums, all demurrage, dockage, and anchorage charges, all legal fees, and all other costs and expenses whatsoever incurred by the Owner by reason of the occurrence of an Event of Default or by reason of the exercise by the Owner of any remedy under this Charter, including, without limitation, any cost or expense incurred by the Owner in connection with any re-taking of the Vessel or putting the Vessel in the condition required in this Charter.
 
(vi)        The proceeds of any sale, charter or other disposition of the Vessel received by the Owner, if any, pursuant to this Section 17(b) shall be applied in the following order of priority:
 

 (1)
to pay all of the Owner’s and the Head Owner’s costs, charges and expenses incurred in taking, moving, laying- up, holding, repairing, selling, chartering or otherwise disposing of the Vessel;
 

 (2)
to the extent not previously paid by the Charterer, to pay the Owner all sums (including the Loss Value as provided in Section 17(b)(iii) above) due by the Charterer under this Charter and under clause 108 (Washout clause) of the Time Charter upon termination of this Charter; and

40

 (3)
to reimburse the Charterer for any Loss Value previously paid by the Charterer to the Owner in accordance with Section 17(b)(iii) above; and
 

 (4)
any sums remaining shall be retained by the Owner.
 
The Charterer shall pay to the Owner any deficiency in (1) and (2) above

(vii)      If an Event of Default occurs in relation to the Charter Security or part thereof (as more particularly described at Section 17(a) (vi), (vii), (viii), (ix), (x), (xi), (xii), (xiii) and / or (xv) above), the Owner may (but shall not be obliged to) request the Charterer to provide, and in which case the Charterer shall be obliged to provide, such other additional security in form and substance reasonably satisfactory to the Owner which (in the opinion of the Owner) has a net realisable value (on an aggregate basis) equal to or greater than the applicable shortfall or deficiency in the Charter Security including, without limitation, a deposit of cash to such account as the Owner may nominate in an amount equivalent to the amount of any shortfall or deficiency in respect of the Charter Security (“Additional Security”).
 
(viii)      The Owner may recover from the Charterer any amount due under clause 108 (Washout clause) of the Time Charter.
 
No remedy referred to in this Section 17(b) is intended to be exclusive, but each remedy shall be cumulative and in addition to, and may be exercised concurrently with, any other remedy which is referred to in this Charter or which may otherwise be available to the Owner at law, in equity or in admiralty.
 

 (c)
Multipartite. If the Owner, by written notice to the Charterer, declares the Charterer in default under this Charter pursuant to this Section 17 and the Event of Default in question is a Relevant Event of Default (as defined below), and the Charterer is entitled to purchase the Vessel pursuant to the terms of clause 5.1 of the Multipartite Agreement and the Vessel is to be acquired by the Charterer pursuant to such terms, then prior to the Charterer’s purchase of the Vessel pursuant to the terms of clause 5.1 of the Multipartite Agreement the Charterer shall pay to the Owner (v) Charter Hire due through and including the date of purchase; (w) any applicable taxes (other than any taxes based upon or measured by the net income (however denominated) of the Owner); (x) expenses of sale (including the Owner’s and the Head Owner’s reasonable counsel fees); (y) the amount due under clause 108 (Washout clause) of the Time Charter; (z) either (i) plus any Arrangements Credit (as defined in Section 12(j)), or (ii) less any Arrangements Debit (as defined in Section 12(j)); and (zz) the Asset Upside Amount ((v), (w), (x), (y) and (z), together the “Outstanding Balance”). For the purposes of this Charter, a “Relevant Event of Default” means an Event of Default (as defined in the Bareboat Charter) under the Bareboat Charter which was caused in whole or in part by the act or omission of the Charterer.

41

 (d)
Notwithstanding any other provision of this Charter (and without prejudice to Section 18(g)), in the event that this Charter is terminated pursuant to the terms of clause 4.6 of the Multipartite Agreement, the Parties unconditionally and irrevocably agree that the following Sections shall survive (or as the case may be shall be deemed to survive) such termination of this Charter and are expressly made for the benefit of, and shall be enforceable by, the Owner, its successors and assigns: the indemnity provisions in Section 9(a) (Insurances); Section 16 (Notices); Section 17 (Defaults; Remedies); Section 19 (Income Tax); Section 20 (Law and Jurisdiction); Section 25 (Waiver); and Section 26 (No Remedy Exclusive).
 

 18.
Indemnification, Withholding and Certain Agreements.
 

 (a)
Owner’s Indemnification of the Charterer. The Owner agrees to indemnify, defend, and hold harmless the Charterer from all damages or costs arising as a result of (i) the Owner’s violation of any law or regulation of the jurisdiction in which the Owner is organized or maintains its principal office (other than a violation that would not have occurred but for the use, operation or presence of the Vessel or any part thereof in the relevant jurisdiction or the failure of the Charterer to perform its obligations under this Charter or any act or omission of the Charterer), (ii) the gross negligence or wilful misconduct of the Owner unless such gross negligence or wilful misconduct is imputed to the Owner as a result of any act or omission of the Charterer or any failure of the Charterer to perform its obligations under this Charter, or (iii) the failure of the Owner to pay any taxes which the Owner is required by law to pay.


(b)
Charterer’s Indemnification of the Owner and the Head Owner. The Charterer hereby assumes liability for, and shall defend, indemnify and hold harmless the Indemnified Parties (for the purposes of this Section 18, “Indemnified Parties” means: the Owner, the Head Owner and any of their affiliates and any mortgagee of the Vessel, whose identity the Owner has notified the Charterer of, and each of their respective successors and assigns, and the directors, officers, employees, representatives, agents and servants of any of the foregoing, and each an “Indemnified Party”) from and against any and all Claims (as hereinafter defined) which may be imposed on, incurred by or asserted against any of the Indemnified Parties, and the Vessel and/or the Approved ESD, (in each case whether or not also indemnified against pursuant to any other agreement or by any other person), regardless of when asserted (whether before, after or during the Charter Term) and in any way relating to or arising out of any of the following: the documentation, registry, delivery, possession, ownership, use, operation, lay-up, chartering, subchartering, condition, maintenance, repair, inspection, compliance with Environmental Laws and return of the Vessel and/or the Approved ESD, as applicable. Notwithstanding the foregoing, the Charterer shall not be obligated to indemnify any Indemnified Party in respect of any act or omission constituting gross negligence or wilful misconduct by such Indemnified Party, or its agents or representatives. The Charterer agrees to further indemnify, defend and hold harmless each Indemnified Party and the Vessel from and against all liens created and imposed on the Vessel other than those caused by Owner’s or, as the case may be, the Head Owner’s own actions, and in the event of the seizure of the Vessel under legal process to enforce such lien or asserted lien, the Charterer shall secure the prompt release of the Vessel by payment of same or otherwise as may be appropriate. The Owner’s right to Charter Hire as provided for in Section 5 of this Charter shall not be suspended during any time when the Vessel is under seizure by legal process as a result of such liens or asserted liens. As used in this Charter, “Claims” shall mean any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, expenses, fines, penalties and disbursements (including, without limitation, reasonable attorneys’ fees, litigation expenses and investigatory fees and disbursements) of whatsoever kind and nature, including, without limitation, (i) claims or penalties arising from any violation of the laws or regulations of any authority or country or political subdivision thereof, (ii) claims as the result of latent, patent or other defects, whether or not discoverable by the Owner, the Head Owner or the Charterer, (iii) Environmental Claims and (iv) tort claims of any kind, including, without limitation, claims for injury or damage caused by leakage, discharge or spillage of oil or cargo, refuse or any hazardous substance, but excluding Taxes (as such term is defined in Section 18(c) below).

42

 (c)
Charterer’s Withholding. Notwithstanding anything in this Charter or in the Bareboat Charter to the contrary, the Charterer hereby covenants and agrees that it shall make all payments of Charter Hire and other amounts payable by the Charterer under this Charter to the Owner or any Indemnified Party or any Tax Indemnitee (for the purposes of this Section 18, “Tax Indemnitee” means any of: the Owner and each of its affiliates that is included with the Owner in a consolidated, combined, unitary or other group Tax return) free and clear from, and without deduction or withholding of or by reason of, any taxes (including income, gross receipts, sales or use taxes), money transfer fees or other charges or withholdings of any nature whatsoever except to the extent that deduction or withholding of any Tax (for the purposes of this Section 18, “Tax” means all taxes (including income taxes, gross receipts taxes, sales taxes, use taxes, value added taxes, ad valorem taxes and other taxes), fees, duties, charges, assessments, and withholdings of whatever nature, imposed, assessed, levied or asserted by any governmental authority or other taxing authority (and any and all penalties, fines, interest and other charges relating thereto)) is required by law, in which event the Charterer shall (i) notify the person entitled to receive the payment (the “Payee”) of such requirement, (ii) make such deduction or withholding, (iii) if such Tax is an Indemnified Tax (as defined in Section 18(e)), pay on an after-Tax basis pursuant to Section 18(d) such additional amount as is necessary so that the Payee receives, after such deduction or withholding (including any deduction or withholding with respect to such additional amount) an amount equal to the amount that the Payee would have received if such deduction or withholding had not been made, (iv) pay the full amount deducted or withheld to the appropriate taxing authority in accordance with applicable law, and (v) deliver to the Payee promptly after making such payment an original receipt (or certified copy thereof) or other evidence reasonably satisfactory to the Payee evidencing payment of the tax withheld to the appropriate taxing authority.

43

 (d)
Payment After Tax. Each payment or indemnity payable by the Charterer to or for the benefit of an Indemnified Party or a Tax Indemnitee pursuant to this Section 18 shall be paid on an after- Tax basis, which means that the Charterer must pay, in addition to such payment or indemnity, such additional amount or amounts as will, in the reasonable good faith determination of such Indemnified Party or Tax Indemnitee, leave such Indemnified Party or Tax Indemnitee and its affiliates (if any) in the same economic position as they would be in if such payment or indemnity were not subject to taxation, taking into account any Tax costs resulting from the such Indemnified Party’s or Tax Indemnitee’s actual or constructive receipt or accrual of the Charterer’s payment or indemnity and any Tax saving realized by such Indemnified Party or Tax Indemnitee and its affiliates (if any) as a result of the allowance of any Tax credit, deduction or other Tax benefit for the Tax, liability or expense incurred by such Indemnified Party or Tax Indemnitee that gave rise to the Charterer’s obligation to pay such payment or indemnity pursuant to this Section 18.


(e)
Indemnified and Excluded Taxes. For the purposes of this Section 18, an “Indemnified Tax” means all Taxes, regardless of how or when such Taxes are imposed, incurred or asserted (whether imposed on, incurred by or asserted against the Vessel or the Owner or the Charterer or otherwise) arising out of, in connection with or otherwise relating to the Vessel or this Charter or any of the transactions contemplated in or done pursuant to this Charter (including the Owner’s chartering of the Vessel from the Head Owner, and chartering of the Vessel during the term of this Charter), provided that the Charterer shall have no obligation under this Section 18 to indemnify a Tax Indemnitee for the following Taxes (“Excluded Taxes”):

44
(i)          any Tax imposed on or calculated by reference to the overall net income, overall gross income, overall profits, overall gains, capital or net worth of such Tax Indemnitee, provided that the exclusion in this Section 18(e)(i) shall not apply to any Tax to the extent such Tax would not have been payable in the absence of the documentation, registry, delivery, use, presence or other connection of the Vessel or any part thereof or with, or any act or omission or other connection of the Charterer or any affiliate, agent, representative or contractor of the Charterer or any other person (other than the Owner, unless an Event of Default is continuing) using or having possession, custody or control of the Vessel or any part thereof in or with, the jurisdiction imposing such Tax;
 
(ii)          any ad valorem Tax assessed on or with respect to the Vessel arising from the presence of the Vessel in the jurisdiction imposing the Tax after the Charterer has redelivered the Vessel to the Owner in accordance with the provisions of this Charter and has performed all of its obligations under the Charter, unless the Vessel is redelivered as a result of the occurrence of an Event of Default;
 
(iii)        any Tax imposed on or with respect to any sale or other transfer by the Owner of any of the Owner’s interest in the Vessel or the Charter to any person other than the Charterer, provided that the exclusion in this Section 18 18(e)(iii) shall not apply to any such sale or transfer that occurs (1) in connection with or as a result of an Event of Default, a Total Loss, or any maintenance, repair, overhaul, pooling, interchange, exchange, removal, replacement, substitution, modification, improvement, or alteration of the Vessel or any part thereof or (2) at the Charterer’s request or (3) pursuant to a requirement in this Charter;

(iv)        any Tax to the extent resulting from any act or event occurring after the Charterer has returned the Vessel and all Technical Documents to the Owner in compliance with the terms of this Charter and has performed all its obligations under this Charter (the “Return Compliance Time”), provided that the exclusion in this Section 18(e)(iv) shall not apply to any Tax that (1) arises from any act, event or circumstance (or relates to any period of time) occurring at or before the Return Compliance Time or (2) is imposed with respect to any payment by the Charterer pursuant to Charter or (3) is incurred in connection with the exercise of any rights or remedies of the Owner after the occurrence of an Event of Default;
 
(v)          any Tax if and to the extent that such Tax would be payable by such Tax Indemnitee in the absence of the transactions contemplated in this Charter;
 
(vi)        any Tax if and to the extent that such Tax is caused by, and would not be payable but for, (1) any gross negligence or willful misconduct of such Tax Indemnitee or (2) the inaccuracy or breach of any representation, warranty or covenant of the Owner in this Charter.

45
 
(f)
Proof of Payment – Taxes. Promptly upon the written request of the Owner, the Charterer shall provide to the Owner copies of all documentation and proof of payment of any Taxes.
 

 (g)
Survival. The obligations of the Owner and the Charterer under this Section 18 shall survive the expiration or earlier termination or cancellation of this Charter and are expressly made for the benefit of, and shall be enforceable by, the Party to which the obligations are owed, and its successors and assigns.


(h)
No Limitation. Except as otherwise limited in this Charter, it is the intent of the Parties that all indemnity obligations or liabilities assumed by the Parties under this Charter be without limit and without regard to the cause or causes thereof (including pre- existing conditions), the unseaworthiness of any vessel, strict liability or the negligence of any party or parties, whether such negligence be sole, joint or concurrent, active or passive.
 

 (i)
Consequential Damages. Neither Party shall be liable to the other Party for any consequential or special damages, arising out of, resulting from or relating in any way to this Charter, irrespective of the negligence or fault of any party.


19. Income Tax

The Charterer agrees to take no tax position inconsistent with the fact that the Owner is the owner of the Vessel for tax purposes.
 

 20.
Law and Jurisdiction
 

 (a)
Governing Law. This Charter is governed by and interpreted in accordance with the general maritime laws of the United States and, to the extent they are not applicable, the internal laws of the State of New York (without regard to New York’s conflict of laws provisions).


(b)
Venue. All judicial actions by any Party to enforce any provision of this Charter shall, if requested by the Owner, be brought in the United States District Court for the Southern District of New York or the state court of general jurisdiction sitting in the County of New York in the State of New York. Each Party consents to the jurisdiction of such courts and hereby irrevocably waives any objection, including any objection to the laying of venue or based on the grounds of forum non-conveniens, which it may now or hereafter have to the bringing of any such action or proceedings in such court.
 

 (c)
JURY TRIAL WAIVER. EACH PARTY HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY TO EVERY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS CHARTER.

46

 (d)
Service of Process. Service of process may be made on the Charterer or the Guarantor by mailing or delivering a copy of such process to the Charterer c/o the Guarantor at the Guarantor’s address listed below (with a copy to the Charterer at its address identified in or in accordance with Section 16), or to any new address of the Guarantor of which the Owner has been notified by the Charterer. The Charterer hereby irrevocably authorises and directs the Guarantor to accept such service on its behalf at such address. As an alternative method of service, the Charterer also irrevocably consents to the service of any and all process, postage prepaid, in any such action or proceeding by mailing a copy of such process to the Guarantor with a copy to the Charterer at its address identified in or in accordance with Section 16. Nothing in this Charter shall affect the right to effect service of process in any other manner permitted by law.
 
Guarantor’s address:

Seanergy Maritime Holdings Corp.
c/o Seanergy Management Corp.
154 Vouliagmenis Avenue,
16674 Glyfada, Athens, Greece
 

 21.
Salvage.
 
Service of process may be made on the Owner by mailing or delivering a copy of such process to the Owner at the Owner’s address identified in or in accordance with Section 16.

All salvage and towage performed by the Vessel shall be for the Charterer’s benefit and the cost of repairing damage occasioned thereby shall be borne by the Charterer.


 22.
War.
 
(a)       For the purpose of this Charter, the words “War Risks” shall include any war (whether actual or threatened), act of war, civil war, hostilities, revolution, rebellion, civil commotion, warlike operations, the laying of mines (whether actual or reported), acts of piracy, acts of terrorists, acts of hostility or malicious damage, blockades (whether imposed against all vessels or imposed selectively against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever), by any person, body, terrorist, pirate or political group, or the government of any state whatsoever, which may be dangerous or are likely to be or to become dangerous to the Vessel, her cargo, crew or other persons on board the Vessel.
 

 (b)
The Charterer shall have the liberty:
 
(i)          to comply with all orders, directions, recommendations or advice as to departure, arrival routes, sailing in convoy, ports of call, stoppages, destinations, discharge of cargo, delivery, or in any other way whatsoever, which are given by the government of the Flag State, or any other government, body or group whatsoever acting with the power to compel compliance with their orders or directions;

47
(ii)          to comply with the orders, directions or recommendations of any War Risks underwriters who have the authority to give the same under the terms of the War Risks insurance;

(iii)        to comply with the terms of any resolution of the Security Council of the United Nations, any directives of the European Union, the effective orders of any other supranational body which has the right to issue and given the same, and with national laws aimed at enforcing the same to which the Owner or the Charterer are subject, and to obey the orders and directions of those who are charged with their enforcement.
 

 23.
Assignment of Insurances.
 

 (a)
Collateral. In order to secure all obligations of the Charterer owing to the Owner under this Charter, the Charterer hereby assigns to the Head Owner with first priority and to the Owner with second priority, all of the Charterer’s right, title and interest in and to all policies and contracts of insurance, including, without limitation, all entries in any protection and indemnity or War Risks association or club, which are from time to time taken out in respect of the Vessel, her hull, machinery, freight, disbursements, profits or otherwise, and all the benefits thereof, including, without limitation, all claims of whatsoever nature arising under such policies, as well as all amounts due from underwriters under any such insurance whether as payment of losses, or as return premiums, or otherwise, (collectively, the “Insurances”), and any proceeds of any of the foregoing. No later than the Delivery Date the Charterer shall give each underwriter, broker, P&I club and insurer notice of the assignment of insurances contained in this Charter in the form and terms attached as Exhibit B to this Charter (or in such other form and terms as the Owner may reasonably require) and procure that the loss payable clauses as attached to Exhibit B to this Charter (or loss payable clauses otherwise in a form and terms satisfactory to the Owner and the Head Owner) shall have been duly endorsed on all the insurances.
 

 (b)
No Obligation to Perform. The Charterer hereby agrees and covenants that, notwithstanding the provisions of this Section 23, neither the Owner nor the Head Owner shall have any of the Charterer’s obligations under any Insurances.
 

 24.
Change of Ownership.
 
The Charterer acknowledges and agrees that the Head Owner may transfer its ownership of the Vessel to another entity during the term of this Charter subject to clause 2.5 of the Multipartite Agreement.
 
Following the receipt by the Charterer of a notice from the Owner stating that the Head Owner intends to transfer the ownership of the Vessel to another entity (the “Transferee”) as of the date of the transfer set forth in such notice, (i) reference to ‘the Head Owner’ in Section 9 and Section 23 of this Charter shall be deemed to refer to the Transferee (ii) as of such date of transfer, the Charterer shall procure that the insurances over the Vessel are updated to reflect the Transferee’s ownership of the Vessel and (iii) as of such date of transfer, the Charterer shall provide updated notices of assignment of insurances and loss payable clauses to each underwriter substantially in the form attached at Exhibit B to this Charter (or otherwise in a form and terms satisfactory to the Owner and the Transferee) logically amended to show the Transferee as the ‘‘Owner’’.

48

 25.
Waiver. No waiver by either Party of any breach by the other of any obligation, agreement or covenant under this Charter shall be deemed to be a waiver of that or any subsequent breach of the same or any other covenant, agreement or obligation nor shall any forbearance by any Party to seek a remedy for any breach by the other Party be deemed a waiver by such Party of its rights or remedies with respect to such breach, unless such waiver is in each case in writing duly executed by such Party.
 

 26.
No Remedy Exclusive. Each and every right, power and remedy given to the Owner in this Charter shall be cumulative and in addition to every other right, power and remedy in this Charter or therein given now or hereafter existing at law, in equity, in admiralty, by statute or otherwise. Each and every right, power and remedy whether given therein or otherwise existing may be exercised from time to time as often and in such order as may be determined by the Owner, and neither the failure or delay in exercising any power or right nor the exercise or partial exercise of any right, power or remedy shall be construed to be a waiver of or acquiescence in any default therein; nor shall the acceptance of any security or of any payment of or on account of any loan, promissory note, advance, obligation, expense, interest or fees maturing after an Event of Default or of any payment on account of any past default shall be construed to be a waiver of any right to take advantage of any future default or of any past default not completely cured thereby.
 

 27.
Entire Agreement; Amendment. This Charter and its exhibits and schedules constitute the entire agreement between the Parties relating to the subject matter of this Charter and supersedes all prior agreements and undertakings of the Parties, whether oral or written, in connection herewith. No amendment of this Charter shall be valid unless made in writing and signed by each of the Parties and consented to by the Head Owner.
 

 28.
Counterparts. This Charter may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. It is the express intent of the Parties to be bound by the exchange of signatures on this Charter via Portable Document Format (PDF), which the Parties agree shall constitute an original writing for all legal purposes.
 

 29.
Severability. The Owner and the Charterer agree that with respect to any specific provision of this Charter that is held by any court or other constituted legal authority to be void or otherwise unenforceable in any particular manner, the Parties consider and permit this Charter to be amended in such manner as may be required in order to cause said provision and all other terms of this Charter to remain binding and enforceable against the Owner and the Charterer.


30.
Captions. The captions in this Charter are for convenience and reference only and shall not define or limit any of the terms or provisions, or otherwise affect the construction, of this Charter.

49

 31.
Binding Effect. Subject to Section 14, this Charter shall be binding upon, inure to the benefit of, and be enforceable by the Parties and their respective successors and assigns.


32.
Interpretation. Unless otherwise stated, reference to a “Section” in this Charter is to a section of this Charter (and “Sections” shall be construed accordingly) and a reference to an “Exhibit” is a reference to an exhibit to this Charter. The words “include(s)” and “including” shall be construed as being followed by the words “without limitation”.
 
[Remainder of page intentionally left blank]
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IN WITNESS WHE REOF, the Parties have executed this Charter as of the date first written above.
 
OWNER
 
CARGILL INTERNATIONAL SA
 
By: /s/ George Wells
Name:  George Wells
Title:  Assistant Vice President

CARGILL INTERNATIONAL SA

By: /s/ Theodora Mitropetrou
Name:  Theodora Mitropetrou
Title:  Attorney in fact

Signature Page - Sub-Bareboat Charter " NEW EXPEDITION" (tbr " FLAGSHIP")
 
EXHIBIT A – Basic Charter Hire

Basic Charter Hire US$ 6,695 per day

EXHIBIT A-1

Loss Value and Purchase Price Schedule Original Vessel Cost: US$ 20,500,000

 
Payment
Number
Payment
Date/
Relevant
Purchase
Price Date
 
 
Loss Value $
Loss Value
as a % of
Original
Vessel Cost
 
Purchase
Price $
 
 
Floor Price $
0
5/10/2021
20,500,000.00
100%
20,500,000.00
28,385,000.00
1
6/10/2021
20,334,398.64
99%
20,334,398.64
28,254,902.08
2
7/10/2021
20,168,490.00
98%
20,168,490.00
28,124,804.17
3
8/10/2021
20,002,273.51
98%
20,002,273.51
27,994,706.25
4
9/10/2021
19,835,748.60
97%
19,835,748.60
27,864,608.33
5
10/10/2021
19,668,914.70
96%
19,668,914.70
27,734,510.42
6
11/10/2021
19,501,771.24
95%
19,501,771.24
27,604,412.50
7
12/10/2021
19,334,317.64
94%
19,334,317.64
27,474,314.58
8
1/10/2022
19,166,553.33
93%
19,166,553.33
27,344,216.67
9
2/10/2022
18,998,477.73
93%
18,998,477.73
27,214,118.75
10
3/10/2022
18,830,090.26
92%
18,830,090.26
27,084,020.83
11
4/10/2022
18,661,390.34
91%
18,661,390.34
26,953,922.92
12
5/10/2022
18,492,377.39
90%
18,492,377.39
26,823,825.00
13
6/10/2022
18,323,050.84
89%
18,323,050.84
26,693,727.08
14
7/10/2022
18,153,410.10
89%
18,153,410.10
26,563,629.17
15
8/10/2022
17,983,454.58
88%
17,983,454.58
26,433,531.25
16
9/10/2022
17,813,183.71
87%
17,813,183.71
26,303,433.33
17
10/10/2022
17,642,596.90
86%
17,642,596.90
26,173,335.42
18
11/10/2022
17,471,693.56
85%
17,471,693.56
26,043,237.50
19
12/10/2022
17,300,473.10
84%
17,300,473.10
25,913,139.58
20
1/10/2023
17,128,934.94
84%
17,128,934.94
25,783,041.67
21
2/10/2023
16,957,078.49
83%
16,957,078.49
25,652,943.75
22
3/10/2023
16,784,903.15
82%
16,784,903.15
25,522,845.83
23
4/10/2023
16,612,408.34
81%
16,612,408.34
25,392,747.92
24
5/10/2023
16,439,593.46
80%
16,439,593.46
25,262,650.00
25
6/10/2023
16,266,457.92
79%
16,266,457.92
25,132,552.08
26
7/10/2023
16,093,001.12
79%
16,093,001.12
25,002,454.17
27
8/10/2023
15,919,222.47
78%
15,919,222.47
24,872,356.25
28
9/10/2023
15,745,121.37
77%
15,745,121.37
24,742,258.33
29
10/10/2023
15,570,697.22
76%
15,570,697.22
24,612,160.42
30
11/10/2023
15,395,949.42
75%
15,395,949.42
24,482,062.50
31
12/10/2023
15,220,877.37
74%
15,220,877.37
24,351,964.58
32
1/10/2024
15,045,480.47
73%
15,045,480.47
24,221,866.67
33
2/10/2024
14,869,758.12
73%
14,869,758.12
24,091,768.75
34
3/10/2024
14,693,709.71
72%
14,693,709.71
23,961,670.83
35
4/10/2024
14,517,334.64
71%
14,517,334.64
23,831,572.92
36
5/10/2024
14,340,632.30
70%
14,340,632.30
23,701,475.00
37
6/10/2024
14,163,602.09
69%
14,163,602.09
23,571,377.08

38
7/10/2024
13,986,243.39
68%
13,986,243.39
23,441,279.17
39
8/10/2024
13,808,555.60
67%
13,808,555.60
23,311,181.25
40
9/10/2024
13,630,538.11
66%
13,630,538.11
23,181,083.33
41
10/10/2024
13,452,190.30
66%
13,452,190.30
23,050,985.42
42
11/10/2024
13,273,511.56
65%
13,273,511.56
22,920,887.50
43
12/10/2024
13,094,501.28
64%
13,094,501.28
22,790,789.58
44
1/10/2025
12,915,158.84
63%
12,915,158.84
22,660,691.67
45
2/10/2025
12,735,483.63
62%
12,735,483.63
22,530,593.75
46
3/10/2025
12,555,475.03
61%
12,555,475.03
22,400,495.83
47
4/10/2025
12,375,132.42
60%
12,375,132.42
22,270,397.92
48
5/10/2025
12,194,455.18
59%
12,194,455.18
22,140,300.00
49
6/10/2025
12,013,442.69
59%
12,013,442.69
22,010,202.08
50
7/10/2025
11,832,094.32
58%
11,832,094.32
21,880,104.17
51
8/10/2025
11,650,409.46
57%
11,650,409.46
21,750,006.25
52
9/10/2025
11,468,387.48
56%
11,468,387.48
21,619,908.33
53
10/10/2025
11,286,027.75
55%
11,286,027.75
21,489,810.42
54
11/10/2025
11,103,329.65
54%
11,103,329.65
21,359,712.50
55
12/10/2025
10,920,292.55
53%
10,920,292.55
21,229,614.58
56
1/10/2026
10,736,915.82
52%
10,736,915.82
21,099,516.67
57
2/10/2026
10,553,198.83
51%
10,553,198.83
20,969,418.75
58
3/10/2026
10,369,140.95
51%
10,369,140.95
20,839,320.83
59
4/10/2026
10,184,741.55
50%
10,184,741.55
20,709,222.92
60
5/10/2026
10,000,000.00
49%
10,000,000.00
20,579,125.00
 
Stipulated loss values are due in addition to any advance or arrears rent due on the same date.

EXHIBIT B
 
NOTICE OF ASSIGNMENT OF INSURANCE
 
TO:
 
PLEASE TAKE NOTICE:
 

 (1)
That by an assignment of Insurances contained in a Sub-Bareboat Charter Agreement dated as of, 2021 made by FLAG MARINE CO. (the “Sub-Charterer”) to CARGILL INTERNATIONAL SA (together with its successors and assigns, “Head Charterer”), the Sub-Charterer has collaterally assigned to the registered owner of the Vessel (as defined below), CFT INVESTMENTS 1 LLC, its successors and assigns (“Owner”) as first priority and to the Head Charterer as second priority all of the Sub-Charterer’s rights, title and interests in, to and under all policies and contracts of insurance, including the Sub-Charterer’s rights under all entries in any protection and indemnity or war risk association or club, which are from time to time taken out by the Sub-Charterer in respect of M/V “FLAGSHIP” with IMO No. 9514224(the “Vessel”), her hull, machinery, freight, disbursements, profits or otherwise, and all the benefits thereof, including, without limitation, all claims of whatsoever nature arising under such policies, as well as all amounts due from underwriters under any such insurance whether as payment of losses, or as return premiums, or otherwise (collectively, the “Insurances”).


(2)
That you are hereby irrevocably authorized and instructed to pay from the date hereof all payments under:
 

 (a)
all Insurances, except entries in protection and indemnity associations or clubs or insurances effected in lieu of such entries, relating to the Vessel in accordance with the loss payable clause in Attachment 1 to this Notice; and


(b)
all entries in protection and indemnity associations or clubs or insurances effected in lieu of such entries relating to the Vessel in accordance with the loss payable clause in Attachment 2 to this Notice.
 

 (3)
that you are hereby instructed to endorse the assignment, notice of which is given to you herein, on all policies or entries relating to the Vessel.

FLAG MARINE CO.
CARGILL INTERNATIONAL SA
   
   
By:
    
By:
    
Name:
Name:
Title:
Title:

Dated as of______________________, 2021

ATTACHMENT 1

LOSS PAYABLE AND NOTICE OF CANCELLATION CLAUSE


 (A)
Until CFT Investments 1 LLC (together with its successors and assigns, the “Owner”) shall have notified underwriters to the contrary,
 

 (1)
Except as provided in subsection (2) of this Clause (A), any claim under the insurance policy in respect of M/V “FLAGSHIP” with IMO No. 9514224 (the “Vessel”) (other than in respect of a total loss), up to and including the amount of United States Dollars One Million (US$1,000,000) shall be paid:


i.
directly for the repair, salvage or other charges involved; or


ii.
if Cargill International SA (the “Charterer”) shall have first fully repaired the damage or paid all of the salvage or other charges, to the Charterer as reimbursement therefor as its interests may appear; or
 

 iii.
if Flag Marine Co. (the “Sub-Charterer”) shall have first fully repaired the damage or paid all of the salvage or other charges, to the Sub-Charterer as reimbursement therefor as its interests may appear,

save that, without prejudice to subsection (2) of this Clause (A), if the Charterer and/or the Owner has provided the insurers with notice of an Event of Default by the Sub- Charterer under the sub-bareboat charter agreement (between the Charterer and the Sub- Charterer) with respect to the Vessel, no payment shall be made to the Sub- Charterer under subsection (1)(iii) of this Clause (A), but instead shall be paid in accordance with subsection (1)(i) of this Clause (A) or subsection (1)(ii) of this Clause (A) only, unless it refers to amounts already paid by the Sub-Charterers.
 

 (2)
Any claim in respect of a total loss, and any claim of any nature (whether on account of the loss of or damage to the Vessel, on account of return premiums, or otherwise) in excess of United States Dollars One Million (US$1,000,000) or during the continuance of an Event of Default:
 

 i.
by the Charterer under the bareboat charter agreement (between the Owner and the Charterer) with respect to the Vessel (notice of which Event of Default shall be provided by the Owner to the insurers); and/or
 

 ii.
by the Sub-Charterer under the sub-bareboat charter agreement (between the Charterer and the Sub- Charterer) with respect to the Vessel (notice of which Event of Default shall be provided by the Owner and/or the Charterer to the insurers),
 
shall be paid directly to the Owner or otherwise as the Owner may consent.


 (B)
The underwriters agree to advise the Owner and the Charterer:
 

 (1)
If any insurer cancels or gives notice of cancellation of any insurance (other than war risks) or entry at least fourteen (14) days before such cancellation is to take effect, unless the insurer cancels such insurance because of non-payment of premium, in which case the insurer shall give Owner and the Charterer at least ten (10) days’ notice before such cancellation is to take effect; and


(2)
Of any material change in the terms and conditions of the aforesaid insurance policies or non-renewal at least fourteen (14) days before such change or non-renewal is to take effect.
 
The foregoing shall not apply to war risk insurance.

ATTACHMENT 2
 
FORM OF LOSS PAYABLE ENDORSEMENT

PROTECTION & INDEMNITY
 
M/V “FLAGSHIP” with IMO No. 9514224 Payment of any recovery to which FLAG MARINE CO. (the “Sub-Bareboat Charterer”), is entitled to make out of the funds of the Association in respect of any liability, costs or expenses incurred by the Sub-Bareboat Charterer, shall be made to the Sub-Bareboat Charterer or to its order, unless and until the Association receives:
 

 i)
subject always to paragraph ii, below, notice from CFT Investments 1 LLC (the “Owner”) and/or Cargill International SA (“Bareboat Charterer”) that the Sub-Bareboat Charterer is in default under the Bareboat Charter Agreement dated, 2021 between the Bareboat Charterer and the Sub-Bareboat Charterer respecting the Vessel, in which event all recoveries shall thereafter be paid to the Bareboat Charterer or to its order; provided that no liability whatsoever shall attach to the Association, its Managers or their agents for failure to comply with the latter obligation until and after the expiry of two (2) clear business days from the receipt of such notice;


ii)
notice from the Owner that the Bareboat Charterer is in default under the Bareboat Charter Agreement dated, 2021 between the Owner and the Bareboat Charterer respecting the Vessel, in which event all recoveries shall thereafter be paid to the Owner or to its order; provided that no liability whatsoever shall attach to the Association, its Managers or their agents for failure to comply with the latter obligation until and after the expiry of two (2) clear business days from the receipt of such notice.
 
The Association undertakes:


 a)
to inform the Owner and the Bareboat Charterer if the Association gives the Sub-Bareboat Charterer of the above ship notice that his insurance in the Association in respect of such ship is to cease at the end of the then current Policy Year;
 

 b)
to give the Owner and the Bareboat Charterer fourteen (14) days’ notice of the Association’s intention to cancel the insurance of the Sub-Bareboat Charterer by reason of this failure to pay, when due and demanded any sum due from Sub-Bareboat Charterer to the Association.
 
All notices to the Owner shall be made to the following address:

CFT Investments 1 LLC
c/o SMBC Leasing and Finance, Inc.
277 Park Avenue
New York, New York 10172
Attn: Chief Credit Officer
Tel: +1 (212) 224-5278
 
All notices to the Bareboat Charterer shall be made to the following address:

Cargill International SA
Esplanade de Pont-Rouge 4
1212 Grand-Lancy, Switzerland

(mailing address:
Cargill International SA
P.O. Box 1415
1211 Geneva 26, Switzerland)

Attn: Ann Shazell and Bernd Bachmann

Tel: +41-22-703-2111

email: ann_shazell@cargill.com
bernd_bachmann@cargill.com
gnva-otd-bareboat@cargill.com
-gnva-admin-OTLawyers@cargill.com

EXHIBIT C
 
Agreed form of Time Charter
ORIGINAL

Time Charter
 
GOVERNMENT FORM
Approved by the New York Produce Exchange
 
November 6th, 1913 - Amended October 20th, 1921; August 6th, 1931; October 3rd, 1946

1
This Charter Party , made and concluded on this in ........................................ .................11th................. day of .................May          19 2021

2
Between ..................................................................................FLAG MARINE CO., of the Marshall Islands, as..................................................................................
 
3
Owners of the good ..Marshall Islands flag.. Steamship/Motorship .."FLAGSHIP"..  ex New Expedition, IMO No.: 9514224 (Vessel's description See Clause   29) of ..............................................

4
of ............................................ tons gross register, and ............................................ tons net register, having engines of          indicated horse power
 
5
and with hull, machinery and equipment in a thoroughly efficient state, and classed ..............................................................................................................................
 
6
at ................................................ of about ................................................ cubic feet bale capacity, and about          tons of 2240 lbs.
 
7
deadweight capacity (cargo and bunkers, including fresh water and stores not exceeding one and one-half percent of ship's deadweight capacity,
 
8
allowing a minimum of fifty tons) on a draft of ........................ feet ........................ inches on   Summer freeboard, inclusive of permanent bunkers,
 
9
which are of the capacity of about       tons of fuel, and capable of steaming, fully laden, under good weather

10
conditions about ...................................... knots on a consumption of about   tons of best Welsh coal -  best grade fuel oil - best grade Diesel oil,
 
11
now ............................................................................................................................................................................................................................................................
 
12
.......................... and .............................CARGILL INTERNATIONAL S.A.,............................. as Charterers of the City of .........................Geneve.........................
 
13
Witnesseth, That the said Owners agree to let, and the said Charterers agree to hire the said vessel, from the time of delivery, for

14
about minimum of 5 years firm plus redelivery window of 60 days, exact period in Charterers' option. Furthermore, Charterers have the option to add any off hire days occurred throughout the firm duration at the end of the firm period (in conformity with Clause 35.5), which to be declared latest 30 days prior the expiration of the 5 year firm period. In case declared by Charterers, the optional period (sum of off hire days) shall commence from the end of the 5 year initial firm period
 
15
within below mentioned trading limits.

16
Charterers to have liberty to sublet the vessel for all or any part of the time covered by this Charter, but Charterers remaining responsible for
 
17
the fulfillment of this Charter Party.
 
18
Vessel to be placed at the disposal of the Charterers, at at / in Singapore / Japan range with intended delivery port in Japan or South Korea or Philippines (intention of the Charterers 12 nm off the port of Yeosu, S. Korea), at any time day and night Sundays and Holidays included. Provided that Vessel is able to follow Charterers voyage orders, from 10th May, 2021 00:01 GMT and until the Vessel is delivered to the Owner (as charterer) under the Sub-Bareboat Charter, the Vessel is to be deemed on hire, with the relevant hire (for such period) to be calculated as per clause 43 without the $ 1,325 daily discount applied.

19
..................................................................................................................................................................................................................................................................
 
20
in such dock or at such wharf or place (where she may safely lie, always afloat, at all times of tide, except as otherwise provided in clause No. 6), as
 
21
the Charterers may direct. If such dock, wharf or place be not available time to count as provided for in clause No. 5. Without prejudice to Clause 38 and 46 (on their entirety), Vessel on her delivery or latest on arrival first loadport and throughout the duration of the Charter Party to be

22
ready to receive cargo with clean-swept holds and tight, staunch, strong and in every way fitted for the service, having water ballast, winches and
 
23
donkey boiler with sufficient steam power, or if not equipped with donkey boiler, then other power sufficient to run all the winches at one and the same
 
24
time (and with full  complement  of  officers,  seamen,  engineers  and  firemen  for  a  vessel  of  her  tonnage),  to  be  employed,  in  carrying  lawful  merchan- 25 dise. , including petroleum or its products, in proper containers, excluding .....................................................as per Rider Clauses.....................................................

25
dise. , including petroleum or its products, in proper containers, excluding .....................................................as per Rider Clauses.....................................................

26
(vessel is not to be employed in the carriage of Live Stock, but Charterers are to have the privilege of shipping a small number on deck at their risk,
 
27
all necessary fittings and other requirements to be for account of Charterers), in such lawful trades, between safe port and/or ports in British North
 
28
America,  and/or  United  States  of  America,  and/or  West  Indies,  and/or  Central  America,  and/or  Caribbean  Sea,  and/or  Gulf  of  Mexico,  and/or              29     Mexico,  and/or South America          and/or Europe

29
Mexico,  and/or South America

30
and/or Africa, and/or Asia, and/or Australia, and/or Tasmania, and/or New Zealand, but excluding Magdalena River, River St. Lawrence between
 
31
October  31st  and   May   15th,   Hudson   Bay   and   all   unsafe   ports;   also   excluding,   when   out   of   season,   White   Sea,   Black   Sea   and   the   Baltic,

32
................................................................................................................As per Rider Clauses................................................................................................................

33
..................................................................................................................................................................................................................................................................
 
34
..................................................................................................................................................................................................................................................................
 
35
as the Charterers or their Agents shall direct, on the following conditions:
 
36
1.          That the Owners shall provide and pay for all provisions, wages and consular shipping and discharging fees of the Crew; shall pay for the


37
customary insurance of the vessel, also for all the cabin, deck, engine-room and other necessary stores, including boiler water and maintain her class and keep
 

 38
the vessel in a thoroughly efficient state in hull and holds, machinery and equipment for and during the service.
 
39
2.  That the Charterers while the Vessel is on hire shall provide and pay for all the fuel except as otherwise agreed, Port Charges,  canal tolls, all  compulsory and customary Pilotages (including Magellan Straits, Skaw/ Great Belt, Dardanelles plus Bosphorus), Agencies, Commissions,

40
Consular Charges (except those pertaining to the Crew and Vessel's flag), and all other usual expenses except those before stated, but when the vessel puts into
 
41
a port for causes for which vessel is responsible, then all such charges incurred shall be paid by the Owners. Charterers to pay for any tugboats assistance however when such assistance is required because of Vessel's problem/ failure, then all cost incurred shall be paid by the Owners. Fumigations ordered because of

42
illness of the crew to be for Owners account. Fumigations ordered because of cargoes carried or ports visited while vessel is employed under this
 
43
charter to be for Charterers account. All other fumigations to be for Charterers account after vessel has been on charter for a continuous period
 
44
of six months or more.
 
45
Charterers are to provide necessary dunnage and shifting boards, also any extra fittings requisite for a special trade or unusual cargo, but

ORIGINAL

46
Owners to allow them the use of any dunnage and shifting boards already aboard vessel. Charterers to have the privilege of using shifting boards
 
47
for dunnage, they making good any damage thereto.
 
48
3.       That the Charterers, at the port of delivery, and the Owners, at the port of re-delivery, shall take over and pay for all fuel remaining on

49
board the vessel at the current prices in the respective ports, the vessel to be delivered with not less than     tons and not more than
 
50
.............................................. tons and to be re-delivered with not less than .............................................. tons and not more than ..............................................tons.
 
51
4.          That the Charterers shall pay for the use and hire of the said Vessel at the rate of USD - See Clause 43

52
For the index-linked portion, the hire rate for each fifteen (15) days period is calculated by taking within that fifteen (15) days period the average of all the published Baltic Cape Index (BCI) of the 5 TC routes daily reports.
 
The hire for the first fifteen (15) days period is to be paid within three (3) banking days after delivery. The approximate hire is to be calculated using the fifteen
 
(15) days period prior delivery. The difference between said approximated hire and the actual hire based on actual index of the fifteen (15) days after delivery is to be settled in the subsequent hire.
 
All subsequent hire payments will follow the same procedure until Vessel's redelivery.
 
Charterers will, within fifteen (15) days of redelivery, pay the final outstanding hire to Owners. Owners agree to return any overpaid amounts to Charterers (if any) within the same deadline. United States Currency per ton on vessel's total deadweight carrying capacity, including bunkers and

53
stores, on  summer freeboard, per Calendar Month, commencing on and from the day of her delivery, as aforesaid, and at
 
54
and after the same rate for any part of a day month; hire to continue until the hour of the day of her re-delivery in like good order and condition, ordinary
 
55
wear and tear excepted, to the Owners (unless lost) at on dropping last outward sea pilot or passing one safe port PMO/ Japan range or in Charterers' option Skaw/ Passero range, including United Kingdom/ Eire, at any time day and night Sundays and Holidays included

56
.............................................................................................. unless otherwise mutually agreed. Charterers are to give Owners not less than          days
 
57
notice of vessels expected date of re-delivery, and probable port.
 
58
5.          Payment of said hire to be made in New York paid to Owners' Bank account, See Clause 97 in cash in United States Currency, every 15 days semi- monthly in advance, and for the last 15 days half month or

59
part of same the approximate amount of hire, and should same not cover the actual time, hire is to be paid for the balance day by day, as it becomes
 
60
due, if so required by Owners, unless bank guarantee or deposit is made by the Charterers, otherwise failing the punctual and regular payment of the
 
61
hire, or bank guarantee, or on any breach of this Charter Party, the Owners shall be at liberty to withdraw the vessel from the service of the Char-
 
62
terers, without prejudice to any claim they (the Owners) may otherwise have on the Charterers. Time to count from 7 a.m. on the working day
 
63
following that on which written notice of readiness has been given to Charterers or their Agents before 4 p.m., but if required by Charterers, they
 
64
to have the privilege of using vessel at once, such time used to count as hire. See Clause 43
 
65
Cash for vessel's ordinary disbursements at any port may be advanced as required by the Captain, by the Charterers or their Agents, subject
 
66
to 2 1/2% commission and such advances shall be deducted from the hire. The Charterers, however, shall in no way be responsible for the application
 
67
of such advances and in case Owners outlays are disputed, Owners are to settle disputed items with Agents involved directly (See also Clause 40).
 
68
6.          That the cargo or cargoes be laden and/or discharged in any safe dock or at any safe wharf or safe anchorage or safe place that Charterers or their Agents may

69
direct, provided the vessel can safely lie always afloat at any time of tide, except at such places where it is customary for similar size vessels to safely
 
70
lie aground.
 
71
7.          That the whole reach of the Vessel's Hold, Decks, and usual places of loading (not more than she can reasonably stow and carry), also

72
accommodations for Supercargo, if carried, shall be at the Charterers' disposal, reserving only proper and sufficient space for Ship's officers, crew,
 
73
tackle, apparel, furniture, provisions, stores and fuel. Charterers have the privilege of passengers as far as accommodations allow, Charterers
 
74
paying Owners  per day per passenger for accommodations and meals. However, it is agreed that in case any fines or extra expenses are

75
incurred in the consequences of the carriage of passengers, Charterers are to bear such risk and expense.
 
76
8.          That the Captain shall prosecute his voyages with the utmost despatch, and shall render all customary assistance with ship's crew and

77
boats. The Captain (although appointed by the Owners), shall be under the orders and directions of the Charterers as regards employment and
 
78
agency; and Charterers are to load, stow, and trim and discharge the cargo at their expense under the supervision of the Captain, who is to sign Bills of Lading for
 
79
cargo as presented, in conformity with Mate's or Tally Clerk's receipts without prejudice to this Charter Party.
 
80
9.          That if the Charterers shall have reason to be dissatisfied with the conduct of the Captain, Officers, or Engineers, the Owners shall on

81
receiving particulars of the complaint, investigate the same, and, if necessary, make a change in the appointments.
 
82
10. That the Charterers shall have permission to appoint a Supercargo, who shall accompany the vessel and see that voyages are prosecuted
 
83
with the utmost despatch. He is to be furnished with free accommodation, and same fare as provided for Captain's table, Charterers paying at the
 
84
rate of $10.00 per day. Owners to victual Pilots and Customs Officers, and also, when authorized by Charterers or their Agents, to victual Tally
 
85
Clerks, Stevedore's Foreman, etc., Charterers paying as per Clause 72. at the current rate per meal, for all such victualling.
 
86
11. That the Charterers shall furnish the Captain from time to time with all requisite instructions and sailing directions, in writing, and the
 
87
Captain shall keep a full and correct Log of the voyage or voyages, which are to be patent to the Charterers or their Agents, and furnish the Char-
 
88
terers, their Agents or Supercargo, when required, with a true copy of daily Logs, showing the course of the vessel and distance run and the con-
 
89
sumption of fuel.
 
90
12. That the Captain shall use diligence in caring for the care and ventilation of the cargo. The Vessel has natural ventilation.
 
91
13. That the Charterers shall have the option of continuing this charter for a further period of ................................................................................................
 
92
..................................................................................................................................................................................................................................................................
 
93
on giving written notice thereof to the Owners or their Agents          days previous to the expiration of the first-named term, or any declared option.

ORIGINAL

94
14.     That if required by Charterers, time not to commence before ...........................01st April 2021 (See also Clause 36)and should vessel
 
95
not have given written notice of readiness on or before ..........................20th May 2021 (See also Clause 36)but not later than 4 p.m. Charterers or
 
96
their Agents to have the option of cancelling this Charter at any time not later than the day of vessel's readiness. (See also Clause 36).
 
97
15. That in the event of the loss of time from default and/or deficiency of men Ship's Officers and Crew or any other person appointed by the Owners or  Ship's stores, fire, breakdown or damages to hull, machinery or equipment,

98
grounding, detention by average accidents to ship or cargo, drydocking for the purpose of examination or painting bottom, or by any other cause whatsoever
 
99
preventing the full working of the vessel, the payment of hire shall cease for the time thereby lost; until the Vessel has returned to the same or equivalent  position and if upon the voyage the speed be reduced by

100
defect in or breakdown of any part of her hull, machinery or equipment, the time so lost, and the cost of any extra fuel consumed in consequence
 
101
thereof, and all extra expenses shall be deducted from the hire.
 
102
16. That should the Vessel be lost, money paid in advance and not earned (reckoning from the date of loss or being last heard of) shall be
 
103
returned to the Charterers at once. The act of God, enemies, fire, restraint of Princes, Rulers and People, and all dangers and accidents of the Seas,
 
104
Rivers, Machinery, Boilers and Steam Navigation, and errors of Navigation throughout this Charter Party, always mutually excepted.
 
105
The vessel shall have the liberty to sail with or without pilots, to tow and to be towed, to assist vessels in distress, and to deviate for the
 
106
purpose of saving life and property.
 
107
17. That should any dispute arise between Owners and the Charterers, the matter in dispute shall be referred to three persons at London New York,
 
108
one to be appointed by each of the parties hereto, and the third by the two so chosen; their decision or that of any two of them, shall be final, and for
 
109
the purpose of enforcing any award, this agreement may be made a rule of the Court. The Arbitrators shall be commercial shipping men. For any dispute not exceeding the amount of $100,000, the parties agree same to be dealt with by LMAA, small claims proceedings 2002 or any amendment thereof.
 
110
18. That the Owners shall have a lien upon all cargoes, and all sub-freights, sub-hires for any amounts due under this Charter, including General Aver-
 
111
age contributions, and the Charterers to have a lien on the Ship for all monies paid in advance and not earned, and any overpaid hire or excess
 
112
deposit to be returned at once. Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their agents, which
 
113
might have priority over the title and interest of the owners in the vessel.
 
114
19. That all derelicts and salvage shall be for Owners' and Charterers' equal benefit after deducting Owners' and Charterers' expenses and
 
115
Crew's proportion. General Average shall be adjusted, stated and settled, according to Rules 1 to 15, inclusive, 17 to 22, inclusive, and Rule F of
 
116
York-Antwerp Rules 1974 and any amendments thereto 1924, at such port or place in the United States as may be selected by the carrier, and as to matters not provided for by these

117
Rules, according to the laws and usages at the port of London. New York. In such adjustment disbursements in foreign currencies shall be exchanged into
 
118
United States money at the rate prevailing on the dates made and allowances for damage to cargo claimed in foreign currency shall be converted at
 
119
the rate prevailing on the last day of discharge at the port or place of final discharge of such damaged cargo from the ship. Average agreement or
 
120
bond and such additional security, as may be required by the carrier, must be furnished before delivery of the goods. Such cash deposit as the carrier
 
121
or his agents may deem sufficient as additional security for the contribution of the goods and for any salvage and special charges thereon, shall, if
 
122
required, be made by the goods, shippers, consignees or owners of the goods to the carrier before delivery. Such deposit shall, at the option of the
 
123
carrier, be payable in United States money and be remitted to the adjuster. When so remitted the deposit shall be held in a special account at the
 
124
place of adjustment in the name of the adjuster pending settlement of the General Average and refunds or credit balances, if any, shall be paid in
 
125
United States money. Hire not to contribute to general Average.
 
126
In the event of accident, danger, damage, or disaster, before or after commencement of the voyage resulting from any cause whatsoever,
 
127
whether due to negligence or not, for which, or for the consequence of which, the carrier is not responsible, by statute, contract, or otherwise, the
 
128
goods, the shipper and the consignee, jointly and severally, shall contribute with the carrier in general average to the payment of any sacrifices,
 
129
losses, or expenses of a general average nature that may be made or incurred, and shall pay salvage and special charges incurred in respect of the
 
130
goods. If a salving ship is owned or operated by the carrier, salvage shall be paid for as fully and in the same manner as if such salving ship or
 
131
ships belonged to strangers.
 
132
Provisions as to General Average in accordance with the above are to be included in all bills of lading issued hereunder.
 
133
20. Fuel used by the vessel while off hire, also for cooking, condensing water, or for grates and stoves to be agreed to as to quantity, and the
 
134
cost of replacing same, to be allowed by Owners.
 
135
21. That as the vessel may be from time to time employed in tropical waters during the term of this Charter, Vessel is to be docked at a
 
136
convenient place, bottom cleaned and painted whenever Charterers and Captain think necessary, at least once in every six months, reckoning from
 
137
time of last painting, and payment of the hire to be suspended until she is again in proper state for the service. See Dry-Docking Clause No. 92.
 
138
..................................................................................................................................................................................................................................................................
 
139
..................................................................................................................................................................................................................................................................
 
140
22. Owners shall maintain the gear of the ship as fitted, providing gear (for all derricks) capable of handling lifts up to three tons, also
 
141
providing ropes, falls, slings and blocks. If vessel is fitted with derricks capable of handling heavier lifts, Owners are to provide necessary gear for
 
142
same, otherwise equipment and gear for heavier lifts shall be for Charterers' account. Owners also to provide on the vessel lanterns and oil for
 
143
night work, and vessel to give use of electric light when so fitted, but any additional lights over those on board to be at Charterers' expense. The
 
144
Charterers to have the use of any gear on board the vessel.
 
145
23. Vessel to work night and day, if required by Charterers, and all winches to be at Charterers' disposal during loading and discharging;
 
146
steamer to provide one winchman per hatch to work winches day and night, as required, Charterers agreeing to pay officers, engineers, winchmen,
 
147
deck hands and donkeymen for overtime work done in accordance with the working hours and rates stated in the ship's articles. If the rules of the
 
148
port, or labor unions, prevent crew from driving winches, shore Winchmen to be paid by Charterers. In the event of a disabled winch or winches, or
 
149
insufficient power to operate winches, Owners to pay for shore engine, or engines, in lieu thereof, if required, and pay any loss of time occasioned
 
150
thereby.
 
151
24. It is also mutually agreed that this Charter is subject to all the terms and provisions of and all the exemptions from liability contained

ORIGINAL

152
in the Act of Congress of the United States approved on the 13th day of February, 1893, and entitled "An Act relating to Navigation of Vessels;
 
153
etc.," in respect of all cargo shipped under this charter to or from the United States of America. It is further subject to the following clauses, both
 
154
of which are to be included in all bills of lading issued hereunder:
 
155
U. S. A. Clause Paramount
 
156
This bill of lading shall have effect subject to the provisions of the Carriage of Goods by Sea Act of the United States, approved April
 
157
16, 1936, which shall be deemed to be incorporated herein, and nothing herein contained shall be deemed a surrender by the carrier of
 
158
any of its rights or immunities or an increase of any of its responsibilities or liabilities under said Act. If any term of this bill of lading
 
159
be repugnant to said Act to any extent, such term shall be void to that extent, but no further.
 
160
Both-to-Blame Collision Clause
 
161
If the ship comes into collision with another ship as a result of the negligence of the other ship and any act, neglect or default of the
 
162
Master, mariner, pilot or the servants of the Carrier in the navigation or in the management of the ship, the owners of the goods carried
 
163
hereunder will indemnify the Carrier against all loss or liability to the other or non-carrying ship or her owners in so far as such loss
 
164
or liability represents loss of, or damage to, or any claim whatsoever of the owners of said goods, paid or payable by the other or non-
 
165
carrying ship or her owners to the owners of said goods and set off, recouped or recovered by the other or non-carrying ship or her
 
166
owners as part of their claim against the carrying ship or carrier.
 
167
25. The vessel shall not be required to force ice or follow ice breakers or enter any ice-bound port, or any port where lights or light-ships have been or are about to be with-

168
drawn by reason of ice, or where there is risk that in the ordinary course of things the vessel will not be able on account of ice to safely enter the
 
169
port or to get out after having completed loading or discharging.

170
26. Nothing herein stated is to be construed as a demise of the vessel to the Time Charterers. The owners to remain responsible for the
 
171
navigation of the vessel, insurance, crew, and all other matters, same as when trading for their own account.
 
172
27.     A commission of 2 1/2  1.25 per cent ................................is payable by the Vessel and Owners to

173
..........................................................................................................Seanergy Management Corp..........................................................................................................
 
174
both on hire earned and paid under this Charter, and also upon any continuation or extension of this Charter.
 
175
28.     An address commission of 2 1/2 3.75 per cent          payable to Charterers on the hire earned and paid under this Charter.

Additional Clauses from Clause 29 to Clause 116, as attached to be fully incorporated in this CharterParty.

THE OWNERS 
THE CHARTERERS

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ADDITIONAL CLAUSES TO MV “FLAGSHIP” / CARGILL INTERNATIONAL S.A., CHARTER PARTY DT., 11TH MAY, 2021
CLAUSE 29 - TIME CHARTER VESSEL'S DESCRIPTION
M/V FLAGSHIP EX NEW EXPEDITION - TIMECHARTER DESCRIPTION (all figures about)


 
Flag / Class:
  
MARSHALL ISLANDS
 
Built / Place:
  
2013 / MITSUI CHIBA, JAPAN
 
Classification:
  
DNV
 
Deadweight:
  
ABT 176,387 MT ON 17,985 M SSW DRAFT
 
IMO number:
  
9514224
 
LOA / LBP:
  
292.0M / 282.96 MTRS
 
Beam:
  
44.98 MTRS
 
Depth (Moulded):
  
24.70 MTRS
 
TPC:
  
118.7 TON AT SUMMER DRAFT
SIDE ROLLING TYPE STEEL H/COVERS
 
GT/NT:
  
92,382 / 57,315
 
Suez net/gross:
  
85,554,23 / 90495,1
 
Speed & Consumption:
  
(IFO = 0,5%), ALL FIGURES ABOUT
 
BALLAST: ABT 15.0 KNTS ON ABT 47,0 MT COMPLIANT FUEL PLUS ABT 0.1 MT MGO BALLAST: ABT 12.5 KNTS ON ABT 32.1 MT COMPLIANT FUEL PLUS ABT 0.1 MT MGO
LADEN: ABT 13.5 KNTS ON ABT 48 MT COMPLIANT FUEL PLUS ABT 0.1 MT MGO
LADEN: ABT 12.5 KNTS ON ABT 40.65 MT COMPLIANT FUEL PLUS ABT 0.1 MT MGO
PLUS ABT 3 MT COMPLIANT FUEL AT SEA FOR AUX, PER ISO CONDITIONS.
,
PLUS ABT 3.0 MT COMPLIANT FUEL WHEN BALLASTING/DEBALLASTING OR DURING HOLDS’ CLEANING
 
PORT WORKING/IDLE 7 / 3,5 MT IFO/MGO (AS THE CASE MAY BE) PER ISO CONDITIONS
 
ECO SPEED(S)
 
PLEASE NOTE BELOW SPEED/CONS DATA IS WITHOUT GUARANTEE AND EXTRA FUELS MAY BE USED EITHER BECAUSE SHIPS COMMAND, AT ITS DISCRETION, EITHER SWITCH THE BLOWERS ON AND/OR INCREASE THE SPEED OF THE SHIP FOR 2/3 HOURS PER 24 HOURS TIME AND/OR BOILER.
 
BALLAST: ABT 11.5 KNTS ON ABT 29.5 MT COMPLIANT FUEL PLUS ABT 0.1 MT MGO

     
BALLAST: ABT 10.5 KNTS ON ABT 24.5 MT COMPLIANT FUEL PLUS ABT 0.1 MT MGO
LADEN: ABT 11.5 KNTS ON ABT 35,95 MT COMPLIANT FUEL PLUS ABT 0.1 MT MGO
LADEN: ABT 10.5 KNTS ON ABT 29,18 MT COMPLIANT FUEL PLUS ABT 0.1 MT MGO
 
ALL FIGURES ‘ABOUT’ MEAN 0.5 KNOTS FOR SPEED AND ‘ABOUT’ 5% FOR CONSUMPTION. ABOVE MENTIONED WARRANTED SPEEDS AND CONSUMPTIONS ARE BASED ON GOOD WEATHER DAYS CONDITION AND SMOOTH SEA MAX. BEAUFORT SCALE 4 AND MAXIMUM 1.25 METERS SIGNIFICANT WAVE HEIGHT, UNDER NO ADVERSE INFLUENCE OF SWELL AND CURRENTS AS RECORDED IN THE LOGBOOKS, FROM COMMENCEMENT TO END OF A SEA-PASSAGE, EVEN KEEL, IN DEEP WATER, PROVIDED NO FOULING DUE TO IMMOBILIZATION OR DRIFTING FOR 20 DAYS OR MORE. ALSO, FUELS USED FOR BALLASTING AND DE-BALLASTING OPERATIONS ARE EXCLUDED FROM THE ABOVE-MENTIONED CONSUMPTION. NO WARRANTY APPLIES IF WEATHER CONDITIONS EXCEED WIND BEAUFORT 4 AND SEA STATE, AS DEFINED HERE ABOVE, OR IN ADVERSE CURRENTS DURING WHICH PERFORMANCE EVALUATION IS NOT ALLOWED. NO EXTRAPOLATIONS TO BE MADE FOR WEATHER/SEA CONDITIONS OTHER THAN THOSE DESCRIBED ABOVE. THE VESSEL MAY AND HAS THE LIBERTY TO USE LSMGO FOR STARTING/STOPPING OF MAIN ENGINE, WHILE MANOEUVRING IN SHALLOW/NARROW WATERS, CANALS, RIVERS, IN/OUT OF PORTS AND DURING POOR VISIBILITY.
 
GRADE OF FUEL VLSFO, SEGREGATION IS REQUIRED, ALWAYS AS PER ISO8217 2010 OR 2005 AND ALL AMENDMENTS/REGULATIONS THEREAFTER UNTIL OR WHEREVER/WHENEVER DURING THE CURRENCY OF THIS CP ISO8217 2015 AND/OR 2017 CAN BE ADOPTED/ACCEPTED BY
CHARTERERS' SUPPLIERS.
 
HOLDS/HATCHES:
  
NS* (CSR. BC-A, BC-XII, GRAB20, PSPC-WBT) ESP, BWTS, MNS* holds 2,4,6,8 MAY BE EMPTY
9/9 HO/HA / NATURAL VENT
 
HATCH SIZES:
  
(L x B)
NO.1: 15.75 MTRS X 16.32 MTRS
NO.2-8: 15.75 MTRS X 21.40 MTRS
NO.9: 15.75 MTRS X 16.32 MTRS
 
HOLD CAPACITIES:
  
NO.1 18150,7
NO.2 22308,3
NO.3 22805,5
NO.4 22808,5
NO.5 22793,8

     
NO.6 22746,6
NO.7 22792,8
NO.8 22499,4
NO.9 20228,6 TOTAL:197,150,2 CBM
 
OWNERS P&I CLUB:
  
STEAMSHIP MUTUAL UNDERWRITING ASSOCIATION
(EUROPE) LTD
 
OWNERS:
  
FLAG MARINE CO, MI
 
MANAGERS:
  
V.SHIPS LIMITED

GOOD WEATHER DEFINITION

Basis good weather, which is hereby defined as max Beaufort force 4 and Douglas Sea State 3. Vessel’s good weather performance speed to be adjusted for the effect of currents.

PERFORMANCE WARRANTY
 
“Speed and consumption figures are always given on an "about" basis, where "about" is understood to mean either 0.5 knot downwards in the speed or 5% upwards in the consumption (but not both), i.e., only one “about” is to apply.
 
Owners have ordered impellers for the auxiliary blowers, seals and motor. The lead time will be around 60 days and until then, slow steaming is not allowed.

RIGHTSHIP CLAUSE
 
Vessel’s speed/cons as described are warranted throughout the duration of this CP. Owners warrant the vessel is Rightship approved with minimum safety score rating 3. Should the vessel fail to maintain safety score rating 3, the Charterers have the right to place the vessel off-hire until rectified, unless ship’s rating is lost due to Charterers’ or Charterers’ appointed/nominated servants (e.g., Stevedores) in which case the ship to remain on-hire. Should the GHG rating of Rightship fall to such levels that vessel is commercially unacceptable to her Charterers i.e. F then the Owners in cooperation with Charterers to discuss and further find the best way for improving vessel’s rating to an agreed by both parties acceptable level.
 
CLAUSE 30 - WEATHER ROUTING
 
Charterers may supply independent weather bureau advice (from a reputable independent weather bureau as selected by Charterers) to the Master during voyages specified by the Charterers. The Master is to comply with the reporting procedures of the routing service selected by Charterers. If, during the currency of the Charter Party, the speed of the vessel be reduced and/or fuel oil consumption be increased, Charterers shall have the right to deduct from hire an amount equivalent to the time lost and/or cost of any extra fuels consumed subject to having produced to owners a documented claim supported by the weather bureau.
 
Evidence of weather conditions to be taken from the vessel's deck logs and independent weather bureau reports. In the event of a discrepancy between deck logs, ‘in the absence of data from another equally reputable weather Bureau (appointed by the Owners) evidencing to the contrary’, and the independent weather bureau reports, then the independent bureau reports are to be taken as final and binding on both parties. ‘In case of conflict between the data presented by the two weather Bureaus, the average of the two to be taken as ruling.’

CLAUSE 31 - DIESEL OIL IN PORT
 
The Vessel is to have the liberty of using LSMGO when entering and leaving port and for maneuvering in shallow narrow waters, provided such usage is determined to be essential for the safe maneuvering of the Vessel, always at the discretion of the Master and in compliance with local and international regulations.

CLAUSE 32 - COMMUNICATION EQUIPMENT
The Vessel shall, as a minimum be equipped with wireless telegraph, email and VHF telephone to comply with International regulations and to allow Vessel to communicate with land stations. Master, Senior Officers and Radio Officer to be fully conversant with the English language.

CLAUSE 33 - PERMITTED CARGOES
 
Coal (excluding Pond Coal), Iron Ore and/or Pellets and/or Concentrates (excluding DRI / DPI and sponge iron), iron ore lumps, manganese ore and bauxite.

Above cargoes are to be loaded always within Vessels natural segregation and always according to IMO Regulations.
 
CLAUSE 34 - TRADING
Worldwide excluding all countries that would cause Owners to violate trade sanction laws promulgated by the USA/EU/UN and:
Angola including Cabinda, Albania, Alaska, Abkhazia, Amazon / Orinoco Rivers, Bangladesh, Bosnia- Herzegovina, Cyprus, Cuba, Cambodia, Congo (formally Zaire), Croatia (except Bakar), Ethiopia, Eritrea, El Salvador, Ghana, Haiti, Honduras, Guatemala, Iraq, Kuwait, Libya, Morocco, North Korea, Nicaragua, Nigeria, Namibia, Somalia and including Somalia Coast, Syria, Sri Lanka (but bunkering in these places is always allowed), Turkish occupied Cyprus, Yemen, Yugoslavian Federal Republic of (Serbia and Montenegro) and any declared war zone or where a war like situation prevails.
 
Charterers to reimburse Owners any net additional war risk insurance premium on entered hull and machinery value where Vessel breaches war risk warranties payable against Underwriters invoice not greater than quoted at Lloyds. It is understood that in the event of any change of premium Owners undertake to pass on to Charterers the actual premium debited to Owners and Charterers only to pay this amount as evidenced by vouchers. Owners undertake to use best efforts to minimize the rate. Crew war bonus, if any, to be for Charterers' account.
 
Subject to Owners’ approval which to be given within 4 hours following the request and not to be unreasonably withheld, Charterers are to have the option to instruct the vessel to break Institute Warranty/Navigating Limits. Charterers are to reimburse to Owners any additional H&M insurance premium actually imposed by the vessel’s Underwriters as a consequence of a breach of IWL/INL but to be entitled to have the benefit of any discounts received by the Owners for such extra insurance.
 
Also ref clause 94 for Gulf of Aden/Indian Ocean HRA trading EBOLA CLAUSE:
When trading to Liberia and / or Sierra Leone that have had confirmed cases of Ebola in the
 
preceding 40 days period, Charterers to take the following precautions, which are based on the latest WHO updates:
 
-
Only necessary shore personnel to be allowed on board the Vessel;
-
Vetting personnel coming on board, rejecting anyone with obvious symptoms eg. coughing, high fever / sweating to be refused for boarding;
-
Shore personnel and ship's crew to wear masks, gloves etc prior going on board and thereafter;
-
No shore personnel to enter the superstructure;
-
If officials need to enter superstructure for any required inspections, then same to be allowed but always with protective equipment and accompanied by a member of the crew;

-
Shore personnel to be set up in the tally office. This may extend to temporary bed and victualing;
-
No shore leave for ship’s crew.
 
CLAUSE 35 - DELIVERY / REDELIVERY RANGE AND NOTICES / ITINERARY

35.1
- Owners to tender 1 day definite notice.

35.2
- Charterers are to give Owners not less than 15 approximate days notice of redelivery range and then 10, 5 and 2 days notice of redelivery. Charterers are to keep Owners duly informed of Vessel's itinerary and any change of redelivery range / redelivery port.

Redelivery on dropping last outward sea pilot or passing one safe port PMO / Japan range or in Charterers' option Skaw / Passero range, including United Kingdom / Eire, at any time, day, night, Sundays and holidays included.

35.3
- Charterers undertake to inform the Owners, during the period of Charter, as regards to the itinerary of the Vessel and the names and full styles of their Agents at ports of call whenever so required by the Owners.
 

35.4
- Charterers will not fix the vessel deliberately to exceed maximum period allowed under this CP but if due to unforeseen circumstances, should the maximum period be exceeded, then the Charterers to pay Owners a hire for any such exceeding period based on(index/fixed rate), but in any case not less than the charter party hire.
 

35.5
- Charterers option to add any or all time off-hire to the maximum Charter period, including any dry-docking period in any, to be declared latest 1 month before the minimum Charter Party period.
 
CLAUSE 36 - DELIVERY DATE
 
Laycan: 1st April 2021 - 20th May 2021 at any time day, night, Sundays and holidays included.
 
CLAUSE 37 - JOINT SURVEY
Charterers and Owners are to hold joint on and off hire bunker and condition surveys on delivery and redelivery, the expense and time (if time lost) is to be shared equally between Owners and Charterers.

CLAUSE 38 - HOLDS' CONDITION AND CLEANING
 
38.1
Vessel to deliver with all holds/cargo compartments clean, dry, free of rust and/or scale and cargo residues and ready in all respects to the satisfaction of the relevant surveyor and/or such other recognized local authority or official as local regulations or Shippers may require to receive permitted cargo which the Vessel may be required to load. If, on presentation for loading at the first loading port the Vessel should fail to pass the above cargo surveys, then all expenses for cleaning and/or fumigating including cost of labor standing by to be for the Owners' account, and the Vessel to be off-hire from time of failing such surveys until it is in all respects ready to load and survey passed. If some holds / cargo carrying compartments are not accepted, Charterers shall have the option of accepting the Vessel with those which are accepted and in that case Charterers shall pay hire proportionate to the number of holds/ cargo carrying compartments which have passed survey. However, if thereafter there should be any delay owing to non-acceptance of any hold/cargo carrying compartment Vessel shall be wholly off-hire until the loading program can be fully resumed.

38.2
Hold Cleaning/Residue Disposal Clause for Time Charter Parties
 
  a)
The Charterers may request the Owners to direct the crew to sweep and/or wash and/or clean the holds between voyages and/or between cargoes against payment

of U.S.$ . 600-- Per hold actually cleaned, provided the crew is able safely to undertake such work and is allowed to do so by local regulations. In connection with any such operation the Owners shall not be responsible if the Vessel's holds are not accepted or passed. Time for cleaning shall be for the Charterers' account.
 

 b)
All materials (including chemicals and detergents) required for cleaning of cargo holds shall be supplied by and paid for by the Charterers.
 

 c)
Throughout the currency of this Charter Party and at redelivery, the Charterers shall remain responsible for all costs and time, including deviation, if any, associated with the removal and disposal of cargo related residues and/or hold washing water and/or chemicals and detergents and/or waste as defined by MARPOL Annex V, Section 1 or other applicable rules relating to the disposal of such substances.
 
38.3
- Charterers have the option to redeliver the Vessel unclean as left by stevedores against paying U.S. $. 6.000-- in lieu of hold cleaning.
 
CLAUSE 39 - BUNKERS CLAUSE
Vessel will be delivered with bunker quantity as on board (Owners to provide as soon as possible the approximate quantity expected on board on delivery) but same to always be sufficient to reach nearest main bunkering port.
 
Bunkers on redelivery to be similar to the actual quantities on delivery.

Prices of bunkers on delivery and redelivery to be the Platts Singapore prices for each grade prevailing at the day of delivery and redelivery respectively.
 
Charterers to pay for bunkers on delivery together with first hire payment and Charterers to deduct value of estimated redelivery bunkers from last sufficient hire payment(s) but such deduction does not constitute redelivery notice(s).

Charterers to have the option of bunkering the Vessel for their own account prior to delivery provided same does not interfere with Owners’ operations. Owners to have the option of bunkering the Vessel for their own account prior to redelivery provided same does not interfere with Charterers’ operations.

Owners warrant that:
 
-
They will free up/provide a dedicated tank for LSGO that has sufficient LSGO capacity for ECA-Zone trading (about 10 - 12 days trading at full speed), latest 7 days prior entering any IMO/ MARPOL defined ECA Zone at Owners time, risk and expense ;
 
-
The Vessel is fully compliant with the IMO/MARPOL ECA Zone regulations as applicable from time to time throughout this Charter-Party. Any deviation and consequential costs due to Owners non-compliance with this Clause including consequential damages shall be for Owners' account.
 
Alternative bunker specs:
Owners accept local bunker specifications in South Africa (IFO RMF 25), Brazil, India, Taiwan as long as same are being supplied by internationally recognized bunker suppliers and comply with Marpol Annex VI Rule 18.
 
For vessels that are being taken for long period going beyond 2020 following to apply: Owners warrant that the vessel will, for the duration of the CP, comply with all IMO regulations, including those related to bunker sulphur limits. Owners warrant that, as of January

2020, the vessel will be able to burn all ISO standard low sulphur bunker types. Additionally, Owners shall not unreasonably refuse Charterers’ request to burn any type of bunkers that are technically capable of being burned by the vessel. All sludge removal shall be for Owners’ account.

CLAUSE 40 - OWNERS' AND CHARTERERS' EXPENSES
Owners to provide and pay for all expenses of the Officers and Crew including but not limited to immigration fees and also all consular fees necessitated because of Vessel's flag or nationality of Owners/Master/Crew. Owners to pay for all lubricating oils. Vessel is to have on board all certificates necessary to comply with all requirements at the ports of call and canals during the currency of this Charter Party, failing which Owners are to be responsible for all time lost and expenses incurred thereby.
 
Charterers' agents to attend to Vessel's customary minor matters without paying agency fee but actual costs for such items to be for Owner's account. In case of major repairs, repatriation or General Average the Owners to nominate their own agents or use Charterers' agents against paying all relevant charges/ fees.
 
Charterers' agent to husband the Vessel as required but Owners to pay for any difference between Charterers' normal agency fee and the fee chargeable for attendance to both interests.

CLAUSE 41- INSURANCE / P. AND I. COVER
41.1
- Owners warrant that throughout the currency of this Charter Party the Vessel shall be fully covered by leading insurance companies/international P and I Clubs against Hull and Machinery Insurance, Increased Value Insurance, War and Protection and Indemnity Risk. Costs of such cover to be at the sole expense of Owners.
 
41.2
- If required by the Charterers, prior to commencement of the Charter or at any other time, the Owners shall procure that the Managers of the Hull and Machinery insurance, Increased Value Insurance and the Protection and Indemnity Association shall give the Charterers proper evidence that the Vessel is fully covered by the Owners, provided same allowed by the rules of the Hull and Machinery insurers.

H. and M.: Hull and Machinery with
: Leading U/W: A Rated Underwriters
H. and M. Value
: 36,000,000
P. & I. Club   
: Steamship Mutual Underwriting Association (Europe) Limited
War Risks covered with
: Hellenic War Risks
IV Value
 : 17,000,000
     
CLAUSE 42 - WITHHOLDINGS
Charterers shall be entitled to deduct from hire payments any disbursements for owners account, either actual amounts supported by vouchers or estimated amounts, but maximum U.S.$ 1,000.00 per port of call also any advances to the Master including commission thereon and any previous overpayments of hire including agreed offhire and substantiated performance claims.
 
CLAUSE 43 - HIRE PAYMENT CLAUSE
Hire: 5 years index linked at 102% of BCI 5TC Weighted Average (less 3.75% address commission) and less $ 1,325 per day, with said daily discount ($ 1,325) to be deducted from Cargill's hire payments.

Owners to have the option to convert to fixed rate for between 3 to 12 months based on the prevailing FFA curve bids (subject to market liquidity), i.e. 102% of the FFA rate less 3.75% address commission and less $ 1,325 per day.

For the avoidance of any doubt, Cargill to retain the option to add any off hire days (pro rata) occurred throughout the firm duration, at the end of the firm period (in conformity with Clause 35.5), at the agreed rate as above (102% of BCI 5TC Weighted Average less 3.75% address commission and less $ 1,325 per day).
 
For the index-linked portion, the hire rate for each fifteen (15) days period is calculated by taking within that fifteen (15) days period the average of all the published Baltic Cape Index (BCI) of the 5 TC routes daily reports.
 
The hire for the first fifteen (15) days period is to be paid within three (3) banking days after delivery. The approximate hire is to be calculated using the fifteen (15) days period prior delivery. The difference between said approximated hire and the actual hire based on actual index of the fifteen (15) days after delivery is to be settled in the subsequent hire. All subsequent hire payments will follow the same procedure until vessel's redelivery.
 
Charterers will within fifteen (15) days of redelivery pay the final outstanding hire to Owners. Owners agree to return any overpaid amounts to charterers (if any) within the same deadline.
 
Should the 5 (five) TC BCI type be recalibrated in the future then the size adjustment premium is to be adjusted down accordingly by the official conversion factor as advised by the Baltic Exchange.
 
Hire payable every 15 (fifteen) days in advance including overtime. First hire payable latest 3 (three) banking days after delivery.

Charterers will not agree to the assignment of hire, monies due under this Charter Party in any circumstances whatsoever.
 
Charterers have the right to deduct value of bunkers on redelivery against last sufficient hire payments and such deduction does not constitute redelivery notice(s).

To offset general errors/omissions Owners to give Charterers minimum three (3) banking days written notice before exercising their right under this contract, and when so rectified within those three (3) days following Owners' notice, the payment shall stand a regular and punctual and Owners will not withdraw the vessel.
 
Charterers are not responsible for any delays in Owner receiving funds due to bank delay in transmission of funds resulting from OFAC or similar issues.
 
Owner shall have no right to withdraw the Vessel for non-payment of hire if receipt of funds is delayed by OFAC issues. Proof of Charterer’s proper payment instructions to Charterer’s bank fulfills Charterers’ payment obligations as per Charter Party.
 
In the event that:

(A)           the Owners elect to purchase the Vessel in accordance with section 12(b) of the Sub- Bareboat Charter, the Vessel is acquired by the Owners pursuant to the terms of section 12 (b) of the Sub - Bareboat Charter and the Vessel has completed its voyage at the time of when the Vessel such acquisition is effective; OR
 
(B)            the early termination of the Sub-Bareboat Charter, save for an early termination under section 9 (d) (Termination Due To Loss); OR

(C)          that the Charterers (meaning the Owners under the Sub-Bareboat Charter) exercise their rights under section 17(b) (viii) of the Sub-Bareboat Charter, OR
 
(D)          that the Owners (meaning Charterers under the Sub-Bareboat Charter) is entitled to purchase the Vessel pursuant to the terms of section 5.1 of the Multipartite Agreement and the Vessel is acquired by the Owners pursuant to the terms of clause 5.1 of the Multipartite Agreement:
 
the 60 days redelivery window shall apply (in Charterers’ option), without prejudice to any off- hire days to which Charterers may be entitled under clause 35.5 of this Charter Party. In the period between (X) the time of completion of the purchase of the Vessel by the Owner in accordance with the foregoing, and (Y) the time of redelivery of the Vessel under this Charter, the relevant hire (for such period) to be calculated as per clause 43 without the $ 1,325 daily discount applied, always without prejudice to clause 108 of this Charter.
 
CLAUSE 44 - TAXES
Any tax and/or dues imposed on account of Owners, the vessel, the vessel’s flag or crew and/or charter hire to be for Owners’ account with the exception of all taxes and/or dues whatsoever imposed in Charterer’s domicile (including but not limited to Chinese Enterprise Income Tax and/or Business Tax) which to be for Charterer’s account.
 
All taxes and/or dues imposed on cargo or freight to be for receivers/charterers account, including MMRT (Merchant Marine Renewal Tax)/Wharfage/Inframar/P.U. tax (Port Utilization Tax) or PIUT (Port Infrastructure Utilization Tax).

CLAUSE 45 - DEVIATION / PUT BACK
In the event of loss of time either in port or at sea, deviation from the course of the voyage or putting back whilst on voyage, caused by sickness of or an accident to or misconduct by Master
/ Officers / crew, stowaway, refugee or any person on board Vessel other than persons travelling by request of Charterers or by reason of the refusal of Master or Officer(s) or crew to perform their duties or an accident or breakdown to Vessel or dry-docking or periodical survey, the hire shall be suspended from the time of inefficiency in port or at sea, deviation or putting back until Vessel is again efficient in the same or equivalent position to the port where Vessel is originally destined for and voyage resumed therefore, and all expenses incurred including bunkers consumed during such period of suspension shall be for Owners' account.
 
The Owners to be credited with any saving(s) in respect of time and fuels saved if her position when she re-enters Charterers’ service so allows.

CLAUSE 46 - STEVEDORE DAMAGE
Stevedores to be appointed and paid by the Charterers but to work under the supervision of the Master. Should any damage be caused to the Vessel or her fittings by the Stevedores, the Master shall try to arrange for Stevedores to repair such damage and try to settle the matter directly with them however, the Charterers shall remain liable to the Owners for stevedore damage whether or not payment has been made by stevedores to the Charterers in respect of the stevedore damage.
 
The Charterers shall not be responsible for any damage caused by Stevedores unless the Master notifies the Charterers or their Agents of such damage within 48 hours from occurrence, except for hidden damages which to be reported within 48 hours after discovery but always prior redelivery. The Master shall also endeavor to obtain written acknowledgement of the damage and liability from the concerned Stevedores on occurrence.

Any and all damage(s) affecting the Vessel's seaworthiness and/or class and/or safety of the crew and/or affecting the trading capabilities of the Vessel are to be repaired immediately by  Owners at Charterers cost and the Vessel is to remain on hire until such repairs are completed and if required passes by Vessel's classification society.

The Charterers shall have the liberty to redeliver the Vessel without repairing the damages for which the Charterers are responsible, as long as the damages do not affect the Vessel's seaworthiness and/or class and/or safety of the crew and/or affecting the trading capabilities of the Vessel, but the Charterers undertake to reimburse costs of repair against production of repair bills by repairers of dockyard unless otherwise agreed, but time used for repairs not to count as hire.

CLAUSE 47 - GRAB DISCHARGE
Vessel is to be suitable for normal size grab discharge and no cargo to be loaded in places inaccessible to grabs. Charterers have the privilege of using bulldozers in the Vessel's holds provided their weight does not to exceed the vessel's tank-top strength.
 
CLAUSE 48 - ITF, Maritime Labour Convention and crew wages

(a)          The Owner undertakes as a condition warrants that the terms and conditions of employment of the crew are and will for the duration of this contract remain compliant with both the Maritime Labour Convention 2006, as amended from time to time and with an ITF Agreement or other bona fide trade union agreement acceptable to ITF. In the event of loss of time and/or if extra expenses are incurred as a result of non-compliance with this clause, such time or expense shall be for the Owner’s account. Furthermore Owners warrant that throughout the duration of this Charter, the vessel’s flag and crewing arrangements, save eventual deviation needed for crew change (e.g. covid-19 related), shall not interfere or restrict the vessel’s trading restrictions or employment.
 
(b)          The Owner undertakes as a condition warrants that crew wages will be paid on time and in full. Without prejudice and in addition to any other of the Charterer’s rights under this Charterparty, the Charterer shall be entitled, at its sole discretion, to pay or put the vessel’s managers in funds to settle any shortfall in wages and/or provide any necessities for the safety and wellbeing of the crew and shall be entitled to deduct an equivalent amount from hire.
 
CLAUSE 49 - ARREST
Should the Vessel be arrested during the currency of the Charter Party at the suit of any person having or purporting to have a claim against or any interest in the Vessel, hire under this Charter Party shall not be payable in respect of any period whilst the Vessel remains under arrest or remains unemployed as a result of such arrest. The Clause shall be inoperative should the arrest be caused through any act or omission of the Charterers.
 
CLAUSE 50 - LACK OF CREW MEMBERS
Any time lost by the Vessel by reason of all required crew members not being on board when the Vessel is ready to sail, or by reason of a strike, stoppage or refusal to work by any crew is to be for Owners' account and expenses for waiting or cancelling tugs, pilots or mooring boats are to be for Owners' account.
 
CLAUSE 51 - BILLS OF LADING
51.1
- If required by Charterers and/or their Agents, Master is to authorize them to sign Bills of Lading in Charterers' or sub/head Charterers' form on his behalf in accordance with mate's receipts without prejudice to this Charter Party. All Bill of Lading issued under this Charter Party to bear The Both to Blame Collision clause, General Clause Paramount, New Jason Clause.

51.2
- Discharging port(s) shown on Bills of Lading do not constitute a declaration of discharging port(s) and Charterers have the right to order the Vessel to any safe port(s) within the terms of this Charter Party. In this case Charterers are to give prior notice thereof in advance to Owners.

51.3
- In case Original Bill(s) of Lading not available at discharging port, Owners agree to deliver the entire cargo against a single Letter of Indemnity in the wording acceptable to Owners’ P&I Club (as per the International Group' P. and I. Club wordings) on Charterers’ headed paper, stamped and signed by Charterers only.
 
51.4
- In the event that Charterers request Owners to discharge cargo either: I) without Bills of Lading and or II) at a discharging port other than that named in the Bill of Lading shall discharge such cargo in accordance with Charterers instructions in consideration of receiving a Letter of Indemnity in the wording acceptable to Owners’ P&I Club addressed to them from Charterers hereunder in the International Group' P. and I. Club wording on Charterers’ headed paper, stamped and signed by Charterers only.

SPLIT OF BILLS OF LADING
 
Charterers and/or agents are hereby authorised by Owners/Master to split Bills of Lading and issue ship delivery orders in negotiable and transferable forms against collection of full set of original Bills of Lading. Delivery orders to conform with all terms and conditions and exceptions of Bills of Lading and shall not prejudice shipowner's rights.
 
Owners shall remain responsible for the total quantity loaded but owners shall not be responsible for the delivery of the cargo to each delivery order holder.

REISSUANCE OF BILLS OF LADING
Charterers have the option to re-issue a new set of bills of lading in replacement of the initial set under the condition that full initial set is collected back by Charterers agents and that a scanned copy of 3/3 original bills of lading marked null and void is sent to Owners by fax or by email. Immediately upon receipt of the said documents, Owners to agree to and authorize Charterers' agents to issue and sign the new set of original bills of lading. Charterers shall then send to Owners the full initial set of original bills of lading.
 
The new set to reflect quantity, description of cargo and port of origin, mirror image.

SEA WAYBILL
Charterers have an option to issue non-negotiable Sea Waybills in lieu of Bills of Lading in which case owners to instruct Master to release cargo to the consignee named on the seaway bill.
Charterers hereby indemnify Owners/Master against any consequences arising therefrom.
 
BIMCO ELECTRONIC BILLS OF LADING CLAUSE
(a)
At the Charterers’ option, bills of lading, waybills and delivery orders referred to in this Charter Party shall be issued, signed and transmitted in electronic form with the same effect as their paper equivalent.
 
(b)
For the purpose of Sub-clause (a) the Owners shall subscribe to and use Electronic (Paperless) Trading Systems as directed by the Charterers, provided such systems are approved by the International Group of P&I Clubs. Any fees incurred in subscribing to or for using such systems shall be for the Charterers’ account.
 
(c)
The Charterers agree to hold the Owners harmless in respect of any additional liability arising from the use of the systems referred to in Sub-clause (b), to the extent that such liability does not arise from Owners’ negligence.

CLAUSE 52 - CERTIFICATES
The Owners warrant that throughout the currency of this Charter Party, the Vessel shall to be in possession of any necessary valid certificates enabling the Vessel to perform the Charter Party and to comply with all applicable requirements, regulations and recommendations, including but not limited to:

-
Tonnage and measurement certificates
-
Classification and Trading certificates.
-
Certificates issued pursuant to Section 311 (P) of the U.S. Federal Water Pollution Control Act, as amended (title 33 U.S. Code, Section 1321 (P)
-
Certificates of Financial Responsibility to trade to U.S. waters or to the waters of any other country relevant under this Charter Party
-
ISM certificates
-
Brazilian Authorities' DPC approval to be in order Charterers are to facilitate the issuance of the DPC Certificate / Inspection.
-
All relevant certificates pertaining to the Crew.
 
Any time lost or other consequence of any failure to comply with this warranty shall be for Owners' account.

CLAUSE 53 - SUEZ CERTIFICATES
Throughout the period of the Charter, Vessel will have on board current valid Suez Canal Certificates, and will so comply with all applicable requirements, regulations and recommendations as to avoid any delay in transit of canal, failing which time and expenses to be for Owners' account including but not limited to any tug assistance to the Vessel.
 
CLAUSE 54 - VACCINATION CERTIFICATES
Owners shall be responsible for and arrange at their own expense that the Master, Officers and crew of the Vessel to be vaccinated and to be in possession of necessary valid vaccination certificates on delivery of the Vessel and throughout the period of this Charter Party. Any time lost and or additional expenses incurred due to failure to provide such certificates shall be for Owners' account.

CLAUSE 55 - QUARANTINE
Normal quarantine time and expenses to enter port are to be for Charterers' account. Any extra time or detention and expenses for quarantine due to pestilence and illness of the Vessel's Master, Officers and crew are to be for Owners' account, but if quarantine detention is on account of the Vessel having been sent by Charterers to any infected port, such detention time and expenses are to be for Charterers' account.
 
CLAUSE 56 - FUMIGATION
Owners are to supply valid deratization certificate on Vessel's delivery and if same does not cover whole period of this Charter Party, cost of fumigation (in case fumigation is needed) shall be for Owners' account and time so required is not to count unless fumigation is required on account of cargo carried or ports visited while Vessel is employed under this Charter Party in which case, cost and time are to be for Charterers' account.
 
CLAUSE 57 - COMPLIANCE WITH U.S. SAFETY AND HEALTH REGULATIONS
If the Vessel calls at any U.S. port for the purpose of loading or discharging cargo, the Vessel's equipment shall comply with regulations established under U.S. Public Law 85 - 742 Part 9 (Safety and Health Regulations for Long shoring) or any subsequent amendments. If longshoremen are not permitted to work due to the failure of master and or Owners to comply with the aforementioned regulations, any delays to the Vessel resulting shall be for Owners' account.
 
CLAUSE 58 - COMPLIANCE WITH INTERNATIONAL CONVENTIONS

58.1
- In the event of the Vessel being prevented from performing, or being unable to perform the service immediately required hereunder, by reason of:

  A.
- Action on the part of relevant authorities resulting from non - compliance with any compulsory applicable enactment enforcing all or part of any of the following international conventions:
  -
International Conventions for the Safety of Life at Sea, either SOLAS 1960, or SOLAS 1974, or SOLAS 1974 in conjunction with its 1978 Protocol.

-
International Load Lines Convention 1969.

-
International Convention for the Prevention of Pollution from Ships 1973, in conjunction with its 1978 protocol.

-
ILO Merchant Shipping (minimum standards) Convention 1976 (nr. 147).

-
International Convention on Standards of Training, Certification and Watch Keeping for Seafarers 1978.

B.
- Labor stoppages or shortage, boycott, secondary boycott, manifestation of any kind in services essential to the operation of the Vessel owing to its flag or registry or Ownership or management or to the conditions of employment on board.

Provided always that the event (A) and/or (B) is not directed against the Charterers or brought about any act, instruction or omission on the part of the Charterers, then any loss of time shall result in the Vessel being off-hire and shall be dealt with in accordance with the off-hire Clause.
 
58.2
- It is understood that, if necessary, Vessel will com ply with any safety regulations and/or requirements in effect at ports of loading and/or discharging. A particular reference is the United States Department of Labor Safety and Health Regulations set forth in part III of the Federal Register.
 
58.3
- Although other provisions of this Charter make it the responsibility of the Owners, it is agreed that should the Vessel not meet safety rules and regulations Owners will take immediate corrective measures and any stevedore standby time and other expenses involved, including off-hire, will be for Owners' account
 
CLAUSE 59 - SMUGGLING
Any delay, expenses and/or time incurred on account of smuggling are to be for Charterers' account if caused by Charterers and/or persons appointed by Charterers and are to be for Owners' account, if caused by Owners, Officers and/or crew and/or persons appointed by Owners.
 
CLAUSE 60 - CUBA CALLS
 
Owners warrant that the Vessel is in full compliance with U.S.A. regulations pertaining to port calls to/from Cuba, specifically in compliance with the "U.S. Cuban Democracy Act" and can trade without restraint into U.S. ports.
 
CLAUSE 61 - PRATIQUE
Vessel shall prepare radio pratique, when instructed by Charterers and be in possession of necessary certificates including but not limited to Japanese Sanitary Certificates. Charterers' Agent(s) will assist, as trading pattern allows and properly direct Master regarding the Port Authority's requirements well in advance, prior to Vessel's arrival at subject port, however, should any time and or expenses incurred, same to be for Owners' account.
 
CLAUSE 62 - PLAN / DRAFT SURVEY
Owners warrant that the Vessel will throughout the duration of the Charter-Party have on board all required documentation including but not limited to a capacity plan, hydrostatic curves and tables of displacement, tank calibration and trimming correction tables. All sounding pipes to be well maintained and free from impediments and Vessel to have ballast tanks either empty or pressed full and trim to be deducted to minimum and not to exceed trim table corrections. If Vessel does not comply with above requirements she will be put off-hire until she is able to perform such survey. Master to keep written record of drainage moisture pumped out. If required, Master to forward to Charterers upon arrival at unloading port and before start of discharging a certificate indicating all ballast remains.
 
CLAUSE 63 - SUSPENSION IN CASE OF WAR
In the event of war or warlike operations involving two or more of the following nations: the United States of America, Japan, Australia, Russia, UK, Germany, France, Italy, Spain and People's Republic of China and/or the nation under the flag which Vessel is performing under this Charter is registered, which seriously affects Charterers' or Owners' ability to perform their obligations under this Charter Party, both Charterers and Owners shall have the right to suspend this Charter Party with three (3) weeks written notice without liability to the other party. If the Charter Party is suspended, such suspension shall take place at port of destination after discharge of any cargo on board, subject to the provisions of attached Conwartime 2004 Clause.

CLAUSE 64 - OFF HIRE / TERMINATION OF THE CHARTER
The Charterers shall have the option of cancelling this Charter Party in the event the Vessel is off-hire for reasons attributed to the Owners for a period in excess of 30 consecutive days in any period of 12 months.
 
CLAUSE 65 - OFF-HIRE BUNKER CONSUMPTION
Bunkers consumed during any period during which the Vessel is off - hire for whatever cause,
 
shall be calculated at the latest bunkering price actually paid by the Charterers.
 
CLAUSE 66 - EQUIPMENT
Owners warrant and guarantee that throughout this CP, Vessel’s equipment and certificates shall comply with all regulations and/or requirements in effect at ports of call, canals and countries within the permitted trading range under this CP. Without prejudice to any rights to claim damages, Charterers may suspend hire for time lost and any extra expenses including but not limited to stevedores’ standby time to be for Owners’ account.
 
CLAUSE 67 - HATCHES
Crew is to open and close hatches before, during and after stevedore work when and where required and when permitted by shore regulations.
 
CLAUSE 68 - FRESH WATER
 
Fresh water consumed under this Charter for the purpose of drinking and use on board by the Officers and crew (excluding water used for hold cleaning) is to be for Owners' account.
 
CLAUSE 69 - SUBLET
Charterers may sublet Vessel, but shall always remain responsible to Owners for due fulfilment of this Charter Party.

CLAUSE 70 - US SECURITY/WATCHMEN
US SECURITY / WATCHMEN
If the vessel calls in the United States, including any US territory, the following provisions shall apply with respect to any applicable security regulations or measures:
Notwithstanding anything else contained in this Charter Party all costs or expenses arising out of or related to security regulations or measures required by any US authority including, but not limited to, security guards, launch services, tug escorts, port security fees or taxes and inspections, shall be for the Charterers' account, unless such costs or expenses result solely from the Owners' negligence, or due to crew nationality / visa, or due to the vessel's flag, in which case costs to be for Owners' account.

CLAUSE 71 - HEALTH AND SAFETY
Owner shall have on board the Vessel an effective occupational health and safety policy with the objective that due care and attention is given by crew members to safe working practices in all operations pertaining to the Vessel. Owner shall have a policy regarding drug and alcohol abuse onboard the Vessel with the objective that no crew member will navigate the Vessel or operate its onboard equipment whilst impaired by drugs or alcohol. The policy will also have the objective of strictly prohibiting the possession, use, transport and distribution of illicit or nonprescribed drugs by crew members. Owner shall exercise due diligence throughout the currency of this Contract to ensure that such policies are complied with in full.

CLAUSE 72 - ADDITIONAL EXPENSES / CVE
Charterers are to pay a lumpsum of U.S.$. 1,500.00-- per 30 days or pro rata to cover entertainment expenses and radio telegrams / telephone charges for Charterers' account disbursed by Owners.

CLAUSE 73 - BIMCO HULL FOULING CLAUSE FOR TIME CHARTER PARTIES (AMENDED)
(a)
If, in accordance with the Charterers’ orders, the Vessel remains at or shifts within a place, customary anchorage and/or berth for an aggregated period exceeding:


(i)
20 days in a Tropical Zone or Seasonal Tropical Zone*; or


(ii)
25 days outside such Zones*
 
any warranties concerning speed and consumption shall be suspended pending inspection of the Vessel’s underwater parts including, but not limited to, the hull, sea chests, rudder and propeller.
 
*If no such periods are agreed the default periods shall be 15 days.
 
(b)
In accordance with Sub-clause (a), either party may call for inspection which shall be arranged jointly by the Owners and the Charterers and undertaken at the Charterers’ risk, cost, expense and time.
 
(c)
If, as a result of the inspection either party calls for cleaning of any of the underwater parts, such cleaning shall be undertaken by the Charterers at their risk, cost, expense and time in consultation with the Owners.
 
  (i)
Cleaning shall always be under the supervision of the Master and, in respect of the underwater hull coating, in accordance with the paint manufacturers’ recommended guidelines on cleaning, if any. Such cleaning shall be carried out without damage to the Vessel’s underwater parts or coating. If during Charterers’ under-water inspection and/or cleaning operations the vessel’s anti-fouling coating is observed to be detaching, the cleaning shall be immediately suspended and resumed only upon Charterers’ receipt of the Owners’ written hold-harmless confirmation. If the required confirmation is rejected or not received within reasonable time, charters shall be considered to have fulfilled their obligation under the clause. In any such event, the vessel’s speed and consumption warranty shall be reinstated.
 
  (ii)
If, at the port or place of inspection, cleaning as required under this Sub-clause (c) is not permitted or possible “or there is no availability of suitable facilities and equipment” or if the Charterers choose to postpone cleaning, speed and consumption warranties shall remain suspended until such cleaning has been completed.


(iii)
If, despite the availability of suitable facilities and equipment, the Owners nevertheless refuse to permit cleaning, the speed and consumption warranties shall be reinstated from the time of such refusal.
 
 
(iv)
Owners recommend one propeller polishing to be performed once every 6 or 7 months depending on the Vessel’s schedule at a convenient place/port, at Owners’ expense, provided that no time will be lost otherwise, it will be in Owners’ time.

(d)
Cleaning in accordance with this Clause shall always be carried out prior to redelivery. If, nevertheless, the Charterers are prevented from carrying out such cleaning, the parties shall, prior to but latest on redelivery, agree a lump sum payment in full and final settlement of the Owners’ costs and expenses arising as a result of or in connection with the need for cleaning pursuant to this Clause.
 
(e)
If the time limits set out in Sub-clause (a) have been exceeded but the Charterers thereafter demonstrate that the Vessel’s performance remains within the limits of this Charter Party the vessel’s speed and consumption warranties will be subsequently reinstated and the Charterers’ obligations in respect of inspection and/or cleaning shall no longer be applicable.
 
CLAUSE 74 - BIMCO Ship to Ship Transfer Clause for Time Charter Parties
(a)
The Charterers shall have the right to order the Vessel to conduct ship to ship cargo operations, including the use of floating cranes and barges. All such ship to ship transfers shall be at the Charterers’ risk, cost, expense and time.
 
(b)
The Charterers shall direct the Vessel to a safe area for the conduct of such ship to ship operations where the Vessel can safely proceed to, lie and depart from, always afloat, but always subject to the Master’s approval. The Charterers shall provide adequate fendering, securing and mooring equipment, and hoses and/or other equipment, as necessary for these operations, to the satisfaction of the Master.
 
(c)
The Charterers shall obtain any and all relevant permissions from proper authorities to perform ship to ship operations and such operations shall be carried out in conformity with best industry practice.
 
(d)
If, at any time, the Master considers that the operations are, or may become, unsafe, he may order them to be suspended or discontinued. In either event the Master shall have the right to order the other Vessel away from the Vessel or to remove the Vessel.
 
(e)
If the Owners are required to extend their existing insurance policies to cover ship to ship operations or incur any other additional cost/expense, the Charterers shall reimburse the Owners for any additional premium or cost/expense incurred.

(f)
The Charterers shall indemnify the Owners against any and all consequences arising out of the ship to ship operations including but not limited to damage to the Vessel and other costs and expenses incurred as a result of such damage, including any loss of hire; damage to or claims arising from other alongside Vessels, equipment, floating cranes or barges; loss of or damage to cargo; and pollution.

CLAUSE 75 - GMT TIME
All times are understood to be in GMT except for laydays / cancelling which to be local time.

CLAUSE 76 - CHANGE OF FLAG / OWNERSHIP / SALE DELETE
Owners shall have the right to change the Vessel's flag, subject to Charterers' prior consent which is not to be unreasonably withheld. Such change(s) are not, in any way, to hinder, prevent or detract from Charterers' rights and ability to use the Vessel according to present Charter Party terms.

Owners have the option of selling this Vessel at any time during the course of this Charter Party subject to Charterers approval of the buyers which not to be unreasonably withheld and Owners will give Charterers at least 45 days prior notice of expected time and place which will not interfere Charterers' normal operation of the ship. All time lost and all directly related expenses including additional bunker consumed in related to such sale to be for Owners' account. The buyers undertake to perform the balance of this Charter Party at the same terms and conditions which to be stated in the sale contract. Should the Owners elect to sell the Vessel, the Charterers are to be given ROFR on the Vessel. For the purpose of clarity, ROFR refers to the right that the Charterers hold in case the Owners are selling the Vessel. No third party can be given priority before the Charterers have declared within two working days whether they want to match the price possibly achievable from third party buyer.
 
CLAUSE 76 - RECONCILIATION OF ACCOUNTS
Owners shall, every 6 months, provide a copy of their complete statement of accounts (S.O.A.) along with all supporting documentation (not previously provided to Charterers) covering the period from delivery until the latest 15 days hire payment date, in order to allow an interim reconciliation of the accounts.
 
Upon redelivery, within maximum 14 days, Owners shall provide their complete S.O.A. along with all supporting documentation covering the full charter period from the delivery date until redelivery date, including bunkers on delivery and redelivery (or bunkers actually remaining on board in case of direct continuation). Undisputed amounts (if any) shall be paid within 7 days after sharing the S.O.A.ʼs.
 
CLAUSE 77 - LAW AND ARBITRATION
This Charterparty is governed by English Law. GA/Arbitration in London. Also ref Clause 90.
 
CLAUSE 78 - PROTECTIVE CLAUSES
The New Both - to - Blame Collision Clause, New Jason Clause, Conwartime 2004, whichever applicable, are deemed to be incorporated in all Bills of Lading issued under this Charter Party and all sub-Charter Parties. Conwartime 2004 War Clause, as attached, P. & I. Bunker Clause, Deviation Clause, Drug and Alcohol Policy, Assignment Clause, are deemed to be incorporated in this Charter-Party and to apply.

NEW JASON CLAUSE
 
In the event of accident, danger, damage or disaster before or after commencement of the voyage, resulting from any cause whatsoever, whether due to negligence or not, for which, or for the consequences of which, the carrier is not responsible, by statute, contract or otherwise, the goods, shippers, consignees, or Owners of the goods shall contribute with the carrier in general average to the payment of any sacrifices, losses, or expenses of a general average nature that may be made or incurred and shall pay salvage and special charges incurred in respect of the goods.
 
If a salving ship is owned or operated by the carrier, salvage shall be paid for as fully as if such salving ship or ships belonged to strangers. Such deposit as the carrier or his agents may deem sufficient to cover the estimated contribution of the goods and any salvage and special charges thereon shall, if required, be made by the goods, shippers, consignees or Owners of the goods to the carrier before delivery.

NEW BOTH TO BLAME COLLISION CLAUSE
If the liability for any collision in which the Vessel is involved while performing this Bill of Lading fails to be determined in accordance with the laws of the United States of America, the following Clause shall apply: If the ship comes into collision with another ship as a result of the negligence of the other ship and any act, neglect or default of the Master, mariner, pilot or the servants of the carrier in the navigation or in the management of the ship, the Owners of the goods carried hereunder will indemnify the carrier against all loss or liability to the other or non-carrying ship or her Owners insofar as such loss or liability represents loss of, or damage to, or any claim whatsoever of the Owners of the said goods, paid or payable by the other or non-carrying ship or her Owners to the Owners of the said goods and set off, recouped or recovered by the other or non-carrying ship or carrier or her Owners as part of their claim against the carrying ship or carrier.
 
The foregoing provision shall also apply where the Owners, Operators or those in charge of any ship or ships or objects other than, or in addition to, the colliding ships or objects are at fault in respect to a collision or contact.
 
DEVIATION CLAUSE
The Vessel has liberty to call at any port or ports in any order, for any purpose, to sail without pilots, to tow and/or assist Vessels in all situations, and also to deviate for the purpose of saving life and/or property.
Eventual costs and benefits to be equally shared by Charterers and Owners.
 
DRUG AND ALCOHOL POLICY
 
Owners warrant that there is a policy on Drug and Alcohol Abuse (Policy) applicable to the Vessel which meets or exceeds that standard in the International Marine Forum Guidelines for the control of Drugs and Alcohol on board the Ship. Under the Policy, alcohol impairment shall be defined as a blood alcohol content of 40mg/100ml or greater; the appropriate seafarers to be tested shall be the full Vessel's complement and the drug/alcohol testing and screening shall include unannounced testing in addition to route medical examinations. An objective of the Policy should be that the frequency of the unannounced testing be adequate to act as an effective abuse deterrent, and that all officers be tested at least once a year through a combined program of unannounced testing and routine medical examinations.
 
Owners further warrant that the Policy will remain in effect during the term of this Charter and that Owners shall exercise due diligence to ensure that the Policy is complied with. It is understood that an actual impairment of any test finding of impairment shall not in and of itself mean the Owners have failed to exercise due diligence.
 
CLAUSE 79 - MOBILE CRANE CLAUSE
Charterers are permitted to place mobile cranes on deck provided the weight of such cranes (including the weight of the fully loaded grab) does not exceed the Vessel's maximum permissible deck strength and subject to class approval. Charterers shall arrange and pay for deck bearers and/or protection plates to be fitted under cranes, if required and same to be removed upon completion of discharge in Charterers' time and their risk and expense. Should any cutting and/or welding and/or reinforcement be necessary to accommodate placement of such cranes, all expenses and time for such work to be for Charterers' account.

Charterers to remain fully responsible for any/all direct damages, time, expenses and costs (including, but not limited to, burnt areas of paints on decks and underneath) resulting from such operations. Such damages to be restored by Charterers to their original state prior redelivery. Charterers to be fully responsible for any rain damage to cargo directly attributable to hatches remaining open and prevented from being closed.

Such cutting/welding always to be carried out subject to Vessel's Classification Society's approval.
 
CLAUSE 80 - BIMCO BUNKER QUALITY CONTROL FOR TIME CHARTERING
 
(AMENDED STANDARD BY CARGILL)
(1)
The Charterers shall supply bunkers of a quality suitable for burning in the Vessel's engines and auxiliaries and which conform to the specification(s) mutually agreed under this Charter, and which comply to Marpol Annex VI.

(2)
At the time of delivery of the Vessel the Owners shall place at the disposal of the Charterers, the bunker delivery note(s) and any samples relating to the fuels existing on board. The Owners shall place at the disposal of the Charterers, the bunker delivery notes from the last 36 (thirty six) months to evidence that the vessel is compliant with NAECA zone rules.
 
(3)
During the currency of the Charter the Charterers shall ensure that bunker delivery notes are presented to the Vessel on the delivery of fuel(s) and that during bunkering representative samples of the fuel(s) supplied shall be taken at the Vessel's bunkering manifold wherever possible and sealed in the presence of competent representatives of the Charterers and the Vessel.

(4)
The fuel samples shall be retained by the Vessel for 1 year (one year) after the date of delivery or for whatever period necessary in the case of a prior dispute and any dispute as to whether the bunker fuels conform to the agreed specification(s) shall be settled by analysis of the sample(s) by (FOBAS) or by another mutually agreed fuels analyst whose findings shall be conclusive evidence as to conformity or otherwise with the bunker fuels specification(s). Bunker delivery note to be kept onboard for 3 years as per Marpol Annex VI.

(5)
The Owners reserve their right to make a claim against the Charterers for any damage to the main engines or the auxiliaries caused by the use of unsuitable fuels or fuels not complying with the agreed specification(s). Additionally, if bunker fuels supplied do not conform with the mutually agreed specification(s) or otherwise prove unsuitable for burning in the ship's engines or auxiliaries the Owners shall not be held responsible for any reduction in the Vessel's speed performance and/or increased bunker consumption nor for any time lost and any other consequences.

CLAUSE 81 - BIMCO 2020 MARINE FUEL SULPHUR CONTENT CLAUSE FOR TIME CHARTER PARTIES (CARGILL AMENDED)
 
(a) For the purpose of this Clause, "Sulphur Content Requirements" means any sulphur content and related requirements as stipulated in MARPOL Annex VI (as amended from time to time) and/or by any other applicable lawful authority.
 
(b) The Charterers shall supply fuels to permit the Vessel, at all times, to comply with any applicable Sulphur Content Requirements. All such fuels shall meet the specifications and grades set out in this Charter Party.
 
The Charterers also warrant that any bunker suppliers, bunker craft operators and bunker surveyors used by the Charterers shall comply with the Sulphur Content Requirements.
 
The Charterers shall indemnify, protect, defend and hold harmless the Owners from any and against all losses, damages, liabilities, delays, deviations, claims, fines, costs, expenses, actions, proceedings, suits, demands arising out of the Charterers’ failure to comply with this subclause (b), and the Vessel shall remain on hire throughout.

(c)          The Owners warrant that the Vessel shall comply with the Sulphur Content Requirements. Subject to the Charterers having supplied the Vessel with fuels in accordance with subclause (b), the Charterers shall not otherwise be liable for any losses, damages, liabilities, delays, deviations, claims, fines, costs, expenses, actions, proceedings, suits, demands arising out of the Owners’ failure to comply with this subclause (c)

(d)          Owners to keep Charterers fully and timely informed of information relevant to bunker management, including without limitation the quantity of bunkers in each tank and tank cleaning schedules, and to provide Charterers access to relevant documentation, including without limitation the oil record book, any available bunker delivery notes, and any available analysis results for bunkers on board (whether stemmed by Charterers or not).

In addition to the above, the following apply:
 
1.     All such fuels shall comply with Regulation 4.2.1.1. of the International Convention for Safety of Life at Sea (SOLAS) Chapter II-2 regarding a minimum flashpoint for fuel oil of 60°C
2.     avoid non-compatibility with any fuel oil previously supplied under this charter party.
3.     in accordance with the specifications in the latest version of ISO 8217:2015 as at the time of supply and/or any other specifications and grades contained elsewhere in this charter party.
4.     that are fit for purpose and suitable for burning in the main and auxiliary engines of the Vessel.
 
CLAUSE 82 - SEAWORTHY TRIM CLAUSE
Charterers shall leave the Vessel in seaworthy trim and with cargo on board safely stowed to Master's satisfaction between loading berths/ports and between discharging berths/ports, respectively; any expenses and time resulting therefrom shall be for Charterers' account.

CLAUSE 83 - LIQUEFYING OF BULK CARGOES
 
Unless the cargo is elsewhere excluded in this Charter Party, the vessel may load any lawful, properly certified, safe, cargo in compliance with applicable regulations of the International Maritime Solid Bulk Cargoes Code (IMSBC Code) or any subsequent revisions thereof and applicable local regulations in effect at the time of loading.
 
At Owner’s/Master’s request, Charterers/Shippers to identify the cargo to be loaded and jointly with Owners (or their agents) take representative samples. Such sample(s) to be tested/analysed in a mutually acceptable, competent laboratory before the ship is called to berth to determine whether the cargo is safe to load. For cargoes that may be subject to liquefaction, this will include testing/analysis of the Flow Moisture Point, the Transportable Moisture Limit and the actual Moisture Content. The results of such testing/analysis to be binding on all parties.
 
At Owner’s/Master’s request, Charterers and/or Shippers shall provide to the Master before loading, complete and valid certification for all cargo intended for loading, as per the foregoing. The certificate(s) will remain valid for such period as defined by the IMSBC code or applicable local regulations, whichever is the shorter. The vessel shall have the right to refuse to commence loading if such certification is not provided or the validity of which has expired, before loading and time will continue to count (or the vessel shall remain on hire, as applicable). Any time lost or cost incurred as a result of Shippers'/Charterers' failure to comply with this clause will be for Charterers' account.

CLAUSE 84 - BIMCO ISPS/MTSA Clause
(a)
(i) The Owners shall comply with the requirements of the International Code for the Security of Ships and of Port Facilities and the relevant amendments to Chapter XI of SOLAS (ISPS Code) relating to the Vessel and “the Company” (as defined by the ISPS Code). If trading to or from the United States or passing through United States waters,

the Owners shall also comply with the requirements of the US Maritime Transportation Security Act 2002 (MTSA) relating to the Vessel and the “Owner” (as defined by the MTSA).
 
  (ii)
Upon request the Owners shall provide the Charterers with a copy of the relevant International Ship Security Certificate (or the Interim International Ship Security Certificate) and the full style contact details of the Company Security Officer (CSO).
 
  (iii)
Loss, damages, expense or delay (excluding consequential loss, damages, expense or delay) caused by failure on the part of the Owners or “the Company”/”Owner” to comply with the requirements of the ISPS Code/MTSA or this Clause shall be for the Owners’ account, except as otherwise provided in this Charter Party.
 
(b)
(i) The Charterers shall provide the Owners and the Master with their full style contact details and, upon request, any other information the Owners require to comply with the ISPS Code/MTSA. Where sub-letting is permitted under the terms of this Charter Party, the Charterers shall ensure that the contact details of all sub-charterers are likewise provided to the Owners and the Master. Furthermore, the Charterers shall ensure that all sub-charter parties they enter into during the period of this Charter Party contain the following provision:

“The Charterers shall provide the Owners with their full style contact details and, where sub-letting is permitted under the terms of the charter party, shall ensure that the contact details of all sub-charterers are likewise provided to the Owners”.
 
(ii) Loss, damages, expense or delay (excluding consequential loss, damages, expense or delay) caused by failure on the part of the Charterers to comply with this Clause shall be for the Charterers’ account, except as otherwise provided in this Charter Party.
 
 
(c)
Notwithstanding anything else contained in this Charter Party all delay, costs or expenses whatsoever arising out of or related to security regulations or measures required by the port facility or any relevant authority in accordance with the ISPS Code/MTSA including, but not limited to, security guards, launch services, vessel escorts, security fees or taxes and inspections, shall be for the Charterers’ account, unless such costs or expenses result solely from the negligence of the Owners, Master or crew. All measures required by the Owners to comply with the Ship Security Plan shall be for the Owners’ account.
 
 
(d)
If either party makes any payment which is for the other party’s account according to this Clause, the other party shall indemnify the paying party.

CLAUSE 85 - U.S. TRADE - UNIQUE BILL OF LADING IDENTIFIER CLAUSE
The Charterers warrant that each transport document accompanying a shipment of cargo destined to a port or place in the United States of America shall have been endorsed with a Unique Bill of Lading Identifier as required by the U.S. Custom s Regulations (19 CFR Part 4 Section 4.7.a) including subsequent changes, amendments or modifications thereto, not later than the first port of call.

Non-compliance with the provisions of this Clause shall amount to breach of warranty for the consequences of which the Charterers shall be liable and shall hold the Owners harmless and shall keep them indemnified against all claims whatsoever which may arise and be made against them.
 
Furthermore, all time lost and all expenses incurred including fines as a result of the Charterers' breach of the provisions of this Clause shall be for the Charterers' account.

CLAUSE 86 - U.S. CUSTOMS ADVANCE NOTIFICATION / AMS CLAUSE FOR
 
TIME CHARTER PARTIES

(a)
If the Vessel loads or carries cargo destined for the U.S. or passing through U.S. ports in transit, the Charterers shall comply with the current U.S. Customs Regulations (19 CFR 4.7) or any subsequent amendments thereto and shall undertake the role of carrier for the purposes of such regulations and shall, in their own name, time and expense :

 
i)
Have in place a SCAC (Standard Carrier Alpha Code);

ii)
Have in place an ICB (International Carrier Bond);

iii)
Provide the Owners with a timely confirmation of i) and ii) above; and

iv)
Submit a cargo declaration by AMS (Automated Manifest System) to the U.S. Customs and provide the Owners at the same time with a copy thereof.

(b)
The Charterers assume liability for and shall indemnify, defend and hold harmless the Owners against the direct losses and/or dam ages (excluding consequential loss and/or dam age) arising from the Charterers' failure to comply with any of the provisions of sub - clause (a). Should such failure result in any delay then, notwithstanding any provision in this Charter - Party to the contrary, the Vessel shall remain on hire.
 
(c)
If the Charterers' ICB is used to meet any penalties, duties, taxes or other charges which are solely the responsibility of the Owners, the Owners shall promptly reimburse the Charterers for those amounts.
 
(d)
The assumption of the role of carrier by the Charterers pursuant to this Clause and for the purpose of the U.S. Customs Regulations (19 CFR 4.7) shall be without prejudice to the identity of carrier under any Bill of Lading, other contract, law or regulation.

CLAUSE 87 - CONFIDENTIALITY
All negotiations and fixture to be kept strictly private and confidential save as otherwise may be required by the laws of regulations applicable to Seanergy Maritime Holdings Corp. or to the Owners, including but not limited to any stock exchange and/or Securities and Exchange Commission laws and regulations.

CLAUSE 88 - OIL POLLUTION
Owners are required to establish and maintain financial security for responsibility in respect of oil or other pollution damage as required by any government including federal state or municipal or other division or authority thereof, to enable the vessel, without penalty or charge, lawfully to enter, remain at or leave any port, place territorial or contiguous waters of any country, state or municipality in performance of this Charter without any delay. This obligation shall apply whether or not such requirements have been lawfully imposed by such government or division or authority thereof. Owners shall make and maintain all arrangements by bond or otherwise as may be necessary to satisfy such requirements at the Owners’ expense and Owners shall indemnify Charterers against all consequences (including loss of time) and all expenses and costs of any failure or inability to comply with the requirements of this clause.
 
Charterers not to be responsible for any claim brought against the vessel, her Owners, previous owners, her cargo or bunkers for any pollution claim. Owners warrant that they are covered for pollution liability insurance up to USD 1000 million by a P&I Club member of the International Group of P&I Clubs.

CLAUSE 89
Notwithstanding any provision to the contrary in this Charter Party and irrespective of whether bills of lading have been issued, Charterers shall have liberty at any time to order the Vessel to sail to and/or anchor at any safe place or places of their choosing and to wait there pending further voyage instructions.

CLAUSE 90 - LAW AND ARBITRATION
 
This Contract shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Contract 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.
 
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 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.
 
In cases where neither the claim nor any counterclaim exceeds the sum of USD 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 91
In case of discrepancies between Printed form and Rider Clauses, the Rider Clauses will prevail.

CLAUSE 92 - DRY-DOCKING
 
The Owners shall have the option to place the vessel in a dry-dock during the currency of this Charter Party, at a port or place to be nominated by Owners, for Class Surveys and/or repairs as required by Class. Payment of hire shall be suspended upon deviation from Charterers' service until vessel is again placed at Charterers' disposal at an equidist point not less favourable to the Charterers than when the hire was suspended.

Charterers to credit Owners with any fuels/time saved, based on ship’s next employment (next loadport). Any such off-hire period may be added to the maximum CP period. For the installation of the ESD during the dry-dock a minimum of 6 months advance planning is required. As such Charterers to conclude to the ESD installation in cooperation with Owners’ well before the dry-dock date is decided.

Owners and Charterers to mutually agree for dry-docking arrangements always subject to Charterers’ commercial schedule of the vessel but in any case Charterers' intended trip to be performed at any time. Charterers and Owners to co-operate and keep each other informed of vessel's itinerary and dry-dock schedule in order to optimize schedules for both parties. In any event owners to give at least 5 months prior notice of expected dry-dock, including the date and place.

CLAUSE 93 - WAR RISK CLAUSE FOR TIME CHARTERS, 2004
 
CODE NAME: "CONWARTIME 2004"
WAR RISK CLAUSE FOR TIME CHARTERS, 2004 CODE NAME: "CONWARTIME 2004"

(a)
For the purpose of this Clause, the words:
 
 
(i)
"Owners" shall include the shipowners, bareboat charterers, disponent owners, managers or other operators who are charged with the management of the Vessel, and the Master; and
 
 
(ii)
"War Risks" shall include any actual, threatened or reported:
 
war; act of war; civil war; hostilities; revolution; rebellion; civil commotion; warlike operations; laying of mines; acts of piracy; acts of terrorists; acts of hostility or malicious damage; blockades (whether imposed against all Vessels or imposed selectively against Vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever); by any person, body, terrorist or political group, or the Government of any state whatsoever, which, in the reasonable judgment of the Master and/or the Owners, may be dangerous or are likely to be or to become dangerous to the Vessel, her cargo, crew or other persons on board the Vessel.
 
(b)
The Vessel, unless the written consent of the Owners be first obtained, shall not be ordered to or required to continue to or through, any port, place, area or zone (whether of land or sea), or any waterway or canal, where it appears that the Vessel, her cargo, crew or other persons on board the Vessel, in the reasonable judgment of the Master and/or the Owners, may be, or are likely to be, exposed to War Risks. Should the Vessel be within any such place as aforesaid, which only becomes dangerous, or is likely to be or to become dangerous, after her entry into it, she shall be at liberty to leave it.

(c)
The Vessel shall not be required to load contraband cargo, or to pass through any blockade, whether such blockade be imposed on all Vessels, or is imposed selectively in any way whatsoever against Vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever, or to proceed to an area where she shall be subject, or is likely to be subject to a belligerent's right of search and/or confiscation.

(d)
(i) The Owners may effect war risks insurance in respect of the Hull and Machinery of the Vessel and their other interests (including, but not limited to, loss of earnings and detention, the crew and their protection and Indemnity Risks), and the premiums and/or calls therefore shall be for their account.
 
 
(ii)
If the Underwriters of such insurance should require payment of premiums and/or calls because, pursuant to the Charterers' orders, the Vessel is within, or is due to enter and remain within, or pass through any area or areas which are specified by such Underwriters as being subject to additional premiums because of War Risks, then the actual premiums and/or calls paid shall be reimbursed by the Charterers to the Owners at the same time as the next payment of hire is due, or upon redelivery, whichever occurs first.


(e)
If the Owners become liable under the terms of employment to pay to the crew any bonus or additional wages in respect of sailing into an area which is dangerous in the manner defined by the said terms, then the actual bonus or additional wages paid shall be reimbursed to the Owners by the Charterers at the same time as the next payment of hire is due, or upon redelivery, whichever occurs first.

(f)
The Vessel shall have liberty:


(i)
to comply with all orders, directions, recommendations or advice as to departure, arrival, routes, sailing in convoy, ports of call, stoppages, destinations, discharge of cargo, delivery, or in any other way whatsoever, which are given by the Government of the Nation under whose flag the Vessel sails, or other Government to whose laws the Owners are subject, or any other Government, body or group whatsoever acting with the power to compel compliance with their orders or directions;
 

 (ii)
to comply with the order, directions or recommendations of any war risks underwriters who have the authority to give the same under the terms of the war risks insurance;


(iii)
to comply with the terms of any resolution of the Security Council of the United Nations, the effective orders of any other Supranational body which has the right to issue and give the same, and with national laws aimed at enforcing the same to which the Owners are subject, and to obey the orders and directions of those who are charged with their enforcement;


(iv)
to discharge at any other port any cargo or part thereof which may render the Vessel liable to confiscation as a contraband carrier;


(v)
to call at any other port to change the crew or any part thereof or other persons on board the Vessel when there is reason to believe that they may be subject to internment, imprisonment or other sanctions.

(g)
If in accordance with their rights under the foregoing provisions of this Clause, the Owners shall refuse to proceed to the loading or discharging ports, or any one or more of them, they shall immediately inform the Charterers. No cargo shall be discharged at any alternative port without first giving the Charterers notice of the Owners' intention to do so and requesting them to nominate a safe port for such discharge. Failing such nomination by the Charterers within 48 hours of the receipt of such notice and request, the Owners may discharge the cargo at any safe port of their own choice.
 
(h)
If in compliance with any of the provisions of sub-clauses (b) to (g) of this Clause anything is done or not done, such shall not be deemed a deviation, but shall be considered as due fulfillment of this Charter Party.
 
CLAUSE 94 - GULF OF ADEN / INDIAN OCEAN HIGH RISK AREA TRANSIT
Notwithstanding any other provisions in this charter party, it is hereby agreed that Owners will permit the vessel to transit the High Risk Area (HRA) of the Indian Ocean / Arabian Sea / Gulf of Aden / Gulf of Oman / Southern Red Sea (as defined by the Joint War Committee of Lloyds Market Association from time to time) subject to the following terms and conditions:
 

 1.
Security Guards.


a.
Owners will employ an armed security team comprising 3 (three) members on board the vessel at their risk and at Charterers’ expense (subject to 1(g) below).
 
  b.
Owners will contract with an SSP (Security Services Provider) selected by Owners from one of the SSPs on Charterers’ approved short list, provided total cost is competitive compared to the other 3 companies listed. Such short list shall be provided by Charterers to Owners from time to time for Owners’ approval and shall have a minimum of three (3) SSP which shall be considered by Owners and approved – such approval not to be unreasonably withheld for each SSP. Charterers list as of August 2015 is as follows: (i) Ambrey Risk: servicedelivery@ambreyrisk.com (ii) Secure a

Ship: commercial.sales@secureaship.com (iii) Diaplous: contact@diaplous-ms.com (iv) Sea Guardian: info@sguardian.com which Charterers confirm are all approved by Charterers’ insurers for both LOH and K&R Insurances as mentioned below. Charterers shall review such selection of preferred SSPs from time to time and shall advise Owners accordingly. Charterers confirm that any additions to the SSPs on the short list will be approved by leading underwriters of both LOH and K&R Insurances and will be members of the Security Association for the Maritime Industry (SAMI).
 

 c.
The basis of the contractual arrangement between Owners and the SSP will be the Bimco “Guardcon” contract subject to such amendments as are agreed between Owners and the SSP. Owners will provide Charterers with a copy of the contract with the SSP upon request.
 

 d.
The on board security team will be embarked and disembarked at the closest convenient locations to the entry and exit point of the HRA as provided by the chosen SSP.
 

 e.
The vessel will take a reasonably direct route through the HRA from the embarkation point of the security team to the disembarkation point but will always proceed via the IRTC (Internationally Recognized Transit Corridor) when proceeding via Suez and/or transiting the Gulf of Aden. By “reasonably direct route”, it is understood that this will normally be the shortest practical route between the two points but always subject to the master’s discretion to deviate in the case of an actual or threatened security alert or advice from the military authorities in the region concerned to avoid any particular area(s).
 

 f.
The contracted SSP will also liaise with Owners/Master to determine an inventory of hardening materials (including full razor wire protection) not already on board, reasonably required for the vessel’s forthcoming transit in accordance with BMP4 (Best Management Practices v.4 and any subsequent amendments) to be supplied to the vessel prior to or at the latest at the same time as the embarkation of the security team. Such materials to be paid for by Owners and to be installed by the crew under the direction of and verified by the security team. Provision of hardening materials, if applicable will be re-imbursed by Charterers to Owners promptly on presentation of usual supporting documentation.
 

 g.
Costs of the SSP will be paid directly by Charterers to the SSP.


2.
Insurance.
 

 a.
Charterers have contracted for LOH (Loss of Hire) Insurance (including blocking and trapping) for a period not less than 360 days at their expense which Policy includes Owners as a co-insured beneficiary (and/or vessel Managers) for such transit. The vessel will remain on-hire in the event of capture by pirates for a maximum of 360 days. Underwriters for Charterers’ LOH Policy have agreed to waive rights of subrogation against Owners’ insurance policies including but not limited to Hull and Machinery insurances, Disbursements insurances, Loss of Hire insurances and War Risks insurances for all interests.
 

 b.
Charterers have contracted for K&R (Kidnap & Ransom) Insurance for an aggregate amount of not less than US$ 15,000,000 (fifteen million US Dollars, any one event) with first class underwriters which Policy includes Owners (and/or the vessel Managers) as a co-insured beneficiary for such transit, with primacy in the case. Underwriters for Charterers’ K&R Policy have agreed to waive rights of subrogation against Owners’ insurance policies including but not limited to Hull and Machinery insurances, Disbursements insurances, Loss of Hire insurances and War Risks

insurances for all interests. In the event of an incident leading to capture of the vessel, Owners agree to use Charterers’ underwriters’ nominated response consultants and to notify same immediately using the following contact details: insofar as Charterers’ K&R and Loss of Hire policies are concerned Ambrey Risk Management For Non-Emergency Maritime Counter- Piracy Advice contact details xxx This shall not restrict Owners from contacting the insurers or brokers directly in the event of an insured peril.
 

 c.
Owners will contract for additional war risk premium (AWRP) on vessel’s total value for each transit of the HRA and advise the expected gross and nett cost to Charterers. This cover will be subject to the nett premium payable being at or below a level considered reasonable by Charterers (and in line with the current London Insurance Market at the time of transit) and above which level Charterers will have the right to provide their own cover if required. Such premium if contracted by Owners, to be re-imbursed by Charterers on presentation of usual supporting documentation evidencing premiums paid. Charterers to have the benefit of any discounts or no-claims bonus enjoyed by Owners. If the AWRP is contracted by Charterers, such cover will be placed with first class underwriters and will include Owners as a co-insured beneficiary under the Policy for such transit.

  3.
Insurance Warranties


a.
When armed guards on board:-
 
The assured must register the vessel with MSCHOA (Maritime Security Centre, Horn of Africa) [http:www.mschoa.eu] and UKMTO prior to entering the HRA and ensure that all recommendations are fully complied with.


 b.
When no armed guards on-board:-


(i)
Vessels Speed: A minimum speed of 9 knots or normal service speed if greater as conditions will allow, if weather conditions require the vessel to reduce speed, the 9 knot warranty will not be applicable. If the vessel is subject to a casualty within the excluded area which results in vessel’s inability to maintain minimum of 9 knots, coverage hereon maintained. In the event of any suspicious approaches within the guidelines of Best Management Practice 4 then a minimum 12 knots speed must be adhered to.
 

 (ii)
Minimum freeboard whilst fully laden 4.0 metres for all vessels other than Cape size vessels. Minimum freeboard whilst fully laden 6.0 metres for Capesize vessels.
 
  (iii)
Razor wire must be fitted to the entire vessel bulwark in respect of breach area.
 

 (iv)
Vessel to be fitted with a citadel.
 

 (v)
The assured must register the vessel with MSCHOA (Maritime Security Centre, Horn of Africa) [http:www.mschoa.eu] and UKMTO prior to entering the HRA and ensure that all recommendations are fully complied with.
 

 4.
Annual Review
 
This clause and any Insured amounts herein may be reviewed annually prior July 9th and adapted as required after mutual agreement between Owners and Charterers.

Also refer to clause 105.

CLAUSE 95 - BIMCO BULK CARRIER SAFETY CLAUSE

(a)
The Charterers shall instruct the Terminal Operators or their representatives to co-operate with the Master in completing the IMO SHIP/SHORE SAFETY CHECKLIST and shall arrange all cargo operations strictly in accordance with the guidelines set out therein.

(b)
In addition to the above and notwithstanding any provision in this Charter Party in respect of loading/ discharging rates, the Charterers shall instruct the Terminal Operators to load/discharge the Vessel in accordance with the loading/discharging plan, which shall be approved by the Master with due regard to the Vessel's draught, trim, stability, stress or any other factor which may affect the safety of the Vessel.
 
(c)
At any time during cargo operations the Master may, if he deems it necessary for reasons of safety of the Vessel, instruct the Terminal Operators or their representatives to slow down or stop the loading or discharging.
 
(d)
Compliance with the provisions of this Clause shall not affect the counting of laytime.
 
CLAUSE 96 - INTERCLUB AGREEMENT - CARGO CLAIMS
Cargo claims as between the Owners and the Charterers shall be settled in accordance with the
 
New York Produce Exchange Inter-Club agreement 1996 (as amended September 2011).
 
CLAUSE 97 - OWNERS BANK DETAILS AND FULL STYLE
OWNERS BANK DETAILS AND FULL STYLE:
 
Bank
:      Alpha Bank A.E.
 
Piraeus Shipping Branch 960
Address
:      93, Akti Miaouli,
 
185 38 Piraeus Greece
 
210 - 4290208 Shipping Branch
Fax
210 - 4290116 Shipping Division
 
210 - 4290348 / 210 4290677
SWIFT Address
 :      CRBAGRAAXXX
   
Beneficiary
: FLAG MARINE CO.
   
USD Account No. : 960- 01- 5006034460
   
IBAN No. : GR93 0140 9600 9600 1500 6034 460
   
USD Correspondent          
: Citibank NA, New York
 
399 Park Avenue
 
New York N.Y. 10022 U.S.A.
SWIFT Address   
:  CITIUS33XXX
 
CLAUSE 98 - SANCTIONS / ELIGIBILITY
SANCTIONS/ELIGIBILITY
 
Owner represents and warrants that Owner and its vessel are not in any way directly or indirectly owned, controlled by or related to any: (1) Cuban or Iranian interests; or (2) designated target of economic trade sanctions promulgated by the U.N., U.S., E.U., or Switzerland, ("Sanction Laws"). Owner undertakes that Owner and its agents and representatives will fully comply with all applicable Sanction Laws in their performance hereunder. If the goods are to be loaded or unloaded in the United States, then Owner represents and warrants that (i) the vessel has not called at a port in North Korea within 180 days of the vessel's estimated arrival at a U.S. port, (ii) the vessel has not engaged in any ship-to-ship transfer with a vessel that has called at a port in North Korea within 180 days of the vessel's estimated arrival at a U.S. port, and (iii) in the event the vessel has called at a Cuban port within 180 days of the vessel's estimated arrival at a U.S. port, all such calls were fully permissible under U.S. laws imposing sanctions on Cuba, and the vessel is not restricted in its ability to call at a U.S. port under these U.S. laws. Owner undertakes that Owner, its agents and representative will not cause Charterer to violate applicable Sanction Laws, in their performance hereunder. Owner agrees to cooperate with Charterer's reasonable requests for information or documentation to verify compliance with this clause.

Charterer represents and warrants that neither it nor any person or entity that owns or controls it is a designated target of economic trade sanctions promulgated by the U.N., U.S., E.U., or Switzerland ("Sanction Laws"). Charterer undertakes that Charterer and its agents and representatives will fully comply with all applicable Sanction Laws in their performance hereunder. Charterer undertakes that Charterer, its agents and representatives will not cause Owner to violate applicable Sanction Laws, in their performance hereunder. Charterer agrees to cooperate with Owner's reasonable requests for information or documentation to verify compliance with this clause."
 
CLAUSE 99
Should the Vessel be requisitioned by the government of the Vessel's flag during the period of the Charter, the Vessel shall be deemed to be off-hire during the period of such requisition, and any hire paid by the said government in respect of such requisition period shall be retained by the Owners. However, the Charterers shall have the option to cancel this Charter.

CLAUSE 100
 
The Charterers and/or their Supercargo(es) and/or their Representative(s) shall have free and unlimited access to the whole Vessel including but not limited to bridge, holds, engine room, all Vessels tanks including bunker, lubricating oil, sludge, ballast, water, freshwater tanks during the charter period. Whenever required the Master must bring the Vessel to an even trim to ensure correct bunker soundings. The Charterers and/or their Supercargo(es) and/or their Representative(s) to have free and unlimited access to the Vessels deck and engine log books, radio logs, tank plans, calibration scales and/or other plans as requested and are allowed to make copies of same.

CLAUSE 101
1.
The Owners warrant and undertake that throughout the currency of this Charter-Party :
 
  1.1.
The Vessel shall not be named on the list of Special Designated Nationals and Blocked persons (the "SDN List") as published and amended from time to time by the U.S. Treasury Department's Office of Foreign Assets Control ("OFAC"); and
 

 1.2.
The Vessel's registered owner shall not be named on the SDN List; and
 

 1.3
The Vessel shall not be owned, operated or controlled by any person or entity named on the SDN List; and
 

 1.4
The Vessel shall not be flagged or registered by a country that is subject to the U.S. sanctions laws administered by OFAC from time to time (the "U.S. Sanctions") and acceptance of the Vessel by Charterers shall not constitute a violation of US Sanctions; and
 

 1.5
The Vessel shall not be owned by a person or entity that is registered, constituted or organized in, or that is a citizen or resident of or located in, a country that is subject to the US Sanctions and acceptance or trading of the Vessel by Charterers would constitute a violation of US Sanctions; and

 
1.6
Acceptance and trading of the Vessel by the Charterers throughout the Charter-Party duration shall not constitute a violation of any sanctions laws of the United Nations, the United Kingdom, the European Union, the United States of America, by the Charterers as if it were subject to such sanctions laws, all as amended from time to time.
 
  2.
Should at any time during this Charter-Party Owners be in breach of any of the provisions
 
and/ or warranties contained in this Clause, then:

 
2.1
Owners shall indemnify the Charterers against any losses or damages whatsoever resulting, and
 

 2.2
Charterers shall have the right to immediately cancel the Charter-Party.
 
CLAUSE 102 - BIMCO STANDARD I.S.M. CLAUSE
From the date of coming into force of the International Safety Management (ISM) code in relation to the Vessel and thereafter during the currency of this Charter Party, the Owners shall procure that the Vessel and "the Company" (as defined by the ISM code) shall comply with the requirements of the ISM code. Upon request the Owners shall provide a copy of relevant Document of Compliance (DOC) and Safety Management Certificate (SMC) to the Charterers.

Except as otherwise provided in this Charter Party, loss, damage, expense or delay caused by failure on the part of "the Company" to comply with the ISM Code shall be for the Owners' account.

CLAUSE 103 - BIMCO PIRACY CLAUSE FOR TIME CHARTER PARTIES 2013
 
(a)
The Vessel shall not be obliged to proceed or required to continue to or through, any port, place, area or zone, or any waterway or canal (hereinafter “Area”) which, in the reasonable judgement of the Master and/or the Owners, is dangerous to the Vessel, cargo, crew or other persons on board the Vessel due to any actual, threatened or reported acts of piracy and/or violent robbery and/or capture/seizure (hereinafter “Piracy”), whether such risk existed at the time of entering into this Charter Party or occurred thereafter. Should the Vessel be within any such place as aforesaid which only becomes dangerous, or may become dangerous, after entry into it, the Vessel shall be at liberty to leave it.
 
(b)
If in accordance with sub-clause (a) the Owners decide that the Vessel shall not proceed or continue to or through the Area they must immediately inform the Charterers. The Charterers shall be obliged to issue alternative voyage orders and shall indemnify the Owners for any claims from holders of the Bills of Lading or third parties caused by waiting for such orders and/or the performance of an alternative voyage. Any time lost as a result of complying with such orders shall not be considered off-hire.
 
(c)
If the Owners consent or if the Vessel proceeds to or through an Area exposed to the risk of Piracy the Owners shall have the liberty:
 
  (i)
to take reasonable preventative measures to protect the Vessel, crew and cargo including but not limited to re-routeing within the Area, proceeding in convoy, using escorts, avoiding day or night navigation, adjusting speed or course, or engaging security personnel and/or deploying equipment on or about the Vessel (including embarkation/disembarkation).
 
  (ii)
to comply with the requirements of the Owners’ insurers under the terms of the Vessel’s insurance(s);


(iii)
to comply with all orders, directions, recommendations or advice given by the Government of the Nation under whose flag the Vessel sails, or other Government to whose laws the Owners are subject, or any other Government, body or group (including military authorities) whatsoever acting with the power to compel compliance with their orders or directions; and


(iv)
to comply with the terms of any resolution of the Security Council of the United Nations, the effective orders of any other Supranational body which has the right to issue and give the same, and with national laws aimed at enforcing the same to which the Owners are subject, and to obey the orders and directions of those who are charged with their enforcement;

and the Charterers shall indemnify the Owners for any claims from holders of Bills of Lading or third parties caused by the Vessel proceeding as aforesaid, save to the extent that such claims are covered by additional insurance as provided in sub-clause (d)(iii).
 
(d)
Costs
 
 
(i)
If the Vessel proceeds to or through an Area where due to risk of Piracy additional costs will be incurred including but not limited to additional personnel and preventative measures to avoid Piracy, such reasonable costs shall be for the Charterers’ account. Any time lost waiting for convoys, following recommended routeing, timing, or reducing speed or taking measures to minimise risk, shall be for the Charterers’ account and the Vessel shall remain on hire;
 

 (ii)
If the Owners become liable under the terms of employment to pay to the crew any bonus or additional wages in respect of sailing into an area which is dangerous in the manner defined by the said terms, then the actual bonus or additional wages paid shall be reimbursed to the Owners by the Charterers;
 

 (iii)
If the Vessel proceeds to or through an Area exposed to the risk of Piracy, the Charterers shall reimburse to the Owners any additional premiums required by the Owners' insurers and the costs of any additional insurances that the Owners reasonably require in connection with Piracy risks which may include but not be limited to War Loss of Hire and/or maritime K&R.


(iv)
All payments arising under Sub-clause (d) shall be settled within fifteen (15) days of receipt of Owners’ supported invoices or on redelivery, whichever occurs first.
 

 (e)
If the Vessel is attacked by pirates any time lost shall be for the account of the Charterers and the Vessel shall remain on hire.
 

 (f)
If the Vessel is seized by pirates the Owners shall keep the Charterers closely informed of the efforts made to have the Vessel released. The Vessel shall remain on hire throughout the seizure and the Charterers’ obligations shall remain unaffected, except that hire payments shall cease as of the ninety-first (91st) day after the seizure until release. The Charterers shall pay hire, or if the Vessel has been redelivered, the equivalent of Charter Party hire, for any time lost in making good any damage and deterioration resulting from the seizure. The Charterers shall not be liable for late redelivery under this Charter Party resulting from the seizure of the Vessel.
 

 (g)
If in compliance with this Clause anything is done or not done, such shall not be deemed a deviation, but shall be considered as due fulfilment of this Charter Party. In the event of a conflict between the provisions of this Clause and any implied or express provision of the Charter Party, this Clause shall prevail.

CLAUSE 104 - BIMCO SLOW STEAMING CLAUSE

a)
The Charterers may at their discretion provide, in writing to the Master, instructions to reduce speed or RPM (main engine Revolutions Per Minute) and/or instructions to adjust the Vessel's speed to meet a specified time of arrival at a particular destination.
 

 (i)
*Slow Steaming - Where the Charterers give instructions to the Master to adjust the speed or RPM, the Master shall, subject always to the Master's obligations in respect of the safety of the Vessel, crew and cargo and the protection of the marine environment, comply with such written instructions, provided that the engine(s) continue(s) to operate above the cut-out point of the Vessel's engine(s) auxiliary blower(s) and that such instructions will not result in the Vessel's engine(s) and/or equipment operating outside the manufacturers'/designers' recommendations as published from time to time.
 

 (ii)
*Ultra-Slow Steaming - Where the Charterers give instructions to the Master to adjust the speed or RPM, regardless of whether this results in the engine(s) operating above or below the cut-out point of the Vessel's engine(s) auxiliary blower(s), the Master shall, subject always to the Master's obligations in respect of the safety of the Vessel, crew and cargo and the protection of the marine environment, comply with such written instructions, provided that such instructions will not result in the Vessel's engine(s) and/ or equipment operating outside the manufacturers'/designers' recommendations as published from time to time. If the manufacturers'/designers' recommendations issued subsequent to the date of this Charter Party require additional physical modifications to the engine or related equipment or require the purchase of additional spares or equipment, the Master shall not be obliged to comply with these instructions.
 
* Sub-clauses (a)(i) and (a)(ii) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative (a)(i) shall apply.

(b)
At all speeds the Owners shall exercise due diligence to ensure that the Vessel is operated in a manner which minimises fuel consumption, always taking into account and subject to the following:


(i)
The Owners' warranties under this Charter Party relating to the Vessel's speed and consumption;


(ii)
The Charterers' instructions as to the Vessel's speed and/or RPM and/or specified time of arrival at a particular destination;
 

 (iii)
The safety of the Vessel, crew and cargo and the protection of the marine environment; and
 

 (iv)
The Owners' obligations under any bills of lading, waybills or other documents evidencing contracts of carriage issued by them or on their behalf.
 

 (c)
For the purposes of Sub-clause (b), the Owners shall exercise due diligence to minimize fuel consumption:
 

 (i)
when planning voyages, adjusting the Vessel's trim and operating main engine(s) and auxiliary engine(s);
 

 (ii)
by making optimal use of the Vessel's navigation equipment and any additional aids provided by the Charterers, such as weather routing, voyage optimization and performance monitoring systems; and


(iii)
by directing the Master to report any data that the Charterers may reasonably request to further improve the energy efficiency of the Vessel.


(d)
The Owners and the Charterers shall share any findings and best practices that they may have identified on potential improvements to the Vessel's energy efficiency.


(e)
**For the avoidance of doubt, where the Vessel proceeds at a reduced speed or with reduced RPM pursuant to Sub-clause (a), then provided that the Master has exercised due diligence to comply with such instructions, this shall constitute compliance with, and there shall be no breach of, any obligation requiring the Vessel to proceed with utmost and/or due despatch (or any other such similar/equivalent expression).
 

 (f)
**The Charterers shall ensure that the terms of the bills of lading, waybills or other documents evidencing contracts of carriage issued by or on behalf of the Owners provide that compliance by Owners with this Clause does not constitute a breach of the contract of carriage. The Charterers shall indemnify the Owners against all consequences and liabilities that may arise from bills of lading, waybills or other documents evidencing contracts of carriage being issued as presented to the extent that the terms of such bills of lading, waybills or other documents evidencing contracts of carriage impose or result in breach of the Owners' obligation to proceed with due despatch or are to be held to be a deviation or the imposition of more onerous liabilities upon the Owners than those assumed by the Owners pursuant to this Clause.

CLAUSE 105 - TRADING/TRANSITING WC INDIA
Notwithstanding the Gulf of Aden/Indian Ocean High Risk Area transit clause (Clause 94), Owners agree to transit and trade the West Coast of India within the 12 NM zone and transit into the Persian Gulf navigating via the piracy zone off the coast of Pakistan and Iran when requested to do so by charterers without employing any (armed/unarmed) guards, without hardening material, without any extra insurance and crew bonus for charterers account. If the Master decides to navigate outside the 12 NM zone against Charts orders and/or when the vessel navigates inside the piracy zone off the coast of Pakistan and Iran then any applicable insurances net of discounts/no claim bonuses are to be for Charterers account but Charterers will not be required to pay for any guards and/or hardening materials and/or crew bonus.
 
CLAUSE 106 - ASIAN GYPSY MOTH CLAUSE
ASIAN GYPSY MOTH CLAUSE
Owners warrant that vessel has not called at any Russian Far East port and warrant that vessel is free from Asian Gypsy moth on delivery. Should vessel have called at any Japanese port(s) designated as an Asian Gypsy Moth high risk port by either the Japanese Government and/or USDA and/or APHIS and/or PPQ during the high risk period designated by any of those authorities during a period of one year prior to the date of delivery, then Owners shall provide an Asian Gypsy Moth free certificate if required by Charterers. However, should Asian Gypsy Moth infestation be found, fumigation to be arranged by and paid for by Owners and the vessel to be considered as off-hire during such fumigation and until the vessel is passed as free from Asian Gypsy Moth.
 
In case Charterers order the vessel to any Japanese or other far east port(s) designated as an Asian Gypsy Moth high risk port by either the Japanese Government and/or USDA and/or APHIS and/or PPQ during the high risk period designated by any of those authorities, then Charterers shall at their time and expense, prior to vessel’s redelivery or prior calling at any North American port whichever is the earlier, arrange for an inspection of the vessel by a survey firm approved by any one of such authorities and the issue of an Asian Gypsy Moth free certificate. Should infestation be found, fumigation to be arranged by and paid for by the Charterers and the vessel to remain on-hire during such fumigation and until the vessel is passed as free from Asian Gypsy Moth.

CLAUSE 107 - BIMCO PARAMOUNT CLAUSE GENERAL
The International Convention for the Unification of Certain Rules of Law relating to Bills of Lading signed at Brussels on 25 August 1924 ("The Hague Rules") as amended by the Protocol signed at Brussels on 23 February 1968 ("The Hague-Visby Rules") and as enacted in the country of shipment shall apply to this contract. When the Hague-Visby Rules are not enacted in the country of shipment, the corresponding legislation of the country of destination shall apply, irrespective of whether such legislation may only regulate outbound shipments.

When there is no enactment of the Hague-Visby Rules in either the country of shipment or in the country of destination, the Hague-Visby Rules shall apply to this contract save where the Hague Rules as enacted in the country of shipment or if no such enactment is in place, the Hague Rules as enacted in the country of destination apply compulsorily to this contract.

The Protocol signed at Brussels on 21 December 1979 ("The SDR Protocol 1979") shall apply where the Hague-Visby rules apply, whether mandatorily or by this contract.
 
The carrier shall in no case be responsible for loss of or damage to cargo arising prior to loading, after discharging, or while the cargo is in the charge of another carrier, or with respect to deck cargo and live animals.
 
CLAUSE 108 - WASHOUT CLAUSE
 
In the event that either:

(A)          the Owners elect to purchase the Vessel in accordance with section 12(b) of the Sub-Bareboat Charter, the Vessel is acquired by the Owners pursuant to the terms of section 12 (b) of the Sub‐Bareboat Charter and the Vessel has completed its voyage at the time of when the Vessel such acquisition is effective; OR
(B)          the early termination of the Sub-Bareboat Charter, save for an early termination under section 9 (d) (Termination Due To Loss) of the Sub-Bareboat Charter; OR
(C)          that the Charterers (meaning the Owners under the Sub-Bareboat Charter) exercise their rights under section 17(b) (viii) of the Sub-Bareboat Charter, OR
(D)          that the Owners (meaning Charterers under the Sub-Bareboat Charter) is entitled to purchase the Vessel pursuant to the terms of section 5.1 of the Multipartite Agreement and the Vessel is acquired by the Owners pursuant to the terms of clause
5.1 of the Multipartite Agreement,
 
then this Charter shall terminate immediately and automatically without any act by either party to this Charter, and the Owners shall:

i.
pay to the Charterers on the Termination Date an amount equal to $1325 USD multiplied by the number of days from and including the Termination Date to and including the last day of the maximum duration of this Charter (for the avoidance of any doubt, such maximum duration includes any accumulated off hire days up until the Termination Date);
 
ii.
if the Owners have fixed the hire rate for any current or future period under this Charter in accordance with clause 43 (a “Fixed Hire Period”) and the Notional Hire Rate (as defined in this clause hereunder) for a Fixed Hire Period is below 102% of the average of the BFA Capsize 5TC Values for this period, the Owners shall pay to the Charterers the difference between (i) the average of 102% of the BFA Capesize 5TC Values for the remaining days in the Fixed Hire Period and (ii) the Notional Hire Rate in accordance with this clause, multiplied by the number of remaining days under the Fixed Hire Period; OR if the Notional Hire Rate for a Fixed Hire Period is above 102% of the average of the BFA Capesize 5TC Values for this period, then Charterers shall pay (or offset) to the Owners the difference between (i) the Notional Hire Rate in accordance with this clause and (ii) the average of 102% of the BFA Capesize 5TC Values for the remaining days in the Fixed Hire Period, multiplied by the number of remaining days under the Fixed Hire Period; AND

iii.
if Vessel is located in the Atlantic basin on the Termination Date, the Owners will compensate the Charterers by paying a reposition bonus in an amount to reflect the front haul premium at the time of termination or alternatively Charterers shall be allowed to complete a voyage to an area not less favorable than the area of delivery.
 
For the avoidance of doubt, this clause shall not apply in case the Owners purchase the Vessel under section 12(a) of the Sub-Bareboat Charter.

Examples:
 
(i) No fixed hire period, maximum duration of this Charter is 365 days, Pacific redelivery:
 
Washout Amount = 365 * $1,325 = $483,625.00 to Charterers.

(ii) Hire fixed with Notional Hire Rate at $11,000/d for 365 days from the Termination Date, average of the Capesize BFA for the same period is $12,000/d, the maximum duration of this Charter is 730 days, Pacific redelivery:

Washout amount 1 = ($12,000*1.02 - $11,000) * 365 = $ 452,600 to Charterers.

Washout amount 2 = $ 1,325 * 730 = $ 967,250 to Charterers.
 
Total Washout 1 + 2 = $ 1.419mill to Charterers.
 
(iii)  Hire fixed with Notional Hire Rate at $ 13,000/d for 365 days from the Termination Date, average of the Capesize BFA for the same period is $ 12,000/d, the maximum duration of this Charter is 730 days, Pacific redelivery:

Washout amount 1 = ($ 13,000 - $ 12,000 * 1.02) * 365 = $ 277,400 to Owners.
 
Washout amount 2 = $ 1,325 * 730 = $ 967,250 to Charterers.

Total washout 1 + 2 = $ 967,250 - $ 277,400 = $ 689,850 to Charterers.

(iv) Hire fixed with Notional Hire Rate at $ 12,000 for 365 days from the Termination Date, average of the Capesize BFA for the same period is $ 11,765/d, the maximum duration of this Charter is 365 days, Pacific redelivery:
 
Washout amount 1 = ($ 11,765 * 1.02 - $ 12,000) * 365 = $ 109.50 to Charterers.
 
Washout amount 2 = $ 1,325 * 365 = $ 483,625 to Charterers.

Total washout 1 + 2 = $ 483,625 + $ 109.5 = $ 483,734.5 to Charterers.

“BFA Capesize 5TC Values” means the Baltic Forward Curve Assessment for the 5TC average for Capesize vessels published by the Baltic Exchange for a particular period.
 
“Notional Hire Rate”: means, upon Owners converting to fixed hire rate in accordance with clause 43, 102% gross (no commissions or daily discount applied) of the average of the BFA Capesize 5TC Value of the period Owners elected to convert. Upon converting the hire rate, Charterers and Owners to mark the notional hire rate for reference purposes.
 
“Multipartite Agreement” means the multipartite agreement (as amended and supplemented from time to time) between, amongst others, the Owners (as sub-bareboat charterer) and the Charterers (as head bareboat charterer and time charterer) dated or to be dated (as the case may be) on or about the date of this Charter.

“Sub-Bareboat Charter” means the sub-bareboat charter (as amended and supplemented from time to time) in respect of the Vessel between the Owners (as sub-bareboat charterers) and the Charterers (as demise owners) dated or to be dated (as the case may be) on or about the date of this Charter.

“Termination Date” means the date of the termination of this Charter pursuant to this Clause 108.
 
CLAUSE 109 ENERGY SAVINGS DEVICES CLAUSE
 
Charterers to pay for the equipment and installation of certain energy saving devices (ESDs) it elects to install and Owners commit to work with Charterers on the ESDs package (including but not limited to Clause "Vessel Data") or on improvements sought for the Vessel. This includes: the installation of sensors that send high frequency data to Cargill's i4 platform which will model the data, implementation of Zero North to provide voyage optimisation.
 
There will be no other provider of modelling or optimization services aside from above.

Owners and Charterers shall agree on the ESDs to be installed either during the Vessel’s scheduled dry-docking, alongside or during cargo operations and Charterers shall provide sufficient advance notice to allow for the proper planning of the installation and timely ordering of the equipment.

Vessel to remain on hire throughout the installation of the ESDs if done alongside or simultaneous with cargo operations and not concurrent with Vessel's dry dock in 2023.
 
Owners will not have any profit sharing part arising from the installation of the ESDs on board the vessel but will have full access on all data from the Vessel. Seanergy will keep the ESDs on board the Vessel at the conclusion of the charter without further obligation.
 
The aggregate cost of the ESDs paid by Charterers.
 
In the event that either
 
(A)  the Owners elect to purchase the Vessel in accordance with section 12(b) of the Sub- Bareboat Charter, the Vessel is acquired by the Owners pursuant to the terms of section 12 (b) of the Sub‐Bareboat Charter and the Vessel has completed its voyage at the time of when the Vessel such acquisition is effective; OR
(B)  the early termination of the Sub-Bareboat Charter, save for an early termination under section 9 (d) (Termination Due To Loss); OR
(C)  that the Charterers (meaning the Owners under the Sub-Bareboat Charter) exercise their rights under section 17(b) (viii) of the Sub-Bareboat Charter, OR

(D)  that the Owners (meaning Charterers under the Sub-Bareboat Charter) is entitled to purchase the Vessel pursuant to the terms of section 5.1 of the Multipartite Agreement and the Vessel is acquired by the Owners pursuant to the terms of clause 5.1 of the Multipartite Agreement:
any unamortized costs of the ESDs shall be reimbursed by Owners to Charterers pursuant to a future addendum that shall be agreed by the parties and contain a linear amortization schedule, starting as of the date of sailing of the Vessel from the yard/port following the successful installation of the ESDs and until the termination of this Charter.

For the avoidance of doubt, this clause shall not apply in case the Owners purchase the Vessel under section 12(a) of the Sub-Bareboat Charter.

CLAUSE 110 - BUNKERS AND 2020 GLOBAL SULPHUR CAP CLAUSE
 
a.
Implementation Date: For purposes of this clause, “Implementation Date” means the date established by the IMO for the entry into force of the 0.50% m/m global sulphur cap as described in MARPOL Annex VI (expected 1st January 2020).
 
b.
Bunker Quality:
 

 1.
Charterer shall:
 

 (i)
Prior to the Implementation Date, Provide bunkers that comply with ISO standard 8217:2010, or 8217:2005 specs when 8217:2010 specs are not available; and


(ii)
After the Implementation Date, Unless the vessel is fitted with fully operable scrubbers, in which case bunkers with maximum 3.5% sulphur content shall be supplied, provide bunkers (including, at their option, Marine Gasoil Oil):
 
  1.
with a sulphur content of no more than 0.50% sulphur bunkers (“Low Sulphur Bunkers”) or 0.1% sulphur in case of ECA/NECA or as deemed necessary by future regulations; and


2.
that comply with any ISO standard


(iii)
homogeneous blends Bunkers of different grades, specifications and/or suppliers shall be segregated into separate tanks within the Vessel’s natural segregation. The Owners shall not be held liable for any restriction in bunker capacity as a result of segregating bunkers as aforementioned. Commingling can be allowed subject to:
 

 1.
compatibility of underlying fuels
 

 2.
consultation with and approval by the Owner
 

 3.
grades to be mixable and
 

 4.
Owners not to be held responsible for any additional consumption due to additional production/accumulation of sludge other than the agreed 1.2% of vessel’s daily consumption due to commingling of bunkers on board
 

 2.
Owners warrant that, subject to Charterers’ compliance with sub-paragraphs (b)(1):

(i)
the bunker tanks will be fully at Charterers’ disposal;
 

 (ii)
the vessel will comply with all applicable regulations related to emissions, including MARPOL Annex VI;
 

 (iii)
the vessel will be able to receive, store, treat, consume and segregate (tanks’ availability/capacity permitting segregation) the fuels provided by the Charterers;
 

 (iv)
Owners will comply with any specific lawful orders from Charterers with respect to the consumption of bunkers on board;
 

 (v)
Owners to keep Charterers fully and timely informed of information relevant to bunker management, including without limitation the quantity of bunkers in each tank and tank cleaning schedules, and to provide Charterers access to relevant documentation, including without limitation the oil record book, any available bunker delivery notes, and any available analysis results for bunkers on board (whether stemmed by Charterers or not);


(vi)
Unless otherwise ordered by Charterers, Owners to ensure segregation of bunkers in storage tanks and, to the extent possible, avoid commingling in all bunker tanks, including settling and service tanks.
 
c.
Bunkers on Delivery
 
 
1.
Charterers on delivery shall take over and pay Owners for the quantity of bunkers on board on delivery at the Platts Singapore prices for each grade prevailing at the day of delivery.
 

 		(i)
Low Sulphur Fuel Oil (IMO 2020 compliant) : 1662.5 mt
 

 		(ii)
LSMGO: 264.3 mt
 

 		(iii)
MGO…… (max 0.1% sulphur)
 

 		(iv)
LSFO ... (max 0.5% sulphur)
 
d.
Bunkers on Redelivery
 

 1.
Owners shall take over and pay Charterers for the bunkers remaining on board on redelivery at Platts Singapore prices for each grade prevailing at the day of redelivery.


2.
If no Platts price is available for the grade in question, the price shall be established by Charterers’ last bunkering invoice for the grade in question.
 

 3.
Charterers’ payment under this clause may be deducted from the last sufficient hire payments.


4.
The Vessel shall be redelivered with the about same quantity of each of the grades described in paragraph (c)(1) as were on the vessel on delivery, save that the quantity of IFO on delivery shall be replaced by the same quantity of LSFO, ULSFO, and/or MGO on redelivery. In any event, the grades and quantities of bunkers on redelivery shall always be appropriate and sufficient to allow the Vessel to reach safely the nearest port at which fuels of the required types are available.

e.
Non-Pumpable Residue and Tank Cleaning
 
Owners undertake that, upon delivery to Charterers, there will be no HSFO on board the vessel, and that all the vessel’s tanks and piping system will have been cleaned, all remnants of non- compliant fuel and non-pumpable residues will have been removed and any residues disposed of and that the tanks will be fit and ready to load compliant fuel as defined in Marpol Annex VI, as amended from time to time.

Should Owners be in breach of this clause, Owners will be responsible for any loss, damages, costs or liability resulting therefrom. All of the foregoing may be deducted from hire.

CLAUSE 111 - MINERS APPROVAL
 
Definitions

i) For the purpose of this clause:
 
•      “Miner” means BHP Billiton, Rio Tinto, FMG, Roy Hill, Vale, CSN, Anglo American or any of their affiliates
 
•      “Rejection” or “Rejected” refers to circumstances where a vessel is nominated to a Miner by Charterers or any sub-charterer, and the Miner rejects or does not accept the vessel.
 
•      “Acceptance” or “Accepted” refers to circumstances where Charterers or any sub-charterer have received a communication from a Miner which is reasonably understood to indicate that the vessel is acceptable to the Miner.
 
Miner Approval
ii)   If at any time during the Charter party, the vessel is Rejected, Charterers shall inform Owners immediately in writing, and Owners shall ensure that the vessel receives a new Acceptance within 2 days. If the vessel’s trading patterns or Miner’s rules do not allow for re inspection within 2 days, Owners shall ensure that the vessel receives a new Acceptance as soon as possible. If, after that 2 day period, the vessel has not been Accepted, Charterers shall have the right to place the vessel off hire until such time that the vessel is Accepted. If the vessel is not Accepted within 30 45 days then Charterers shall have the option to terminate the Charter party, provided no cargo is onboard the vessel.
 
Costs and expenses of inspections
 
iii)   If, in order for the vessel to obtain Acceptance, a Miner or any other party needs to carry out an inspection of the vessel, the cost and time lost as a result of the inspection shall be for Owners' account.
 
This clause is inoperative if the cause of rejection is attributed to a) event under cls. 38, b) event under cls. 46 including loss of ship’s Rightship star rating as a result and c) such rejection is attributed to negligence or omission(s) of Charterers’/Charterers’ (or any other sub-Charterer down the line) representatives being appointed/nominated on their behalf, including their agents.

CLAUSE 112 - VESSEL DATA
1.    Owners shall provide, on a daily basis by no later than 12h00 LT, a report on vessel operations and performance in the form included in Appendix 1 (“Form”). In addition, if the vessel is equipped with a high frequency performance data collection system (sensors), Owners shall provide Charterers with live
access to any data collected.
 
2. Charterers may make reasonable changes to the Form during the period of this Charter.
 
3. Owners agree to provide the data requested in an accurate and timely manner.

4.    If Charterers believe in good faith that the data received is or may be inaccurate, they may notify Owners of the same, in which case Owners shall evaluate Charterers’ concerns, provide a reasonable response, and, if applicable, clarify and/or correct the data submitted.
 
5.    Cargill shall treat the data provided by Owners under this clause (“Data”) as strictly private and confidential for a period of 2 years and shall not use or disclose the Data except as provided in Paragraph 6.

6.    Notwithstanding Paragraph 5., the Data can be used, stored, enhanced and transformed by Charterers and their affiliates and contractors for the purpose of monitoring, analyzing, benchmarking, and optimizing vessel/fleet operations, including making decisions regarding the efficient operation of the vessel and other vessel’s in the charterer’s fleet. Disclosure to their affiliates and contractors not to be made by Charterers without first advising of the confidential nature of the Data.

CLAUSE 113 - EMISSIONS REGULATIONS CLAUSE
Owners  warrant  for  the   duration   of   the   CP   that   the   vessel   shall   comply   with  all current applicable international, national, regional and local laws and regulations related to vessel emissions, including but not limited to MARPOL Annex VI and any subsequent amendments. Owners shall indemnify Charterers for all delays, losses and costs arising out of Owners’ non-compliance with this clause. Should the vessel be forced to limit engine output and/or slow down below 11,5 knots in good weather conditions as defined in ship’s TC description in order to remain compliant with regulations and such engine output limitation/or slow down negatively impacts the vessels relative value to the BCI AVERAGE 5TC index then both parties shall discuss and mutually agree a reduction to the hire rate. Whether the hire rate has  been  fixed   or   not,   the   reduction   shall   be   agreed   on   the   basis   of   the vessels theoretical actual value change in % vs the BCI AVERAGE 5TC and that % reduction should be applied to either the index hire or any fixed rates agreed for the balance of the period. Should owners/charterers be unable to agree on the % adjustment then either IFCHOR, Arrow or Clarksons to be appointed as independent party and their assessment shall be binding for both parties.
 
CLAUSE 114 - WIFI INTERNET ACCESS
Owners confirm that the vessel is equipped with WiFi and it is accessible to the crew.
 
CLAUSE 115 - CODE OF CONDUCT
Owners agree to follow Cargill’s Supplier Code of Conduct,found at: https://www.cargill.com/about/supplier-code-of-conduct.
 
CLAUSE 116 - BIMCO COVID-19 CREW CHANGE CLAUSE FOR TIME CHARTER PARTIES 2020 CARGILL AMENDED:
 
(a)   In addition to any other right to deviate under this contract, the Vessel shall have liberty to deviate for crew changes if COVID-19-related restrictions prevent crew changes from being conducted at the ports or places to which the Vessel has been ordered or within the scheduled period of call.
 
(b)   Owners shall exercise the right under subclause (a) above with due regard to Charterers’ interests and subject to Charterers’ consent (not to be unreasonably withheld), and shall notify Charterers in writing as soon as reasonably possible, and always at least two weeks in advance, of any intended deviation for crew changes purposes.

(c)   During the period of such deviation the Vessel shall be off-hire and the cost of bunkers consumed shall be for Owners’ account.
 
(d)   While the Vessel is at the port of deviation all port charges, pilotage and other expenses arising out of such crew changes shall be for the Owners’ account.

END
Exhibit 4.54
 

DATED
11 May 2021

( 1 )
SEANERGY MARITIME HOLDINGS CORP .
(as Guarantor)
 
( 2 )
CARGILL INTERNATIONAL SA
(as Owner)

GUARANTEE AND INDEMNITY
IN RESPECT OF M .V . “ FLAGSHIP ”

REFERENCE : 736648.00198

CONTENTS

CLAUSE
 
1.
DEFINITIONS AND INTERPRETATION
3
2.
GUARANTEE AND INDEMNITY
5
3.
DEFAULT INTEREST
9
4.
REPRESENTATIONS
9
5.
UNDERTAKINGS
9
6.
PAYMENTMECHANICS
10
7.
PARTIAL PAYMENTS
10
8.
SET - OFF
10
9.
TAX GROSS - UP
11
10 .
CURRENCY CLAUSES
11
11 .
COSTS AND EXPENSES
11
12 .
CERTIFICATES AND DETERMINATIONS
11
13 .
PARTIAL INVALIDITY
11
14 .
REMEDIES AND WAIVERS
12
15 .
NOTICES
12
16 .
ENGLISH LANGUAGE
13
17 .
COUNTERPARTS
13
18 .
GOVERNING LAW
13
19 .
ENFORCEMENT
13
   
EXECUTION PAGE
15

THIS DEED (“Deed”) is dated 11 May 2021 (“Effective Date”) BETWEEN:

(1)
SEANERGY MARITIME HOLDINGS CORP., a corporation duly incorporated and validly existing under the laws of the Republic of the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, MH96960 Majuro, Marshall Islands (“Guarantor”); and
 
(2)
CARGILL INTERNATIONAL SA, a company duly incorporated and validly existing under the laws of Switzerland whose registered office is at Esplanade de Pont-Rouge 4, 1212 Grand- Lancy, Switzerland (“Owner”).
 
(the Guarantor and the Owner, together the “Parties” and each a “Party”)

BACKGROUND: 1
 
(i)
By a memorandum of agreement (as amended and supplemented from time to time, “MOA”) dated       7 May2021 between the Guarantor (as guarantor), Flag Marine Co. (as seller) (“Seller”) and the Owner (as buyer), the Seller has agreed to sell and the Owner has agreed to purchase the 176,387 DWT bulk carrier named “FLAGSHIP” with IMO number 9514224 (“Vessel”) on the terms and conditions set out therein.
 
(ii)
By a bareboat charter (as amended and supplemented from time to time, “Bareboat Charter”) dated on or about the date of this Deed between the Owner (as owner) and Flag Marine Co. (“Bareboat Charterer”) (as charterer), the Owner has agreed or, as the case may, shall agree to let to the Bareboat Charterer and the Bareboat Charterer has agreed or, as the case may be, shall agree to take on bareboat charter, the Vessel on the terms and conditions set out therein.
 
(iii)
By a multipartite agreement (as amended and supplemented from time to time, “Multipartite Agreement”) dated on or about the date of this Deed among the Owner (in its capacities as  head-bareboat charterer and as time charterer), the Bareboat Charterer and the Head Owner (as owner), the parties to the Multipartite Agreement have agreed or, as the case may be, shall agree certain aspects of how the relationship among the parties to the Multipartite Agreement is to be regulated.

(iv)
By a time charter (as amended and supplemented from time to time, “Time Charter”) dated on or about the date of this Deed between the Owner (as charterers) and the Bareboat Charterer (as owners) the Bareboat Charterer has agreed or, as the case may, shall agree to let to the Owner and the Owner has agreed or, as the case may be, shall agree to take on time charter, the Vessel on the terms and conditions set out therein.

(v)
This Deed is the “Guarantee” referred to in each of the MOA and the Bareboat Charter.
 
IT IS AGREED as follows:
 
1.
DEFINITIONS AND INTERPRETATION

1 Note to CISA: The Charter Guarantee is on the same basis of the one for Championship, i.e. not on demand, but true guarantee/indemnity. Please confirm if you agree with the proposed approach

 
PAGE 3
 
1.1
Definitions
 
In this Deed the following definitions and the definitions in the above recitals shall apply:

Charter Security has the meaning ascribed to it in the Bareboat Charter.

Guaranteed Obligations means all money and liabilities now or hereafter due, owing or incurred to the Owner by the Bareboat Charterer under the Relevant Documents (or any of them) and under this Deed in whatsoever manner in any currency or currencies whether present or future, actual or contingent, whether incurred solely or jointly with any other person and whether as principal or surety together with all interest accruing on such moneys and liabilities and all costs, charges and expenses incurred by the Owner under any Relevant Document.

Head Owner means CFT Investments 1 LLC with an office at c/o SMBC Leasing and Finance, Inc., 277 Park Avenue, New York, New York 10172 or its successors, assigns and nominees.

Relevant Documents means the Bareboat Charter, the Multipartite Agreement and the Time Charter (and each of the Bareboat Charter, the Multipartite Agreement and the Time Charter, a “Relevant Document”).
 
Responsible Person means, in respect of the Guarantor, a Responsible Officer (as such term is defined in the Bareboat Charter).
 
Tax Deduction means a deduction or withholding for or on account of tax from a payment under this Deed.
 

 1.2
Interpretation


1.2.1
Unless defined elsewhere in this Deed or the context otherwise requires, terms defined in, or whose interpretation is provided for in, the Bareboat Charter shall have the same meaning when used in this Deed.
 

 1.2.2
Unless a contrary indication appears, a reference in this Deed (including the recitals hereto) to:


(a)
any Party or any other person shall be construed so as to include, where relevant, its successors in title, permitted assigns and permitted transferees;


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

 (c)
Clauses are references to clauses of this Deed;
 

 (d)
a Relevant Document or any other agreement or instrument is a reference to that Relevant Document or other agreement or instrument as amended, novated, varied, supplemented or restated (however fundamentally) or replaced from time to time;

PAGE 4

(e)
the words “include(s)”, “including” shall be construed as followed by the words “without limitation”;
 

 (f)
“liabilities” includes any obligation, whether incurred as principal or as surety, for the payment or the repayment of money, whether present or future, actual or contingent and whether owed jointly or severally or in any other capacity;
 

 (g)
references to “taxes” include all present and future income, corporation and value-added taxes and all stamp and other taxes, duties, levies, imposts, deductions, charges and withholdings whatsoever, together with interest thereon and penalties with respect thereto, if any, and any payments of principal, interest, charges, fees or other amounts made on or in respect thereof, and references to “tax” and “taxation” shall be construed accordingly;
 

 (h)
a provision of law is a reference to a provision of any treaty, legislation, regulation, decree, order or by-law and any secondary legislation enacted under a power given by that provision, as amended, applied or re-enacted or replaced whether before or after the date of this Deed; and
 

 (i)
a time of day is a reference to Geneva time.

 
1.2.3
Clause headings are for ease of reference only.


1.2.4
Words importing the plural shall include the singular and vice versa and words importing a gender shall include every gender.
 

 1.3
Third party rights

Unless expressly 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 enjoy the benefit of any term of this Deed.
 

 1.4
Deed

This Deed is intended to take effect as a deed from and including the date of the Bareboat Charter.
 

 1.5
Relevant Documents

The Guarantor confirms that it has received copies of, has reviewed and is familiar with the terms and provisions of the Relevant Documents.
 
2.
GUARANTEE AND INDEMNITY
 

 2.1
Guarantee and indemnity

PAGE 5

2.1.1
The Guarantor irrevocably and unconditionally:
 

 (a)
guarantees to the Owner the due and punctual performance by the Bareboat Charterer of all the Bareboat Charterer’s obligations (whether actual or contingent) under, or in connection with, the Relevant Documents;
 

 (b)
undertakes with the Owner that whenever the Bareboat Charterer does not pay any amount when due under or in connection with any Relevant Document, the Guarantor shall promptly on demand pay that amount as if it was the principal obligor; and
 

 (c)
agrees with the Owner that, if, for whatever reason, any sums (or other obligations, as the case may be) hereby guaranteed are not recoverable (or are not able to be satisfied) pursuant to this Clause 2.1 on the basis of a guarantee (whether by reason of any legal limitation, illegality, disability or incapacity on, or of, the Bareboat Charterer or any other person or by reason of any other fact or circumstance, and whether or not known to, or discoverable by, the Guarantor, the Bareboat Charterer or the Owner or any other person), the Guarantor will, as a separate and independent stipulation and as a primary obligor, pay (or, as the case may be, perform or procure performance of the Bareboat Charterer’s obligations) to the Owner on demand an amount or amounts equal to the amount or amounts which the Guarantor would have been liable to pay but for such irrecoverability and will on demand indemnify the Owner against any costs, expenses, losses or liability suffered or incurred by the Owner a result of such irrecoverability.
 

 2.2
Continuing guarantee


2.2.1
This Deed is a continuing guarantee and will extend to the ultimate balance of the Guaranteed Obligations, regardless of any intermediate payment or discharge in whole or in part.


2.3
Reinstatement
 

 2.3.1
If any discharge, release or arrangement (whether in respect of the obligations of the Bareboat Charterer or any Charter Security for those obligations or any security provided for those obligations or otherwise) is made by the Owner in whole or in part on the faith of any payment, Charter 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 Deed will continue or be reinstated as if the discharge, release or arrangement had not occurred.


2.4
Waiver of defences
 

 2.4.1
The obligations of the Guarantor under this Deed will not be affected by an act, omission, matter or thing which, but for this Clause 2.4, would reduce, release or prejudice any of its obligations under this Deed (without limitation and whether or not known to it or to the Owner) including:

PAGE 6

(a)
any time, waiver or consent granted to, or composition with, the Bareboat Charterer and/or any other person, as the case may be;
 

 (b)
the release of the Bareboat Charterer or any other person, as the case may be, under the terms of any composition or arrangement with any creditor of the Guarantor or its subsidiaries;


(c)
the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or over, assets of, the Bareboat Charterer or other person, as the case may be, 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 Charter Security;


(d)
any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of the Bareboat Charterer or any other person, as the case may be;


(e)
any amendment (however fundamental) or replacement of a Relevant Document or any other agreement or instrument or Charter Security;
 

 (f)
any unenforceability, illegality or invalidity of any obligation of any person under any Relevant Document or any other agreement or instrument or Charter Security; or


(g)
any insolvency or similar proceedings.


2.5
Guarantor Intent


2.5.1
Without prejudice to the generality of Clause 2.4 the Guarantor expressly confirms that it intends that this Deed shall extend from time to time to any (however fundamental) variation, increase, extension or addition of or to any of the Relevant Documents.


2.6
Immediate recourse


2.6.1
The Guarantor waives any right it may have of first requiring the Owner to commence proceedings against or enforce any other rights or Charter Security before enforcing any rights of the Owner against the Guarantor under this Deed. This waiver applies irrespective of any law or any provision of a Relevant Document to the contrary.


2.7
Appropriations


2.7.1
Until all amounts which may be or become payable by the Bareboat Charterer under or in connection with the Relevant Documents have been irrevocably paid in full, the Owner may:
 

 (a)
refrain from applying or enforcing any other moneys, Charter Security or rights held or received by the Owner 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

PAGE 7

(b)
hold in a suspense account any moneys received from the Guarantor or on account of the Guarantor’s liability under this Deed.


2.8
Deferral of Guarantor’s rights


2.8.1
Until all amounts which may be or become payable by the Bareboat Charterer under or in connection with the Relevant Documents have been irrevocably paid in full and unless the Owner otherwise directs, the Guarantor will not exercise any rights which it may have by reason of performance by it of its obligations under the Relevant Documents or by reason of any amount being payable, or liability arising, under this Clause 2.8:


(a)
to be indemnified by the Bareboat Charterer;
 

 (b)
to claim any contribution from the Bareboat Charterer of the Bareboat Charterer’s obligations under the Relevant Documents;
 

 (c)
to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Owner under the Relevant Documents or of any other guarantee or Charter Security taken pursuant to, or in connection with, the Relevant Documents by the Owner;


(d)
to bring legal or other proceedings for an order requiring the Bareboat Charterer to make any payment, or perform any obligation, in respect of which the Guarantor has given a guarantee, undertaking or indemnity under Clause 2.1 (Guarantee and indemnity);


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


(f)
to claim or prove as a creditor of the Bareboat Charterer in competition with the Owner.


2.8.2
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 Owner by the Bareboat Charterer under or in connection with the Relevant Documents to be repaid in full on trust for the Owner and shall promptly pay or transfer the same to the Owner for application towards the Guaranteed Obligations.


2.9
Additional Security


2.9.1
This Deed is in addition to, and is not in any way prejudiced by, any other guarantee or Charter Security now or subsequently held by the Owner.
 

 2.10
No Security from Bareboat Charterer
 

 2.10.1
Until the Guaranteed Obligations have been irrevocably paid in full, the Guarantor shall not take, or retain, any Charter Security from the Bareboat  Charterer or other person in connection with any of the Guarantor’s liabilities under this Deed.
 
PAGE 8

2.11
Trust
 

 2.11.1
If the Guarantor is in breach of Clauses 2.8 or 2.10, the Guarantor shall hold on trust the payment, contribution, benefit, right or Charter Security to transfer or pay it to the Owner to the extent necessary to satisfy any of the Guarantor’s liabilities under this Deed, and promptly transfer or pay any such payment, contribution, benefit, right or Charter Security to the Owner.
 
3.
DEFAULT INTEREST
 

 3.1
If the Guarantor fails to pay any amount payable by it under this Deed on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at the Default Rate. Any interest accruing under this Clause 3 shall be immediately payable by the Guarantor on demand by the Owner.
 

 3.2
Default interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount with monthly rests but will remain immediately due and payable.
 
4.
REPRESENTATIONS
 

 4.1
The Guarantor represents and warrants to the Owner on the date of this Deed that:


4.1.1
the Guarantor has power to execute, deliver and perform its obligations under this Deed and all necessary corporate action has been taken to authorise the execution, delivery and performance of the same; and
 

 4.1.2
this Deed constitutes valid, legally binding and enforceable obligations of the Guarantor.
 

 4.2
The representations made under Clause 4.1 shall be repeated by the Guarantor by reference to the facts and circumstances then existing on each and every day during the Charter Term.
 
5.
UNDERTAKINGS
 

 5.1
The undertakings in this Clause 5.1 remain in force from the date of this Deed until the Guaranteed Obligations have been irrevocably and unconditionally discharged in full. The Guarantor undertakes and agrees that throughout the relevant Charter Term it will:


5.1.1
furnish to the Owner:
 

 (a)
within one hundred and eighty (180) days after the close of each fiscal year, beginning with the close of the fiscal year 2021, the year-end audited financial statements of the Guarantor including a balance sheet and related profit and loss and surplus statements certified by its auditors;

PAGE 9

(b)
within ninety (90) days after the close of each fiscal quarter, the unaudited quarterly financial statements of the Guarantor containing profit and loss statements and a balance sheet and certified by the Responsible Person, subject to year-end audit;


(c)
such other financial information as the Owner may from time to time reasonably request relating to the financial condition of the Guarantor or the Bareboat Charterer,
 

 (d)
as soon as practicable after the same are instituted (or, once the Guarantor is aware of the same), details of any litigation, arbitration or administrative proceedings involving the Guarantor where the value of the claim or any counterclaim exceeds United States Dollars Two Million Five Hundred Thousand (US$2,500,000) (or its equivalent in any other applicable currency, when converted at the prevailing rate); and


(e)
from time to time such additional financial or other information relating to the business of the Guarantor and as may be reasonably requested by the Owner.


5.1.2
not, without the prior written consent of the Owner (such consent in the Owner’s sole discretion), change or permit any change in the share owning structure of the Bareboat Charterer.


5.2
Any financial statements and / or financial information provided to the Owner in accordance with Clause 5.1 shall be prepared in accordance with US GAAP, consistently applied on a consistent basis.
 
6.
PAYMENT MECHANICS
 

 6.1
All payments by the Guarantor under this Deed shall be made for value on the due date at the time and in the currency in which the Guaranteed Obligations are due and payable.


6.2
Payment shall be made to such account as the Owner specifies to the Guarantor in writing.
 

 6.3
All payments to be made by the Guarantor under this Deed shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.
 
7.
PARTIAL PAYMENTS
 

 7.1
If the Owner receives a payment that is insufficient to discharge all the amounts then due and payable by the Guarantor under this Deed, the Owner shall apply that payment towards the obligations of the Guarantor under this Deed to discharge amounts owed to the Owner under any of the Relevant Documents in such order as the Owner may, in its discretion, determine.
 
8.
SET-OFF
 
The Owner may set off any matured obligation due from the Guarantor under this Deed (to the extent beneficially owned by the Owner) against any matured obligation owed by the Owner to the Guarantor, regardless of the place of payment, or currency of either obligation. If the obligations are in different currencies, the Owner may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.
 
PAGE 10
9.
TAX GROSS-UP
 

 9.1
The Guarantor shall make all payments to be made by it under this Deed without any Tax Deduction, unless a Tax Deduction is required by law.
 

 9.2
If a Tax Deduction is required by law to be made by the Guarantor, the amount of the payment due from the Guarantor 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.


9.3
If the Guarantor is required to make a Tax Deduction, the Guarantor 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.


9.4
The Guarantor shall deliver to the Owner evidence reasonably satisfactory to the Owner that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.

10.
CURRENCY CLAUSES
 

 10.1
If a payment is made to the Owner under this Deed in a currency (“Payment Currency”) other than the currency in which it is expressed to be payable (“Contractual Currency”), the Owner may convert that payment into the Contractual Currency at the rate at which it (acting reasonably and in good faith) is able to purchase the Contractual Currency with the Payment Currency on or around the date of receipt of the payment and to the extent that the converted amount of the payment falls short of the amount due and payable the Guarantor will remain liable for such shortfall and such shortfall shall form part of the Guaranteed Obligations.
 
11.
COSTS AND EXPENSES
 

 11.1
The Guarantor shall pay to the Owner the amount of all costs and expenses (including, without limitation, legal fees, stamp duties and any value added tax) incurred by the Owner in connection with the enforcement of, or preservation of, any rights under, this Deed on a full indemnity basis.

12.
CERTIFICATES AND DETERMINATIONS
 

 12.1
Any certificate or determination by the Owner of a rate or an amount payable under this Deed is, in the absence of manifest error, conclusive evidence of the matters to which it relates.

13.
PARTIAL INVALIDITY
 

 13.1
If, at any time, any provision of this Deed 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 nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.
 
PAGE 11
14.
REMEDIES AND WAIVERS
 

 14.1
No failure to exercise, nor any delay in exercising, on the part of the Owner, any right or remedy under this Deed or any Relevant Document shall operate as a waiver, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in this Deed and the Relevant Documents are cumulative and not exclusive of any rights or remedies provided by law.

15.
NOTICES
 

 15.1
Any communication to be made under or in connection with this Deed shall be made in writing and, unless otherwise stated, may be made by e-mail, fax or letter.
 

 15.2
The address, fax number and e-mail address (and the department or officer, if any, for whose attention the communication is to be made) of the Guarantor and the Owner for any communication or document to be made or delivered under or in connection with this Deed is:
 

 15.2.1
in the case of the Guarantor:
 
Address: Seanergy Maritime Holdings Corp.
c/o Seanergy Management Corp.
154 Vouliagmenis Avenue,
16674 Glyfada, Athens, Greece
 
Attn: Stamatios Tsantanis

Tel: +30 2130181507

Emails: legal@seanergy.gr and finance@seanergy.gr
 

 15.2.2
in the case of the Owner:
Address:
Cargill International SA
Esplanade de Pont-Rouge 4
1212 Grand-Lancy, Switzerland
 
(Mailing address: Cargill International SA, P.O. Box 1415, 1211 Geneva 26, Switzerland)
 
Attn: Ann Shazell, Bernd Bachmann, Nicholas Logan and George Wells Tel: +41-22-703-2111
 
E-mail:
Ann_shazell@cargill.com
Bernd_Bachmann@cargill.com
 
Nicholas_Logan@cargill.com
George_Wells@cargill.com

or any substitute address, e-mail address or department or officer as may be notified in writing to the other Party by not less than seven (7) days’ notice.

PAGE 12

15.3
Any communication or document made or delivered by one person to another under or in connection with this Deed will be effective only:


15.3.1
if by way of letter, when it has been left at the relevant address or five (5) days after being deposited in the post postage prepaid in an envelope addressed to it at that address; or
 

 15.3.2
if by way of e-mail, when it is received,
 
and, if a particular department or officer is specified as part of its address details provided under Clause 15.2, if addressed to that department or officer.
 

 15.4
Any communication or document to be made or delivered to the Owner will be effective only when actually received by the Owner and then only if it is expressly marked for the attention of the department or officer identified above (or any substitute department or officer as the Owner shall specify for this purpose).

16.
ENGLISH LANGUAGE
 

 16.1
Any notice or other document given or provided under or in connection with this Deed must be in English.
 
17.
COUNTERPARTS
 

 17.1
This Deed may be executed in counterparts each of which when executed and delivered shall constitute an original of this Deed, but all the counterparts shall together constitute the same agreement. No counterpart shall be effective until each Party has executed at least one counterpart. A signed copy received in pdf format shall be deemed to be an original.
 
18.
GOVERNING LAW
 

 18.1
This Deed and any non-contractual obligations arising out of or in connection with it are governed by, and construed in accordance with, English law.
 
19.
ENFORCEMENT
 

 19.1
Jurisdiction of English courts


19.1.1
The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Deed (including a dispute relating to the existence, validity or termination of this Deed and/or any non-contractual obligation arising out of or in connection with this Deed) (a “Dispute”).

PAGE 13

19.1.2
The Parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.
 

 19.1.3
This Clause 19 is for the benefit of the Owner. As a result, the Owner shall not be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Owner may take concurrent proceedings in any number of jurisdictions.
 

 19.2
Service of process


19.2.1
Without prejudice to any other mode of service allowed under any relevant law, the Guarantor (not being incorporated in England and Wales):
 

 (a)
irrevocably appoints Messrs E. J. C. Album Solicitors, presently at 47 Lyndale Avenue, London NW2 2QB, England (attention: Mr Edward Album, tel: +44 20 7794 6080, +44(0) 20 7431 2942 and +44(0) 7980 798659 and email: ejca@mitgr.com) as its agent for service of process in relation to any proceedings before the English courts in connection with this Deed; and


(b)
agrees that failure by an agent for service of process to notify the Guarantor of the process will not invalidate the proceedings concerned.
 

 19.2.2
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 Guarantor must immediately (and in any event within five (5) days of such event taking place) appoint another agent on terms acceptable to the Owner. Failing this, the Owner may appoint another agent for this purpose.
 
T H I S D E E D HAS BEEN EXECUTED AND DELIVERED ON THE DATE STATED AT THE BEGINNING OF THIS DEED.

PAGE 14
EXECUTION PAGE - GUARANTEE AND INDEMNITY - “NEW EXPEDITION” (TBR “FLAGSHIP”)

GUARANTOR

Signed as a deed by
)
     
Seanergy Maritime Holdings Corp., a
)
     
corporation duly incorporated and validly existing under the laws of the Republic of the Marshall Islands, by
)
/s/ Stavros Gyftakis
     
Stavros Gyftakis,
)
Authorised Signatory
     
being a person who, in accordance with the laws ) of that territory, is acting under the authority of ) the corporation.
    

EXECUTION PAGE - GUARANTEE AND INDEMNITY – “NEW EXPEDITION” (TBR “FLAGSHIP”)
 
OWNER
 
Signed as a deed by
)
     
CARGILL INTERNATIONAL SA, a
)
     
company duly incorporated and validly existing under the law of Switzerland, by
)
     
George Wells,
)
/s/ George Wells
     
being a person who, in accordance with the laws
)
Authorised Signatory
of that territory, is acting under the authority of
)
  
the company.
    


Exhibit 4.55
STANDARD BAREBOAT CHARTER
PART1

1.    Shipbroker
N/A
2.    Place and date
 22 June 2021
3.    Owners/Place of business (Cl. 1)
 
Sea 241 Leasing Co. Limited, a company incorporated under the laws of Hong Kong with registration number 3016198 whose registered office is at 27/F, Three Exchange Square, 8 Connaught Place Central, Hong Kong
4.    Bareboat Charterers/Place of business (Cl. 1)
 
Hellas Ocean Navigation Co., a corporation incorporated under the laws of the Republic of Liberia whose registered address is at 80 Broad
Street, Monrovia, Liberia
5.    Vessel’s name, call sign and flag (Cl. 1 and 3)
Hellasship
Call Sign: 5LAL4
Flag:Liberia
6.    Type of Vessel
Bulk carrier
7.    GT/NT
92752/ 60504
8.    When/Where built
2012
Imabari Shipbuilding Co., Ltd.
9.    Total DWT (abt.) in metric tons on summer freeboard
181325
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
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)
Three (3) 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
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

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.

36.  War cancellation (indicate countries agreed) (Cl. 26(f))
N/A
37.  Newbuilding Vessel (indicate with “yes” or “no” whether PART III applies) (optional)
No
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.
 
  Signature (Owners)   Signature (Charterers)
       
 
/s/ Zhou Ling
  
/s/ Stavros Gyftakis 
  Zhou Ling   Stavros Gyftakis
  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
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 in Clause 66. means the mortgage, deed of
9
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
25
Box 13. in such ready safe berth as the Charterers may
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 businesswhich
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
120
bear all expenses of the On-hire Survey including loss

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
 
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
143
Owners.
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
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 atthe
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, 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. 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
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)
 
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
 
358
(a) During the Charter Period the Vessel shall be kept
359
insured in accordance with Clause 39 and by 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 inwriting
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), the appointed managers, 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 party Owners 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 reasonably 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 risksagainst
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
464
presentation of accounts.

465
(e) The Charterers to remain responsible for and to
466
effect repairs and settlement of costs and expenses
 
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

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 Clauses 38.3, 39.14, 39.15, 39.16, 39.17, 41.4, 44, 53.1(j), 57 and 58)
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.

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
 
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

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 ofthe
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 “CompulsoryAcqui-
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 obtained (such adequacy to be deteremined by the Owners (acting reasonably)), 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. 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
 
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

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 isdue.
 
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, andwith
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 thereofat
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 recognisedat
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 andpunctual.
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 Charterersshall
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  becomean
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
 
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

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 terminatethis
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 Charterin
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 orlocal
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 bythe
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 ofwages,
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 effectto
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 arecommenced.
 
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 orin
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
946
they agree to mediation, in which case the parties
947
shall thereafter agree a mediator within afurther
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 forthat
952
purpose. The mediation shall be conducted in such
953
place and in accordance with such procedureand
 
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

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 thearbitration.
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) arealternatives;
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 personalservice.
 
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
3
the Building Contract (hereafter called “the Building
4
Contract”) as annexed to this Charter, made between the
5
Builders and the Owners and in accordance with the
6
specifications and plans annexed thereto, such Building
7
Contract, specifications and plans having been counter-
8
signed as approved by the Charterers.

9
(b) No change shall be made in the Building Contract or
10
in the specifications or plans of the Vessel as approved by
11
the Charterers as aforesaid, without the Charterers’
12
consent.
 
13
(c) The Charterers shall have the right to send their
14
representative to the Builders’ Yard to inspect the Vessel
15
during the course of her construction to satisfy themselves
16
that construction is in accordance with suchapproved
17
specifications and plans as referred to undersub-clause
18
(a) of this Clause.
 
19
(d) The Vessel shall be built in accordance with the
20
Building Contract and shall be of the description set out
21
therein. Subject to the provisions of sub-clause 2(c)(ii)
22
hereunder, the Charterers shall be bound to accept the
23
Vessel from the Owners, completed and constructed in
24
accordance with the Building Contract, on the date of
25
delivery by the Builders. The Charterers undertake that
26
having accepted the Vessel they will not thereafter raise
27
any claims against the Owners in respect of the Vessel’s
28
performance or specification or defects, if any.
29
Nevertheless, in respect of any repairs, replacements or
30
defects which appear within the first 12 months from
31
delivery by the Builders, the Owners shall endeavour to
32
compel the Builders to repair, replace or remedy any defects
33
or to recover from the Builders any expenditure incurred in
34
carrying out such repairs, replacements or remedies.
35
However, the Owners’ liability to the Charterers shall be
36
limited to the extent the Owners have a valid claim against
37
the Builders under the guarantee clause of theBuilding
38
Contract (a copy whereof has been supplied to the
39
Charterers). The Charterers shall be bound to accept such
40
sums as the Owners are reasonably able to recover under
41
this Clause and shall make no further claim on the Owners
42
for the difference between the amount(s) so recovered and
43
the actual expenditure on repairs, replacementor
44
remedying defects or for any loss of time incurred.
45
Any liquidated damages for physical defects or deficiencies
46
shall accrue to the account of the party stated in Box 41(a)
47
or if not filled in shall be shared equally between the parties.
48
The costs of pursuing a claim or claims against the Builders
49
under this Clause (including any liability tothe Builders)
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.
 
52
2. Time and Place of Delivery
 
53
(a) Subject to the Vessel having completedher
54
acceptance trials including trials of cargo equipment in
55
accordance with the Building Contract and specifications
56
to the satisfaction of the Charterers, the Owners shall give
57
and the Charterers shall take delivery of the Vessel afloat
58
when ready for delivery and properly documented at the
59
Builders’ Yard or some other safe andreadily accessible
60
dock, wharf or place as may be agreed between the parties
61
hereto and the Builders. Under the Building Contract the
62
Builders have estimated that the Vessel will be ready for
63
delivery to the Owners as therein provided but the delivery
64
date for the purpose of this Charter shall be the date when
65
the Vessel is in fact ready for delivery by the Builders after
66
completion of trials whether that be before or after as
67
indicated in the Building Contract. The Charterers shall not
68
be entitled to refuse acceptance of delivery of the Vessel
69
and upon and after such acceptance, subject to Clause
70
1(d), the Charterers shall not be entitled to make any claim
71
against the Owners in respect of any conditions,
72
representations or warranties, whether  express  or  implied,
73
as to the seaworthiness of the Vessel or in respect of delay
74
in delivery.
 
75
(b) If for any reason other than a default by the Owners
76
under the Building Contract, the Builders become entitled
77
under that Contract not to deliver the Vessel to the Owners,
78
the Owners shall upon giving to the Charterers written
79
notice of Builders becoming so entitled, be excused from
80
giving delivery of the Vessel to the Charterers and upon
81
receipt of such notice by the Charterers this Charter shall
82
cease to have effect.
 
83
(c) If for any reason the Owners become entitled under
84
the Building Contract to reject the Vessel the Owners shall,
85
before exercising such right of rejection, consultthe
86
Charterers and thereupon

87
(i) if the Charterers do not wish to take delivery of the Vessel
88
they shall inform the Owners within seven (7) running days
89
by notice in writing and upon receipt by the Owners of such
90
notice this Charter shall cease to have effect; or

91
(ii) if the Charterers wish to take delivery of the Vessel
92
they may by notice in writing within seven (7) running days
93
require the Owners to negotiate with the Builders as to the
94
terms on which delivery should be taken and/or refrain from
95
exercising their right to rejection and upon receipt of such
96
notice the Owners shall commence such negotiations and/
97
or take delivery of the Vessel from the Builders and deliver
98
her to the Charterers;
 
99
(iii) in no circumstances shall the Charterers be entitled to
100
reject the Vessel unless the Owners are able to reject the
101
Vessel from the Builders;
 
102
(iv) if this Charter terminates under sub-clause (b) or (c) of
103
this Clause, the Owners shall thereafter not be liable to the
104
Charterers for any claim under or arising out of this Charter
105
or its termination.
 
106
(d) Any liquidated damages for delay in delivery under the
107
Building Contract and any costs incurred in pursuing a claim
108
therefor shall accrue to the account of the party stated in
109
Box 41(c) or if not filled in shall be shared equally between
110
the parties.
 
111
3. Guarantee Works
112
If not otherwise agreed, the Owners authorise the
113
Charterers to arrange for the guarantee works to be
114
performed in accordance with the building contract terms,
115
and hire to continue during the period of guarantee works.
116
The Charterers have to advise the Owners about the
117
performance to the extent the Owners may request.
 
118
4. Name of Vessel
119
The 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 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
122
the house flag as required by the Charterers.
 
123
5. Survey on Redelivery
124
The Owners and the Charterers shall appoint surveyors
125
for the purpose of determining and agreeing in writing the
126
condition of the Vessel at the time of re-delivery.
127
Without prejudice to Clause 15 (Part II), the Charterers
128
shall bear all survey expenses and all other costs, if any,
129
including the cost of docking and undocking, if required,
130
as well as all repair costs incurred. The Charterers shall
131
also bear all loss of time spent in connection with any
132
docking and undocking as well as repairs, which shall be
133
paid 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)

1
On expiration of this Charter and provided the Charterers
2
have fulfilled their obligations according to Part I and II
3
as well as Part III, if applicable, it is agreed, that on
4
payment of the final payment of hire as per Clause 11
5
the Charterers have purchased the Vessel with
6
everything belonging to her and the Vessel is fully paid
7
for.
8
In the following paragraphs the Owners are referred to
9
as the Sellers and the Charterers as the Buyers.
10
The Vessel shall be delivered by the Sellers and taken
11
over by the Buyers on expiration of the Charter.
12
The Sellers guarantee that the  Vessel,  at  the  time  of
13
delivery, is free from all  encumbrances  and  maritime
14
liens or any debts whatsoever other than those arising
15
from anything  done or not done  by the Buyers or any
16
existing mortgage agreed not to be paid off by the time
17
of delivery. Should any claims, which have been incurred
18
prior to the time of delivery be made against the Vessel,
19
the Sellers hereby  undertake to indemnify the Buyers
20
against all consequences of such claims to the extent it
21
can be proved that the Sellers are responsible for such
22
claims. Any taxes, notarial, consular and other charges
23
and expenses connected with the purchase and
24
registration under Buyers’ flag, shall be for Buyers’
25
account. Any taxes, consular and other charges and
26
expenses connected with closing of the Sellers’ register,
27
shall be for Sellers’ account.
28
In exchange for payment of  the last month’s  hire
29
instalment the Sellers shall furnish the Buyers with a
30
Bill of Sale duly  attested and legalized, together with a
31
certificate setting out the  registered encumbrances, if
32
any. On delivery of the Vessel the Sellers shall provide
33
for deletion of the Vessel from the Ship’s Register and
34
deliver a certificate of deletion to the Buyers.
35
The Sellers shall, at the time of delivery, hand to the
36
Buyers all classification certificates (for hull, engines,
37
anchors, chains, etc.), as well as all plans which may
38
be in Sellers’ possession.
39
The Wireless Installation and Nautical Instruments,
40
unless on hire, shall be included in the sale without any
41
extra payment.
42
The Vessel with everything belonging to her shall be at
43
Sellers’ risk and expense until she is delivered to the
44
Buyers, subject to the conditions of this Contract and
45
the Vessel with everything belonging to her shall be
46
delivered and taken over as she is at the time of delivery,
47
after which the Sellers  shall  have no responsibility for
48
possible faults or deficiencies of any description.
49
The Buyers undertake to pay for the repatriation of the
50
Master, officers and other personnel if appointed by the
51
Sellers to the port where the Vessel entered the Bareboat
52
Charter 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)

1
1. Definitions
2
For the purpose of this PART V, the following terms shall
3
have the meanings hereby assigned to them:
4
“The Bareboat Charter Registry” shall mean the registry
5
of the State whose flag the Vessel will fly and in which
6
the Charterers are registered as the bareboat charterers
7
during the period of the Bareboat Charter.
8
“The Underlying Registry” shall mean the registry of the
9
state in which the Owners of the Vessel are registered
10
as Owners and to which jurisdiction and control of the
11
Vessel will revert upon termination of the Bareboat
12
Charter Registration.
 
13
2. Mortgage
14
The Vessel chartered under this Charter is financed by
15
a mortgage and the provisions of Clause 12(b)  (Part II)
16
shall apply.
17
3.  Termination of Charter by Default
18
If the Vessel chartered under this Charter is registered
19
in a Bareboat Charter Registry as stated in Box 44, and
20
if the Owners shall default in the payment of any amounts
21
due under the mortgage(s) specified in Box 28, the
22
Charterers shall, if so required by the mortgagee, direct
23
the Owners to re-register the Vessel in the Underlying
24
Registry as shown in Box 45.
25
In the event of the Vessel being deleted from the
26
Bareboat Charter Registry as stated in Box 44, due to a
27
default by the Owners in the payment of  any amounts
28
due under the mortgage(s), the Charterers shall have
29
the right to terminate this Charter forthwith and without
30
prejudice 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.

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 sixty (60) months 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); or
 
(b)
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)), save that if the Charter is terminated and/or the Vessel not delivered under the MOA for a reason solely related to a default of the Owners, then the Charterers shall not be obliged to pay the Arrangement Fee (and if the Arrangement Fee has already been paid at such time, the Owners shall refund the Arrangement Fee to the Charterers within a reasonable time). Any such payment by the Charterers under this Clause 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:

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(a)
no Termination Event or Potential Termination Event having occurred and being continuing 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 Delivery occurring on or before the Cancelling Date; and
 
(d)
the Owners having received from the Charterers:
 

 (i)
on or before the Prepositioning Date, 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 (d) 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 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.

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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
Provided that no Potential Termination Event, Termination Event or Total Loss has occurred, the Owners hereby agree not to disturb or interfere in any way whatsoever 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 Financing Amount 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 1/20*(Financing Amount less 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,

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 in that Hire Period.
 
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

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(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 (20) 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 4.00 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 of this Charter.
 
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) 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;
 
(e)
the Total Loss or any damage to or forfeiture or court marshall’s or other sale of the Vessel if the 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;

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(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.
 
Nothing contained in this Section 36.11 shall be deemed to hinder or prevent the Charterers from pursuing any claim the Charterers may have at law against the Owner for damages for the Owner’s breach of its express obligations under this Charter.
 
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 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 (for the avoidance of doubt, the above excludes any income tax or any tax arising from the Owners’ shares by competent tax authorities in their domicile, which shall be borne by the Owners). 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.

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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;
 

 (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

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 (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 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
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 aggregate of (i) the applicable Interest Rate for the relevant Hire Period and (ii) 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 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.
 
37.6
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.
 
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 documented 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 steps to prevent) an arrest of the Vessel.

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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, in the case of war risks, through a protection and indemnity club which meets the requirements of paragraph (d) above; 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 and the Charterers 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 (provided that in the event they do not agree to this, the Charterers agree that they shall be responsible for bearing such deductible portion) and that they shall do all things necessary and provide all documents, evidence and information reasonably required 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;

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(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 ten (10) 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 seven (7) 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;

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(c)
at least two (2) 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 the Vessel forthwith upon being so requested by the Owners or the Owners’ Financiers (if any) and where practicable.

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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; and

(b)
a copy of the 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.
 
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.
 
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.

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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 with copies of all 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)
prior to the occurrence of a continuing Termination Event, a Major Casualty or a Total Loss; and
 

 (ii)
at any time after the occurrence of a Termination Event and while it is continuing, any material communications whatsoever relating to the insurances of the Vessel.
 
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 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 such an amount as the Owners consider reasonable 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.

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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 reasonably 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 (acting reasonably) 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.

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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:
 
(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 37.5 shall apply and the Owners shall be entitled to exercise their rights under Clause 42.
 
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), 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 all mortgages, encumbrances, liens, debts or any claims whatsoever 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 documented 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, 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 20 running days’ preliminary notice of expected date and port or place of redelivery and not less than 3 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.

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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 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, unextended certificates for not less than three (3) 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 (if applicable) at the Charterers’ time and expense without any recommendations or conditions:
 

 (i)
to the satisfaction of the Approved Classification Society; and
 

 (ii)
in the case of the 5-year special survey, to the reasonable satisfaction of an Owners’ Surveyor appointed at the cost of the Charterers;
 
(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);
 
(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); 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 five per cent. (5%) or to the then applicable BCI rate, whichever is the higher, for the number of days by which the Charter Period is exceeded.

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41.8
If the Charterers are required to redeliver the Vessel to the Owners under the terms of this Charter, the Owners shall be entitled to appoint surveyors (the “Owners’ Surveyor”) (but at Charterers’ cost) 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.
 
41.9
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 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.

41.10
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 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 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, subject to the right of the Charterers to have a period of 45 days from the Termination Date (the “Nomination Period”) to first nominate or identify a purchaser for the Vessel (a “Nominated Purchaser”) and the Owners shall sell the Vessel to such Nominated Purchaser subject to all of the following conditions being satisfied:

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 (i)
the Nominated Purchaser is acceptable to the Owners (such acceptability not to be unreasonably withheld or delayed); 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 documented 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 37.5.
 
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, elect to retain the Vessel instead of selling 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 Termination Date (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) and if the Fair Market Value (less such deductions) of the Vessel as at the date of such nomination is less than the Termination Sum as at such date, 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 twenty five 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 Termination Sum to the Owners on the Total Loss Payment Date. Upon such receipt by the Owners of the 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 and shall satisfy the obligation of the Charterers to pay the 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 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 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 legal costs, expenses and other disbursements incurred by the Owners and each of their legal counsels in relation to preparing, negotiating and executing this Charter and the Leasing Documents and/or any Financial Instruments, 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 reasonable and documented 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 (including but not limited to the Owners’ being registered as a foreign maritime entity)/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 reasonable and 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.

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44.6
The Charterers shall, on demand, pay to the Owners the amount of all 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
 
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
   
China 200120
   
Attention:       Xiao Yue
   
Email:             xiao_yue@cmbchina.com/ zyzlsceb@cmbchina.com
   
Tel:                 +86-21-61061534
     
(b)
to the Charterers:
Hellas Ocean Navigation Co.
    c/o Seanergy Management Corp.
   
154 Vouliagmenis Avenue,
    16674 Glyfada, Athens, Greece
   
Attention:    Mr. Stavros Gyftakis
   
Email:          legal@seanergy.gr and finance@seanergy.gr
   
Tel:              +30 210 8913520
 
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.
 
CLAUSE 47 – TERMINATION EVENTS
 
47.1
The Owners and the Charterers hereby agree that any of the following events shall constitute a Termination Event:

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(a)
the Charterers or the Guarantor 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 34.7, 50.1(f), Clause 51, Clause 52, 53.1(b), 53.1(c), 53.1(d), 53.1(g) or 53.1(h);
 
(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 that is not a member of the Group 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 (acting reasonably) within ten (10) 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, proves to be, in the opinion of the Owners, 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 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 or member of the Group 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) and following the expiry of any applicable grace period, 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 is less than US$5,000,000 (or its equivalent in any other currency or currencies);

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(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 filed in any Relevant Jurisdiction for its winding up or administration, or the appointment of a provisional liquidator over it;
 

 (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 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, in the opinion of the Owners, 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) provided that no Termination Event will occur under this sub-paragraph (viii) in respect of the Guarantor unless the relevant event would have or is reasonably likely to have a Material Adverse Effect;
 

 (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; or
 

 (x)
if it suspends or ceases to carry on all or a material part of its business;
 
(h)
any consent, approval, authorisation, license or permit necessary to enable the Charterers to operate or charter the Vessel or to enable any Obligor or any Approved Manager 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);

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(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 the Other Charter) occurs under the 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)
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;

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 (iv)
has a Prohibited Person serving as a director, officer or employee;
 
(r)
any lease, hire purchase agreement, charter or any other financing arrangement in respect of any Fleet 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); or
 
(s)
a Change of Control in respect of the Charterers 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, 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” but which shall be no earlier than the date falling twenty (20) Business Days after the date of the Termination Notice).
 
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, or the title is transferred to the Charterers in accordance with Clause 41.3 or the Vessel is sold in accordance with Clause 42.
 
47.4
Without limiting the generality of the foregoing or any other rights of the Owners, upon the occurrence of a Termination Event, 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 47A – MANDATORY SALE
 
If there is a Change of Control of the Guarantor, the Charterers shall immediately notify the Charterers of the same and (unless the Owners otherwise agree in writing) the Charterers shall be required to purchase the Vessel from the Owners by the Charterers paying the Termination Sum to the Owners within thirty (30) days from the Change of Control and (upon such payment of the Termination Sum) this Charter shall terminate and title to the Vessel shall be transferred in accordance with the procedures set out in Clause 41.3.

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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 and any Approved Manager which is a member of the Group is duly incorporated and validly existing under the laws of its jurisdiction of incorporation;
 
(b)
each Obligor and any Approved Manager which is a member of the Group 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 any Approved Manager which is a member of the Group, 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 any Approved Manager which is a member of the Group, 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 which is a member of the Group 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;

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(h)
each Security Document to which an Obligor or Approved Manager which is a member of the Group 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 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, or to the best of their knowledge affiliates or employees, has taken or will take any action in furtherance of an offer, payment, promise to pay or authorization 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 or threatened 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;
 
(r)
no Termination Event or Potential Termination Event has occurred 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;

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(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 or threatened 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 GAAP consistently applied and give a true and fair view of (if audited) or fairly represent (if unaudited) the financial condition of 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 the Guarantor’s 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 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;
 
(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 which is a member of the Group, sub-charterer (to the best of its knowledge) and no member of the Group:
 

 (i)
is a Prohibited Person;

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 (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 any member of the Group nor (to the best of its knowledge) any or 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 each financial half year of the Charterers, the unaudited semi-annual management accounts of the Charterers;
 

 (ii)
as soon as possible, but in no event later than one hundred and fifty (150) days after the end of each financial year of the Charterers, the unaudited annual management accounts of the Charterers;
 

 (iii)
as soon as possible, but in no event later than ninety (90) days after the end of each financial half year of the Guarantor, the unaudited semi-annual consolidated financial accounts of the Guarantor;
 

 (iv)
as soon as possible, but in no event later than one hundred and fifty (150) days after the end of each financial year of the Guarantor, the audited annual consolidated financial accounts of the Guarantor;

(b)
they will procure that each set of financial statements delivered pursuant to Clause 49.1(a) shall be 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 and the financial statements of the Guarantor shall be provided together with a Compliance Certificate signed by an authorized signatory of the Guarantor certifying that the financial covenants referred to in Clause 51 have been complied with and setting out all relevant calculations and statements demonstrating compliance with such financial covenants;
 
(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);

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(d)
they will provide the Owners promptly 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 or Anti-Money Laundering Laws which are current or pending against any Obligor, Approved Manager, sub-charterer or other member of the Group;
 

 (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 reasonable 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)
details of the Vessel’s management and employment status and copies of all accurate, complete and up-to-date records and logs of all voyages made by the Vessel (but not more than once every twelve months);
 

 (iii)
the Security Interests relating to any Leasing Documents;
 

 (iv)
compliance of each Obligor and any Approved Manager with the terms of the Leasing Documents;
 

 (v)
the financial condition, business and operations of the Obligors; or
 

 (vi)
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; and
 
(g)
they shall immediately 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;

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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 which is a member of the Group 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 which is a member of the Group 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 which is a member of the Group, will:
 

 (i)
ensure that any Leasing Document to 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 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, and will procure that each other Obligors will not, enter into any merger, amalgamation, demerger, solvent reorganisation or corporate reconstruction other than an internal group reorganisation under which the (i) the Charterers and Guarantor each survive and (ii) the Charterers remain wholly and directly (or indirectly) wholly owned by the Guarantor (and if indirectly owned, any replacement shareholder of the Charterers has entered into Share Security over the shares in the Charterers in a form acceptable to the Owners);
 
(g)
they will not:

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 (i)
enter into any borrowing except for loans from affiliates which are unsecured and fully subordinated to the Owners in a manner acceptable to the Owners and which are approved by the Owners in writing;


(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 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 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 the Vessel, its Earnings or its Insurances; and


(vi)
without prejudice to the above sub-paragraphs (i) to (v), 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; and
 
(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 or suffering a net loss in respect of the preceding financial year:
 

 (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);
 

 (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.
 
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)
On each Testing Date and for the relevant Accounting Period throughout the Charter Period:
 

 (i)
Cash and Cash Equivalents divided by the number of Fleet Vessels shall not be lower than $500,000; and
 

 (ii)
the Leverage Ratio shall not be more than 85 per cent.
 
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51.2
In this Clause 51 (Financial Covenants):

“Accounting Information” means, (i) the annual audited financial statements of the Guarantor and (ii) the semi-annual unaudited consolidated financial statements of the Guarantor as provided to the Owners in accordance with Clause 49.1(a).
 
“Accounting Period” means:
 

 (i)
the financial year of the Guarantor ending 31 December of each calendar year; or
 

 (ii)
the financial half year of the Guarantor ending 30 June of each calendar year,
 
in respect of which, in each case, the relevant Accounting Information is required to be delivered pursuant to Clause 49.1(a).
 
“Cash and Cash Equivalents” shall be that shown in the balance sheet in the relevant Accounting Information and includes term deposits, restricted cash and amounts required by the Group’s lenders and lessors to be held for minimum liquidity purposes.
 
“Fleet Market Value” means valuations of the Fleet Vessels calculated in accordance with the principles set out in the definition of Fair Market Value but using one Approved Valuer.
 
“Fleet Vessels” means all vessels owned by the Guarantor and its subsidiaries.
 
“Market Value Adjusted Total Assets” means, as at the date of calculation, the aggregate of the Market Value Adjusted Other Assets and the Total Current Assets.
 
“Market Value Adjusted Other Assets” means, as at the date of calculation, the Fleet Market Value plus the book value (less depreciation and amortization computed in accordance with the applicable Accounting Information on a consolidated basis of all non-current assets of the Group (which, without limitation, shall exclude all Fleet Vessels)), as stated in the latest Accounting Information.
 
“Total Current Assets” means, the aggregate of the cash, term deposits and marketable securities, trade and other receivables from persons (other than persons being members of the Group) realisable within 1 year such amount to be determined on a consolidated basis less any discounts, allowances and activated goodwill, in each case as shown in the applicable Accounting Information.
 
“Net Debt” means, as at the date of calculation, the Total Debt less any cash, term-deposits restricted cash and cash equivalents, in each case as stated in the applicable Accounting Information.
 
“Leverage Ratio” means, as at the date of calculation, the ratio (expressed as a percentage) of Net Debt to Market Value Adjusted Total Assets.
 
“Testing Date” means 30 June and 31 December of each financial year.
 
“Total Debt” means, as at the date of calculation, the current portion of long-term debt, net of deferred finance costs and the long-term debt, net of current portion and deferred finance costs of the Group as shown in the applicable Accounting Information.
 
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51.3
The Charterers shall promptly notify the Owners if the Guarantor agrees to provide any more favourable financial covenants to a creditor than those that are set out in favour of the Owners under Clause 51.1 above (or to amend existing ones such that they place such creditor in a position which is comparatively more favourable in terms of the financial covenants than the position of the Owners) under any agreements entered into or to be entered into in connection with any Financial Indebtedness owed by the Guarantor or a Group member to a creditor. Such more favourable financial covenants shall be deemed as automatically incorporated into this Charter in favour of the Owners from the date of the financing agreements entered into in connection with such other Financial Indebtedness (in place of the financial covenants set out in Clause 51.1 or to supplement them, at the option of the Owners) and the Charterers agree that they will and shall procure that 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 record the incorporation of 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; and
 

 (ii)
at least twice per calendar year (on each Testing Date) and at any time after the occurrence of a Potential Termination Event or Termination Event which is continuing if requested by the Owners, provide to the Owners valuations of the Vessel (or any other vessel over which additional Security Interests have been created in accordance with Clause 52.1(b)) (to be addressed to the Owners) to enable the Owners to determine the Fair Market Value of the Vessel or such other relevant vessel; and
 
(b)
if at any time, the Vessel’s Fair Market Value falls below an amount equivalent to one hundred and twenty per cent (120%) of the Owners’ Costs (the “LTV Breach”, and the said difference between the Fair Market Value and one hundred and twenty per cent (120%) of the Owners’ Costs shall be referred to as the “shortfall” for the purposes of this paragraph), 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 and in the Owners’ sole discretion, either:
 

 (i)
make payment in an amount such as to eliminate the shortfall which payment shall be deemed to be an advance payment of hire and credited against future instalment(s) of Fixed Charterhire (or part thereof) payable in inverse order of maturity of payments of Fixed Charterhire; and/or
 

 (ii)
provide, or ensure that a third party has provided, additional Security Interests which, in the opinion of the Owners has a net realisable value at least equal to the shortfall and is acceptable to the Owners, and which is documented in such terms as the Owners may require.

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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 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 the Major Casualty amount;


(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;
 

 (v)
that a Total Loss has occurred; and
 

 (vi)
any violation of Sanctions in relation to the Vessel,
 
and will keep the Owners fully up-to-date with all developments;
 
(b)
they will comply, and will procure that each other Obligor and each other member of the Group and (on a best efforts basis) 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, 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

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 (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;
 

 (ii)
the Vessel shall not be employed in trading with any Prohibited Person or in any manner contrary to Sanctions;
 

 (iii)
notwithstanding any other provision of this paragraph (c), the Vessel shall not be permitted to call at any port in any Prohibited Country or any area or country where trading in such area or country would constitute or would be reasonably expected to constitute a breach of Sanctions;


(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;
 
(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 promptly 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 ten per cent. (10%) of the management fee payable under the relevant Management Agreement as at the date of this Charter;
 
(f)
they shall not:
 

 (i)
change or appoint a manager of the Vessel other than an Approved Manager and provided that any such Approved Manager has (prior to accepting its appointment) entered into a Manager’s Undertaking in such form as may be acceptable to the Owners; or


(ii)
terminate or otherwise assign or transfer any Management Agreement unless with the prior approval in writing by the Owners such approval not to be unreasonably withheld or delayed;

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(g)
with effect from and following Delivery, 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 conditions (unless special dispensation is obtained from class and insurers), and maintain such class during the Charter Period;
 
(i)
unless with the Owners’ prior written consent they shall not deactivate or lay up the Vessel;
 
(j)
save for the installation of scrubbers (which, once installed shall form part of the Vessel and shall not be removed at redelivery) they shall not make any structural change to the Vessel without the prior written consent of the Owners other than a structural change that is mandatorily required by any applicable law and regulation 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 reasonably require for the purposes of determining their approval 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 and shall not (unless requested by Owners) be removed at any redelivery;
 
(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 and if a Potential Termination Event or 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 Assignable Sub-Charter; 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:
 

(i)
all Earnings in connection with the Vessel are paid into the Operating Account;
 

 (ii)
at all times during the Charter Period the Operating Account has a minimum credit balance of at least US$550,000; and
 

 (iii)
the Owners are given any information and access relating to the Operating Account that they may require; and

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(n)
they shall, upon the request of the Owners and at the cost of the Charterers, on or before 31st July in each calendar year commencing from 1 January 2022, 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 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.
 
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 prior notice) without interference to the operation and trading 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 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 material damage to the Vessel.
 
CLAUSE 55 – PURCHASE OPTION

55.1
The Charterers shall have the option (the “Purchase Option”) to purchase the Vessel on any Purchase Option Date (as hereinafter defined) 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).

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55.2
The Purchase Option shall be exercisable only (unless otherwise agreed by the Owners):
 
(a)
upon the Charterers providing not less than forty five (45) days’ written notice (the “Purchase Option Notice”) to purchase the Vessel on a date specified therein (the “Purchase Option Date”) which Purchase Option Date shall, subject to Clause 60.1, fall on any anniversary of the Commencement Date on or after the second (2nd) anniversary of the Commencement Date or on the last day of the Charter Period (as the case may be) unless the Purchase Option Notice is served pursuant to a proposed Transfer by the Owners, in which case the Purchase Option Notice must be served by the Charterers within the time provided under Clause 62.4 (but regardless of whether this falls on or after the second (2nd) anniversary of the Commencement Date) and the Purchase Option Date specified in such Purchase Option Notice may fall on any Business Day being not less than thirty (30) days after the date of the relevant Purchase Option Notice; and
 
(b)
in the absence of the occurrence of a Termination Event that is continuing on or prior to either the date of the Purchase Option Notice or the Purchase Option Date.
 
55.3
The Purchase Option Notice shall each 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).
 
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;

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(b)
the Vessel shall be free from all registered mortgages, liens, encumbrances, claims and debts whatsoever incurred by the Owners (save for those 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 37.5 (if applicable), fees, expenses and any other moneys then owing by or accrued or due from the Charterers under this Charter; 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 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). 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 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 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), or the financing or re-financing in relation to the Vessel obtained from the Owners’ Financiers;
 
(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).

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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 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:

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(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) 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 any documented loss, liability or cost which the Owners (acting reasonably) 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.
 
CLAUSE 59 – INCREASED COSTS
 
59.1
This Clause 59 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 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.

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CLAUSE 61 – FATCA
 
61.1
Defined terms
 
For the purposes of this Clause 61, 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 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.

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(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(z) 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 without the prior written consent of the Owners.
 
62.2
The Charterers acknowledge that, at any time during the Charter Period:
 
(a)
the Owners (at their own cost) are entitled to enter into certain funding arrangements with the Owners’ Financiers in order to refinance the Financing Amount (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 after giving Charterers at least five (5) days prior written notice):
 

 (i)
execute a ship mortgage over the Vessel or any other Financial Instrument in favour of the Owners’ Financiers (provided that the Owners shall use reasonable endeavours to procure that the Owners’ Financiers enter into a quiet enjoyment letter on terms acceptable to the owners’ Financiers, Charterer and Owners);
 

 (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 directed from time to time during the currency of this Charter by the Owners’ Financiers in conformity with any Financial Instrument provided always that the same are no more onerous than set out under the Leasing Documents. 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. 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 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 (other than pursuant to Clause 62.2),
 
(any such event described in (a) and (b) above being a “Transfer”) to any affiliate or to another 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 shipping loans, securities or other financial assets without the consent of the Charterers, provided that (other than in respect of a Transfer to an affiliate) the Owners shall give the Charterers at least 30 days prior written notice of their intention to effect a Transfer (a “Transfer Notice”). Within five (5) Business Days of the Owners serving a Transfer Notice on the Charterers, the Charterers may elect to serve a Purchase Option Notice on the Owners in accordance with Clause 55.2, following which the Charterers shall purchase the Vessel in accordance with the applicable terms of this Charter and the Owners shall not proceed with the relevant proposed Transfer (unless the Charterers fail to complete the purchase on the relevant Purchase Option Date in which case the Owners shall be free to effect such Transfer without reference to the Charterers and shall not be obliged to serve Transfer Notices for any future proposed Transfers). If the Charterers do not serve a Purchase Option Notice within the aforementioned five (5) Business Day period, then the Owners may proceed with the Transfer.
 
62.5
Any Transfer shall not in any manner whatsoever 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 applicable new owner of the Vessel for its performance of all obligations under this Charter (as novated) after any such Transfer 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 Transfer.
 
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 any Transfer made pursuant to this Clause 62 (Assignment, Transfer and Re-financing).
 
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;

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(b)
it is required to be disclosed under the applicable laws of any Relevant Jurisdiction or by a governmental order, any stock exchange and/or securities and exchange commission laws and regulations including but not limited to the US SEC Rule or the Nasdaq Rules, 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);
 
(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, its shareholders, auditors, third party managers, external counsels or accountants;
 

 (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 the Other Owner (as trustee for the Owners) shall be applied in the following order of application against amounts payable under the Leasing Documents:

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(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.
 
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.

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“Account Bank” means Alpha Bank S.A. 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.
 
“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, 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 Bureau Veritas, Lloyds’ Register 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 Fidelity Marine Inc., Seanergy Management Corp. 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.

“Approved Manager” means the Approved Commercial Manager or the Approved Technical Manager.
 
“Assignable Sub-charter” means any charter or any other form of employment contract relating to the Vessel, whether or not already in existence with a duration exceeding or capable of exceeding 12 months (inclusive of options to renew).
 
“Approved Technical Manager” means V Ships Limited (a Cyprus entity), V Ships Greece, Seanergy Shipmanagement Corp. 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 (such approval from the Owners not to be required for the appointment of an entity controlled by the Guarantor).

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“Approved Valuer” means Simpson Spence Young, Clarksons Platou, Maersk Broker, Arrow Shipbrokers, Howe Robinson, Braemar ACM Shipbroking, Barry Rogliano Salles 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 (excluding the margin) 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 and Athens and/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.

“Cancelling Date” has the meaning given to such term under the MOA. “Change of Control” means:


 (a)
the Guarantor ceases to own and/or control directly or indirectly, all of the shares and voting rights in the Charterers; and/or
 

 (b)
the Guarantor ceases to be listed on Nasdaq.
 
“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.
 
“Compliance Certificate” means a certificate substantially in the form set out in Schedule 3.

“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.
 
“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.

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“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 US$8,700,000.
 
“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 prepared:


(i)
on a date no earlier than fifteen (15) days prior to the relevant date of valuation (except in the case of the Initial Market Value, in which cash such valuation reports shall be prepared on a date no earlier than fifteen (15) days prior to the Commencement Date);
 

 (ii)
by Approved Valuers one nominated by the Owners and the other nominated by the Charterers;
 
 
(iii)
without physical inspection of the Vessel or other 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 whatsoever; and


(b)
if there is a discrepancy of five per cent. (5%) or more between the market valuations shown on the two valuation reports obtained pursuant to paragraph (a) above (using the lower valuation figure as the denominator), the arithmetic mean of the valuations shown by three (3) valuation reports each 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).
 
“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;

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 (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 this Charter, assignment in respect of the Guarantees, 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.
 
“Financing Amount” shall have the same meaning as defined under the MOA. “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.

“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.
 
“GAAP” means generally accepted accounting principles in the United States of America or such other accounting principles as agreed by both Parties.
 
“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) for the time being.

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“Guarantee” means the guarantee executed by the Guarantor in favour of the Owners on or about the date hereof.

“Guarantor” means Seanergy Maritime Holdings Corp., a corporation incorporated and existing under the laws of the Republic of Marshall Islands.

“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.
 
“Initial Market Value” means, in relation to the Vessel, the Fair Market Value of the Vessel as at a date no earlier than fifteen (15) days prior to the Commencement Date.
 
“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:


 (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).

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“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.
 
“Leasing Documents” means this Charter, the Guarantees, the MOA, the Fee Letter and the Security Documents 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,
 
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$1,000,000 or the equivalent in any other currency.

“Management Agreement” means:
 

 (a)
the technical management agreement dated 22 April 2021 and made between V Ships Limited and the Charterers;
 

 (b)
the commercial management agreement dated 2 March 2015 and made between Fidelity Marine Inc. and Seanergy Management Corp. as amended by a first amendment dated 11 September 2015, a second amendment dated 24 February 2016, a third amendment dated 1 February 2018, a fourth amendment dated 28 June 2018 and as further amended from time to time), as acceded to by the Charterers pursuant to an accession letter dated 27 April 2021; and/or
 

 (c)
such other management agreement for the technical and/or commercial management of the Vessel as may be subsequently entered into in respect of the Vessel by the Charterers with an Approved Manager.
 
“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 three point fifty per cent. (3.50%) 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:

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 (a)
the business, operations, property, condition (financial or otherwise) of any Obligor or any member of the Group; 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). “Nomination Period” 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)
any Approved Manager 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).
 
“Operating Account” means an interest bearing account with account number 960- 01- 5006034452 opened in the name of the Charterers with the Account Bank.
 
“Original Financial Statements” means in relation to the Guarantor, its audited consolidated financial statements for the fiscal year ended 31 December 2020.
 
“Original Jurisdiction” means, in relation to an Obligor, the jurisdiction under whose laws they are incorporated as at the date of this Charter.
 
“Other Charter” means, in relation to the Other Vessel, the bareboat charterparty dated on or around the date of this Charter entered into between the Other Owner and the Other Charterer.

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“Other Charterer” means Patriot Shipping Co. “Other Owner” means Sea 242 Leasing Co. Limited. “Other Vessel” means m.v. Patriotship.
 
“Owners’ Costs” means, on any relevant date, (i) the Financing Amount 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” means the surveyor appointed by the Owners in accordance with Clause 7.
 
“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;
 

 (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.

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“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 those countries and territories subject to country-wide or territory-wide Sanctions and/or trade embargoes from time to time during the Charter Period, in particular but not limited to pursuant to the U.S.’s Office of Foreign Assets Control of the U.S. Department of Treasury (“OFAC”) or the United Nations.
 
“Prohibited Person” means any person, entity or any other party which is (i) located, domiciled, resident or incorporated in a Prohibited Country, and/or (ii) subject to any sanction administrated by the United Nations, the European Union, the United States and the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”), the United Kingdom, Her Majesty’s Treasury (“HMT”) and the Foreign and Commonwealth Office of the United Kingdom, the Special Administrative Region of Hong Kong, the People’s Republic of China and/or (iii) owned or controlled by or affiliated with persons, entities or any other parties as referred to in (i) and (ii).

“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 Fee” means:
 

 (a)
if the Purchase Option is exercised on the second (2nd) anniversary of the Commencement Date (or prior to it but only in accordance with Clause 62.4), two point five per cent. (2.50%) of the Owners’ Costs on that date;
 

 (b)
if the Purchase Option is exercised on the third (3rd) anniversary of the Commencement Date, one point five per cent. (1.50%) of the Owners’ Costs on that date; and
 

 (c)
if the Purchase Option is exercised on the fourth (4th) or fifth (5th) anniversary of the Commencement Date, zero per cent. (0%) of the Owners’ Costs on that date.
 
“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 prior to the last day of the Charter Period, the aggregate of:
 

 (i)
the Owners’ Costs prevailing as at the relevant Purchase Option Date;
 

 (ii)
any Variable Charterhire accrued but unpaid as at the date of payment of the Purchase Option Price;


(iii)
any Purchase Option Fee;
 

 (iv)
any Breakfunding Costs;

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 (v)
any reasonable and 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 the last day of the Charter Period, 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 reasonable and 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.
 
“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 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:

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

 (i)
the administrator of that Screen Rate; or
 

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

 (b)
in the opinion of the Owners, generally accepted in the international or any relevant domestic syndicated loan markets as the appropriate successor to that Screen Rate; or
 

 (c)
in the opinion of the Owners, an appropriate successor to a Screen 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, 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 regardless of whether the same is or is not applicable or binding on any Obligor; or


(b)
otherwise imposed by any law or regulation which are applicable to and/or binding on any Obligor (which shall include without limitation, any extra-territorial sanctions imposed by law or regulation of the United States of America).
 
“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.
 
“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;

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(b)
(i)
 

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

 (B)
information is published in any order, decree, notice, petition or filing, however described, of or filed with a court, tribunal, exchange, regulatory authority or similar administrative, regulatory or judicial body which reasonably confirms that the administrator of that Screen Rate is insolvent,
 
provided that, in each case, at that time, there is no successor administrator to continue to provide that Screen Rate;
 

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

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


(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.

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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.
 
“Shares Pledge” means a first priority pledge over the shares of the Charterers executed or to be executed by the Guarantor in favour of the Owners.
 
“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.
 
“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 two per cent. (2.00%) of the Owners’ Costs as at the relevant date. “Termination Notice” has the meaning given to it under Clause 47.2.
 
“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 (other than in connection with a payment of the Termination Sum following a Total Loss);
 

 (d)
any Breakfunding 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 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

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 (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 sixty (60) 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 sixty (60) 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 one hundred and fifty (150) 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.

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“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.
 
“Transfer” has the meaning given to it under Clause 62.4. “Transfer Notice” has the meaning given to it under Clause 62.4.

“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 bulker vessel named m.v. Hellasship 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;

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“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”
 
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

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(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
A Potential Termination Event is “continuing” if it has not been remedied or waived and a Termination Event is “continuing” if it has not been waived.
 
66.6
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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65
EXECUTION PAGE

OWNERS

SIGNED BY
 )

for and on behalf of
 )

SEA 241 LEASING CO. LIMITED
 )
/s/ Zhou Ling
as attorney-in-fact
 )

in the presence of
 )
  
     
Witness’ signature: /s/ Xiao Jue
 )

Witness’ name: Xiao Jue
 )

Witness’ address: 22F, China Merchants Bank Building, NO. 1088
Lujiazui Ring Road, Shanghai, China
 )


CHARTERERS

SIGNED BY
 )

for and on behalf of
 )

HELLAS OCEAN NAVIGATION CO.
 )
/s/ Stavros Gyftakis
as attorney-in-fact
 )
Stavros Gyftakis
in the presence of
 )

     
Witness’ signature:
 )
/s/ Maria Moschopoulou
Witness’ name:
 )
Maria Moschopoulou
Witness’ address:
 )
154 Vouliagmenis Avenue
16674 Glyfada, Athens Greece

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SCHEDULE 1

ACCEPTANCE CERTIFICATE

HELLAS OCEAN NAVIGATION CO. (the “Charterers”) hereby acknowledge that at [●] hours on [●], there was delivered to, and accepted by, the Charterers the vessel known as m.v. “Hellasship” (the “Vessel”), registered in the name of SEA 241 LEASING CO. LIMITED (the “Owners”) under the flag of Liberia with IMO number 9574236 under a charter dated [●] 2021 (the “Charter”) and made between the Owners and the Charterers and that Delivery (as defined in the Charter) thereupon took place and that, accordingly, the Vessel is and will be subject to all the terms and conditions contained in the Charter.
 
The Charterers warrant that the representations and warranties made by them in Clause 48 (Representations and Warranties) of the Charter remain correct and that no Termination Event or Potential Termination Event (each as defined in the Charter) has occurred at the date of this Acceptance Certificate.
Name:
Title:
for and on behalf of
  
HELLAS OCEAN NAVIGATION CO.
  
Dated:
  

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SCHEDULE 2

CONDITIONS PRECEDENT

PART A

The following are the documents referred to in Clause 34.2(d)(i):
 
1
Corporate Authority
 
1.1
A copy of the constitutional documents of the Charterers and the Guarantor.
 
1.2
If required, a copy of the resolutions of the board of directors (or equivalent) of the Charterers and the Guarantor:
 
(a)
approving the terms of, and the transactions contemplated by, the Leasing Documents to which it is a party and resolving that it execute the Leasing Documents to which it is a party;
 
(b)
authorizing a specified person or persons to execute the Leasing Documents to which it is a party on its behalf; and

(c)
authorising a specified person or persons, on its behalf, to sign and/or dispatch all documents and notices to be signed and/or dispatched by it under, or in connection with, the Leasing Documents to which it is a party.
 
1.3
If required, a copy of the power of attorney of the Charterers and the Guarantor authorising a specified person or persons to execute the Leasing Documents to which it is a party.
 
1.4
If required, a specimen of the signature of each person authorized by the resolution referred to in paragraph 1.2 above.
 
1.5
If required, a copy of the resolutions signed by all the holder(s) of the issued shares of any Obligors, approving the terms of, and the transactions contemplated by such Leasing Document.
 
1.6
A copy of a certificate of an officer or authorized signatory of the Charterers and the Guarantor certifying that each copy document relating to it specified in this Schedule 2 Part A is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement.
 
2
Leasing Documents
 
2.1
A duly executed original of each Leasing Document (except the Security Documents) and of each document to be delivered under each of them.
 
2.2
Agreed forms of the Security Documents and of each document to be delivered under each of them.
 
2.3
Evidence that the Operating Account has been opened and maintained with the Account Bank and there is a credit balance of at least US$550,000.
 
3
Initial Market Value

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Valuations of the Vessel, addressed to the Owners and dated not earlier than fifteen (15) days before the Commencement Date indicating the Initial Market Value.
 
4
Legal opinion
 
4.1
An agreed form legal opinion by English legal advisers to the Owners on such matters on the laws of England in relation to the applicable documents listed in paragraphs 2.1 and 2.2 of Part A of this Schedule, in form and substance acceptable to the Owners.
 
4.2
Agreed forms of legal opinions by lawyers appointed by the Owners on such matters relating to the applicable documents listed in paragraphs 2.1 and 2.2 of Part A of this Schedule, concerning the laws of the Republic of Liberia, the Republic of the Marshall Islands, Greece and such other relevant jurisdictions as the Owners may reasonably require, in form and substance acceptable to the Owners.
 
5
Vessel Insurances
 
5.1
Evidence that the Vessel is or will be on Delivery insured in the manner required under Clause 39.1.
 
5.2
Agreed form of letters of undertaking relating to insurances as set out in Clause 39.1 from the relevant insurer, insurance broker, protection and indemnity association or war risks association (as the case may be).
 
5.3
An insurance report by an insurance advisor appointed by the Owners (but at the cost of the Charterers) in an agreed form acceptable to the Owners.
 
6
Others
 
6.1
Evidence that the Arrangement Fee and all other fees, costs and expenses then due from the Charterers to the Owners under the Leasing Documents have been paid and received by the Owners.

6.2
A copy of the Management Agreement and any amendments thereto.

6.3
A copy of any Assignable Sub-Charter and any amendments thereto.

6.4
Copies of the Document of Compliance of the Approved Technical Manager.
 
6.5
Copies of the Vessel’s Safety Management Certificate (together with any other details of the applicable Safety Management System which the Owners require) and of any other documents required under the ISM Code and the ISPS Code (including without limitation an ISSC and IAPPC).

6.6
A copy of the Vessel’s class certificate evidencing that the Vessel maintains its classification with the Approved Classification Society and a copy of the confirmation of class issued within three (3) Business Days prior to the Commencement Date confirming that the Vessel is free of all recommendations and conditions.
 
6.7
Copies of the Original Financial Statements.

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6.8
Such evidence relating to the Obligors as the Owners may reasonably require for their (or their financiers) to be able to satisfy each of their “know your customer” or similar identification procedures in relation to the Leasing Documents.
 
6.9
A copy of any other consents, approvals, authorization or other document, opinion or assurance which the Owners consider to be reasonably desirable in connection with the entry into and performance of the transactions contemplated by any of the Leasing Documents or for the validity and enforceability of such documents.
 
6.10
Such other documents as the Owners may reasonably require by giving notice to the Charterers.

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PART B
 

The following are the documents referred to in Clause 34.2(d)(ii):

1
Security Documents
 
1.1
A duly executed original of each of the Security Documents (and of each document to be delivered under each of them).
 
2
Vessel Documents
 
2.1
Documentary evidence that the Vessel is or will be:

(a)
permanently or provisionally registered in the name of the Owners under the Flag State;
 
(b)
in the absolute and unencumbered ownership of the Owners;
 
(c)
unconditionally delivered by the Charterers to the Owners pursuant to the terms of the MOA, where such documents shall include without limitation:
 

 (i)
a copy of the notarized and/or legalised (if required by the Flag State) copies of the bill of sale duly executed by the Charterers and stating that the Vessel is free from all mortgages, encumbrances and liens (whether maritime or otherwise) or any other debts whatsoever (and where executed by an attorney of the Charterers, together with such a copy of the notarized and/or legalised (if required by the Flag State) Charterers’ power of attorney); and


(ii)
a copy of the protocol of delivery and acceptance duly executed by the Charterers and the Owners.
 
2.2
Any additional documents as may be required by the competent authorities of the Flag State for the purpose of registering the Vessel.
 
3
Others
 
3.1
Evidence that any fees, costs and expenses then due from the Charterers to the Owners under the Leasing Documents have been paid and received by, or will be paid and received by, the Owners, on Delivery of the Vessel.

3.2
Such other documents as the Owners may reasonably require by giving notice to the Charterers.

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PART C
 
The following are the documents referred to in Clause 34.7:
 
1
Security Interests

Not later than five (5) Business Days after the Commencement Date, documentary evidence that the Security Interests intended to be created by each of the Security Documents have been duly perfected under applicable law (as applicable).
 
2
Legal opinions
 
Not later than three (3) Business Days after the Commencement Date, issued signed copies of the legal opinions referred to in paragraph 4 of Part A of Schedule 2 of this Charter.
 
3
Insurances
 
3.1
Not later than ten (10) Business Days after the Commencement Date, receipt of copies of the executed letters of undertaking and certificates of entry (as the case may be) relating to insurances as set out in Clause 39.1 acknowledged by the relevant insurer, insurance broker, protection and indemnity association or war risks association (as the case may be), each in the agreed form under paragraph 5 of Part A of Schedule 2 of this Charter.
 
3.2
Not later than fifteen (15) Business Days after the Commencement Date, the signed insurance report in the form agreed under paragraph 5 of Part A of Schedule 2 of this Charter.
 
4
Others
 
4.1
No later than six (6) months after the Commencement Date, evidence that (if applicable) the Vessel has been permanently registered with the Flag State.

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72
SCHEDULE 3

FORM OF COMPLIANCE CERTIFICATE

To:
SEA 241 LEASING CO. LIMITED (the “Owner”)

From:
SEANERGY MARITIME HOLDINGS CORP. (the “Guarantor”)
 
Date:
[●]

RE:
THE BAREBOAT CHARTER (THE “CHARTER”) DATED [●]
 
1.
We refer to the Charter. This is a Compliance Certificate. Unless otherwise specified, terms defined in the Charter shall have the same meaning in this compliance certificate.

2.
We confirm that as calculated by reference to the semi-annual unaudited consolidated financial statements for the financial year ended [●],


(a)
Cash and Cash Equivalents divided by the number of Fleet Vessels is not lower than $500,000; and


(b)
the Leverage Ratio is not more than 85 per cent.

3.
[We confirm that, as at the date hereof, no Termination Event has occurred and is continuing which has not been waived or remedied at the date hereof]1

For and on behalf of
SEANERGY MARITIME HOLDINGS CORP.

 
 
Name(s):
  
Chief Financial Officer
  

1 If this statement cannot be made, this compliance certificate should identify any Termination Event (as defined in the Charter) that is continuing and the steps, if any, being taken to remedy it.

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Exhibit 4.56
 
Dated 22 June 2021
 
SEANERGY MARITIME HOLDINGS CORP.
as Guarantor
 
and
 
SEA 241 LEASING CO. LIMITED
as Owner
 
GUARANTEE
 
relating to
a Bareboat Charter of
one (1) bulk carrier named “Hellasship” dated 22 June 2021


 
Index
 
Clause   Page
     
1
Interpretation
1
2
Guarantee
2
3
Liability as Principal and Independent Debtor
3
4
Expenses
3
5
Adjustment of Transactions
3
6
Payments
4
7
Interest
4
8
Subordination
5
9
Enforcement
5
10
Judgments and Currency Indemnity
6
11
Supplemental
6
12
Assignment or Transfer
8
13
Notices
8
14
Invalidity of Leasing Documents
9
15
Incorporation of Bareboat Charter Provisions
9
16
Governing Law and Enforcement
9
     
Execution
     
Execution Page
11
     

THIS GUARANTEE is made on 22 June 2021.
 
BETWEEN
 
(1)
SEANERGY MARITIME HOLDINGS CORP., a corporation incorporated and existing under the laws of the Republic of Marshall Islands with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the “Guarantor”); and
 
(2)
SEA 241 LEASING CO. LIMITED, a company incorporated under the laws of Hong Kong with registration number 3030018 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 on or about the date of this agreement (the “Bareboat Charter”) made between (i) the Owner as owner and (ii) HELLAS OCEAN NAVIGATION CO. as bareboat charterer (the “Bareboat Charterer”), the Owner has agreed to bareboat charter one (1) bulk carrier named m.v. “Hellasship” (the “Vessel”) to the Bareboat Charterer pursuant to the terms and conditions contained therein.
 
(B)
The Guarantor directly holds one hundred (100) per cent. of the issued and outstanding shares in the Bareboat Charterer.
 
(C)
The execution and delivery to the Owner of this Guarantee is one of the conditions to the chartering of the Vessel under the Bareboat Charter.
 
(D)
This Deed is the Guarantee referred to in the Bareboat Charter.
 
OPERATIVE PROVISIONS
 
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.
 
“Party” means a party to this Guarantee.
 
“Security Period” means the period commencing on the date hereof and ending on the date on which the Owner is satisfied that all present and future liabilities of the Bareboat Charterer under or in connection with the Leasing Documents have been irrevocably paid in full.
 
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1.3
References 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 66.6 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 each Leasing Document to which it is a party;
 
(b)
guarantees the punctual performance by the Bareboat Charterer of all its obligations under or in connection with any Leasing Document to which it is a party;
 
(c)
undertakes to pay to the Owner, within three (3) Business Days of 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 (or any of them) (taking into account any grace period for such payment as may be applicable under the terms of the Leasing Documents); and
 
(d)
undertakes to fully indemnify, as an independent and primary obligation, the Owner within three (3) Business Days of 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 (Guarantee and indemnity).
 
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).
 
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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 (Principal and independent debtor), 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 within three (3) Business Days of its demand the amount of all expenses (including, without limitation, out of 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 (Costs of preservation of rights, enforcement etc.) is without prejudice to the Guarantor’s liabilities in respect of the Charterers’ obligations under any Leasing Document to which it is a party.
 
5
ADJUSTMENT OF TRANSACTIONS
 
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 any other Obligor on the ground that any Leasing Document to which that Obligor is a party, or a payment by that Obligor, was invalid or unenforceable or on any similar ground.
 
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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 under any law of its Original Jurisdiction except a tax deduction or withholding which the Guarantor is required by such law to make.
 
6.2
Grossing-up for taxes
 
If the Guarantor is required by law to make a tax deduction then the Guarantor shall increase the payment due from them to the Owners 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.
 
In this clause, “tax deduction” means any deduction or withholding for or on account of any present or future tax, other than a FATCA Deduction.
 
6.3
Indemnity and evidence of payment of taxes
 
(a)
The Guarantor shall fully indemnify the Owner within three (3) Business Days of the Owner’s demand in respect of all documented claims, expenses, liabilities and losses incurred by the Owner by reason of any failure of the Guarantor to make any tax deduction or by reason of any increased payment not being made on the due date for such payment in accordance with Clause 6.2 (Grossing up for taxes).
 
(b)
Within thirty (30) days after making tax deduction, the Guarantor shall deliver to the Owner any receipts, certificates or other documentary evidence satisfactory to the Owner that the tax had been paid to the appropriate taxation authority.
 
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 from the Guarantor 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 at the rate described in clause 37.5 of the Bareboat Charter and otherwise in accordance with the terms thereof. For the avoidance of doubt, it is confirmed that this Guarantee covers all interest payable under the relevant Leasing Document.
 
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8
SUBORDINATION
 
8.1
Until the end of the Security Period, 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 (or any of them), and, in particular, the Guarantor shall not:
 
(a)
claim, or in a bankruptcy of the Bareboat Charterer or any other Obligor prove for, any amount payable to the Guarantor by the Bareboat Charterer or any other Obligor, whether in respect of this Guarantee or any other transaction;
 
(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 other 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 any other Obligor
 
The Owner will not need to commence any proceedings under, or enforce any Security Interest created by, the Bareboat Charter or any other Leasing Document before claiming or commencing proceedings under this Guarantee.
 
9.2
Conclusive evidence of certain matters
 
As against the Guarantor:
 
(a)
any final award of an arbitration tribunal in London in connection with the Bareboat Charter or any other Leasing Document; and
 
(b)
any statement or admission of the other Obligor in connection with the Bareboat Charter or any other Leasing Document,
 
shall be binding and conclusive as to all matters of fact and law to which it relates.
 
9.3
Suspense account
 
The Owner may, for the purpose of claiming or proving in an insolvency of any Obligor, place any sum received or recovered under or by virtue of this Guarantee on a separate interest bearing suspense or other nominal account without applying it in satisfaction of the Bareboat Charterer’s or Guarantor’s obligations under any Leasing Document.
 
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10
JUDGMENTS AND CURRENCY INDEMNITY
 
10.1
Judgments relating to Bareboat Charter and other Leasing Documents
 
This Guarantee shall cover any amount payable by any other Obligor under or in connection with any judgment or award relating to the Bareboat Charter and any other Leasing Document.
 
10.2
Currency indemnity
 
If any sum due from the Guarantor to the Owner under this Guarantee or under any order, judgment or award 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)
at the Owner’s request, in the event that there are any restrictions whatsoever preventing the remittance of payments in Dollars to the Owner or otherwise adversely affecting the ability of the Owners to receive payments in or deal in Dollars (including without limitation, any suspension of the SWIFT system in any jurisdiction where the Owner would have received payment or would customarily receive payments);
 
(b)
making or lodging any claim or proof against the Guarantor, whether in its liquidation, any arrangement involving it or otherwise;
 
(c)
obtaining an order, judgment or award from any court or other tribunal; or
 
(d)
enforcing any such order, judgment or award,
 
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 10.2 (Currency indemnity), the “available rate of exchange” means the rate at which the Owner is able at the opening of business (Shanghai time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.
 
11
SUPPLEMENTAL
 
11.1
Continuing guarantee
 
This Guarantee shall remain in force as a continuing security interest at all times during the Security Period.
 
11.2
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.
 
11.3
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.
 
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11.4
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.
 
11.5
Guarantee not affected by other Security Interests
 
This Guarantee shall not impair, nor be impaired by, any other guarantee or any right of set-off or netting or to combine accounts which the Owner may now or later hold in connection with the Bareboat Charter or any other Leasing Document.
 
11.6
Guarantor bound by Bareboat Charter and incorporation of its terms
 
The Guarantor is fully familiar with, and agrees to all the provisions of, the Bareboat Charter and the other Leasing Documents to which it is not a party. The Guarantor agrees with the Owner:
 
(a)
to be bound by all provisions of the Bareboat Charter which are applicable to the Obligors in the same way as if those provisions had been set out (with any necessary modifications) in this Guarantee; and
 
(b)
that any provision of the Bareboat Charter which, by its terms, applies or relates to the Leasing Documents applies to this Guarantee.
 
11.7
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.
 
11.8
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.
 
11.9
Sovereign immunity
 
The Guarantor waives any rights of sovereign immunity which it or any of its assets may enjoy in any jurisdiction and subjects itself to civil and commercial law with respect to their obligations under this Guarantee.
 
11.10
Reinstatement
 
If any discharge, release or arrangement (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) is made by the Owner 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 Guarantee will continue or be reinstated as if the discharge, release or arrangement had not occurred.
 
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11.11
Release
 
Subject to Clause 11.10 (Reinstatement), at the end of the Security Period, the Owner shall, at the request and cost of the Guarantor, irrevocably and unconditionally release the guarantee created under this Guarantee.
 
12
ASSIGNMENT OR TRANSFER
 
12.1
Assignment or transfer 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.
 
12.2
Assignment by Guarantor
 
The Guarantor may not assign any of its rights or transfer any of its rights or obligations under this Guarantee.
 
13
NOTICES
 
13.1
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:
 
 
to the Owner:
to the same address and in the same manner as notices to the Owner under the Bareboat Charter.
     
 
to the Guarantor:
c/o Seanergy Management Corp.
154 Vouliagmenis Avenue,
16674 Glyfada, Athens, Greece
Attention:          Mr. Stavros Gyftakis
Email:                legal@seanergy.gr and finance@seanergy.gr
Tel:                    +30 210 8913520

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.
 
13.2
Service of notices
 
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.
 
CMBFL Seanergy | Guarantee
m.v. “Hellasship”
SINGAPORE/90256718v1
8
13.3
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 Event notice referred to under clause 47.2 of the Bareboat Charter,
 
and a demand under this Guarantee may refer to all amounts payable under or in connection with a Leasing Document without specifying a particular sum or aggregate sum.
 
14
INVALIDITY OF LEASING DOCUMENTS
 
14.1
Invalidity of Bareboat Charter or other Leasing Documents
 
In the event of:
 
(a)
the Bareboat Charter or any other 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 of the Obligor party thereto, the introduction of any law or any other matter resulting in that Obligor being discharged from liability under the Bareboat Charter or other Leasing Document, or the Bareboat Charter or other Leasing Document 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 the Bareboat Charter or other Leasing Document if the Bareboat Charter or other Leasing Document had been and remained entirely valid, legal and enforceable, or that Obligor had not suffered bankruptcy, or any combination of such events or circumstances, as the case may be, and the Bareboat Charterer had remained fully liable under it for liabilities whether invalidly incurred or validly incurred but subsequently retrospectively invalidated; and references in this Guarantee to amounts payable by that Obligor under or in connection with the Bareboat Charter or other Leasing Document shall include references to any amount which would have so been or become payable as aforesaid.
 
15
INCORPORATION OF BAREBOAT CHARTER PROVISIONS
 
15.1
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); and
 
clause 61 (FATCA).
 
15.2
Clause 15.1 (Incorporation of Bareboat Charter Provisions) 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.
 
16
GOVERNING LAW AND ENFORCEMENT
 
16.1
This Guarantee and any non-contractual obligations arising under or in connection with it are governed by English law.
 
CMBFL Seanergy | Guarantee
m.v. “Hellasship”
SINGAPORE/90256718v1
9
16.2
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 and finally resolved by 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 16 (Governing Law and Enforcement). 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.
 
16.3
The seat of the arbitration shall be London, England, even where any hearing takes place outside England.
 
16.4
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 the date that the notice is delivered to the other party 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 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.
 
16.5
Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator.
 
16.6
Where the reference is to three arbitrators the procedure for making appointments shall be in accordance with the procedure for full arbitration stated above.
 
16.7
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.
 
16.8
The language of the arbitration shall be English.
 
This Guarantee has been executed as a Deed and delivered on the date stated at the beginning of this Guarantee.
 
CMBFL Seanergy | Guarantee
m.v. “Hellasship”
SINGAPORE/90256718v1
10
EXECUTION PAGE
 
GUARANTOR
 
EXECUTED and DELIVERED as a DEED
)
by SEANERGY MARITIME HOLDINGS CORP.
)
acting by Stavros Gyftakis
)/s/ Stavros Gyftakis
being an attorney-in-fact
)
in the presence of:
)

Witness’ signature: /s/ Maria Moschopoulou
Witness’ name: Maria Moschopoulou
Witness’ address: 154 Vouliagmenis Avenue

16674 Glyfada, Athens Greece

OWNER
  
SIGNED, SEALED and DELIVERED as a DEED
)
by Sea 241 Leasing Co. Limited
)
by Zhou Ling
) /s/ Zhou Ling
    
its attorney-in-fact under power of attorney
)
dated 17 June 2021
)
in the presence of:
)

Witness’ signature: /s/ Xiao Jue
Witness’ name: Xiao Jue
Witness’ address: 22F, China Merchants Bank Building, NO. 1088
 
Lujiazui Ring Road, Shanghai, China

CMBFL Seanergy | Guarantee
m.v. “Hellasship”
SINGAPORE/90256718v1


11
Exhibit 4.57

 
 

1.    Shipbroker
N/A
2.    Place and date
22 June 2021
3.    Owners/Place of business (Cl. 1)
 
Sea 242 Leasing Co. Limited, a company incorporated under the laws of Hong Kong with registration number 3016198 whose registered office is at 27/F, Three Exchange Square, 8 Connaught Place Central, Hong Kong
4.    Bareboat Charterers/Place of business (Cl. 1)
 
Patriot Shipping Co., a corporation incorporated under the laws of the Republic of Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro,
Marshall Islands MH96960
5.    Vessel’s name, call sign and flag (Cl. 1 and 3)
Patriotship
Call Sign: V7A4666
Flag:Marshall Islands
6.    Type of Vessel
Bulk carrier
7.    GT/NT
93079/ 60504
8.    When/Where built
2010
Imabari Shipbuilding Co., Ltd.
9.    Total DWT (abt.) in metric tons on summer freeboard
181709
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
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)
Three (3) 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)
No
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.

 
Signature (Owners)
  
Signature (Charterers)
       
  /s/ Zhou Ling    /s/ Stavros Gyftakis
  Zhou Ling   Stavros Gyftakis
  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
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 in Clause 66. means the mortgage, deed of
9      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 51the 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 59of 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 businesswhich
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 scientificpurposes
112   provided the Owners’ prior approval has beenobtained
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
120   bear all expenses of the On-hire Survey including loss
 
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

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 bythe
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 ofall
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 atthe
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 (excludingspare
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 Periodare
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, thenthe
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 orcontiguous
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 CharterPeriod
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, 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 beforethe
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 itemsof 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. 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 inconnection
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 theessence.
 
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 postedas
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 asagreed
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., shallapply.
 
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 unreasonablywithheld.
 
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 theFinancial 
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 warrantthat
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
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)
 

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

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 inwriting
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), the appointed managers, 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 Ownersor
395  the Charterers as the case may be shall immediately
396  furnish the other partyOwners with particulars ofany 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 reasonably 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 totalloss.
 
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 orsubrogation
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 andthe
440   Charterers according to their respectiveinterests.
 
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 risksagainst 
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, expensesand
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
464   presentation of accounts.
 
465   (e) The Charterers to remain responsible for and to
466   effect repairs and settlement of costs and expenses
 
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

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  shallimmediately
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 wherethe
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, whoshall
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 expecteddate,
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 anypreceding
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 Clauses 38.3, 39.14, 39.15, 39.16, 39.17, 41.4, 44, 53.1(j), 57 and 58)
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 duringthe
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.
 
587   18. Lien
588   The Owners to shall have a lien upon all cargoes, sub-hire
589   and sub-freights belonging or due to the Charterers or
 
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

590  any sub-charterers and any Bill of Lading freight forall
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 priorwritten
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 incorporatingany 
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 andtheir
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 underthis
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 ofthe
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 bythe
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
673   Acquisition” 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 obtained (such adequacy to be deteremined by the Owners (acting reasonably)), 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. 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 flagsor
709   ownership, or against certain cargoes or crews or
 
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

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 isdue.
 
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, andwith
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 thereofat
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 recognisedat
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 andpunctual.
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 Charterersshall
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  becomean
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
 
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

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 terminatethis  
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 Charterin
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 orlocal
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 bythe
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 ofwages,
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 effectto
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 arecommenced.
 
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 orin
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
946   they agree to mediation, in which case the parties
947   shall thereafter agree a mediator within afurther
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 forthat
952   purpose. The mediation shall be conducted in such
953   place and in accordance with such procedureand
 
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

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 thearbitration.
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) arealternatives;
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 personalservice.
 
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
3      the Building Contract (hereafter called “the Building
4      Contract”) as annexed to this Charter, made between the
5      Builders and the Owners and in accordance with the
6      specifications and plans annexed thereto, such Building 
7      Contract, specifications and plans having been counter-
8      signed as approved by the Charterers.
 
9      (b) No change shall be made in the Building Contract or
10    in the specifications or plans of the Vessel as approved by
11    the Charterers as aforesaid, without the Charterers’
12    consent.
 
13    (c) The Charterers shall have the right to send their
14    representative to the Builders’ Yard to inspect the Vessel
15    during the course of her construction to satisfy themselves
16    that construction is in accordance with suchapproved
17    specifications and plans as referred to undersub-clause
18    (a) of this Clause.
 
19    (d) The Vessel shall be built in accordance with the
20    Building Contract and shall be of the description set out
21    therein. Subject to the provisions of sub-clause 2(c)(ii)
22    hereunder, the Charterers shall be bound to accept the
23    Vessel from the Owners, completed and constructed in
24    accordance with the Building Contract, on the date of
25    delivery by the Builders. The Charterers undertake that
26   having accepted the Vessel they will not thereafter raise 27 any claims against the Owners in respect of the Vessel’s 28 performance or specification or defects, if any.
29    Nevertheless, in respect of any repairs, replacements or
30    defects which appear within the first 12 months from
31    delivery by the Builders, the Owners shall endeavour to
32   compel the Builders to repair, replace or remedy any defects 33 or to recover from the Builders any expenditure incurred in  34 carrying out such repairs, replacements or remedies.
35    However, the Owners’ liability to the Charterers shall be
36    limited to the extent the Owners have a valid claim against
37    the Builders under the guarantee clause of theBuilding
38    Contract (a copy whereof has been supplied to the
39    Charterers). The Charterers shall be bound to accept such
40   sums as the Owners are reasonably able to recover under 41  this Clause and shall make no further claim on the Owners 42  for the difference between the amount(s) so recovered and 43 the actual expenditure on repairs, replacementor
44    remedying defects or for any loss of time incurred.
45    Any liquidated damages for physical defects or deficiencies
46    shall accrue to the account of the party stated in Box 41(a)
47    or if not filled in shall be shared equally between the parties.
48    The costs of pursuing a claim or claims against the Builders
49    under this Clause (including any liability tothe Builders)
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.
 
52    2. Time and Place of Delivery
53    (a) Subject to the Vessel having completedher
54    acceptance trials including trials of cargo equipment in 
55    accordance with the Building Contract and specifications
56    to the satisfaction of the Charterers, the Owners shall give
57    and the Charterers shall take delivery of the Vessel afloat
58    when ready for delivery and properly documented at the
59    Builders’ Yard or some other safe andreadily accessible
60    dock, wharf or place as may be agreed between the parties
61    hereto and the Builders. Under the Building Contract the
62     Builders have estimated that the Vessel will be ready for
63     delivery to the Owners as therein provided but the delivery
64     date for the purpose of this Charter shall be the date when
65     the Vessel is in fact ready for delivery by the Builders after
66     completion of trials whether that be before or after as
67     indicated in the Building Contract. The Charterers shall not
68     be entitled to refuse acceptance of delivery of the Vessel
69     and upon and after such acceptance, subject to Clause
70     1(d), the Charterers shall not be entitled to make any claim
71     against the Owners in respect of any conditions,
72     representations or warranties, whether  express  or  implied, 73 as to the seaworthiness of the Vessel or in respect of delay 74 in delivery.
 
75     (b) If for any reason other than a default by the Owners 
76     under the Building Contract, the Builders become entitled
77     under that Contract not to deliver the Vessel to the Owners,
78     the Owners shall upon giving to the Charterers written
79 notice of Builders becoming so entitled, be excused from 80   giving delivery of the Vessel to the Charterers and upon 81 receipt of such notice by the Charterers this Charter shall 82 cease to have effect.
 
83     (c) If for any reason the Owners become entitled under
84     the Building Contract to reject the Vessel the Owners shall,
85     before exercising such right of rejection, consultthe
86     Charterers and thereupon
 
87     (i) if the Charterers do not wish to take delivery of the Vessel
88     they shall inform the Owners within seven (7) running days
89     by notice in writing and upon receipt by the Owners of such
90     notice this Charter shall cease to have effect; or
 
91     (ii) if the Charterers wish to take delivery of the Vessel
92     they may by notice in writing within seven (7) running days
93     require the Owners to negotiate with the Builders as to the
94     terms on which delivery should be taken and/or refrain from
95     exercising their right to rejection and upon receipt of such
96     notice the Owners shall commence such negotiations and/
97     or take delivery of the Vessel from the Builders and deliver
98     her to the Charterers;
 
99     (iii) in no circumstances shall the Charterers be entitled to
100   reject the Vessel unless the Owners are able to reject the
101   Vessel from the Builders;
 
102   (iv) if this Charter terminates under sub-clause (b) or (c) of
103   this Clause, the Owners shall thereafter not be liable to the
104   Charterers for any claim under or arising out of this Charter
105   or its termination.
 
106   (d) Any liquidated damages for delay in delivery under the
107   Building Contract and any costs incurred in pursuing a claim
108   therefor shall accrue to the account of the party stated in
109   Box 41(c) or if not filled in shall be shared equally between
110   the parties.
 
111   3. Guarantee Works
112   If not otherwise agreed, the Owners authorise the
113   Charterers to arrange for the guarantee works to be
114   performed in accordance with the building contract terms,
115   and hire to continue during the period of guarantee works.
116   The Charterers have to advise the Owners about the
117   performance to the extent the Owners may request.
 
118   4. Name of Vessel
119   The 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 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
122  the house flag as required by the Charterers.
 
123  5. Survey on Redelivery
124  The Owners and the Charterers shall appoint surveyors
125  for the purpose of determining and agreeing in writing the
126  condition of the Vessel at the time of re-delivery.
127  Without prejudice to Clause 15 (Part II), the Charterers
128   shall bear all survey expenses and all other costs, if any,
129   including the cost of docking and undocking, if required,
130   as well as all repair costs incurred. The Charterers shall
131   also bear all loss of time spent in connection with any
132   docking and undocking as well as repairs, which shall be
133   paid 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 V
HIRE/PURCHASE AGREEMENT
(Optional, only to apply if expressly agreed and stated in Box 42)

1      On expiration of this Charter and provided the Charterers
2      have fulfilled their obligations according to Part I and II
3      as well as Part III, if applicable, it is agreed, that on
4      payment of the final payment of hire as per Clause 11
5      the Charterers have purchased the Vessel with
6      everything belonging to her and the Vessel is fully paid
7      for.
8      In the following paragraphs the Owners are referred to
9      as the Sellers and the Charterers as the Buyers.
10    The Vessel shall be delivered by the Sellers and taken
11    over by the Buyers on expiration of the Charter.
12    The Sellers guarantee that the  Vessel,  at  the  time  of
13    delivery, is free from all  encumbrances  and  maritime
14    liens or any debts whatsoever other than those arising
15    from anything  done or not done  by the Buyers or any
16    existing mortgage agreed not to be paid off by the time
17    of delivery. Should any claims, which have been incurred
18    prior to the time of delivery be made against the Vessel,
19    the Sellers hereby  undertake to indemnify the Buyers 
20    against all consequences of such claims to the extent it
21    can be proved that the Sellers are responsible for such
22    claims. Any taxes, notarial, consular and other charges
23    and expenses connected with the purchase and
24    registration under Buyers’ flag, shall be for Buyers’
25    account. Any taxes, consular and other charges and
26    expenses connected with closing of the Sellers’ register,
27     shall be for Sellers’ account.
28     In exchange for payment of  the last month’s  hire 29     instalment the Sellers shall furnish the Buyers with a
30     Bill of Sale duly  attested and legalized, together with a 31     certificate setting out the  registered encumbrances, if  32     any. On delivery of the Vessel the Sellers shall provide 33     for deletion of the Vessel from the Ship’s Register and 34     deliver a certificate of deletion to the Buyers.
35     The Sellers shall, at the time of delivery, hand to the
36     Buyers all classification certificates (for hull, engines,
37     anchors, chains, etc.), as well as all plans which may
38     be in Sellers’ possession.
39     The Wireless Installation and Nautical Instruments,
40     unless on hire, shall be included in the sale without any
41     extra payment.
42     The Vessel with everything belonging to her shall be at
43     Sellers’ risk and expense until she is delivered to the 
44     Buyers, subject to the conditions of this Contract and
45     the Vessel with everything belonging to her shall be
46     delivered and taken over as she is at the time of delivery,
47     after which the Sellers  shall  have no responsibility for
48     possible faults or deficiencies of any description.
49     The Buyers undertake to pay for the repatriation of the
50     Master, officers and other personnel if appointed by the
51     Sellers to the port where the Vessel entered the Bareboat
52     Charter 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 IV
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
2     For the purpose of this PART V, the following terms shall 3 have the meanings hereby assigned to them:
4      “The Bareboat Charter Registry” shall mean the registry 5         of the State whose flag the Vessel will fly and in which   6       the Charterers are registered as the bareboat charterers 7 during 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
10    as Owners and to which jurisdiction and control of the
11    Vessel will revert upon termination of the Bareboat
12    Charter Registration.

13    2. Mortgage
14   The Vessel chartered under this Charter is financed by
15    a mortgage and the provisions of Clause 12(b)  (Part II) 16 shall apply.
17     3.Termination of Charter by Default
18     If the Vessel chartered under this Charter is registered
19     in a Bareboat Charter Registry as stated in Box 44, and
20     if the Owners shall default in the payment of any amounts
21     due under the mortgage(s) specified in Box 28, the
22     Charterers shall, if so required by the mortgagee, direct
23     the Owners to re-register the Vessel in the Underlying
24     Registry as shown in Box 45.
25     In the event of the Vessel being deleted from the
26     Bareboat Charter Registry as stated in Box 44, due to a
27     default by the Owners in the payment of  any amounts  28 due under the mortgage(s), the Charterers shall have
29     the 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.
 
ADDITIONAL CLAUSES TO BARECON 2001
–
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 sixty (60) months 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).
 
–
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); or
 
(b)
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)), save that if the Charter is terminated and/or the Vessel not delivered under the MOA for a reason solely related to a default of the Owners, then the Charterers shall not be obliged to pay the Arrangement Fee (and if the Arrangement Fee has already been paid at such time, the Owners shall refund the Arrangement Fee to the Charterers within a reasonable time). Any such payment by the Charterers under this Clause 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.
 
–
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:

 
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(a)
no Termination Event or Potential Termination Event having occurred and being continuing 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 Delivery occurring on or before the Cancelling Date; and
 
(d)
the Owners having received from the Charterers:
 

 (i)
on or before the Prepositioning Date, 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 (d) 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 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.


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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.
 
–
QUIET ENJOYMENT
 
35.1
Provided that no Potential Termination Event, Termination Event or Total Loss has occurred, the Owners hereby agree not to disturb or interfere in any way whatsoever with the Charterers’ lawful use, possession and quiet enjoyment of the Vessel during the Charter Period.
 
–
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 Financing Amount 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 1/20*(Financing Amount less 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,
 
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 in that Hire Period.

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


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(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 (20) 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 4.00 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 of this Charter.
 
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) 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;
 
(e)
the Total Loss or any damage to or forfeiture or court marshall’s or other sale of the Vessel if the 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;


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(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.
 
Nothing contained in this Section 36.11 shall be deemed to hinder or prevent the Charterers from pursuing any claim the Charterers may have at law against the Owner for damages for the Owner’s breach of its express obligations under this Charter.
 
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 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 (for the avoidance of doubt, the above excludes any income tax or any tax arising from the Owners’ shares by competent tax authorities in their domicile, which shall be borne by the Owners). 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.


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–
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;

  (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


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  (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 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
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 aggregate of (i) the applicable Interest Rate for the relevant Hire Period and
(ii) 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 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.
 
37.6
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.
 
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.
 
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 documented 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 steps to prevent) an arrest of the Vessel.


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–
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, in the case of war risks, through a protection and indemnity club which meets the requirements of paragraph (d) above; 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 and the Charterers 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 (provided that in the event they do not agree to this, the Charterers agree that they shall be responsible for bearing such deductible portion) and that they shall do all things necessary and provide all documents, evidence and information reasonably required 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;


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(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 ten (10) 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 seven (7) 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;


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(c)
at least two (2) 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 the Vessel forthwith upon being so requested by the Owners or the Owners’ Financiers (if any) and where practicable.


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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; and

(b)
a copy of the 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.
 
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.
 
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.


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Rider Clauses to Bareboat Charter
m.v. Patriotship
SINGAPORE/90256979v1
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 with copies of all 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)
prior to the occurrence of a continuing Termination Event, a Major Casualty or a Total Loss; and
 
  (ii)
at any time after the occurrence of a Termination Event and while it is continuing, any material communications whatsoever relating to the insurances of the Vessel.
 
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 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 such an amount as the Owners consider reasonable 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.


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CMB Financial Leasing | Seanergy
Rider Clauses to Bareboat Charter
m.v. Patriotship
SINGAPORE/90256979v1
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 reasonably 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 (acting reasonably) and takes out in respect of the Vessel.
 
–
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.


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Rider Clauses to Bareboat Charter
m.v. Patriotship
SINGAPORE/90256979v1
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.
 
–
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 37.5 shall apply and the Owners shall be entitled to exercise their rights under Clause 42.
 
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), 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 all mortgages, encumbrances, liens, debts or any claims whatsoever 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 documented 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, 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 20 running days’ preliminary notice of expected date and port or place of redelivery and not less than 3 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.


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Rider Clauses to Bareboat Charter
m.v. Patriotship
SINGAPORE/90256979v1
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 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, unextended certificates for not less than three (3) 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 (if applicable) at the Charterers’ time and expense without any recommendations or conditions:
 
  (i)
to the satisfaction of the Approved Classification Society; and
 
  (ii)
in the case of the 5-year special survey, to the reasonable satisfaction of an Owners’ Surveyor appointed at the cost of the Charterers;
 
(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);
 
(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); 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 five per cent. (5%) or to the then applicable BCI rate, whichever is the higher, for the number of days by which the Charter Period is exceeded.


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CMB Financial Leasing | Seanergy
Rider Clauses to Bareboat Charter
m.v. Patriotship
SINGAPORE/90256979v1
41.8
If the Charterers are required to redeliver the Vessel to the Owners under the terms of this Charter, the Owners shall be entitled to appoint surveyors (the “Owners’ Surveyor”) (but at Charterers’ cost) 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.
 
41.9
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 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.

41.10
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.
 
– 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 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 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, subject to the right of the Charterers to have a period of 45 days from the Termination Date (the “Nomination Period”) to first nominate or identify a purchaser for the Vessel (a “Nominated Purchaser”) and the Owners shall sell the Vessel to such Nominated Purchaser subject to all of the following conditions being satisfied:


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Rider Clauses to Bareboat Charter
m.v. Patriotship
SINGAPORE/90256979v1
  (i)
the Nominated Purchaser is acceptable to the Owners (such acceptability not to be unreasonably withheld or delayed); 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 documented 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 37.5.
 
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, elect to retain the Vessel instead of selling 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 Termination Date (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) and if the Fair Market Value (less such deductions) of the Vessel as at the date of such nomination is less than the Termination Sum as at such date, 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 twenty five days (of the date of the notice) pay the difference to the Charterers.
 
–
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 Termination Sum to the Owners on the Total Loss Payment Date. Upon such receipt by the Owners of the 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 and shall satisfy the obligation of the Charterers to pay the 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 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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CMB Financial Leasing | Seanergy
Rider Clauses to Bareboat Charter
m.v. Patriotship
SINGAPORE/90256979v1
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 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.
 
–
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 legal costs, expenses and other disbursements incurred by the Owners and each of their legal counsels in relation to preparing, negotiating and executing this Charter and the Leasing Documents and/or any Financial Instruments, 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 reasonable and documented 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 (including but not limited to the Owners’ being registered as a foreign maritime entity)/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 reasonable and 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.


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CMB Financial Leasing | Seanergy
Rider Clauses to Bareboat Charter
m.v. Patriotship
SINGAPORE/90256979v1
44.6
The Charterers shall, on demand, pay to the Owners the amount of all 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.

-
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.

-
NOTICES
 
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
   
China 200120
   
    Attention: Xiao Yue
   
Email:
 xiao_yue@cmbchina.com/
    zyzlsceb@cmbchina.com
    Tel: +86-21-61061534
   
(b)
to the Charterers:
Patriot Shipping Co.
c/o Seanergy Management Corp.
154 Vouliagmenis Avenue,
16674 Glyfada, Athens, Greece
    Attention: Mr. Stavros Gyftakis
    Email:
legal@seanergy.gr and
    finance@seanergy.gr
    Tel:
 +30 210 8913520
 
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.
 
–
TERMINATION EVENTS
 
47.1
The Owners and the Charterers hereby agree that any of the following events shall constitute a Termination Event:


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Rider Clauses to Bareboat Charter
m.v. Patriotship
SINGAPORE/90256979v1
(a)
the Charterers or the Guarantor 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 34.7, 50.1(f), Clause 51, Clause 52, 53.1(b), 53.1(c), 53.1(d), 53.1(g) or 53.1(h);
 
(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 that is not a member of the Group 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 (acting reasonably) within ten (10) 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, proves to be, in the opinion of the Owners, 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 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 or member of the Group 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) and following the expiry of any applicable grace period,


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Rider Clauses to Bareboat Charter
m.v. Patriotship
SINGAPORE/90256979v1
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 is less than US$5,000,000 (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 filed in any Relevant Jurisdiction for its winding up or administration, or the appointment of a provisional liquidator over it;
 
  (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 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, in the opinion of the Owners, 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) provided that no Termination Event will occur under this sub-paragraph (viii) in respect of the Guarantor unless the relevant event would have or is reasonably likely to have a Material Adverse Effect;
 
  (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; or
 
  (x)
if it suspends or ceases to carry on all or a material part of its business;
 
(h)
any consent, approval, authorisation, license or permit necessary to enable the Charterers to operate or charter the Vessel or to enable any Obligor or any Approved Manager 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);


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(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 the Other Charter) occurs under the 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)
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;
 

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(r)
any lease, hire purchase agreement, charter or any other financing arrangement in respect of any Fleet 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); or
 
(s)
a Change of Control in respect of the Charterers 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, 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” but which shall be no earlier than the date falling twenty (20) Business Days after the date of the Termination Notice).
 
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, or the title is transferred to the Charterers in accordance with Clause 41.3 or the Vessel is sold in accordance with Clause 42.
 
47.4
vWithout limiting the generality of the foregoing or any other rights of the Owners, upon the occurrence of a Termination Event, 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 47A – MANDATORY SALE
 
If there is a Change of Control of the Guarantor, the Charterers shall immediately notify the Charterers of the same and (unless the Owners otherwise agree in writing) the Charterers shall be required to purchase the Vessel from the Owners by the Charterers paying the Termination Sum to the Owners within thirty (30) days from the Change of Control and (upon such payment of the Termination Sum) this Charter shall terminate and title to the Vessel shall be transferred in accordance with the procedures set out in Clause 41.3.


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–
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 and any Approved Manager which is a member of the Group is duly incorporated and validly existing under the laws of its jurisdiction of incorporation;
 
(b)
each Obligor and any Approved Manager which is a member of the Group 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 any Approved Manager which is a member of the Group, 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 any Approved Manager which is a member of the Group, 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 which is a member of the Group 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;


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(h)
each Security Document to which an Obligor or Approved Manager which is a member of the Group 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 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, or to the best of their knowledge affiliates or employees, has taken or will take any action in furtherance of an offer, payment, promise to pay or authorization 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 or threatened 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;
 
(r)
no Termination Event or Potential Termination Event has occurred 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;


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(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 or threatened 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 GAAP consistently applied and give a true and fair view of (if audited) or fairly represent (if unaudited) the financial condition of 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 the Guarantor’s 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 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;

(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 which is a member of the Group, sub-charterer (to the best of its knowledge) and no member of the Group:
 
  (i)
is a Prohibited Person;


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  (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 any member of the Group nor (to the best of its knowledge) any or 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.
 
–
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 each financial half year of the Charterers, the unaudited semi-annual management accounts of the Charterers;
 
  (ii)
as soon as possible, but in no event later than one hundred and fifty (150) days after the end of each financial year of the Charterers, the unaudited annual management accounts of the Charterers;
 
  (iii)
as soon as possible, but in no event later than ninety (90) days after the end of each financial half year of the Guarantor, the unaudited semi-annual consolidated financial accounts of the Guarantor;
 
  (iv)
as soon as possible, but in no event later than one hundred and fifty (150) days after the end of each financial year of the Guarantor, the audited annual consolidated financial accounts of the Guarantor;
 
(b)
they will procure that each set of financial statements delivered pursuant to Clause 49.1(a) shall be 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 and the financial statements of the Guarantor shall be provided together with a Compliance Certificate signed by an authorized signatory of the Guarantor certifying that the financial covenants referred to in Clause 51 have been complied with and setting out all relevant calculations and statements demonstrating compliance with such financial covenants;
 
(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);


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(d)
they will provide the Owners promptly 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 or Anti-Money Laundering Laws which are current or pending against any Obligor, Approved Manager, sub-charterer or other member of the Group;
 
  (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 reasonable 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)
details of the Vessel’s management and employment status and copies of all accurate, complete and up-to-date records and logs of all voyages made by the Vessel (but not more than once every twelve months);
 
  (iii)
the Security Interests relating to any Leasing Documents;
 
  (iv)
compliance of each Obligor and any Approved Manager with the terms of the Leasing Documents;
 
  (v)
the financial condition, business and operations of the Obligors; or
 
  (vi)
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; and
 
(g)
they shall immediately 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;


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–
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 which is a member of the Group 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 which is a member of the Group 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 which is a member of the Group, will:
 
  (i)
ensure that any Leasing Document to 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 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, and will procure that each other Obligors will not, enter into any merger, amalgamation, demerger, solvent reorganisation or corporate reconstruction other than an internal group reorganisation under which the (i) the Charterers and Guarantor each survive and (ii) the Charterers remain wholly and directly (or indirectly) wholly owned by the Guarantor (and if indirectly owned, any replacement shareholder of the Charterers has entered into Share Security over the shares in the Charterers in a form acceptable to the Owners);
 
(g)
they will not:


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  (i)
enter into any borrowing except for loans from affiliates which are unsecured and fully subordinated to the Owners in a manner acceptable to the Owners and which are approved by the Owners in writing;
 
  (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 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 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 the Vessel, its Earnings or its Insurances; and
 
  (vi)
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; and

(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 or suffering a net loss in respect of the preceding financial year:
 
  (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);
 
  (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.
 
–
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)
On each Testing Date and for the relevant Accounting Period throughout the Charter Period:
 
  (i)
Cash and Cash Equivalents divided by the number of Fleet Vessels shall not be lower than $500,000; and
 
  (ii)
the Leverage Ratio shall not be more than 85 per cent.


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51.2
In this Clause 51 (Financial Covenants):

“Accounting Information” means, (i) the annual audited financial statements of the Guarantor and (ii) the semi-annual unaudited consolidated financial statements of the Guarantor as provided to the Owners in accordance with Clause 49.1(a).
 
“Accounting Period” means:
 
  (i)
the financial year of the Guarantor ending 31 December of each calendar year; or
 
  (ii)
the financial half year of the Guarantor ending 30 June of each calendar year,
 
in respect of which, in each case, the relevant Accounting Information is required to be delivered pursuant to Clause 49.1(a).

“Cash and Cash Equivalents” shall be that shown in the balance sheet in the relevant Accounting Information and includes term deposits, restricted cash and amounts required by the Group’s lenders and lessors to be held for minimum liquidity purposes.
 
“Fleet Market Value” means valuations of the Fleet Vessels calculated in accordance with the principles set out in the definition of Fair Market Value but using one Approved Valuer.
 
“Fleet Vessels” means all vessels owned by the Guarantor and its subsidiaries.
 
“Market Value Adjusted Total Assets” means, as at the date of calculation, the aggregate of the Market Value Adjusted Other Assets and the Total Current Assets.
 
“Market Value Adjusted Other Assets” means, as at the date of calculation, the Fleet Market Value plus the book value (less depreciation and amortization computed in accordance with the applicable Accounting Information on a consolidated basis of all non-current assets of the Group (which, without limitation, shall exclude all Fleet Vessels)), as stated in the latest Accounting Information.
 
“Total Current Assets” means, the aggregate of the cash, term deposits and marketable securities, trade and other receivables from persons (other than persons being members of the Group) realisable within 1 year such amount to be determined on a consolidated basis less any discounts, allowances and activated goodwill, in each case as shown in the applicable Accounting Information.
 
“Net Debt” means, as at the date of calculation, the Total Debt less any cash, term-deposits restricted cash and cash equivalents, in each case as stated in the applicable Accounting Information.
 
“Leverage Ratio” means, as at the date of calculation, the ratio (expressed as a percentage) of Net Debt to Market Value Adjusted Total Assets.
 
“Testing Date” means 30 June and 31 December of each financial year.
 
“Total Debt” means, as at the date of calculation, the current portion of long-term debt, net of deferred finance costs and the long-term debt, net of current portion and deferred finance costs of the Group as shown in the applicable Accounting Information.


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51.3
The Charterers shall promptly notify the Owners if the Guarantor agrees to provide any more favourable financial covenants to a creditor than those that are set out in favour of the Owners under Clause 51.1 above (or to amend existing ones such that they place such creditor in a position which is comparatively more favourable in terms of the financial covenants than the position of the Owners) under any agreements entered into or to be entered into in connection with any Financial Indebtedness owed by the Guarantor or a Group member to a creditor. Such more favourable financial covenants shall be deemed as automatically incorporated into this Charter in favour of the Owners from the date of the financing agreements entered into in connection with such other Financial Indebtedness (in place of the financial covenants set out in Clause 51.1 or to supplement them, at the option of the Owners) and the Charterers agree that they will and shall procure that 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 record the incorporation of such more favourable financial covenants into this Charter and any applicable Leasing Document (as the case may be).

–
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; and
 
  (ii)
at least twice per calendar year (on each Testing Date) and at any time after the occurrence of a Potential Termination Event or Termination Event which is continuing if requested by the Owners, provide to the Owners valuations of the Vessel (or any other vessel over which additional Security Interests have been created in accordance with Clause 52.1(b)) (to be addressed to the Owners) to enable the Owners to determine the Fair Market Value of the Vessel or such other relevant vessel; and
 
(b)
if at any time, the Vessel’s Fair Market Value falls below an amount equivalent to one hundred and twenty per cent (120%) of the Owners’ Costs (the “LTV Breach”, and the said difference between the Fair Market Value and one hundred and twenty per cent (120%) of the Owners’ Costs shall be referred to as the “shortfall” for the purposes of this paragraph), 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 and in the Owners’ sole discretion, either:
 
  (i)
make payment in an amount such as to eliminate the shortfall which payment shall be deemed to be an advance payment of hire and credited against future instalment(s) of Fixed Charterhire (or part thereof) payable in inverse order of maturity of payments of Fixed Charterhire; and/or
 
 
(ii)
provide, or ensure that a third party has provided, additional Security Interests which, in the opinion of the Owners has a net realisable value at least equal to the shortfall and is acceptable to the Owners, and which is documented in such terms as the Owners may require.


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-
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 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 the Major Casualty amount;
 
  (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;
 
  (v)
that a Total Loss has occurred; and
 
  (vi)
any violation of Sanctions in relation to the Vessel,
 
and will keep the Owners fully up-to-date with all developments;
 
(b)
they will comply, and will procure that each other Obligor and each other member of the Group and (on a best efforts basis) 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, 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,
 

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(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;
 

 (ii)
the Vessel shall not be employed in trading with any Prohibited Person or in any manner contrary to Sanctions;
 

 (iii)
notwithstanding any other provision of this paragraph (c), the Vessel shall not be permitted to call at any port in any Prohibited Country or any area or country where trading in such area or country would constitute or would be reasonably expected to constitute a breach of Sanctions;
 

 (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;
 
(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 promptly 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 ten per cent. (10%) of the management fee payable under the relevant Management Agreement as at the date of this Charter;
 
(f)
they shall not:
 

 (i)
change or appoint a manager of the Vessel other than an Approved Manager and provided that any such Approved Manager has (prior to accepting its appointment) entered into a Manager’s Undertaking in such form as may be acceptable to the Owners; or
 

 (ii)
terminate or otherwise assign or transfer any Management Agreement unless with the prior approval in writing by the Owners such approval not to be unreasonably withheld or delayed;


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(g)
with effect from and following Delivery, 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 conditions (unless special dispensation is obtained from class and insurers), and maintain such class during the Charter Period;

(i)
unless with the Owners’ prior written consent they shall not deactivate or lay up the Vessel;
 
(j)
save for the installation of scrubbers (which, once installed shall form part of the Vessel and shall not be removed at redelivery) they shall not make any structural change to the Vessel without the prior written consent of the Owners other than a structural change that is mandatorily required by any applicable law and regulation 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 reasonably require for the purposes of determining their approval 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 and shall not (unless requested by Owners) be removed at any redelivery;
 
(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 and if a Potential Termination Event or 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 Assignable Sub-Charter; 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:
 

 (i)
all Earnings in connection with the Vessel are paid into the Operating Account;
 

 (ii)
at all times during the Charter Period the Operating Account has a minimum credit balance of at least US$550,000; and
 

 (iii)
the Owners are given any information and access relating to the Operating Account that they may require; and


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(n)
they shall, upon the request of the Owners and at the cost of the Charterers, on or before 31st July in each calendar year commencing from 1 January 2022, 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 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.
 
–
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 prior notice) without interference to the operation and trading 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 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 material damage to the Vessel.
 
–
PURCHASE OPTION
 
55.1
The Charterers shall have the option (the “Purchase Option”) to purchase the Vessel on any Purchase Option Date (as hereinafter defined) 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).


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55.2
The Purchase Option shall be exercisable only (unless otherwise agreed by the Owners):
 
(a)
upon the Charterers providing not less than forty five (45) days’ written notice (the “Purchase Option Notice”) to purchase the Vessel on a date specified therein (the “Purchase Option Date”) which Purchase Option Date shall, subject to Clause 60.1, fall on any anniversary of the Commencement Date on or after the second (2nd) anniversary of the Commencement Date or on the last day of the Charter Period (as the case may be) unless the Purchase Option Notice is served pursuant to a proposed Transfer by the Owners, in which case the Purchase Option Notice must be served by the Charterers within the time provided under Clause 62.4 (but regardless of whether this falls on or after the second (2nd) anniversary of the Commencement Date) and the Purchase Option Date specified in such Purchase Option Notice may fall on any Business Day being not less than thirty (30) days after the date of the relevant Purchase Option Notice; and
 
(b)
in the absence of the occurrence of a Termination Event that is continuing on or prior to either the date of the Purchase Option Notice or the Purchase Option Date.
 
55.3
The Purchase Option Notice shall each 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).
 
–
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;


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(b)
the Vessel shall be free from all registered mortgages, liens, encumbrances, claims and debts whatsoever incurred by the Owners (save for those 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 37.5 (if applicable), fees, expenses and any other moneys then owing by or accrued or due from the Charterers under this Charter; 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 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). 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 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).

–
INDEMNITIES
 
57.1
The Charterers shall pay such amounts to the Owners, on the Owners’ demand, in respect of all 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), or the financing or re-financing in relation to the Vessel obtained from the Owners’ Financiers;
 
(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).


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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 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.
 
–
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:


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(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) 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 any documented loss, liability or cost which the Owners (acting reasonably) 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.
 
–
INCREASED COSTS

59.1
This Clause 59 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 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.
 
–
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.


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–
FATCA
 
61.1
Defined terms
 
For the purposes of this Clause 61, 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 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.


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(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(z) 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.
 
–
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 without the prior written consent of the Owners.
 
62.2
The Charterers acknowledge that, at any time during the Charter Period:
 
(a)
the Owners (at their own cost) are entitled to enter into certain funding arrangements with the Owners’ Financiers in order to refinance the Financing Amount (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 after giving Charterers at least five (5) days prior written notice):
 
  (i)
execute a ship mortgage over the Vessel or any other Financial Instrument in favour of the Owners’ Financiers (provided that the Owners shall use reasonable endeavours to procure that the Owners’ Financiers enter into a quiet enjoyment letter on terms acceptable to the owners’ Financiers, Charterer and Owners);

  (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 directed from time to time during the currency of this Charter by the Owners’ Financiers in conformity with any Financial Instrument provided always that the same are no more onerous than set out under the Leasing Documents. 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. 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 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 (other than pursuant to Clause 62.2),
 
(any such event described in (a) and (b) above being a “Transfer”) to any affiliate or to another 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 shipping loans, securities or other financial assets without the consent of the Charterers, provided that (other than in respect of a Transfer to an affiliate) the Owners shall give the Charterers at least 30 days prior written notice of their intention to effect a Transfer (a “Transfer Notice”). Within five (5) Business Days of the Owners serving a Transfer Notice on the Charterers, the Charterers may elect to serve a Purchase Option Notice on the Owners in accordance with Clause 55.2, following which the Charterers shall purchase the Vessel in accordance with the applicable terms of this Charter and the Owners shall not proceed with the relevant proposed Transfer (unless the Charterers fail to complete the purchase on the relevant Purchase Option Date in which case the Owners shall be free to effect such Transfer without reference to the Charterers and shall not be obliged to serve Transfer Notices for any future proposed Transfers). If the Charterers do not serve a Purchase Option Notice within the aforementioned five (5) Business Day period, then the Owners may proceed with the Transfer.
 
62.5
Any Transfer shall not in any manner whatsoever 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 applicable new owner of the Vessel for its performance of all obligations under this Charter (as novated) after any such Transfer 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 Transfer.

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 any Transfer made pursuant to this Clause 62 (Assignment, Transfer and Re-financing).
 
–
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;


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(b)
it is required to be disclosed under the applicable laws of any Relevant Jurisdiction or by a governmental order, any stock exchange and/or securities and exchange commission laws and regulations including but not limited to the US SEC Rule or the Nasdaq Rules, 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);
 
(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, its shareholders, auditors, third party managers, external counsels or accountants;
 

 (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.
 
–
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 the Other Owner (as trustee for the Owners) shall be applied in the following order of application against amounts payable under the Leasing Documents:


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(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.
 
–
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.
 
–
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.


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“Account Bank” means Alpha Bank S.A. 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.

“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, 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 Bureau Veritas, Lloyds’ Register 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 Fidelity Marine Inc., Seanergy Management Corp. 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.

“Approved Manager” means the Approved Commercial Manager or the Approved Technical Manager.
 
“Assignable Sub-charter” means any charter or any other form of employment contract relating to the Vessel, whether or not already in existence with a duration exceeding or capable of exceeding 12 months (inclusive of options to renew).
 
“Approved Technical Manager” means V Ships Limited (a Cyprus entity), V Ships Greece, Seanergy Shipmanagement Corp. 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 (such approval from the Owners not to be required for the appointment of an entity controlled by the Guarantor).


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“Approved Valuer” means Simpson Spence Young, Clarksons Platou, Maersk Broker, Arrow Shipbrokers, Howe Robinson, Braemar ACM Shipbroking, Barry Rogliano Salles 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 (excluding the margin) 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 and Athens and/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.

“Cancelling Date” has the meaning given to such term under the MOA. “Change of Control” means:


 (a)
the Guarantor ceases to own and/or control directly or indirectly, all of the shares and voting rights in the Charterers; and/or
 

 (b)
the Guarantor ceases to be listed on Nasdaq.

“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.
 
“Compliance Certificate” means a certificate substantially in the form set out in Schedule 3.
 
“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.
 
“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.


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“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 US$ 6,600,000.
 
“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 prepared:
 
 
(i)
on a date no earlier than fifteen (15) days prior to the relevant date of valuation (except in the case of the Initial Market Value, in which cash such valuation reports shall be prepared on a date no earlier than fifteen (15) days prior to the Commencement Date);
 

 (ii)
by Approved Valuers one nominated by the Owners and the other nominated by the Charterers;
 
 
(iii)
without physical inspection of the Vessel or other 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 whatsoever; and


(b)
if there is a discrepancy of five per cent. (5%) or more between the market valuations shown on the two valuation reports obtained pursuant to paragraph (a) above (using the lower valuation figure as the denominator), the arithmetic mean of the valuations shown by three (3) valuation reports each 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).
 
“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;


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(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 this Charter, assignment in respect of the Guarantees, 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.

“Financing Amount” shall have the same meaning as defined under the MOA. “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.
 
“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.
 
“GAAP” means generally accepted accounting principles in the United States of America or such other accounting principles as agreed by both Parties.

“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) for the time being.


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“Guarantee” means the guarantee executed by the Guarantor in favour of the Owners on or about the date hereof.
 
“Guarantor” means Seanergy Maritime Holdings Corp., a corporation incorporated and existing under the laws of the Republic of Marshall Islands.
 
“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.
 
“Initial Market Value” means, in relation to the Vessel, the Fair Market Value of the Vessel as at a date no earlier than fifteen (15) days prior to the Commencement Date.
 
“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:


 (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).


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“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.
 
“Leasing Documents” means this Charter, the Guarantees, the MOA, the Fee Letter and the Security Documents 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,
 
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$1,000,000 or the equivalent in any other currency.

“Management Agreement” means:


 (a)
the technical management agreement dated 19 May 2021 and made between V Ships Limited and the Charterers;
 

 (b)
the commercial management agreement dated 2 March 2015 and made between Fidelity Marine Inc. and Seanergy Management Corp. as amended by a first amendment dated 11 September 2015, a second amendment dated 24 February 2016, a third amendment dated 1 February 2018, a fourth amendment dated 28 June 2018 and as further amended from time to time), as acceded to by the Charterers pursuant to an accession letter dated 19 May 2021; and/or
 

 (c)
such other management agreement for the technical and/or commercial management of the Vessel as may be subsequently entered into in respect of the Vessel by the Charterers with an Approved Manager.
 
“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 three point fifty per cent. (3.50%) 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:


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(a)
the business, operations, property, condition (financial or otherwise) of any Obligor or any member of the Group; 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). “Nomination Period” 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)
any Approved Manager 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).
 
“Operating Account” means an interest bearing account with account number 960- 01- 5006034700 opened in the name of the Charterers with the Account Bank.

“Original Financial Statements” means in relation to the Guarantor, its audited consolidated financial statements for the fiscal year ended 31 December 2020.

“Original Jurisdiction” means, in relation to an Obligor, the jurisdiction under whose laws they are incorporated as at the date of this Charter.
 
“Other Charter” means, in relation to the Other Vessel, the bareboat charterparty dated on or around the date of this Charter entered into between the Other Owner and the Other Charterer.


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“Other Charterer” means Hellas Ocean Navigation Co. “Other Owner” means Sea 241 Leasing Co. Limited. “Other Vessel” means m.v. Hellasship.
 
“Owners’ Costs” means, on any relevant date, (i) the Financing Amount 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” means the surveyor appointed by the Owners in accordance with Clause 7.

“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;


(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.


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“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 those countries and territories subject to country-wide or territory-wide Sanctions and/or trade embargoes from time to time during the Charter Period, in particular but not limited to pursuant to the U.S.’s Office of Foreign Assets Control of the
 
U.S. Department of Treasury (“OFAC”) or the United Nations.

“Prohibited Person” means any person, entity or any other party which is (i) located, domiciled, resident or incorporated in a Prohibited Country, and/or (ii) subject to any sanction administrated by the United Nations, the European Union, the United States and the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”), the United Kingdom, Her Majesty’s Treasury (“HMT”) and the Foreign and Commonwealth Office of the United Kingdom, the Special Administrative Region of Hong Kong, the People’s Republic of China and/or (iii) owned or controlled by or affiliated with persons, entities or any other parties as referred to in (i) and (ii).

“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 Fee” means:
 

 (a)
if the Purchase Option is exercised on the second (2nd) anniversary of the Commencement Date (or prior to it but only in accordance with Clause 62.4), two point five per cent. (2.50%) of the Owners’ Costs on that date;
 

 (b)
if the Purchase Option is exercised on the third (3rd) anniversary of the Commencement Date, one point five per cent. (1.50%) of the Owners’ Costs on that date; and


(c)
if the Purchase Option is exercised on the fourth (4th) or fifth (5th) anniversary of the Commencement Date, zero per cent. (0%) of the Owners’ Costs on that date.
 
“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 prior to the last day of the Charter Period, the aggregate of:

 
(i)
the Owners’ Costs prevailing as at the relevant Purchase Option Date;


(ii)
any Variable Charterhire accrued but unpaid as at the date of payment of the Purchase Option Price;


(iii)
any Purchase Option Fee;
 

 (iv)
any Breakfunding Costs;


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(v)
any reasonable and 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 the last day of the Charter Period, 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 reasonable and 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 (iv) 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.
 
“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 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:


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

 (i)
the administrator of that Screen Rate; or


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

 (b)
in the opinion of the Owners, generally accepted in the international or any relevant domestic syndicated loan markets as the appropriate successor to that Screen Rate; or
 

 (c)
in the opinion of the Owners, an appropriate successor to a Screen 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, 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 regardless of whether the same is or is not applicable or binding on any Obligor; or


(b)
otherwise imposed by any law or regulation which are applicable to and/or binding on any Obligor (which shall include without limitation, any extra-territorial sanctions imposed by law or regulation of the United States of America).

“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.
 
“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;


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(b)
 
(i)
 

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

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

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


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

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

 (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.


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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.

“Shares Pledge” means a first priority pledge over the shares of the Charterers executed or to be executed by the Guarantor in favour of the Owners.
 
“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.

“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 two per cent. (2.00%) of the Owners’ Costs as at the relevant date. “Termination Notice” has the meaning given to it under Clause 47.2.
 
“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 (other than in connection with a payment of the Termination Sum following a Total Loss);


(d)
any Breakfunding 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 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


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(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 sixty (60) 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 sixty (60) 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 one hundred and fifty (150) 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.


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“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.

“Transfer” has the meaning given to it under Clause 62.4. “Transfer Notice” has the meaning given to it under Clause 62.4.
“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 bulker vessel named m.v. Patriotship 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;


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“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”
 
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


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(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
A Potential Termination Event is “continuing” if it has not been remedied or waived and a Termination Event is “continuing” if it has not been waived.

66.6
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 242 LEASING CO. LIMITED
) /s/ Zhou Ling
as attorney-in-fact
)
in the presence of
)
   
Witness’ signature: /s/ Xiao Jue
)
Witness’ name: Xiao Jue
)
Witness’ address: 22F, China Merchants Bank Building, NO. 1088 )
  
Lujiazui Ring Road, Shanghai, China
  
 
CHARTERERS
  
   
SIGNED BY
)
for and on behalf of
)
PATRIOT SHIPPING CO.
) /s/ Stavros Gyftakis
as attorney-in-fact
) Stavros Gyftakis
in the presence of
)
   
Witness’ signature:
) /s/ Maria Moschopoulou
Witness’ name:
) Maria Moschopoulou
Witness’ address:
) 154 Vouliagmenis Avenue
16674 Glyfada, Athens Greece
  


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SCHEDULE 1
ACCEPTANCE CERTIFICATE

PATRIOT SHIPPING CO. (the “Charterers”) hereby acknowledge that at [●] hours on [●], there was
delivered to, and accepted by, the Charterers the vessel known as m.v. “Patriotship” (the “Vessel”), registered in the name of SEA 242 LEASING CO. LIMITED (the “Owners”) under the flag of Marshall Islands with IMO number 9446441 under a charter dated [●] 2021 (the “Charter”) and made between the Owners and the Charterers and that Delivery (as defined in the Charter) thereupon took place and that, accordingly, the Vessel is and will be subject to all the terms and conditions contained in the Charter.
 
The Charterers warrant that the representations and warranties made by them in Clause 48 (Representations and Warranties) of the Charter remain correct and that no Termination Event or Potential Termination Event (each as defined in the Charter) has occurred at the date of this Acceptance Certificate.

   
Name:
  
Title:
  
for and on behalf of
  
PATRIOT SHIPPING CO.
  
Dated:
  


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SCHEDULE 2 CONDITIONS PRECEDENT PART A

The following are the documents referred to in Clause 34.2(d)(i):

1
Corporate Authority
 
1.1
A copy of the constitutional documents of the Charterers and the Guarantor.
 
1.2
If required, a copy of the resolutions of the board of directors (or equivalent) of the Charterers and the Guarantor:

(a)
approving the terms of, and the transactions contemplated by, the Leasing Documents to which it is a party and resolving that it execute the Leasing Documents to which it is a party;
 
(b)
authorizing a specified person or persons to execute the Leasing Documents to which it is a party on its behalf; and

(c)
authorising a specified person or persons, on its behalf, to sign and/or dispatch all documents and notices to be signed and/or dispatched by it under, or in connection with, the Leasing Documents to which it is a party.
 
1.3
If required, a copy of the power of attorney of the Charterers and the Guarantor authorising a specified person or persons to execute the Leasing Documents to which it is a party.
 
1.4
If required, a specimen of the signature of each person authorized by the resolution referred to in paragraph 1.2 above.
 
1.5
If required, a copy of the resolutions signed by all the holder(s) of the issued shares of any Obligors, approving the terms of, and the transactions contemplated by such Leasing Document.

1.6
A copy of a certificate of an officer or authorized signatory of the Charterers and the Guarantor certifying that each copy document relating to it specified in this Schedule 2 Part A is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement.

2
Leasing Documents
 
2.1
A duly executed original of each Leasing Document (except the Security Documents) and of each document to be delivered under each of them.
 
2.2
Agreed forms of the Security Documents and of each document to be delivered under each of them.
 
2.3
Evidence that the Operating Account has been opened and maintained with the Account Bank and there is a credit balance of at least US$550,000.


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3
Initial Market Value
 
Valuations of the Vessel, addressed to the Owners and dated not earlier than fifteen (15) days before the Commencement Date indicating the Initial Market Value.
 
4
Legal opinion
 
4.1
An agreed form legal opinion by English legal advisers to the Owners on such matters on the laws of England in relation to the applicable documents listed in paragraphs 2.1 and 2.2 of Part A of this Schedule, in form and substance acceptable to the Owners.
 
4.2
Agreed forms of legal opinions by lawyers appointed by the Owners on such matters relating to the applicable documents listed in paragraphs 2.1 and 2.2 of Part A of this Schedule, concerning the laws of the Republic of Liberia, the Republic of the Marshall Islands, Greece and such other relevant jurisdictions as the Owners may reasonably require, in form and substance acceptable to the Owners.

5
Vessel Insurances
 
5.1
Evidence that the Vessel is or will be on Delivery insured in the manner required under Clause 39.1.
 
5.2
Agreed form of letters of undertaking relating to insurances as set out in Clause 39.1 from the relevant insurer, insurance broker, protection and indemnity association or war risks association (as the case may be).
 
5.3
An insurance report by an insurance advisor appointed by the Owners (but at the cost of the Charterers) in an agreed form acceptable to the Owners.
 
6
Others

6.1
Evidence that the Arrangement Fee and all other fees, costs and expenses then due from the Charterers to the Owners under the Leasing Documents have been paid and received by the Owners.
 
6.2
A copy of the Management Agreement and any amendments thereto.

6.3
A copy of any Assignable Sub-Charter and any amendments thereto.

6.4
Copies of the Document of Compliance of the Approved Technical Manager.
 
6.5
Copies of the Vessel’s Safety Management Certificate (together with any other details of the applicable Safety Management System which the Owners require) and of any other documents required under the ISM Code and the ISPS Code (including without limitation an ISSC and IAPPC).
 
6.6
A copy of the Vessel’s class certificate evidencing that the Vessel maintains its classification with the Approved Classification Society and a copy of the confirmation of class issued within three (3) Business Days prior to the Commencement Date confirming that the Vessel is free of all recommendations and conditions.
 
6.7
Copies of the Original Financial Statements.


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SINGAPORE/90256979v1
6.8
Such evidence relating to the Obligors as the Owners may reasonably require for their (or their financiers) to be able to satisfy each of their “know your customer” or similar identification procedures in relation to the Leasing Documents.
 
6.9
A copy of any other consents, approvals, authorization or other document, opinion or assurance which the Owners consider to be reasonably desirable in connection with the entry into and performance of the transactions contemplated by any of the Leasing Documents or for the validity and enforceability of such documents.
 
6.10
Such other documents as the Owners may reasonably require by giving notice to the Charterers.


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PART B

The following are the documents referred to in Clause 34.2(d)(ii):
 
1
Security Documents

1.1
A duly executed original of each of the Security Documents (and of each document to be delivered under each of them).
 
2
Vessel Documents

2.1
Documentary evidence that the Vessel is or will be:
 
(a)
permanently or provisionally registered in the name of the Owners under the Flag State;
 
(b)
in the absolute and unencumbered ownership of the Owners;

(c)
unconditionally delivered by the Charterers to the Owners pursuant to the terms of the MOA, where such documents shall include without limitation:

  (i)
a copy of the notarized and/or legalised (if required by the Flag State) copies of the bill of sale duly executed by the Charterers and stating that the Vessel is free from all mortgages, encumbrances and liens (whether maritime or otherwise) or any other debts whatsoever (and where executed by an attorney of the Charterers, together with such a copy of the notarized and/or legalised (if required by the Flag State) Charterers’ power of attorney); and

  (ii)
a copy of the protocol of delivery and acceptance duly executed by the Charterers and the Owners.
 
2.2
Any additional documents as may be required by the competent authorities of the Flag State for the purpose of registering the Vessel.
 
3
Others
 
3.1
Evidence that any fees, costs and expenses then due from the Charterers to the Owners under the Leasing Documents have been paid and received by, or will be paid and received by, the Owners, on Delivery of the Vessel.
 
3.2
Such other documents as the Owners may reasonably require by giving notice to the Charterers.


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PART C

The following are the documents referred to in Clause 34.7:
 
1
Security Interests
 
Not later than five (5) Business Days after the Commencement Date, documentary evidence that the Security Interests intended to be created by each of the Security Documents have been duly perfected under applicable law (as applicable).
 
2
Legal opinions

Not later than three (3) Business Days after the Commencement Date, issued signed copies of the legal opinions referred to in paragraph 4 of Part A of Schedule 2 of this Charter.

3
Insurances

3.1
Not later than ten (10) Business Days after the Commencement Date, receipt of copies of the executed letters of undertaking and certificates of entry (as the case may be) relating to insurances as set out in Clause 39.1 acknowledged by the relevant insurer, insurance broker, protection and indemnity association or war risks association (as the case may be), each in the agreed form under paragraph 5 of Part A of Schedule 2 of this Charter.

3.2
Not later than fifteen (15) Business Days after the Commencement Date, the signed insurance report in the form agreed under paragraph 5 of Part A of Schedule 2 of this Charter.

4
Others

4.1
No later than six (6) months after the Commencement Date, evidence that (if applicable) the Vessel has been permanently registered with the Flag State.


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SCHEDULE 3

FORM OF COMPLIANCE CERTIFICATE

To:
SEA 242 LEASING CO. LIMITED (the “Owner”)

From:
SEANERGY MARITIME HOLDINGS CORP. (the “Guarantor”)
 
  Date: [●]
          
RE:
THE BAREBOAT CHARTER (THE “CHARTER”) DATED [●]
 
1.
We refer to the Charter. This is a Compliance Certificate. Unless otherwise specified, terms defined in the Charter shall have the same meaning in this compliance certificate.

2.
We confirm that as calculated by reference to the audited annual consolidated financial statements for the financial year ended [●],

  (a)
Cash and Cash Equivalents divided by the number of Fleet Vessels is not lower than $500,000; and

  (b)
the Leverage Ratio is not more than 85 per cent.
 
3.
[We confirm that, as at the date hereof, no Termination Event has occurred and is continuing which has not been waived or remedied at the date hereof]1

For and on behalf of
  
SEANERGY MARITIME HOLDINGS CORP.
  
   
   
Name(s):  
President
  

1 If this statement cannot be made, this compliance certificate should identify any Termination Event (as defined in the Charter) that is continuing and the steps, if any, being taken to remedy it.



 73
CMB Financial Leasing | Seanergy
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Exhibit 4.58

Dated 22 June 2021
 
SEANERGY MARITIME HOLDINGS CORP.
as Guarantor
 
and
 
SEA 242 LEASING CO. LIMITED
as Owner
 
GUARANTEE
 
relating to
a Bareboat Charter of
one (1) bulk carrier named “Patriotship” dated 22 June 2021
 
Index
 
Clause   Page
     
1
Interpretation
1
2
Guarantee
2
3
Liability as Principal and Independent Debtor
3
4
Expenses
3
5
Adjustment of Transactions
3
6
Payments
4
7
Interest
4
8
Subordination
5
9
Enforcement
5
10
Judgments and Currency Indemnity
6
11
Supplemental
6
12
Assignment or Transfer
8
13
Notices
8
14
Invalidity of Leasing Documents
9
15
Incorporation of Bareboat Charter Provisions
9
16
Governing Law and Enforcement
9
     
Execution
 
Execution Page
11

THIS GUARANTEE is made on 22 June 2021.
 
BETWEEN
 
(1)
SEANERGY MARITIME HOLDINGS CORP., a corporation incorporated and existing under the laws of the Republic of Marshall Islands with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the “Guarantor”); and
 
(2)
SEA 242 LEASING CO. LIMITED, a company incorporated under the laws of Hong Kong with registration number 3029880 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 on or about the date of this agreement (the “Bareboat Charter”) made between (i) the Owner as owner and (ii) PATRIOT SHIPPING CO. as bareboat charterer (the “Bareboat Charterer”), the Owner has agreed to bareboat charter one (1) bulk carrier named m.v. “Patriotship” (the “Vessel”) to the Bareboat Charterer pursuant to the terms and conditions contained therein.
 
(B)
The Guarantor directly holds one hundred (100) per cent. of the issued and outstanding shares in the Bareboat Charterer.
 
(C)
The execution and delivery to the Owner of this Guarantee is one of the conditions to the chartering of the Vessel under the Bareboat Charter.
 
(D)
This Deed is the Guarantee referred to in the Bareboat Charter.
 
OPERATIVE PROVISIONS
 
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.
 
“Party” means a party to this Guarantee.
 
“Security Period” means the period commencing on the date hereof and ending on the date on which the Owner is satisfied that all present and future liabilities of the Bareboat Charterer under or in connection with the Leasing Documents have been irrevocably paid in full.
 
CMBFL Seanergy | Guarantee
m.v. “Patriotship”
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1.3
References 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 66.6 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 each Leasing Document to which it is a party;
 
(b)
guarantees the punctual performance by the Bareboat Charterer of all its obligations under or in connection with any Leasing Document to which it is a party;
 
(c)
undertakes to pay to the Owner, within three (3) Business Days of 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 (or any of them) (taking into account any grace period for such payment as may be applicable under the terms of the Leasing Documents); and
 
(d)
undertakes to fully indemnify, as an independent and primary obligation, the Owner within three (3) Business Days of 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 (Guarantee and indemnity).
 
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).
 
CMBFL Seanergy | Guarantee
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SINGAPORE/90256717v1
2
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 (Principal and independent debtor), 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 within three (3) Business Days of its demand the amount of all expenses (including, without limitation, out of 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 (Costs of preservation of rights, enforcement etc.) is without prejudice to the Guarantor’s liabilities in respect of the Charterers’ obligations under any Leasing Document to which it is a party.
 
5
ADJUSTMENT OF TRANSACTIONS
 
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 any other Obligor on the ground that any Leasing Document to which that Obligor is a party, or a payment by that Obligor, was invalid or unenforceable or on any similar ground.
 
CMBFL Seanergy | Guarantee
m.v. “Patriotship”
SINGAPORE/90256717v1
3
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 under any law of its Original Jurisdiction except a tax deduction or withholding which the Guarantor is required by such law to make.
 
6.2
Grossing-up for taxes
 
If the Guarantor is required by law to make a tax deduction then the Guarantor shall increase the payment due from them to the Owners 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.
 
In this clause, “tax deduction” means any deduction or withholding for or on account of any present or future tax, other than a FATCA Deduction.
 
6.3
Indemnity and evidence of payment of taxes
 
(a)
The Guarantor shall fully indemnify the Owner within three (3) Business Days of the Owner’s demand in respect of all documented claims, expenses, liabilities and losses incurred by the Owner by reason of any failure of the Guarantor to make any tax deduction or by reason of any increased payment not being made on the due date for such payment in accordance with Clause 6.2 (Grossing up for taxes).
 
(b)
Within thirty (30) days after making tax deduction, the Guarantor shall deliver to the Owner any receipts, certificates or other documentary evidence satisfactory to the Owner that the tax had been paid to the appropriate taxation authority.
 
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 from the Guarantor 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 at the rate described in clause 37.5 of the Bareboat Charter and otherwise in accordance with the terms thereof. For the avoidance of doubt, it is confirmed that this Guarantee covers all interest payable under the relevant Leasing Document.
 
CMBFL Seanergy | Guarantee
m.v. “Patriotship”
SINGAPORE/90256717v1
4
8
SUBORDINATION
 
8.1
Until the end of the Security Period, 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 (or any of them), and, in particular, the Guarantor shall not:
 
(a)
claim, or in a bankruptcy of the Bareboat Charterer or any other Obligor prove for, any amount payable to the Guarantor by the Bareboat Charterer or any other Obligor, whether in respect of this Guarantee or any other transaction;
 
(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 other 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 any other Obligor
 
The Owner will not need to commence any proceedings under, or enforce any Security Interest created by, the Bareboat Charter or any other Leasing Document before claiming or commencing proceedings under this Guarantee.
 
9.2
Conclusive evidence of certain matters
 
As against the Guarantor:
 
(a)
any final award of an arbitration tribunal in London in connection with the Bareboat Charter or any other Leasing Document; and
 
(b)
any statement or admission of the other Obligor in connection with the Bareboat Charter or any other Leasing Document,
 
shall be binding and conclusive as to all matters of fact and law to which it relates.
 
9.3
Suspense account
 
The Owner may, for the purpose of claiming or proving in an insolvency of any Obligor, place any sum received or recovered under or by virtue of this Guarantee on a separate interest bearing suspense or other nominal account without applying it in satisfaction of the Bareboat Charterer’s or Guarantor’s obligations under any Leasing Document.
 
CMBFL Seanergy | Guarantee
m.v. “Patriotship”
SINGAPORE/90256717v1
5
10
JUDGMENTS AND CURRENCY INDEMNITY
 
10.1
Judgments relating to Bareboat Charter and other Leasing Documents
 
This Guarantee shall cover any amount payable by any other Obligor under or in connection with any judgment or award relating to the Bareboat Charter and any other Leasing Document.
 
10.2
Currency indemnity
 
If any sum due from the Guarantor to the Owner under this Guarantee or under any order, judgment or award 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)
at the Owner’s request, in the event that there are any restrictions whatsoever preventing the remittance of payments in Dollars to the Owner or otherwise adversely affecting the ability of the Owners to receive payments in or deal in Dollars (including without limitation, any suspension of the SWIFT system in any jurisdiction where the Owner would have received payment or would customarily receive payments);
 
(b)
making or lodging any claim or proof against the Guarantor, whether in its liquidation, any arrangement involving it or otherwise;
 
(c)
obtaining an order, judgment or award from any court or other tribunal; or
 
(d)
enforcing any such order, judgment or award,
 
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 10.2 (Currency indemnity), the “available rate of exchange” means the rate at which the Owner is able at the opening of business (Shanghai time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.
 
11
SUPPLEMENTAL
 
11.1
Continuing guarantee
 
This Guarantee shall remain in force as a continuing security interest at all times during the Security Period.
 
11.2
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.
 
11.3
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.
 
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SINGAPORE/90256717v1
6
11.4
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.
 
11.5
Guarantee not affected by other Security Interests
 
This Guarantee shall not impair, nor be impaired by, any other guarantee or any right of set-off or netting or to combine accounts which the Owner may now or later hold in connection with the Bareboat Charter or any other Leasing Document.
 
11.6
Guarantor bound by Bareboat Charter and incorporation of its terms
 
The Guarantor is fully familiar with, and agrees to all the provisions of, the Bareboat Charter and the other Leasing Documents to which it is not a party. The Guarantor agrees with the Owner:
 
(a)
to be bound by all provisions of the Bareboat Charter which are applicable to the Obligors in the same way as if those provisions had been set out (with any necessary modifications) in this Guarantee; and
 
(b)
that any provision of the Bareboat Charter which, by its terms, applies or relates to the Leasing Documents applies to this Guarantee.
 
11.7
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.
 
11.8
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.
 
11.9
Sovereign immunity
 
The Guarantor waives any rights of sovereign immunity which it or any of its assets may enjoy in any jurisdiction and subjects itself to civil and commercial law with respect to their obligations under this Guarantee.
 
11.10
Reinstatement
 
If any discharge, release or arrangement (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) is made by the Owner 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 Guarantee will continue or be reinstated as if the discharge, release or arrangement had not occurred.
 
CMBFL Seanergy | Guarantee
m.v. “Patriotship”
SINGAPORE/90256717v1
7
11.11
Release
 
Subject to Clause 11.10 (Reinstatement), at the end of the Security Period, the Owner shall, at the request and cost of the Guarantor, irrevocably and unconditionally release the guarantee created under this Guarantee.
 
12
ASSIGNMENT OR TRANSFER
 
12.1
Assignment or transfer 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.
 
12.2
Assignment by Guarantor
 
The Guarantor may not assign any of its rights or transfer any of its rights or obligations under this Guarantee.
 
13
NOTICES
 
13.1
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:
 
 
to the Owner:
to the same address and in the same manner as notices to the Owner under the Bareboat Charter.
     
 
to the Guarantor:
c/o Seanergy Management Corp.
154 Vouliagmenis Avenue,
16674 Glyfada, Athens, Greece
Attention:          Mr. Stavros Gyftakis
Email:                legal@seanergy.gr and finance@seanergy.gr
Tel:                    +30 210 8913520

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.
 
13.2
Service of notices
 
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.
 
CMBFL Seanergy | Guarantee
m.v. “Patriotship”
SINGAPORE/90256717v1
8
13.3
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 Event notice referred to under clause 47.2 of the Bareboat Charter,
 
and a demand under this Guarantee may refer to all amounts payable under or in connection with a Leasing Document without specifying a particular sum or aggregate sum.
 
14
INVALIDITY OF LEASING DOCUMENTS
 
14.1
Invalidity of Bareboat Charter or other Leasing Documents
 
In the event of:
 
(a)
the Bareboat Charter or any other 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 of the Obligor party thereto, the introduction of any law or any other matter resulting in that Obligor being discharged from liability under the Bareboat Charter or other Leasing Document, or the Bareboat Charter or other Leasing Document 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 the Bareboat Charter or other Leasing Document if the Bareboat Charter or other Leasing Document had been and remained entirely valid, legal and enforceable, or that Obligor had not suffered bankruptcy, or any combination of such events or circumstances, as the case may be, and the Bareboat Charterer had remained fully liable under it for liabilities whether invalidly incurred or validly incurred but subsequently retrospectively invalidated; and references in this Guarantee to amounts payable by that Obligor under or in connection with the Bareboat Charter or other Leasing Document shall include references to any amount which would have so been or become payable as aforesaid.
 
15
INCORPORATION OF BAREBOAT CHARTER PROVISIONS
 
15.1
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); and
 
clause 61 (FATCA).
 
15.2
Clause 15.1 (Incorporation of Bareboat Charter Provisions) 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.
 
16
GOVERNING LAW AND ENFORCEMENT
 
16.1
This Guarantee and any non-contractual obligations arising under or in connection with it are governed by English law.
 
CMBFL Seanergy | Guarantee
m.v. “Patriotship”
SINGAPORE/90256717v1
9
16.2
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 and finally resolved by 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 16 (Governing Law and Enforcement). 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.
 
16.3
The seat of the arbitration shall be London, England, even where any hearing takes place outside England.
 
16.4
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 the date that the notice is delivered to the other party 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 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.
 
16.5
Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator.
 
16.6
Where the reference is to three arbitrators the procedure for making appointments shall be in accordance with the procedure for full arbitration stated above.
 
16.7
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.
 
16.8
The language of the arbitration shall be English.
 
This Guarantee has been executed as a Deed and delivered on the date stated at the beginning of this Guarantee.
 
CMBFL Seanergy | Guarantee
m.v. “Patriotship”
SINGAPORE/90256717v1
10
EXECUTION PAGE
 
GUARANTOR
  
EXECUTED and DELIVERED as a DEED
)
by SEANERGY MARITIME HOLDINGS CORP.
)
acting by Stavros Gyftakis
) /s/ Stavros Gyftakis
being an attorney-in-fact
)
in the presence of:
)

Witness’ signature: /s/ Maria Moschopoulou
Witness’ name: Maria Moschopoulou
Witness’ address: 154 Vouliagmenis Avenue
 
16674 Glyfada, Athens Greece

OWNER
  
SIGNED, SEALED and DELIVERED as a DEED
)
by Sea 242 Leasing Co. Limited
)
by Zhou Ling
) /s/ Zhou Ling
    
its attorney-in-fact under power of attorney
)
dated 17 June 2021
)
in the presence of:
)

Witness’ signature: /s/ Xiao Jue
Witness’ name: Xiao Jue
Witness’ address: 22F, China Merchants Bank Building, NO. 1088
 
Lujiazui Ring Road, Shanghai, China

CMBFL Seanergy | Guarantee
m.v. “Patriotship”
SINGAPORE/90256717v1


11
Exhibit 4.59

Dated:   9 August, 2021
 
ALPHA BANK S.A.
(as lender)
 
- and -
 
FRIEND OCEAN NAVIGATION CO.
 
LORD OCEAN NAVIGATION CO., and
 
SQUIRE OCEAN NAVIGATION CO.
 
(as joint and several borrowers)
 
 
LOAN AGREEMENT
 
for a secured floating interest rate loan facility of up to
US$44,120,000
 


Theo V. Sioufas & Co.
Law Offices
Piraeus
 
TABLE OF CONTENTS
 
CLAUSE
HEADINGS
PAGE
     
1.
PURPOSE, DEFINITIONS AND INTERPRETATION
1
     
2.
THE LOAN
24
     
3.
INTEREST
26
     
4.
REPAYMENT - PREPAYMENT
 30
     
5.
PAYMENTS, TAXES AND COMPUTATION
34
     
6.
REPRESENTATIONS AND WARRANTIES
36
     
7.
CONDITIONS PRECEDENT
42
     
8.
COVENANTS
47
     
9.
EVENTS OF DEFAULT
61
     
10.
INDEMNITIES - EXPENSES - FEES
67
     
11.
SECURITY, APPLICATION, SET-OFF
73
     
12.
UNLAWFULNESS, INCREASED COST AND BAIL-IN
75
     
13.
OPERATING ACCOUNTS
77
     
14.
ASSIGNMENT, TRANSFER, PARTICIPATION, LENDING OFFICE
80
     
15.
MISCELLANEOUS
82
     
16.
JOINT AND SEVERAL LIABILITY OF THE BORROWERS
85
     
17.
NOTICES AND COMMUNICATIONS
87
     
18.
LAW AND JURISDICTION
89

SCHEDULES
 
1.
Form of Drawdown Notice
   
2.
Form of Insurance Letter

THIS AGREEMENT is dated the 9th  day of August, 2021 and made BETWEEN:
 
(1)
ALPHA BANK S.A., a banking société anonyme incorporated in and pursuant to the laws of the Hellenic Republic with its head office at 40 Stadiou Street, Athens, Greece, acting, except as otherwise herein provided, through its office at 93 Akti Miaouli, Piraeus, Greece, as lender (hereinafter called the “Lender”, which expression shall include its successors and assigns); and
 
(2)           (a) FRIEND OCEAN NAVIGATION CO., a company duly incorporated and validly existing under the laws of the Republic of Liberia having its registered office at 80 Broad Street, Monrovia, Republic of Liberia (and includes its successors) (the “Friend Borrower”);
 

 (b)
LORD OCEAN NAVIGATION CO., a company duly incorporated and validly existing under the laws of the Republic of Liberia having its registered office at 80 Broad Street, Monrovia, Republic of Liberia (and includes its successors (the “Lord Borrower); and
 

 (c)
SQUIRE OCEAN NAVIGATION CO., a company duly incorporated and validly existing under the laws of the Republic of Liberia having its registered office at 80 Broad Street, Monrovia, Republic of Liberia (and includes its successors) (the “Squire Borrower” and together with the Friend Borrower and the Lord Borrower hereinafter called the “Borrowers”).
 
AND IT IS HEREBY AGREED as follows:
 
1.
PURPOSE, DEFINITIONS AND INTERPRETATION

1.1
Amount and Purpose
 

 (a)
Amount: This Agreement sets out the terms and conditions upon and subject to which it is agreed that the Lender will make available to the Borrowers, on a joint and several basis, a secured term loan facility in the amount of up to forty four million one hundred twenty thousand Dollars ($44,120,000) by way of up to two (2) Tranches (the “Tranches”) as follows:
 

 (aa)
a first tranche in an amount of up to Dollars Thirty one million one hundred twenty thousand ($31,120,000) (the (“Tranche A”); and
 

 (bb)
a second tranche in an amount of up to the lesser of: (i) Dollars thirteen million ($13,000,000) and (ii) fifty per cent (50%) of the Market Value of the Friend Vessel (the (“Tranche B”) based on a valuation of such Vessel in accordance with  Clause 8.5(b) (Valuation of Vessels).
 

 (b)
Purpose: The Loan proceeds shall be used as follows:
 

 (i)
The Tranche A shall be used for the purpose of re- financing part of the Existing Indebtedness; and
 

 (ii)
The Tranche B shall be used as follows (aa) the amount of $6,670,000 for the purpose of financing part of the purchase price of the Friend Vessel and (bb) the amount of $6,330,000 for the purpose of partial prepayment of the Existing Indebtedness.
 
Both Tranches shall be made available in one advance simultaneously with the release by the Lender of the securities on the mv “LEADERSHIP” owned by Leader Shipping Co.
 
1
1.2
Definitions
 
Subject to Clause 1.3 (Interpretation) and Clause 1.4 (Construction of certain terms), in this Agreement (unless otherwise defined in the relevant Finance Document and unless the context otherwise requires) and the other Finance Documents each term or expression defined in the recital of the parties and in this Clause shall have the meaning given to it in the recital of the parties and in this Clause:
 
“Accounts Pledge Agreement” means an agreement to be entered into between the Borrowers and the Lender for the creation of a pledge over the Operating Accounts in favour of the Lender, in form and substance as the Lender may approve or require, as the same may from time to time be amended and/or supplemented;
 
 “Advance” means each borrowing of a portion of the Commitment by the Borrowers or (as the context may require) the principal amount of such borrowing and shall include the Tranches;
 
“Affiliate” means, in relation to any person, a subsidiary of that person or a parent company of that person or any other subsidiary of that parent company;
 
“Alternative Rate” means a rate agreed between the Lender and the Borrowers on the basis of which (instead of LIBOR) the interest rate is determined pursuant to Clause 3.6 (Market disruption – Non Availability);
 
“Approved Commercial Managers” in relation to a Vessel  means for the time being Seanergy Management and Fidelity or any other person appointed by the relevant Borrower with the prior written consent of the Lender not to be unreasonably withheld or delayed, as the commercial manager of the Vessel owned by it, and includes its successors in title;
 
“Approved Managers” means the Approved Commercial Managers and the Approved Technical Managers.
 
“Approved Manager’s Undertaking(s)” means a letter/letters of undertaking and subordination to be executed by each of the Approved Managers, as commercial, or as the case may be, technical manager of each Vessel respectively, in favour of the Lender, such Approved Manager’s Undertaking to be and in form and substance as the Lender may approve or require, as the same may from time to time be amended and/or supplemented (together the “Approved Manager’s Undertaking(s)”);
 
“Approved Technical Managers” in relation to: (i) the “FRIENDSHIP”, means for the time being V.Ships Greece and Seanergy Shipmanagement (ii) each of the “LORDSHIP” and “SQUIRESHIP” means for the time being, V.Ships Cyprus or any other person appointed by the Owner of such Vessel with the prior written consent of the Lender not to be unreasonably withheld or delayed, as the technical manager of the Vessel owned by it, and includes its successors in title;
 
 “Approved Shipbrokers” means any first class independent firm of internationally known shipbrokers, appointed or acceptable by the Lender and “Approved Shipbroker” means any of them;
 
“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;
 
2
“Assignable Charterparty”  in relation to:
 

 (a)
the “SQUIRESHIP”, means the Time Charterparty dated Lausanne, 17 October 2018 made between the Squire Borrower, as owner and ST Shipping and Transport Pte. Ltd of Singapore, as charterers, as subsequently amended providing for the time charter of such Vessel for a period terminating of minimum 36 to maximum 42 months with two optional periods of minimum 11 to maximum 13 months (the “Squireship Charterparty”); and
 

 (b)
in relation to a Vessel, means any time or bareboat charterparty (irrespective of the duration of such bareboat charterparty), consecutive voyage charter or contract of affreightment or related document in respect of the employment of that Vessel having a duration (or capable of exceeding a duration) of more than 13 months and any guarantee of the obligations of the charterer under such charter in respect of that Vessel, whether now existing or hereinafter entered or to be entered into by the Owner thereof or any person, firm or company on its behalf and a charterer, at a daily rate and on terms and conditions acceptable to the Lender (and shall include any addenda thereto)  ;
 
“Assignee” has the meaning ascribed thereto in Clause 14.3 (Assignment by Lenders);
 
“Availability Period” means the period starting on the date hereof and ending on:
 

 (a)
the  20th  day of August, 2021 or until such later date as the Lender may agree in writing; or
 

 (b)
such earlier date (if any): (i) on which the whole Commitment has been advanced by the Lender to the Borrowers, or (ii) on which the Commitment is reduced to zero pursuant to Clauses 3.6 (Market disruption – Non Availability), 9.2 (Consequences of Default – Acceleration), 12.1 (Unlawfulness) or any other Clause of this Agreement;
 
“Bail-In Action” means the exercise of any Write-down and Conversion Powers;
 
“Bail-In Legislation” means:
 

 (a)
in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time; and
 

 (b)
in relation to any other state, any analogous law or regulation from time to time which requires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation;
 
“Balloon Instalments” has the meaning given in Clause 4.1 (Repayment);
 
“Banking Day” means a day (other than a Saturday or Sunday) on which banks are open for general business:
 

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

 (b)
in New York, Athens and Piraeus in respect of any payment which is required to be made under a Finance Document; and
 
3

 (c)
in Athens, Piraeus and in each country or place in or at which an act is required to be done under this Agreement in accordance with the usual practice of the relevant Lender regarding any other action to be taken under this Agreement or any other Finance Document;
 
“Basel II Accord” means the ”International Convergence of Capital Measurement and Capital Standards, a Revised Framework” published by the Basel Committee on Banking Supervision in June 2004 in the form existing on the date of this Agreement;
 
“Basel II Approach” means either the Standardised Approach or the relevant Internal Ratings Based Approach (each as defined in the Basel II Accord) adopted by the Lender (or its holding company) for the purposes of implementing or complying with the Basel II Accord;
 
“Basel II Regulation” means (a) any law or regulation implementing the Basel II Accord (including the relevant provisions of CRD IV and CRR) to the extent only such law or regulation re-enacts and/or implements the requirement of the Basel II Accord but excluding any provision of such law or regulation implementing the Basel III Accord or (b) any Basel II Approach adopted by the Lender(s);
 
“Basel III Accord” means:
 

 (a)
the agreements on capital requirements, 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;
 
“Basel III Regulation” means any law or regulation implementing the Basel III Accord save and to the extent that it re-enacts a Basel II Regulation;
 
“Borrowed Money” means Financial Indebtedness incurred in respect of (i) money borrowed or raised, (ii) any bond, note, loan stock, debenture or similar instrument, (iii) acceptance of documentary credit facilities, (iv) deferred payments for assets or services acquired, (v) rental payments under leases (whether in respect of land, machinery, equipment or otherwise) entered into primarily as a method of raising finance or of financing the acquisition of the asset leased, (vi) guarantees, bonds, stand-by letters of credit or other instruments issued in connection with the performance of contracts and (vii) guarantees or other assurances against financial loss in respect of Financial Indebtedness of any person falling within any of sub-paragraphs (i) to (vi) above;
 
“Borrowers” means jointly and severally the Friend Borrower, the Lord Borrower and the Squire Borrower, as specified at the beginning of this Agreement and “Borrower” means either of them as the context may require;
 
4
“Break Costs” means the amount (if any) by which:
 

 (a)
the interest (excluding any applicable Margin)  which the Lender should have received for the period from the date of receipt of all or any part of its participation in the Loan or the relevant part of it or any sum due and payable but unpaid by a Security Party under the Security Documents to the last day of the current Interest Period in respect of the Loan or the relevant part of it or any sum due and payable but unpaid by a Security Party under the Security Documents, had the principal amount received been paid on the last day of that Interest Period;
 
exceeds:
 

 (b)
the amount which the Lender would be able to obtain by placing an amount equal to the principal amount or the relevant part of it or any sum due and payable but unpaid by a Security Party under the Security Documents received by it on deposit with a leading bank in the London Interbank Market for a period starting on the Banking Day following receipt or recovery and ending on the last day of the current Interest Period;
 
“Charterparty Assignment” means, in relation to a Vessel, an assignment of the rights of its Owner under the Squireship Charterparty and any other Assignable Charterparty and any guarantee of such Assignable Charterparty executed or to be executed by its Owner in favour of the Lender and the acknowledgement of notice of the assignment in respect of such Assignable Charterparty to be obtained (on best effort basis by its Owner) in form and substance as the Lender may approve or require, as the same may from time to time be amended and/or supplemented and shall include the Squireship Charterparty and, “Charterparty Assignments” means all of them ;
 
“Classification” in relation to a Vessel means the classification referred to in the Mortgage registered thereon with the Classification Society or such other classification society as the Lender shall, at the request of the Borrowers, have agreed in writing, shall be treated as the Classification Society for the purposes of the Finance Documents;
 
“Classification Society” means such classification society which is a member of IACS (other than the China Classification Society and the Russian Maritime Registry of Shipping)  and which the Lender shall, at the request of the Borrowers, have agreed in writing to be treated as the Classification Society for the purposes of the Finance Documents;
 
“Commitment” means the amount which the Lender agreed to lend to the Borrowers under Clause 2.1 (Commitment to Lend) as reduced by any relevant term of this Agreement;
 
“Commitment Letter” means the Commitment Letter dated 21 July, 2021 addressed by the Lender to the Borrowers and accepted by them on the same date, and shall include any amendments or addenda thereto;
 
“Compulsory Acquisition” in relation to a Vessel means requisition for title or other compulsory acquisition, requisition, appropriation, expropriation, deprivation, forfeiture or confiscation for any reason of such Vessel, whether for full or part consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any Government Entity or other competent authority, or by any person or persons claiming to be or to represent any Government Entity, whether de jure or de facto, but shall exclude requisition for use or hire not involving requisition of title;
 
“Corporate Guarantee” means an irrevocable and unconditional guarantee given or, as the context may require, to be given by the Corporate Guarantor in form and substance satisfactory to the Lender as security for the Outstanding Indebtedness and any and all other obligations of the Borrowers under this Agreement and the Security Documents, as the same may from time to time be amended and/or supplemented;
 
5
“Corporate Guarantor” means SEANERGY MARITIME HOLDINGS CORP. a company lawfully incorporated and validly existing under the laws of the Republic of the Marshall Islands, and/or any other person nominated by the Borrowers and acceptable to the Lender which may give a Corporate Guarantee, and includes its successors in title;
 
“CRD IV” means:
 

 (i)
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, supplemented or restated; and
 
 
(c)
any other law or regulation which implements Basel III;
 
“CRR” means Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending regulation (EU) No. 648/2012, as amended, supplemented or restated;
 
“Default” means any Event of Default which is continuing or any event which with the giving of notice or lapse of time or the satisfaction of any other condition (or any combination thereof) would constitute an Event of Default;
 
“Default Rate” means that rate of interest per annum which is determined in accordance with the provisions of Clause 3.4 (Default Interest);
 
 “DOC” means a document of compliance issued to an Operator in accordance with rule 13 of the ISM Code;
 
“Dollars” (and the sign “$”) means the lawful currency for the time being of the United States of America;
 
“Drawdown Date” means the date, being a Banking Day, requested by the Borrowers for the Loan to be made available, or (as the context requires) the date on which the Loan is actually made available;
 
“Drawdown Notice” means a notice substantially in the terms of Schedule 1 (Form of Drawdown Notice) (or in any other form which the Lender approves);
 
“Earnings” in relation to a Vessel means all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Owner thereof and which arise out of the use or operation of that Vessel, including (but not limited to) all freight, hire and passage moneys, compensation payable to the Owner thereof in the event of requisition of that Vessel for hire, remuneration for salvage and towage services, demurrage and detention moneys, contributions of any nature whatsoever in respect of general average, damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of that Vessel and any other earnings whatsoever due or to become due to the Owner thereof in respect of that Vessel and all sums recoverable under the Insurances in respect of loss of Earnings and includes, if and whenever that Vessel is employed on terms whereby any and all such moneys as aforesaid are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing agreement which is attributable to that Vessel;
 
6
“EEA Member Country” means any member state of the European Union, Iceland, Liechtenstein and Norway;
 
“Environmental Affiliate” means any agent or employee of any of the Borrowers or any other Relevant Party or any person having a contractual relationship with any of the Borrowers or any other Relevant Party in connection with any Relevant Ship or her operation or the carriage of cargo thereon;
 
“Environmental Approval” means any consent, authorisation, licence or approval of any governmental or public body or authorities or courts applicable to any Relevant Ship or her operation or the carriage of cargo thereon and/or passengers therein and/or provisions of goods and/or services on or from the Relevant Ship required under any Environmental Law;
 
“Environmental Claim” means:
 

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

 (b)
any claim by any other person which relates to an Environmental Incident,
 
and “claim” means (i) a claim for damages, compensation, fines, penalties or any other payment of any kind which exceeds $650,000 (or the equivalent in any other currency) per Vessel per incident or (ii) one or more claims for damages, compensation, fines, penalties or any other payment of any kind, the subject matter of which exceeds $650,000 (or the equivalent in any other currency) in aggregate, whether such claim or claims are in relation to one or more Vessels and whether resulting from one incident or a series of incidents;
 
“Environmental Incident” means (i) any release of Material of Environmental Concern from a Vessel, (ii) any incident in which Material of Environmental Concern is released from a vessel other than the Vessels and which involves collision between a Vessel and such other vessel or some other incident of navigation or operation, in either case, where a Vessel, the Borrowers (or any of them) or the Approved Manager are actually or allegedly at fault or otherwise liable (in whole or in part) or (iii) any incident in which Material of Environmental Concern is released from a vessel other than the Vessels and where a Vessel is actually or potentially liable to be arrested as a result and/or where the Borrowers (or any of them) or the Approved Manager are actually or allegedly at fault or otherwise liable;
 
“Environmental Laws” means all national, international and state laws, rules, regulations, treaties and conventions applicable to any Relevant Ship pertaining to the pollution or protection of human health or the environment including, without limitation, the carriage of Materials of Environmental Concern and actual or threatened emissions, spills, releases or discharges of Materials of Environmental Concern and actual or threatened emissions, spills, releases or discharges of Materials of Environmental Concern from any Relevant Ship  (including, without limitation, the United States Oil Pollution Act of 1990 and any comparable laws of the individual States of the United States of America);
 
“EU Bail-In Legislation Schedule” means the document described as such and published by the Loan Market Association (or any successor person) from time to time;
 
“Event of Default” means any event or circumstance set out in Clause 9.1 (Events) or described as such in any other of the Finance Documents;
 
7
“Existing Loan Agreement” means:
 
a loan agreement dated 20 May 2021 made between (A) the Lord Borrower, the Squire Borrower and Leader Shipping Co. as joint and several borrowers and (B) the Lender, as lender on the terms and conditions of which the Lender agreed to advance and has advanced to the such borrowers a loan of up to $37,450,000;
 
“Existing Indebtedness” means the principal amount owing to the Lender under the Existing Loan Agreement;
 
“Expenses” means the aggregate at any relevant time (to the extent that the same have not been received or recovered by the Lender) of:
 

 (a)
all losses, liabilities, costs, charges, expenses, damages and outgoings of whatever nature, (including, without limitation, Taxes, repair costs, registration fees and insurance premiums, crew wages, repatriation expenses and seamen’s pension fund dues) suffered, incurred, charged to or paid or committed to be paid by the Lender in connection with the exercise of the powers referred to in or granted by any of the Finance Documents or otherwise payable by the Borrowers or any of them in accordance with the terms of any of the Finance Documents;
 

 (b)
the expenses referred to in Clause 10.2 (Expenses); and
 

 (c)
interest on all such losses, liabilities, costs, charges, expenses, damages and outgoings from, in the case of Expenses referred to in sub-paragraph (b) above, the date on which such Expenses were demanded by the Lender from the Borrowers and in all other cases, the date on which the same were suffered, incurred or paid by the Lender until the date of receipt or recovery thereof (whether before or after judgement) at the Default Rate (as conclusively certified by the Lender);
 
“FATCA” means:
 

 (a)
sections 1471 to 1474 of the US Internal Revenue Code of 1986 (the “Code”) or any associated regulations or other associated official guidance;
 

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

 (c)
any agreement pursuant to the implementation of paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction;
 
“FATCA 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;
 
“Fidelity” means Fidelity Marine Inc., a corporation incorporated in the Marshall Islands having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands and having an office established in Greece pursuant to the Greek laws 378/68, 27/75, 2234/94, 3752/09 and 4150/13 (as amended and in force at the date hereof) at 7, Vassileos Georgiou B’ Street, Voula, Postal Code 16673, Attiki, Greece;
 
8
“Final Maturity Date” means (i) in respect of Tranche A, 21 May 2025 and (ii) in respect of Tranche B, the fourth (4th) anniversary of the Drawdown Date;
 
“Finance Documents” means, together, this Agreement, the Security Documents, the Insurance Letters and any other document designated as such by the Lender and the Borrowers;
 
“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 or any other agreement having the commercial effect of a borrowing or raising of money by the debtor;
 

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

 (f)
under a guarantee, indemnity or similar obligation entered into by the debtor in respect of a liability of another person which would fall within (a) to (e) if the references to the debtor referred to the other person;
 
“Financial Year” means, in relation to the Borrowers, each period of one (1) year commencing on 1st January thereof in respect of which financial statements referred to in Clause 8.1(f) (Financial statements) are or ought to be prepared;
 
“Flag State”  in relation to a Vessel  means Liberia or such other state or territory designated in writing by the Lender, at the request of an Owner, as being the “Flag State” of such Vessel for the purposes of the Security Documents;
 
“General Assignment” means, in relation to each Vessel, the first priority assignment of the Earnings, Insurances and Requisition Compensation collateral to the Mortgage relative to such Vessel, executed or (as the context may require) to be executed by the Owner thereof in favour of the Lender, in form and substance as the Lender may approve or require, as the same may from time to time be amended and/or supplemented (together, the “General Assignments”);
 
“Government Entity” means and includes (whether having a distinct legal personality or not) any national or local government authority, board, commission, department, division, organ, instrumentality, court or agency and any association, organisation or institution of which any of the foregoing is a member or to whose jurisdiction any of the foregoing is subject or in whose activities any of the foregoing is a participant;
 
“Governmental Withholdings” means withholdings and any restrictions or conditions resulting in any charge whatsoever imposed, either now or hereafter, by any sovereign state or by any political sub-division or taxing authority of any sovereign state;
 
9
“Group” means together the Borrowers, the Corporate Guarantor, any Affiliate of any  thereof and all other shipping companies now or in the future substantially directly or indirectly owned and/or controlled by the same Shareholders as the Borrowers and “member of the Group” shall be construed accordingly;
 
“Insurance Letter” in relation to a Vessel means a letter from the Owner thereof in the form of Schedule 2 (Form of Insurance Letter), and “Insurance Letters” means any or all of them, as the context may require;
 
“Insurances” in relation to a Vessel means all policies and contracts of insurance (including, without limitation, all entries of such Vessel in a protection and indemnity, hull and machinery, war risks or other mutual insurance association) which are from time to time in place or taken out or entered into by or for the benefit of its Owner (whether in the sole name of its Owner or in the joint names of its Owner and the Lender, however without the Lender being liable for payment of premiums, contributions or calls) in respect of such Vessel and its earnings or otherwise howsoever in connection with such Vessel and all benefits of such policies and/or contracts (including all claims of whatsoever nature and return of premiums);
 
“Interest Payment Date” means in respect of the Loan or any part thereof in respect of which a separate Interest Period is fixed the last day of the relevant Interest Period and in case of any Interest Period longer than three (3) months the date(s) falling at successive three (3) monthly intervals during such longer Interest Period and the last day of such Interest Period, provided, however, that if any of the aforesaid dates falls on a day which is not a Banking Day the Borrowers shall pay the accrued interest on the first Banking Day thereafter unless the result of such extension would be to carry such Interest Payment Date over into another calendar month in which event such Interest Payment Date shall be the immediately preceding Banking Day;
 
“Interest Period” means in relation to the Loan or any part thereof, each period for the calculation of interest in respect of the Loan or such part ascertained in accordance with Clauses 3.2 (Selection of Interest Period) and 3.3 (Determination of Interest Periods);
 
“ISM Code” means in relation to its application to the Borrowers, the Vessels and their operation:
 

 (a)
“The International Management Code for the Safe Operation of Ships and for Pollution Prevention”, currently known or referred to as the “ISM Code”, adopted by the Assembly of the International Maritime Organisation by Resolution A. 741(18) on 4th November, 1993 and incorporated on 19th May, 1994 into chapter IX of the International Convention for the Safety of Life at Sea 1974 (SOLAS 1974); and
 

 (b)
all further resolutions, circulars, codes, guidelines, regulations and recommendations which are now or in the future issued by or on behalf of the International Maritime Organisation or any other entity with responsibility for implementing the ISM Code, including without limitation, the “Guidelines on implementation or administering of the International Safety Management (ISM) Code by Administrations” produced by the International Maritime Organisation pursuant to Resolution A. 788(19) adopted on 25th November, 1995;
 
as the same may be amended, supplemented or replaced from time to time;
 
10
“ISM Code Documentation” includes:
 

 (a)
the DOC and SMC issued by a classification society in all respects acceptable to the Lender in its absolute discretion pursuant to the ISM Code in relation to the Vessels within the period specified by the ISM Code;
 

 (b)
all other documents and data which are relevant to the ISM SMS and its implementation and verification which the Lender may require by request; and
 

 (c)
any other documents which are prepared or which are otherwise relevant to establish and maintain each Vessel’s or each Owner’s compliance with the ISM Code which the Lender may require by request;
 
“ISM SMS” means the safety management system which is required to be developed, implemented and maintained under the ISM Code;
 
“ISPS Code” means the International Ship and Port Security Code of the International Maritime Organization and includes any amendments or extensions thereto and any regulation issued pursuant thereto;
 
“ISSC” in relation to a Vessel means an International Ship Security Certificate issued in respect of such Vessel pursuant to the ISPS Code;
 
“Lender” means the Lender as specified in the beginning of this Agreement, and includes its successors in title and transferees;
 
“Lending Office” means the office of the Lender appearing at the beginning of this Agreement or any other office of the Lender designated by the Lender as the Lending Office by notice to the Borrowers;
 
“LIBOR” means, in relation to the Loan or any part of the Loan:
 

 (a)
the applicable Screen Rate at or about 11.45 a.m. (London time) on  the Quotation Day for Dollars and for a period equal in length to the Interest Period then applicable to the Loan or that part of the Loan; or
 

 (b)
as otherwise determined pursuant to Clause 3.6(d) (Negotiation of alternative rate of interest),
 
and if, in either case, that rate is less than zero, LIBOR shall be deemed to be zero;
 
“Loan” means the aggregate principal amount borrowed by the Borrowers in respect of the Commitment or (as the context may require) the principal amount owing to the Lender under this Agreement at any time;
 
“Major Casualty” in relation to a Vessel means any casualty to such Vessel in respect whereof the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds the Major Casualty Amount;
 
“Major Casualty Amount” means Six hundred fifty thousand Dollars ($650,000) or the equivalent in any other currency;
 
“Management Agreement” in relation to a Vessel means the agreement made between the Owner thereof and the respective Commercial, or as the case may be, Technical Approved Manager providing (inter alia) for such Approved Manager to manage such Vessel, as amended and/or supplemented from time to time (together, the “Management Agreements”);
 
11
“Margin” means:
 

 (i)
in respect of Tranche A, three point five zero per centum (3.50%) per annum; and
 

 (ii)
in respect of Tranche B, three point twenty five per centum (3.25%) per annum;
 
“Market Value” in relation to a Vessel means the market value of such Vessel as determined in accordance with Clause 8.5(b) (Valuation of Vessels);
 
“Material of Environmental Concern” means and includes pollutants, contaminants, toxic substances, oil as defined in the United States Oil Pollution Act of 1990 and all hazardous substances as defined in the United States Comprehensive Environmental Response, Compensation and Liability Act 1980;
 
“Material Adverse Change” means any event or series of events which, in the opinion of the Lender, is likely to have a Material Adverse Effect;
 
“Material Adverse Effect” means a material, in the reasonable opinion of the Lender, adverse effect on:
 

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

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

 (c)
the validity, legality or enforceability of any Finance Document or the rights and remedies of the Lender under any Finance Document;
 
“MII” has the meaning given in Clause 10.9 (MII costs);
 
“month” means a period beginning in one calendar month and ending in the next calendar month on the day numerically corresponding to the day of the calendar month on which it started, provided that (i) if the period started on the last Banking Day in a calendar month or if there is no such numerically corresponding day, it shall end on the last Banking Day in such next calendar month and (ii) if such numerically corresponding day is not a Banking Day, the period shall end on the next following Banking Day in the same calendar month but if there is no such Banking Day it shall end on the preceding Banking Day and “months” and “monthly” shall be construed accordingly;
 
“Mortgage” in relation to a Vessel means the first preferred ship mortgage or, as the case may be, first priority ship mortgage and the deed of covenant supplemental thereto on that Vessel to be executed by the Owner thereof in favour of the Lender in form and substance as the Lender may approve or require, as the same may from time to time be amended and/or supplemented (together, the “Mortgages”);
 
“Mortgaged Vessel(s)” means the Vessel(s) which remain mortgaged in favour of the Lender pursuant to this Agreement at any relevant time hereunder;
 
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“Operating Account” means the account maintained in the name of each Owner with the Lending Office or with any other branch of the Lender or any other office of the Lender or with such other bank as may be required by and at the discretion of the Lender pursuant to Clause 13.7 (Relocation of Operating Accounts) and shall include any sub-accounts or call accounts (whether in Dollars or any other currency) opened under the same designation or any revised designation or number from time to time notified by the Lender to the Borrowers, to which (inter alia) all Earnings of the relevant Vessel and/or any other moneys are to be paid in accordance with the provisions of this Agreement and/or the relevant General Assignment and/or any of the other Finance Documents (together, the “Operating Accounts”);
 
“Operating Expenses” means the voyage and operating expenses of the Vessels, including, but not limited to, the expenses for operating, crewing, victualing, insuring, maintaining, repairing and generally trading the Vessels (and if applicable, voyage expenses), the expenses for spares, administration and management of the Vessels (inclusive of the management fees) as well as the reserves that the Borrowers, acting reasonably, consider necessary for the commercial operation of the Vessels and the costs of intermediate and special surveys and dry docking of the Vessels;
 
“Operator” means any person who is from time to time during the Security Period concerned in the operation of the Vessels (or any of them) and falls within the definition of “Company” set out in rule 1.1.2. of the ISM Code;
 
“Outstanding Indebtedness” means the aggregate of (a) the Loan and interest accrued and accruing thereon, (b) the Expenses and (c) all other sums of any nature (together with all interest on any of those sums) which from time to time may be payable by the Borrowers to the Lender pursuant to the Finance Documents, whether actually or contingently and (d) any damages payable as a result of any breach by the Borrowers of any of the Finance Documents and (e) any damages or other sums payable as a result of any of the obligations of the Borrowers under or pursuant to any of the Finance Documents being disclaimed by a liquidator or any other person, or, where the context permits, the amount thereof for the time being outstanding;
 
“Owner” in relation to a Vessel means the owner of such Vessel as specified in the definition of the Vessels in this Clause 1.2 and “Owners” means any or all of them, as the context may require;
 
“Party” means a party to this Agreement, and “Parties” means any or all of them, as the context may require;
 
“Permitted Security Interest” means:
 

 (a)
Security Interests created by the Finance Documents;
 

 (b)
liens for unpaid crew’s wages in accordance with usual maritime practice;
 

 (c)
liens for salvage;
 

 (d)
liens arising by operation of law for not more than 2 months’ prepaid hire under any charter in relation to such Vessel not prohibited by this Agreement;
 

 (e)
liens for master’s disbursements incurred in the ordinary course of trading and any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of a Vessel, provided such liens do not secure amounts more than 60 days overdue (unless the overdue amount is being contested in good faith by appropriate steps) and, in the case of liens for repair or maintenance, in such Vessel is put in the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed the Major Casualty Amount provided that (i) either that person has first given to the Lender and in terms satisfactory to it a written undertaking not to exercise any lien on such Vessel or her earnings for the cost of such work or (ii) the previous consent of the Lender shall have been obtained (which consent shall not be unreasonably withheld);
 
13

 (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 Owner is 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 for payment other than taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made;
 
 “Quotation Day” means, in respect of any Interest Period in respect of which an interest rate is to be determined, the date falling two (2) Banking Days before the first day of that Interest Period unless market practice differs in the London interbank market, in which case the Quotation Day will be determined by the Lender in accordance with market practice in the London interbank market (and if quotations would normally be given by leading banks in the London interbank market on more than one day, the Quotation Day will be the last of those days);
 
“Registry” in relation to a Vessel means the offices of such registrar, commissioner or representative of the relevant Flag State who is duly authorised to register such Vessel, its Owner’s title thereto and the relevant Mortgage over such Vessel under the laws and flag of the relevant Flag State;
 
“Regulatory Agency” means the Government Entity or other organization in the relevant Flag State which has been designated by the government of the relevant Flag State to implement and/or administer and/or enforce the provisions of the ISM Code;
 
“Related Company” means any company or other entity which is an Affiliate of the Borrowers and or which is under the control, direct or indirect, of the Corporate Guarantor and “Related Companies” means any or all of them, as the context may require; check
 
“Relevant Jurisdiction” means any jurisdiction in which or where any Security Party is incorporated, resident, domiciled, has a permanent establishment, carries on, or has a place of business or is otherwise effectively connected;
 
“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 Party” means each Borrower and each Borrower’s Related Companies (if any), and “Relevant Parties” means any or all of them, as the context may require;
 
“Relevant Ship” means the Vessels and any other vessel from time to time (whether before or after the date of this Agreement) owned, managed or crewed by, or chartered to, by any Relevant Party, and “Relevant Ships” means any or all of them, as the context may require;
 
“Repayment Date” means each of the dates specified in Clause 4.1 (Repayment) on which the Repayment Instalments shall be payable by the Borrowers to the Lender, and “Repayment Dates” means any or all of them, as the context may require;
 
14
“Repayment Instalment” means each instalment of the Loan which becomes due for repayment by the Borrower to the Lender on a Repayment Date pursuant to Clause 4.1 (Repayment) (together, the “Repayment Instalments”);
 
“Replacement Benchmark” means a benchmark rate which is:
 

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

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

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

 (b)
in the opinion of the Lender and the Borrowers, generally accepted in the international loan markets as the appropriate successor to a Screen Rate; or
 

 (c)
in the opinion of the Lender and the Borrowers, an appropriate successor to a Screen Rate;
 
“Requisition Compensation” in relation to a Vessel means all sums of money or other compensation from time to time payable during the Security Period by reason of Compulsory Acquisition of such Vessel otherwise than by requisition for hire;
 
“Resolution Authority” means any body which has authority to exercise any Write-down and Conversion Powers;
 
“Sanctions” means any economic, financial or trade sanctions laws, regulations, embargoes or other restrictive measures adopted, administered, enacted or enforced by any Sanctions Authority, or otherwise imposed by any law or regulation, compliance with which is reasonable in the ordinary course of business of the Borrowers (or any of them), any other Security Party and the Lender or to which the Borrowers, any other Security Party and the Lender are subject (which shall include without limitation, any extra-territorial sanctions imposed by law or regulation of the United States of America);
 
“Sanctions Authority” means:
 

 (a)
the government of the United States of America;
 

 (b)
the United Nations;
 

 (c)
the European Union (or the governments of any of its member states);
 

 (d)
the United Kingdom;
 

 (e)
the Flag State; or
 

 (f)
the respective governmental institutions and agencies of any of the foregoing including the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”), the United States Department of State, the United States Department of Commerce and Her Majesty’s Treasury;
 
15
“Sanctions Restricted Jurisdiction” means any country or territory which is the target of country-wide or territory-wide Sanctions, including as at the date of this Agreement, Iran, Sudan, Syria, Crimea, North Korea and Cuba;
 
“Sanctions Restricted Person” means a person or vessel:
 

 (a)
that is, or is directly or indirectly, owned or controlled (as such terms are defined by the relevant Sanctions Authority) by, or acting on behalf of, one or more persons or entities on any list (each as amended, supplemented or substituted from time to time) of restricted entities, persons or organisations (or equivalent) published by a Sanctions Authority;
 

 (b)
that is located or resident in or incorporated under the laws of, or owned or controlled by, a person located or resident in or incorporated under the laws of a Sanctions Restricted Jurisdiction; or
 

 (c)
that is otherwise the target or 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 (before any correction, recalculation or republication by the administrator) 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 Lender may specify another page or service displaying the relevant rate after consultation with the Borrowers;
 
“Screen Rate Replacement Event” means, in relation to a Screen Rate:
 

 (a)
the methodology, formula or other means of determining that Screen Rate has, in the opinion of the Lender and the Borrowers, materially changed;
 

 (b)
(i)
 

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

 (B)
information is published in any order, decree, notice, petition or filing, however described, or filed with a court, tribunal, exchange, regulatory authority or similar administrative, regulatory or judicial body which reasonably confirms that the administrator of that Screen Rate is insolvent,
 
provided that, in each case, at that time, there is no successor administrator to continue to provide that Screen Rate;
 

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

 (iii)
the supervisor of the administrator of that Screen Rate publicly announces that such Screen Rate has been or will be permanently or indefinitely discontinued; or
 
16

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

 (v)
in the opinion of the Lender and the Borrowers, that Screen Rate is otherwise no longer appropriate for the purposes of calculating interest under this Agreement;
 
“Seanergy Management” means Seanergy Management Corp., a corporation incorporated in the Marshall Islands having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands and having an office established in Greece pursuant to the Greek laws 378/68, 27/75, 2234/94, 3752/09 and 4150/13 (as amended and in force at the date hereof) at 154 Vouliagmenis Avenue, 16674Glyfada, Athens, Greece;
 
“Seanergy Shipmanagement” means Seanergy Shipmanagement Corp., a corporation incorporated in the Marshall Islands having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands and having an office established in Greece pursuant to the Greek laws 378/68, 27/75, 2234/94, 3752/09 and 4150/13 (as amended and in force at the date hereof) at 154 Vouliagmenis Avenue, 16674Glyfada, Attiki, Greece;
 
“Security Documents” means:
 

 (a)
the Accounts Pledge Agreement;
 

 (b)
the Approved Manager’s Undertakings;
 

 (c)
the General Assignments;
 

 (d)
the Mortgages;
 

 (e)
the Charterparty Assignment in respect of any Assignable Charterparty;
 

 (f)
the Corporate Guarantee; and
 

 (h)
any other agreement or document (whether creating a Security Interest or not) that may have been or shall from time to time after the date of this Agreement be executed to guarantee and/or secure all or any part of the Outstanding Indebtedness and/or any and all other obligations of the Borrowers to the Lender pursuant to this Agreement and any other moneys from time to time owing or payable by the Borrowers under or in connection with this Agreement and/or any of the other documents referred to in this definition, as each such document may from time to time be amended and/or supplemented, and “Security Document” means any of them as the context may require;
 
“Security Interest” means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrest, seizure, garnishee order (whether nisi or absolute) or any other order or judgement arrangements having a similar effect) or other encumbrance of any kind or the security rights of a plaintiff under an action in rem or any right conferring a priority of payment in respect of any obligation of any person;
 
“Security Party” means each Borrower, the Corporate Guarantor and any other person (other than the Lender, Fidelity, V.Ships Greece, V.Ships Cyprus and any charterer) who, as a surety or mortgagor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a document falling within the last paragraph of the definition of “Finance Documents”, and “Security Parties” means any or all of them, as the context may require;
 
17
“Security Period” means the period commencing on the Drawdown Date and ending on the date on which the Lender notifies the Borrower and the Security Parties that:
 

 (a)
all amounts which have become due for payment by the Borrower or any Security Party under the Finance Documents have been paid;
 

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

 (c)
neither the Borrower nor any Security Party has any future or contingent liability under Clauses 11 (Indemnities- Expenses-Fees) or 5 (Payments, Taxes, Loan Account and Computation) or any other provision of this Agreement or another Finance Document;
 
“Security Requirement” means the amount in Dollars (as certified by the Lender whose certificate shall, in the absence of manifest error, be conclusively binding on the Borrower) which is at any relevant time equal to the Security Requirement Ratio;
 
“Security Requirement Ratio” means one hundred and twenty five (125%) of the Loan outstanding at the relevant time;
 
“Security Value” means the amount in Dollars (as certified by the Lender whose certificate shall, in the absence of manifest error, be conclusive and binding on the Borrowers) which, at any relevant time is the aggregate of (i) the aggregate Market Value of the Mortgaged Vessels as most recently determined in accordance with Clause 8.5(b) (Valuation of Vessels), and (ii) the market value of any additional security provided under Clause 8.5(a) (Security shortfall-Additional Security) and accepted by the Lender (if any);
 
 “SMC” means a safety management certificate issued in respect of the Vessels in accordance with rule 13 of the ISM Code;
 
“Subsidiary” of a person means any company or entity directly or indirectly controlled by such person;
 
“Taxes” includes all present and future taxes, levies, imposts, duties, fees or charges of whatever nature together with interest thereon and penalties in respect thereof (except taxes concerning the Lender and imposed on the net income of the Lender) and “Taxation” shall be construed accordingly;
 
“Total Loss” means, in relation to a Vessel:
 

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

 (b)
the Compulsory Acquisition of that Vessel; or
 

 (c)
the condemnation, capture, seizure, confiscation, arrest or detention of that Vessel (other than where the same amounts to the Compulsory Acquisition of that Vessel) by any Government Entity, or by persons acting on behalf of any Government Entity, unless that Vessel be released and restored to the Owner thereof from such condemnation, capture, seizure, confiscation arrest or detention or within sixty (60) days after the occurrence thereof; and
 
18

 (d)
the hijacking, capture, seizure or confiscation of that Vessel arising as a result of a piracy or related incident unless that Vessel be released and restored to the Owner thereof from such hijacking, capture, seizure or confiscation within ninety (90) days after the occurrence thereof;
 
“Total Loss Date” means, in relation to a Vessel:
 

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

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

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

 (ii)
the date of any compromise, arrangement or agreement made by or on behalf of the Owner of that Vessel with that Vessel’s insurers in which the insurers agree to treat that Vessel as a total loss;
 
“Tranches” means the Tranche A and the Tranche B as described in Clause 1.1 (Amount and Purpose)  and “Tranche” means any of them;
 
“Transferee” has the meaning ascribed thereto in Clause 14.3 (Assignment by the Lender);
 
“UK Bail-In Legislation” means (to the extent that the United Kingdom is not an EEA Member Country which has implemented, or implements, Article 55 BRRD) Part 1 of the United Kingdom Banking Act 2009 and any other law or regulation applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutes or their Affiliates (otherwise than through liquidation, administration or other insolvency proceedings);
 
“US” means the United States of America;
 
“US Tax Obligor” means:
 

 (a)
a Borrower which is resident for tax purposes in the US; or
 

 (b)
a Security Party some or all whose payments under the Finance Documents are from sources within the US for US federal income tax purposes;
 
“Vessels” means:
 

 (a)
the capesize bulk carrier motor vessel “FRIENDSHIP“, of about 89,603 gt and 58,437 nt, built in 2009 and having IMO No. 9410454 registered under the laws and flag of Liberia under Official Number: 21000 in the ownership of the Friend Borrower (the “FRIENDSHIP”);
 

 (b)
the capesize bulk carrier motor vessel “LORDSHIP “, of about 93,564 gt and 59,500 nt, built in 2010 and having IMO No. 9519066 registered under the laws and flag of Liberia in the ownership of the Lord Borrower (the “LORDSHIP”); and
 

 (c)
the capesize bulk carrier motor vessel “SQUIRESHIP“, of about 88,479 gt and 56,828 nt, built in 2010 and having IMO No. 9391646registered under the laws and flag of Liberia in the ownership of the Squire Borrower (the “SQUIRESHIP”);
 
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in each case, together with all her boats, engines, machinery tackle outfit spare gear fuel consumable and other stores belongings and appurtenances whether on board or ashore and whether now owned or hereafter acquired and all the additions, improvements and replacements in or on the above described vessel,
 
(hereinafter together called the “Vessels”, and “Vessel” means any of them, as the context may require);
 
“V.Ships Greece”, means V. SHIPS GREECE LTD. a company incorporated and existing in Bermuda whose registered address is at 3rd Floor, Par-La-Ville Place, 14 Par-La-Ville Road, Hamilton HM08, Bermuda, and having an office established in Greece pursuant to the Greek laws 378/68, 27/75, 2234/94, 3752/09 and 4150/13 (as amended and in force at the date hereof) at 3 Agiou Dionisiou Street, Piraeus 185 45, Greece;
 
“V.Ships Cyprus”, means V.SHIPS LIMITED, a company incorporated and existing in the Republic of Cyprus whose registered office is at Zinas Kanther, 16-18, Agia Triada, 3035 Limassol, Cyprus;
 
“Write-down and Conversion Powers” means:
 

 (a)
in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule; and
 

 (b)
in relation to any other applicable Bail-In Legislation:
 

 (i)
any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or Affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers; and
 

 (ii)
any similar or analogous powers under that Bail-In Legislation; and
 

 (c)
in relation to any UK Bail-In Legislation:
 

 (i)
any powers under that UK Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or Affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that UK Bail-In Legislation that are related to or ancillary to any of those powers; and
 

 (ii)
any similar or analogous powers under that UK Bail-In Legislation.
 
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1.3
Interpretation
 
In this Agreement:
 

 (a)
Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Agreement;
 

 (b)
subject to any specific provision of this Agreement or of any assignment and/or participation or syndication agreement of any nature whatsoever, reference to each of the parties hereto and to the other Finance Documents shall be deemed to be reference to and/or to include, as appropriate, their respective successors and permitted assigns;
 

 (c)
where the context so admits, words in the singular include the plural and vice versa;
 

 (d)
the words “including” and “in particular” shall not be construed as limiting the generality of any foregoing words;
 

 (e)
references to (or to any specified provisions of) a Finance Document or any other agreement or instrument is a reference to that Finance Document or other agreement or instrument as it may from time to time be amended, restated, novated or replaced, however fundamentally, whether before the date of this Agreement or otherwise;
 

 (f)
references to Clauses and Schedules are to be construed as references to the Clauses of, and the Schedules to, the relevant Finance Document and references to a Finance Document include all the terms of that Finance Document and any Schedules, Annexes or Appendices thereto, which form an integral part of same;
 

 (g)
references to the opinion of the Lender or a determination or acceptance by the Lender or to documents, acts, or persons acceptable or satisfactory to the Lender or the like shall be construed as reference to opinion, determination, acceptance or satisfaction of the Lender at the sole discretion of the Lender, and such opinion, determination, acceptance or satisfaction of the Lender shall be conclusive and binding on the Borrowers;
 

 (h)
references to a “regulation” include any present or future regulation, rule, directive, requirement, request or guideline (whether or not having the force of law) of any governmental or intergovernmental body, agency, authority, central bank or government department or any self-regulatory or other national or supra-national authority or organisation and includes (without limitation) any Basel II Regulation or Basel III Regulation;
 

 (i)
references to any person include such person’s assignees and successors in title; and
 

 (j)
references to or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Agreement or otherwise;
 
1.4
Construction of certain terms
 
In this Agreement:
 
“asset” includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;
 
21
“company” includes any partnership, joint venture and unincorporated association;
 
“consent” includes an authorisation, consent, approval, resolution, license, 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;
 
“continuing”, in relation to any Default or any Event of Default, means that the Default or the Event of Default has not been remedied or waived;
 
“control” of an entity means:
 

 (a)
the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:
 

 (i)
cast, or control the casting of, more than 50 per cent of the maximum number of votes that might be cast at a general meeting of that entity; or
 

 (ii)
appoint or remove all, or the majority, of the directors or other equivalent officers of that entity; or
 

 (iii)
give directions with respect to the operating and financial policies of that entity with which the directors or other equivalent officers of that entity are obliged to comply; and/or
 

 (b)
the holding beneficially of more than 50 per cent of the issued share capital of that entity (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital) (and, for this purpose, any Security Interest over the share capital shall be disregarded in determining the beneficial ownership of such share capital);
 
and “controlled” shall be construed accordingly;
 
“document” includes a deed; also a letter or fax;
 
“guarantee” means any guarantee, letter of credit, bond, indemnity or similar assurance against loss, or any obligation, direct or indirect, actual or contingent, to purchase or assume any indebtedness of any person or to make an investment in or loan to any person or to purchase assets of any person where, in each case, such obligation is assumed in order to maintain or assist the ability of such person to meet its indebtedness and “guaranteed” shall be construed accordingly;
 
“law” includes any form of delegated legislation, any order or decree, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;
 
“liability” includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;
 
“person” includes any individual, firm, company, corporation, unincorporated body of persons or any state, political sub-division or any agency thereof and local or municipal authority and any international organisation;
 
22
“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;
 
“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;
 
“right” means any right, privilege, power or remedy, any proprietary interest in any asset and any other interest or remedy of any kind, whether actual or contingent, present or future, arising under contract or law, or in equity;
 
“successor” includes any person who is entitled (by assignment, novation, merger or otherwise) to any other person’s rights under this Agreement or any other Finance Document (or any interest in those rights) or who, as administrator, liquidator or otherwise, is entitled to exercise those rights; and in particular references to a successor include a person to whom those rights (or any interest in those rights) are transferred or pass as a result of a merger, division, reconstruction or other reorganisation of it or any other person;
 
“liquidation”, “winding up”, “dissolution”, or “administration” of person or a “receiver” or “administrative receiver” or “administrator” in the context of insolvency proceedings or security enforcement actions in respect of a person shall be construed so as to include any equivalent or analogous proceedings or any equivalent and analogous person or appointee (respectively) under the law of the jurisdiction in which such person is established or incorporated or any jurisdiction in which such person carries on business including (in respect of proceedings) the seeking or occurrences of liquidation, winding-up, reorganisation, dissolution, administration, arrangement, adjustment, protection or relief of debtors.
 
1.5
Same meaning
 
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.
 
1.6
Inconsistency
 
Unless a contrary indication appears, in the event of any inconsistency between the terms of this Agreement and the terms of any other Finance Document when dealing with the same or similar subject matter (other than as relates to the creation and/or perfection of security) are subject to the terms of this Agreement and, in the event of any conflict between any provision of this Agreement and any provision of any Finance Document (other than in relation to the creation and/or perfection of security) the provisions of this Agreement shall prevail.
 
1.7
Finance Documents
 
Where any other Finance Document provides that Clause 1.3 (Interpretation) and Clause 1.4 (Construction of certain terms), shall apply to that Finance Document, any other provision of this Agreement which, by its terms, purports to apply to all or any of the Finance Documents and/or any Security Party shall apply to that Finance Document as if set out in it but with all necessary changes.
 
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2.
THE LOAN

2.1
Commitment to lend
 
The Lender, relying upon (inter alia) each of the representations and warranties set forth in Clause 6 (Representations and warranties) and in each of the Security Documents, agrees to lend to the Borrowers in one (1) Advance and upon and subject to the terms of this Agreement, the amount specified in Clause 1.1 (Amount and Purpose) and the Borrowers shall apply all amounts borrowed under the Commitment in accordance with Clause 1.1 (Amount and Purpose).
 
2.2
Drawdown Notice irrevocable
 
A Drawdown Notice must be signed by a director or a duly authorised attorney-in-fact of the Borrowers and shall be effective on actual receipt thereof by the Lender and, once served, it, subject as provided in Clause 3.6 (Market disruption – Non Availability), cannot be revoked without the prior consent of the Lender.
 
2.3
Drawdown Notice and commitment to borrow
 
Subject to the terms and conditions of this Agreement, the Commitment shall be advanced to the Borrowers following receipt by the Lender from the Borrowers of a Drawdown Notice not later than 10:00 a.m. (London time) on the second Banking Day before the date on which the drawdown is intended to be made unless the Lender otherwise approves.
 
2.4
Number of advances agreed
 
The Commitment shall be advanced to the Borrowers by one (1) Advance and any amount undrawn under the Commitment shall be cancelled and may not be borrowed by the Borrowers at a later date.
 
2.5
Amount, timing, limitation and purpose of the Commitment
 

 (a)
The Loan: The Loan will be advanced to the Borrowers by the Tranches, which shall be made in the amount and subject to the conditions and limitations set forth in Clause 1.1 (Amount and purpose).
 

 (b)
Drawdown of the Loan:  The Loan may not be drawn down after the last day of the Availability Period.
 

 (c)
Conditions precedent: Drawdown of the Loan is subject to:
 

 (i)
fulfilment to the Lender’s satisfaction of all of the conditions precedent set forth in Clause 7 (Conditions Precedent);
 

 (ii)
nο Event of Default having occurred, which is continuing or will result from the borrowing of the Loan;
 

 (iii)
the Loan shall not exceed the maximum amount of the Commitment;
 
Provided, always, that, if any such condition precedent has not been fulfilled to the Lender’s satisfaction or any such Event of Default has occurred the Commitment shall not be available for drawing. Notwithstanding, the Lender may, in its absolute discretion and by notice to the Borrowers, waive compliance with any condition precedent or the occurrence of an Event of Default prior to disbursement, provided, however, that the Borrowers hereby, jointly and severally, covenant in those circumstances to comply with such condition precedent or, as the case may be, to remedy such Event of Default within any period specified in such notice or subsequently notified to the Borrowers and failure to do so shall be deemed to constitute an Event of Default hereunder.
 
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2.6
Disbursement
 
Upon receipt of the Drawdown Notice complying with the terms of this Agreement the Lender shall, subject to the provisions of Clause 7 (Conditions precedent), on the date specified in the Drawdown Notice, make the Loan available to the Borrowers, and payment to the Borrowers shall be made to the account which the Borrowers specify in the Drawdown Notice.
 
2.7
Application of proceeds
 
Without prejudice to the Borrowers’ obligations under Clause 8.1(d) (Use of Loan proceeds), the Lender is not bound to monitor or verify the application of any amount borrowed pursuant to this Agreement and shall have no responsibility for the application of the proceeds of the Loan (or any part thereof) by the Borrowers.
 
2.8
Termination date of the Commitment
 
Any part of the Commitment undrawn and uncancelled at the end of the Availability Period shall thereupon be automatically cancelled.
 
2.9
Evidence
 
It is hereby expressly agreed and admitted by the Borrowers that abstracts or photocopies of the books of the Lender as well as statements of accounts or a certificate signed by an authorised officer of the Lender shall be conclusive binding and full evidence, save for manifest error, on the Borrowers as to the existence and/or the amount of the at any time Outstanding Indebtedness, of any amount due under this Agreement, of the applicable interest rate or Default Rate or any other rate provided for or referred to in this Agreement, the Interest Period, the value of additional securities under Clause 8.5(a) (Security shortfall Additional Security), the payment or non-payment of any amount. Nevertheless, enforcement procedures or any other court or out-of-court procedure can be commenced by the Lender on the basis of the above mentioned means of evidence including written statements or certificates of the Lender.
 
2.10
Cancellation
 
The Borrowers shall be entitled to cancel any undrawn part of the Commitment under this Agreement upon giving the Lender not less than five (5) Banking Days’ notice in writing to that effect, provided that no Drawdown Notice has been given to the Lender under Clause 2.3 (Drawdown Notice and commitment to borrow) for the full amount of the Commitment or in respect of the portion thereof in respect of which cancellation is required by the Borrowers.  Any such notice of cancellation, once given, shall be irrevocable.  Any amount cancelled may not be drawn. Notwithstanding any such cancellation pursuant to this Clause 2.9 the Borrowers shall continue to be liable for any and all amounts due to the Lender under this Agreement including without limitation any amounts due to the Lender under Clause 10 (Indemnities - Expenses – Fees).
 
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2.11
No security or lien from other person
 
Neither of the Borrowers has taken or received, and each of the Borrowers undertakes that until all moneys, obligations and liabilities due, owing or incurred by the Borrowers under this Agreement and the Security Documents have been paid in full, none of the Borrowers will take or receive, any security or lien from any other person liable or for any liability whatsoever.
 
2.12
Interest to co-borrow
 
The Borrowers have an interest in borrowing jointly and severally in that they are companies which have close financial co-operation and mutual assistance and in that the Commitment would not have been available to each one of the Borrowers separately.
 
3.
INTEREST

3.1
Normal Interest Rate
 
The Borrowers shall pay interest on the Loan (or as the case may be, each portion thereof to which a different Interest Period relates) in respect of each Interest Period (or part thereof) on each Interest Payment Date. The interest rate for the calculation of interest shall be the rate per annum determined by the Lender to be the aggregate of (i) the applicable Margin and (ii) LIBOR for that Interest Period, unless there is an Alternative Rate in which case the interest rate for the calculation of interest shall be the rate per annum determined by the Lender to be the aggregate of (i) the applicable Margin and (ii) the Alternative Rate.
 
3.2
Selection of Interest Period
 

 (a)
Notice:  The Borrowers may by notice received by the Lender not later than 10:00 a.m. (London time) on the second Banking Day before the beginning of each Interest Period specify (subject to Clause 3.3 (Determination of Interest Periods) below) whether such Interest Period shall have a duration of one (1)  or three (3) months (or such other period as may be requested by the Borrowers and as the Lender, in its sole discretion, may agree to).
 

 (b)
Non-availability of matching deposits for Interest Period selected:  If, after the Borrowers by notice to the Lender  have selected an Interest Period longer that three (3) months, the Lender notifies the Borrowers on the same Banking Day before the commencement of that Interest Period that it is not satisfied that deposits in Dollars for a period equal to that Interest Period will be available to it in the London Interbank Market when that Interest Period commences, that Interest Period shall be of such duration as the Lender may advise the Borrowers in writing.
 
3.3
Determination of Interest Periods
 
Every Interest Period shall, subject to market availability to be conclusively determined by the Lender, be of the duration specified by the Borrowers pursuant to Clause 3.2 (Selection of Interest Periods) but so that:
 

 (a)
Initial Interest Period: the first Interest Period in respect of the Loan shall commence on the Drawdown Date and each subsequent Interest Period shall commence forthwith upon the expiry of the preceding Interest Period;
 
26

 (b)
Interest tranches: if any Interest Period would otherwise overrun one or more Repayment Dates, then, in the case of the last Repayment Date, such Interest Period shall end on such Repayment Date, and in the case of any other Repayment Date or Dates the Loan shall be divided into parts so that there is one part equal to the amount(s) of the Repayment Instalment(s) due on each Repayment Date falling during that Interest Period and having an Interest Period ending on the relevant Repayment Date and another part equal to the amount of the balance of the Loan having an Interest Period determined in accordance with Clause 3.2 (Selection of Interest Period) and the other provisions of this Clause 3.3 and the other provisions of this Clause 3.3 and the expression “Interest Period in respect of the Loan” when used in this Agreement refers to the Interest Period in respect of the balance of the Loan;
 

 (c)
Failure to notify: if the Borrowers fail to specify the duration of an Interest Period in accordance with the provisions of Clause 3.2 (Selection of Interest Period) and this Clause 3.3, such Interest Period shall have a duration of three (3) months unless another period shall be agreed between the Lender and the Borrower provided, always, that such period (whether of three (3) months or of different duration) shall comply with this Clause 3.3;
 

 (d)
No Interest Period to extend beyond Final Maturity Date:  No Interest Period for the Loan shall end after the Final Maturity Date and any such Interest Period which would otherwise extend beyond the Final Maturity Date shall instead end on the Final Maturity Date,
 
provided, always, that:
 

 (i)
any Interest Period which commences on the last day of a calendar month, and any Interest Period which commences on the day on which there is no numerically corresponding day in the calendar month during which such Interest Period is due to end, shall end on the last Banking Day of the calendar month during which such Interest Period is due to end; and
 

 (ii)
if the last day of an Interest Period is not a Banking Day the Interest Period shall be extended until the next following Banking Day unless such next following Banking Day falls in the next calendar month in which case such Interest Period shall be shortened to expire on the preceding Banking Day.
 
3.4
Default Interest
 

 (a)
Default interest: If the Borrowers fail to pay any sum (including, without limitation, any sum payable pursuant to this Clause 3.4) on its due date for payment under any of the Finance Documents, the Borrowers shall pay interest on such sum from the due date up to the date of actual payment (as well after as before judgement) at the rate determined by the Lender pursuant to this Clause 3.4. The period beginning on such due date and ending on such date of payment shall be divided into successive periods as selected by the Lender each of which (other than the first, which shall commence on such due date) shall commence on the last day of the preceding such period.  The rate of interest applicable to each such period shall be the aggregate (as determined by the Lender) of (i) two per cent (2%) per annum, (ii) the applicable Margin and (iii) LIBOR. Such interest shall be due and payable on the last day of each such period as determined by the Lender and each such day shall, for the purposes of this Agreement, be treated as an Interest Payment Date, provided that if such unpaid sum is of principal which became due and payable by reason of a declaration by the Lender under Clause 9.2 (Consequences of Default – Acceleration) or a prepayment pursuant to Clauses 4.2 (Voluntary Prepayment), 4.3 (Compulsory Prepayment in case of Total Loss or sale of a Vessel), 8.5(a)(i), 12.1 (Unlawfulness) and 12.2 (Increased Cost) on a date other than an Interest Payment Date relating thereto, the first such period selected by the Lender shall be of a duration equal to the period between the due date of such principal sum and such Interest Payment Date and interest shall be payable on such principal sum during such period at a rate two per cent (2%) above the rate applicable thereto immediately before it fell due. If for the reasons specified in Clause 3.6 (Market disruption – Non Availability), the Lender is unable to determine a rate in accordance with the foregoing provisions of this Clause 3.4, interest on any sum not paid on its due date for payment shall be calculated at a rate determined by the Lender to be two per cent (2%) per annum above the aggregate of (i) the applicable Margin and (ii) the Alternative Rate.
 
27

 (b)
Compounding of default interest:  Any such interest which is not paid at the end of the period by reference to which it was determined shall be compounded every six (6) months and shall be payable on demand.
 
3.5
Notification of Interest and interest rate
 
The Lender shall notify the Borrowers promptly of the duration of each Interest Period and of each rate of interest determined by it under this Clause 3 without prejudice to the right of the Lender to make determinations at its sole discretion. In case that the Lender fails to notify the Borrowers as above, such failure will not affect the validity of the determination of the Interest Period and Interest Rate made pursuant to this Clause 3 and neither constitute nor will be interpreted as if to constitute a breach of obligation of the Lender except in case of wilful misconduct.
 
3.6
 Market disruption – Non Availability
 

 (a)
Market Disruption Event - Notification: If and whenever, at any time prior to the commencement of any Interest Period, the Lender (in its discretion) shall have determined (which determination shall be conclusive in the absence of manifest error) that a Market Disruption Event has occurred in relation to the Loan for any such Interest Period, then the Lender shall forthwith give notice thereof (a “Determination Notice”) to the Borrowers and the rate of interest on the Loan (or the relevant part thereof) for that Interest Period shall be the percentage rate per annum which is the sum of:
 
 
(i)
the applicable Margin; and
 

 (ii)
the rate which expresses as a percentage rate per annum the cost to the Lender of funding the Loan (or the relevant part thereof) from whatever source it may reasonably select.
 

 (b)
Suspension of drawdown: If the Determination Notice is given before the Commitment (or a part thereof) is advanced, the Lender’s obligation to make the Commitment (or a part thereof) available shall be suspended while the circumstances referred to in the Determination notice continue.
 

 (c)
Meaning of “Market Disruption Event”: In this Agreement “Market Disruption Event” means:
 

 (i)
at or about noon on the Quotation Day for the relevant Interest Period no Screen Rate is available for Dollars; and/or
 
28

 (ii)
before close of business in London on the Quotation Day for the relevant Interest Period, the Lender determines (in its sole discretion) that the cost to it of obtaining matching deposits in the London Interbank Market to fund the Loan (or the relevant part thereof) for such Interest Period would be in excess of the Screen Rate for that Interest Period; and
 

 (iii)
before close of business in London on the Quotation Day for the relevant Interest Period, deposits in Dollars are not available to the Lender in the London Interbank Market in the ordinary course of business in sufficient amounts to fund the Loan (or the relevant part thereof) for that Interest Period.
 

 (d)
Negotiation of alternative rate of interest:  If the Determination Notice is served after the Loan is borrowed, the Borrowers and the Lender shall enter into negotiations (for a period of not more than 15 Banking  Days after the date on which the Lender serves the Determination Notice (the “Negotiation Period”) and shall use reasonable endeavours to agree, an alternative interest rate or (as the case may be) an alternative basis for the Lender to fund or continue to fund the Loan during the Interest Period concerned. During the Negotiation Period the Lender shall set an Interest Period and interest rate representing the Cost of Funding of the Lender in Dollars, in each case as determined by the Lender, of the Loan plus the applicable Margin.
 

 (e)
Application of agreed alternative rate of interest: Any alternative interest rate or an alternative basis which is agreed during the Negotiation Period shall be binding on the Lender and all Security Parties and shall take effect in accordance with the terms agreed.
 

 (e)
Alternative basis of interest in absence of agreement: If the Lender and the Borrowers will not enter into negotiations as provided in Clause 3.6(d)(i) or if an alternative interest rate or alternative basis is not agreed within the Negotiation Period, and the relevant circumstances are continuing at the end of the Negotiation Period, then the procedure provided for in Clause 3.6(d) (Negotiation of alternative rate of interest) shall be repeated at the end of the Interest Period set by the Lender pursuant to that Clause until such time as the circumstances specified in Sub-Clause 3.6(a) (Market Disruption Event) shall no longer exist, whereupon the normal rate of interest shall apply.
 

 (f)
Notice of prepayment: If the Borrowers do not agree with an interest rate set by the Lender under Clause 3.6(e) (Alternative basis of interest in absence of agreement), the Borrowers may give the Lender not less than 5 Banking Days’ notice of its intention to prepay the Loan at the end of the interest period set by the Lender.
 

 (g)
Prepayment; termination of Commitment: A notice under Clause 3.6(f) (Notice of prepayment) shall be irrevocable; and on the last Banking Day of the interest period set by the Lender, the Borrowers, if the Commitment has already been advanced, shall prepay (without premium or penalty) the Loan, together with accrued interest thereon at the applicable rate plus the applicable Margin and the balance of the Outstanding Indebtedness or, if the Commitment has not been advanced, the Commitment shall be reduced to zero and no Advance shall be made to the Borrowers under this Agreement thereafter.
 

 (h)
Application of prepayment: The provisions of Clause 4 (Repayment-Prepayment) shall apply in relation to the prepayment made hereunder.
 
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3.7
Replacement of Screen Rate
 

 (a)
If a Screen Rate Replacement Event has occurred in relation to the Screen Rate for dollars, any amendment or waiver which relates to:
 

 (i)
providing for the use of a Replacement Benchmark in relation to that currency in place of that Screen Rate ; and
 
(ii)
 

 (1)
aligning any provision of any Finance Document to the use of that Replacement Benchmark;
 

 (2)
enabling that Replacement Benchmark to be used for the calculation of interest under this Agreement (including, without limitation, any consequential changes required to enable that Replacement Benchmark to be used for the purposes of this Agreement);
 

 (3)
implementing market conventions applicable to that Replacement Benchmark;
 

 (4)
providing for appropriate fallback (and market disruption) provisions for that Replacement Benchmark; or
 

 (5)
adjusting the pricing to reduce or eliminate, to the extent reasonably practicable, any transfer of economic value from one Party to another as a result of the application of that Replacement Benchmark (and if any adjustment or method for calculating any adjustment has been formally designated, nominated or recommended by the Relevant Nominating Body, the adjustment shall be determined on the basis of that designation, nomination or recommendation),
 
may be made with the consent of the Lender.
 
4.
REPAYMENT - PREPAYMENT

4.1
Repayment
 
The Borrowers shall and it is expressly undertaken by the Borrowers to repay the Loan jointly and severally as follows:
 
(a) Tranche A shall be repaid by (a) sixteen (16) quarterly unequal repayment instalments (the “Tranche A Repayment Instalments”), the first of which to be repaid on the 23 August 2021 and each of the subsequent ones consecutively falling due for payment on each of the dates falling three (3) months after the immediately preceding Repayment Date with the last (the 16th) of such Repayment Instalments falling due for payment on the Final Maturity Date relative to Tranche A and (b) a  balloon installment in the amount of Dollars Fourteen million nine hundred sixty thousand ($14,960,000) such Balloon Installment to be repaid together with the last (the 16th) Tranche A Repayment Instalment on the Final Maturity Date relative to such Tranche (the “Tranche A Balloon Instalment); subject to the provisions of this Agreement, the amount of each of the Tranche A Repayment Instalments shall be as follows:
 
30

 (i)
1st to 4th (both incl.) in the amount of Dollars One million two hundred fifty thousand ($1,250,000);
 

 (ii)
5th to 8th (both incl.) in the amount of Dollars One million forty thousand ($1,040,000; and
 

 (iii)
9th to 16th (both incl.) in the amount of Dollars Eight hundred seventy five thousand ($875,000);
 
(b) Tranche B shall be repaid by (a) sixteen (16) quarterly unequal repayment instalments (the “Tranche B Repayment Instalments” and together with the Tranche A Repayment Instalments the “Repayment Instalments”), the first of which to be repaid on the date falling three (3) months after the Drawdown Date and each of the subsequent ones consecutively falling due for payment on each of the dates falling three (3) months after the immediately preceding Repayment Date with the last (the 16th) of such Repayment Instalments falling due for payment on the Final Maturity Date relative to Tranche B and (b) a balloon installment in the amount of Dollars Five million seven hundred thousand ($5,700,000) such Balloon Installment to be repaid together with the last (the 16th) Tranche B Repayment Instalment on the Final Maturity Date relative to such Tranche (the “Tranche B Balloon Instalment and together with the Tranche A Balloon Instalment the “Balloon Instalments”); subject to the provisions of this Agreement, the amount of each of the Tranche B Repayment Instalments shall be as follows:
 

 (i)
1st to 4th (both incl.) in the amount of Dollars Seven hundred thousand ($700,000);
 

 (ii)
5th to 16th (both incl.) in the amount of Dollars Three hundred seventy five thousand ($375,000); and
 
provided that (a) if the last Repayment Date relative to a Tranche would otherwise fall after the Final Maturity Date relative to such Tranche, the last Repayment Date for such Tranche shall be the Final Maturity Date relative thereto, (b) there shall be no Repayment Dates for each Tranche after the Final Maturity Date relative to such Tranche, (c) on the Final Maturity Date for Tranche B, the Borrowers shall also pay to the Lender any and all other monies then due and payable under this Agreement and the other Finance Documents, (d) if any part of the Commitment, or a Tranche, as the case may be, is not advanced to the Borrowers the amounts of the Repayment Instalments relative to such Tranche  and the Balloon Instalment relative to such Tranche shall be reduced pro-rata, and (e) if any of the Repayment Instalments shall become due on a day which is not a Banking Day, the due date therefor shall be extended to the next succeeding Banking Day unless such Banking Day falls in the next calendar month, in which event such due date shall be the immediately preceding Banking Day.
 
4.2
Voluntary Prepayment
 
The Borrowers shall have the right, to prepay without premium or penalty, part or all of the Loan in each case together with all unpaid interest accrued thereon and all other sums of money whatsoever due and owing from the Borrowers to the Lender hereunder or pursuant to the other Finance Documents and all interest accrued thereon, provided that:
 

 (a)
the Lender shall have received from the Borrowers not less than five (5) days’ prior notice in writing (which shall be irrevocable) of their intention to make such prepayment and specify the account and the date on which such prepayment is to be made;
 
31

 (b)
such prepayment may take place only on the last day of an Interest Period relating to the whole of the Loan;
 

 (c)
each such prepayment shall be equal to One hundred thousand Dollars ($100,000) or a whole multiple thereof or the balance of the Loan;
 

 (d)
any prepayment of less than the whole of the Loan will be applied either in or towards pro-rata reduction of the Balloon Instalments and the remaining Repayment Instalments or at Borrowers’ request and the sole discretion of the Lender in order of maturity of the Repayment Instalments falling due after the date of prepayment;
 

 (e)
every notice of prepayment shall be effective only on actual receipt by the Lender, shall be irrevocable and shall oblige the Borrowers to make such prepayment on the date specified;
 

 (f)
the Borrowers have provided evidence satisfactory to the Lender that any consent required by the Borrowers (or any of them) or any Security Party in connection with the prepayment has been obtained and remains in force, and that any regulation relevant to this Agreement which affects the Borrowers (or any of them) or any Security Party has been complied with;
 

 (g)
no amount prepaid may be re-borrowed; and
 

 (h)
the Borrowers may not prepay the Loan or any part thereof save as expressly provided in this Agreement;
 
Provided always that if the Borrowers shall, subject always to Clause 4.2(a), make a prepayment on a Banking Day other than the last day of an Interest Period in respect of the whole of the Loan, it shall, in addition to the amount prepaid and accrued interest, pay to the Lender any amount which the Lender may certify is necessary to compensate the Lender for any Break Costs incurred by the Lender as a result of the making of the prepayment in question.
 
4.3
Compulsory Prepayment in case of Total Loss or sale or refinancing of a Vessel
 

 (a)
Total Loss of a Vessel: On a Vessel becoming a Total Loss:
 

 (i)
prior to the advancing of the Commitment, the obligation of the Lender to make available the Commitment shall immediately cease and the Commitment shall be reduced to zero; or
 

 (ii)
in case the Commitment or, as the case may be, any part thereof has been already advanced, the amount of the Loan shall, on on the earlier of the date falling one hundred and eighty (180) days after the Total Loss Date and the date of receipt by the Lender of the insurance proceeds relating to such Total Loss, be reduced by an amount equal to the Relevant Percentage (as hereinafter defined) of the Loan and the Borrowers shall thereupon be obliged to make such repayment of the Relevant Percentage of the Loan.
 
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 (b)
Sale or refinancing of a Mortgaged Vessel:  In the event of a sale or other disposal of any Mortgaged Vessel or in case of refinancing of a Mortgaged Vessel by another bank or financial institution or if the Borrowers request the Lender’s consent for the discharge of the Mortgage registered on a Mortgaged Vessel, the amount of the Loan shall be reduced by an amount equal to the Relevant Percentage (as hereinafter defined) and the Borrowers shall thereupon be obliged to make such repayment of the Relevant Percentage of the Loan;
 
AND for the purpose of this Clause 4.3 “Relevant Percentage” in relation to any Mortgaged Vessel, means an amount equal to the higher of:
 

 (i)
an amount equal to the proportion which the Market Value of such Mortgaged Vessel bears to the aggregate of the Market Values of all Mortgaged Vessels based on the valuations of such Vessels carried out under Clause 8.5(b) (Valuation of Vessels) immediately before the Total Loss occurred or the sale or other disposal of the relevant Mortgaged Vessel, as the case may be occurs; and
 

 (ii)
the amount which is required to be repaid to the Lender so that, after the payment to the Lender of the amount referred to in paragraph (i), the aggregate of (1) the aggregate Market Value of the Vessels remaining mortgaged to the Lender determined in accordance with Clause 8.5(b) (Valuation of Vessels) immediately after the Total Loss or the sale or other disposal of the relevant Vessel, as the case may be is at least equal to 125% of the amount of the Loan;
 
provided, however, that if the relevant Mortgaged Vessel so lost or sold or otherwise disposed of is the last Mortgaged Vessel, then the full amount of the insurance or, as the case may be, the sale proceeds shall apply against repayment of the Outstanding Indebtedness and additionally the Borrowers shall pay to the Lender the balance (if any) of the Outstanding Indebtedness.
 
4.4
Application by the Lender in case of compulsory prepayment
 
Any amount prepaid in accordance with Clause 4.3(a) (Total Loss of a Mortgaged Vessel), and Clause 4.3(b) (Sale of a Mortgaged Vessel) which is less than the whole of the Outstanding Indebtedness will be applied by the Lender in or towards pro rata satisfaction of the outstanding Repayment Instalments and the Balloon Instalments.
 
4.5
Amounts payable on prepayment
 
Any prepayment of all or part of the Loan under this Agreement shall be made together with:
 

 (a)
accrued interest on the amount of the Loan to the date of such prepayment (calculated, in the case of a prepayment pursuant to Clause 3.6 (Market disruption – Non Availability) at a rate equal to the aggregate of the applicable Margin and the cost to the Lender of funding the Loan);
 

 (b)
any additional amount payable under Clause 5.3 (Gross Up);
 

 (c)
all other sums payable by the Borrowers to the Lender under this Agreement or any of the other Finance Documents including, without limitation, any amounts payable under Clause 10 (Indemnities - Expenses – Fees); and
 

 (d)
in relation to any prepayment made on a date other than an Interest Payment Date in respect of the whole of the Loan, it shall, in addition to the amount prepaid and accrued interest, pay to the Lender any amount which the Lender may certify is necessary to compensate the Lender for any Break Costs incurred by the Lender as a result of the making of the prepayment in question.
 
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4.6
Other Compulsory prepayment/ Repayment of the Tranche A
 
It is hereby agreed that on the basis of documentary evidence all amounts payable  by the Corporate Guarantor to Jelco Delta Holding Corp. (“Jelco”) on 31 October 2024 (the “Jelco Payments”), in respect of any subordinated and/or unsecured loans made to the Corporate Guarantor by Jelco are equal to or exceed the amount of $10,000,000, the Borrowers shall pay to the Lender no later than 31 December 2024 the Tranche A.
 
5.
PAYMENTS, TAXES AND COMPUTATION

5.1
Payment - No set-off or counterclaims
 

 (a)
The Borrowers hereby jointly and severally acknowledge that in performing their respective obligations under this Agreement, the Lender will be incurring liabilities to third parties in relation to the funding of amounts to the Borrowers, such liabilities matching the liabilities of the Borrowers to the Lender and that it is reasonable for the Lender to be entitled to receive payments from the Borrowers gross on the due date in order that the Lender is put in a position to perform its matching obligations to the relevant third parties.  Accordingly, all payments to be made by the Borrowers under this Agreement and/or any of the other Finance Documents shall be made in full, without any set-off or counterclaim whatsoever and, subject as provided in Clause 5.3 (Gross Up), free and clear of any deductions or withholdings or Governmental Withholdings whatsoever, as follows:
 

 (i)
in Dollars (except for charges or expenses which shall be paid in the currency in which they are incurred), not later than 10:00 a.m. (London time) on the Banking Day (in Piraeus, Athens, London and New York City) on which the relevant payment is due under the terms of this Agreement; and
 

 (ii)
to such account and at such bank as the Lender may from time to time specify for this purpose by written notice to the Borrowers, reference: FRIEND OCEAN NAVIGATION CO./ LORD OCEAN NAVIGATION CO./ /SQUIRE OCEAN NAVIGATION CO./Loan Agreement dated: August  2021” provided, however, that the Lender shall have the right to change the place of account for payment, upon five (5) Banking Days’ prior written notice to the Borrowers.
 

 (b)
If at any time it shall become unlawful or impracticable for the Borrowers (or any of them) to make payment under this Agreement to the relevant account or bank referred to in Clause 5.1(a), the Borrowers may request and the Lender may agree to alternative arrangements for the payment of the amounts due by the Borrowers to the Lender under this Agreement or the other Finance Documents.
 
5.2
Payments on Banking Days
 
All payments due shall be made on a Banking Day.  If the due date for payment falls on a day which is not a Banking Day, that payment due shall be made on the immediately following Banking Day unless such Banking Day falls in the next calendar month, in which case payments shall fall due and be made on the immediately preceding Banking Day.
 
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5.3
Gross Up
 
If at any time any law, regulation, regulatory requirement or requirement of any governmental authority, monetary agency, central bank or the like compels the Borrowers to make payment subject to Governmental Withholdings, the Borrowers shall pay to the Lender such additional amounts as may be necessary to ensure that there will be received by the Lender a net amount equal to the full amount which would have been received had payment not been made subject to such Governmental Withholdings. The Borrowers shall indemnify the Lender against any losses or costs incurred by the Lender by reason of any failure of the Borrowers to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Borrowers shall, not later than thirty (30) Banking Days after each deduction, withholding or payment of any Governmental Withholdings, forward to the Lender official receipts and any other documentary receipts and any other documentary evidence reasonably required by the Lender in respect of the payment made or to be made of any deduction or withholding or Governmental Withholding. The obligations of the Borrowers under this provision shall, subject to applicable law, remain in force notwithstanding the repayment of the Loan and the payment of all interest due thereon pursuant to the provisions of this Agreement.
 
5.4
Mitigation
 
If circumstances arise which would result in an increased amount being payable by the Borrowers under Clause 5.3 (Gross up) then, without in any way limiting the rights of the Lender under Clause 5.3 (Gross up), the Lender shall use reasonable endeavours to transfer the obligations, liabilities and rights under this Agreement and the Security Documents to another office or financial institution not affected by the circumstances, but the Lender shall be under no obligation to take any such action if in its opinion, to do so would or might:
 

 (a)
have an adverse effect on its business, operations or financial condition on the Lender; or
 

 (b)
involve it in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent, with any regulation of the Lender; or
 

 (c)
involve the Lender in any expense (unless indemnified to its reasonable satisfaction) or tax disadvantage.
 
5.5
Claw-back of Tax benefit
 
If, following any such deduction or withholding as is referred to in Clause 5.3 (Gross-up) from any payment by the Borrowers, the Lender shall receive or be granted a credit against or remission for any Taxes payable by it, the Lender shall, subject to the Borrowers having made any increased payment in accordance with Clause 5.3 (Gross-up) and to the extent that the Lender can do so without prejudicing its retention of the amount of such credit or remission and without prejudice to the right of the Lender to obtain any other relief or allowance which may be available to it, reimburse the Borrowers with such amount as the Lender shall in its absolute discretion certify to be the proportion of such credit or remission as will leave the Lender (after such reimbursement) in no worse position than it would have been in had there been no such deduction or withholding from the payment by the Borrowers. Such reimbursement shall be made forthwith upon the Lender certifying that the amount of the credit or remission has been received by it, provided, always, that:
 

 (a)
the Lender shall not be obliged to allocate this transaction any part of a tax repayment or credit which is referable to a number of transactions;
 

 (b)
nothing in this Clause shall oblige the Lender to rearrange its tax affairs in any particular manner, to claim any type of relief, credit, allowance or deduction instead of, or in priority to, another or to make any such claim within any particular time or to disclose any information regarding its tax affairs and computations;
 
35

 (c)
nothing in this Clause shall oblige the Lender to make a payment which exceeds any repayment or credit in respect of tax on account of which the Borrowers (or any of them) have/has made an increased payment under this Clause;
 

 (d)
any allocation or determination made by the Lender under or in connection with this Clause shall be binding on the Borrowers; and
 

 (e)
without prejudice to the generality of the foregoing, the Borrowers shall not, by virtue of this Clause 5.5, be entitled to enquire about the Lender’s tax affairs.
 
5.6
Loan Account
 
All sums advanced by the Lender to the Borrowers under this Agreement and all interest accrued thereon and all other amounts due under this Agreement from time to time and all repayments and/or payments thereof shall be debited and credited respectively to a separate loan account maintained by the Lender in accordance with its usual practices in the name of the Borrowers. The Lender may, however, in accordance with its usual practices or for its accounting needs, maintain more than one account, consolidate or separate them but all such accounts shall be considered parts of one single loan account maintained under this Agreement.  In case that a ship mortgage in the form of Account Current is granted as security under this Agreement, the account(s) referred to in this Clause shall be the Account Current referred to in such mortgage.
 
5.7
Computation
 
All interest and other payments payable by reference to a rate per annum under this Agreement shall accrue from day to day and be calculated on the basis of actual days elapsed and a 360 day year.
 
6.
REPRESENTATIONS AND WARRANTIES

6.1
Continuing representations and warranties
 
The Borrowers jointly and severally represent and warrant to the Lender that;
 

 (a)
Due Incorporation/Valid Existence:  Each of the Borrowers and the other corporate Security Parties is duly incorporated and validly existing and in good standing under the laws of their respective countries of incorporation, and have power to own their respective property and assets, to carry on their respective business as the same are now being lawfully conducted and to purchase, own, finance and operate vessels, or, as the case may be, manage vessels, as well as to undertake the obligations which such Security Party has undertaken or shall undertake pursuant to the Finance Documents and does not have a place of business in the United Kingdom or the United States of America;
 

 (b)
Due Corporate Authority:  Each of the Borrowers has power to execute, deliver and perform its obligations under the Finance Documents to which is or is to be a party and to borrow the Commitment and each of the other Security Parties has power to execute and deliver and perform its/his obligations under the Finance Documents to which it/he is or is to be a party; all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the powers of the Borrowers (or any of them) to borrow will be exceeded as a result of borrowing the Loan;
 
36

 (c)
No litigation etc.: no litigation or arbitration, tax claim or administrative proceeding (including action relating to any alleged or actual breach of the ISM Code and the ISPS Code) involving a potential liability of the Borrowers (or any of them) or any other Security Party exceeding Five hundred thousand Dollars ($500,000)  is current or pending or (to its or its officers’ knowledge) threatened against the Borrowers (or any of them) or any other Security Party, which, if adversely determined, would have a Material Adverse Effect on any of them;
 

 (d)
No conflict with other obligations:  the execution and delivery of, the performance of its obligations under, and compliance with the provisions of, the Finance Documents by the relevant Security Parties will not (i) contravene any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which the Borrowers (or any of them) or any other Security Party is subject, (ii) conflict with, or result in any breach of any of the terms of, or constitute a default under, any agreement or other instrument to which the Borrowers (or any of them) or any other Security Party is a party or is subject to or by which it or any of its property is bound, (iii) contravene or conflict with any provision of the memorandum and articles of association/articles of incorporation/by-laws/statutes or other constitutional documents of the Borrowers (or any of them) or any other Security Party or (iv) result in the creation or imposition of or oblige the Borrowers (or any of them) or any other Security Party to create any Security Interest (other than a Permitted Security Interest) on any of the undertakings, assets, rights or revenues of the Borrowers (or any of them) or any other Security Party;
 

 (e)
Financial Condition:  to the knowledge of the officers/directors or shareholders of the Borrowers and the other Security Parties, the financial condition of the Borrowers (or any of them) and of the other Security Parties has not suffered any material deterioration since that condition was last disclosed to the Lender;
 

 (f)
No Immunity:  neither the Borrowers nor any other Security Party nor any of their respective 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 judgement, execution or other enforcement);
 

 (g)
Shipping Company:  each of the Borrowers and the Approved Managers is a shipping company involved in the owning or, as the case may be, managing of ships engaged in international voyages and earning profits in free foreign currency;
 

 (h)
Licences/Authorisation:  every consent, authorisation, license or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by any Security Party to authorise, or required by any Security Party in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of each of the Finance Documents or the performance by each Security Party of its obligations under the Finance Documents to which such Security Party is or is to be a party has been obtained or made and is in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same so far as the Borrowers are aware;
 

 (i)
Perfected Securities: the Finance Documents do now or, as the case may be, will, upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents):
 
37

 (i)
constitute the relevant Security Party’s legal, valid and binding obligations enforceable against that Security Party in accordance with their respective terms (having the requisite corporate benefit which is legally and economically sufficient); and
 

 (ii)
create legal, valid and binding Security Interests (having the priority specified in the relevant Finance Document) enforceable in accordance with their respective terms over all the assets and revenues intended to be covered to which they, by their terms, relate, subject to any relevant insolvency laws affecting creditors’ rights generally;
 

 (j)
No third party Security Interests: without limiting the generality of Clause 6.1(i) (Perfected Securities), at the time of the execution and delivery of each Finance Document to which each Borrower is a party:
 

 (i)
each Borrower will have the right to create all the Security Interests which that Finance Document purports to create; and
 

 (ii)
no third party will have any Security Interests (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;
 

 (k)
No Notarisation/Filing/Recording:  save for the registration of any Mortgage in the appropriate shipping Registry, it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of this Agreement or any of the other Finance Documents that it or they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere or that any stamp, registration or similar tax or charge be paid on or in relation to this Agreement or the other Finance Documents;
 

 (l)
No conflict: there are no other agreements or arrangements which may adversely affect or conflict with the Finance Documents or the security thereby created;
 

 (m)
Taxes paid: each Borrower has paid all taxes applicable to, or imposed on or in relation to that Borrower, its business or its Vessel; and
 

 (n)
Valid Choice of Law:  the choice of law agreed to govern this Agreement and/or any other Finance Document and the submission to the jurisdiction of the courts agreed in each of the Finance Documents are or will be, on execution of the respective Finance Documents, valid and binding on each of the Borrowers and any other Security Party which is or is to be a party thereto.
 
6.2
Initial representations and warranties
 
The Borrowers further jointly and severally represent and warrant to the Lender that:
 

 (a)
Direct obligations - Pari Passu: the obligations of the Borrowers under this Agreement are direct, general and unconditional obligations of the Borrowers and rank at least pari passu with all other present and future unsecured and unsubordinated Financial Indebtedness of the Borrowers with the exception of any obligations which are mandatorily preferred by law;
 
38

 (b)
Information:  all information, accounts, statements of financial position, exhibits and reports furnished by or on behalf of any Security Party to the Lender in connection with the negotiation and preparation of this Agreement and each of the other Finance Documents are true and accurate in all material respects and not misleading, do not omit material facts and all reasonable enquiries have been made to verify the facts and statements contained therein; to the best knowledge of the Directors/Officers or shareholders of the Borrowers there are no other facts the omission of which would make any fact or statement therein misleading and, in the case of accounts and statements of financial position, they have been prepared in accordance with generally accepted international accounting principles, standards and practices which have been consistently applied;
 

 (c)
No Default:  no Default has occurred and is continuing;
 

 (d)
No Taxes:  no Taxes are imposed by deduction, withholding or otherwise on any payment to be made by any Security Party under this Agreement and/or any other of the Finance Documents or are imposed on or by virtue of the execution or delivery of this Agreement and/or any other of the Finance Documents or any document or instrument to be executed or delivered hereunder or thereunder.  In case that any Tax exists now or will be imposed in the future, it will be borne by the Borrowers;
 

 (e)
No Default under other Financial Indebtedness:  neither of the Borrowers nor any other Security Party is in Default under any agreement relating to Financial Indebtedness to which it is a party or by which it is or may be bound;
 

 (f)
Ownership/Flag/Seaworthiness/Class/Insurance of the Vessels: each Vessel on the Drawdown Date thereof will be:
 

 (i)
in the absolute and free from Security Interests (other than in favour of the Lender) ownership of the Owner thereof who will on and after the Drawdown Date thereof be the sole legal and beneficial owner of that Vessel;
 

 (ii)
registered in the name of the Owner thereof through the relevant Registry of the port of registry of the Flag State under the laws and flag of the Flag State;
 

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

 (iv)
classed with a Classification Society member of IACS, which has been approved by the Lender in writing and such classification is and will be free of any overdue requirements and recommendations of such Classification Society;
 

 (v)
insured in accordance with the provisions of this Agreement and the relevant Mortgage;
 

 (vi)
managed by the Approved Manager; and
 

 (vii)
in full compliance with the ISM and the ISPS Code;
 

 (g)
No Charter:  unless otherwise permitted in writing by the Lender, none of the Vessels will on or before the Drawdown Date be subject to any charter or contract nor to any agreement to enter into any charter or contract which, if entered into after the Drawdown Date would have required the consent of the Lender under any of the Finance Documents and there will not on or before the Drawdown Date be any agreement or arrangement whereby the Earnings of the relevant Vessel may be shared with any other person;
 
39

 (h)
No Security Interests: neither Vessel, nor its Earnings, Requisition Compensation or Insurances nor any other properties or rights which are, or are to be, the subject of any of the Security Documents nor any part thereof will the Drawdown Date thereof be subject to any Security Interests other than Permitted Security Interests or otherwise permitted by the Finance Documents;
 

 (i)
Compliance with Environmental Laws and Approvals: except as may already have been disclosed by the Borrowers in writing to, and acknowledged in writing by, the Lender:
 

 (i)
each Borrower and its Related Companies have complied with the provisions of all Environmental Laws;
 

 (ii)
each Borrower and its Related Companies have obtained all Environmental Approvals and are in compliance with all such Environmental Approvals; and
 

 (iii)
neither the Borrowers nor any of their respective Related Companies have received notice of any Environmental Claim that the Borrowers or any of their respective Related Companies are not in compliance with any Environmental Law or any Environmental Approval;
 

 (j)
No Environmental Claims: except as may already have been disclosed by the Borrowers in writing to, and acknowledged in writing by, the Lender:
 

 (i)
there is no Environmental Claim pending or, to the best of the Borrowers’ knowledge and belief, threatened against either Borrower or its Vessel or that Borrower’s Related Companies or any other Relevant Ship; and
 

 (ii)
there has been no emission, spill, release or discharge of a Material of Environmental Concern from the Vessels or any other Relevant Ship or any vessel owned by, managed or crewed by or chartered to either Borrower which could give rise to an Environmental Claim;
 

 (k)
Copies true and complete: the copies of the Management Agreements delivered or to be delivered to the Lender pursuant to Clause 7.1 (Conditions precedent to the execution of this Agreement) are, or will when delivered be, true and complete copies of such documents; such documents will when delivered constitute valid and binding obligations of the parties thereto enforceable in accordance with their respective terms and there will have been no amendments or variations thereof or defaults thereunder;
 

 (l)
DOC and SMC: in relation to each Vessel the DOC applicable to the Approved Manager and the SMC applicable to that Vessel are presently in full effect;
 

 (m)
Compliance with ISM Code: each Vessel and the Operator complies with the requirements of the ISM Code and the SMC which has been be issued in respect of each relevant Vessel shall remain valid throughout the Security Period;
 

 (n)
Compliance with ISPS Code:  each Borrower has a valid and current ISSC in respect thereof and and the Operator complies, with the requirements of the ISPS Code and the ISSC in respect of its Vessel shall remain valid throughout the Security Period;
 

 (o)
Shareholding: each Borrower throughout the Security Period is and will continue to be until the Final Maturity Date a 100 % direct or indirect owned subsidiary of the Guarantor;
 
40

 (p)
Corporate Guarantor: the common shares of the Corporate Guarantor are listed on the Nasdaq Stock Exchange and  the Corporate Guarantor is and will continue to be managed by the person(s) disclosed to the Lender at the negotiation of this Agreement;
 

 (q)
No US Tax Obligor: (other than as disclosed to the Lender) none of the Security Parties is a US Tax Obligor;
 

 (r)
Sanctions: none of the Security Parties:
 

 (i)
is a Sanctions Restricted Person;
 

 (ii)
owns or controls directly or indirectly a Sanctions Restricted Person; or
 

 (iii)
has a Sanctions Restricted Person serving as a director, officer or, to the best of its knowledge, employee; and
 

 (iii)
no proceeds of the Loan shall be made available, directly or to the knowledge of the Borrowers, or any of them  indirectly, to or for the benefit of a Sanctions Restricted Person contrary to Sanctions or for transactions in a Sanctions Restricted Jurisdiction nor shall they be otherwise directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions;
 

 (s)
Taxes paid: each of the Borrowers has paid all taxes applicable to, or imposed on or in relation to itself, its business or its Vessel;
 

 (t)
Compliance with laws and regulations:
 

 aa)
each Borrower is in compliance in all material respects with any Environmental Laws and official requirements applicable to it and provided for under the European Union or the relevant international conventions as well the Environmental Laws and regulations of its jurisdiction of incorporation which have as a purpose or effect the protection of, and/or prevention of harm or damage to, and/or improvement of, the environment; and implement the necessary measures and carry out any necessary and designated action for the effective dealing with and remedy of the issues which, in the course of ordinary audits, are indicated to the Borrowers (or any of them), either from the competent authorities of its jurisdiction of incorporation or from advisors specialized in this field having the required expertise;
 

 bb)
each Borrower is in compliance in all material respects with any law or regulation applicable to it and pertaining to the labor and employment conditions, the occupational health and safety and the public health, safety and security and implement the necessary measures and carry out any necessary and designated action for the effective dealing with and remedy of the issues which, in the course of ordinary audits, are indicated to the Borrowers (or any of them) either from the competent authorities of its jurisdiction of incorporation or from advisors specialized in this field having the required expertise; and
 
41

 cc)
each Borrower is in compliance in all material respects with any law or regulation applicable to it and pertaining on the protection of the individual from the processing of personal data and no claim, notice or other communication is received by it in respect of any actual or alleged breach of, or liability under, any such law or regulation which have or are reasonably likely to have a Material Adverse Effect.
 
6.3
Money laundering - acting for own account
 
Each of the Borrowers further jointly and severally represents and warrants and confirms to the Lender that it is the beneficiary for each part of the Loan made or to be made available to it and it will promptly inform the Lender by written notice if it is not, or ceases to be, the beneficiary and notify the Lender in writing of the name and the address of the new beneficiary/beneficiaries; each of the Borrowers is aware that under applicable money laundering provisions, it has an obligation to state for whose account the Loan is obtained; each of the Borrowers confirms that, by entering into this Agreement and the other Finance Documents, it is acting on its own behalf and for its own account and it is obtaining the Loan for its own account. In relation to the borrowing by the Borrowers of the Loan, the performance and discharge of its obligations and liabilities under this Agreement or any of the other Finance Documents and the transactions and other arrangements effected or contemplated by this Agreement or any of the Documents to which each of the Borrowers is a party, it is acting for its own account and that the foregoing will not involve or lead to a contravention of any law, official requirement or other regulatory measure or procedure which has been implemented to combat “money laundering” (as defined in Article 1 of the Directive (91/308/EEC) of the Council of the European Community).
 
6.4
Representations Correct
 
At the time of entering into this Agreement all above representations and warranties or any other information given by the Borrowers and/or the Corporate Guarantor to the Lender are true and accurate.
 
6.5
Repetition of Representations and Warranties
 
The representations and warranties in this Clause 6 (except in relation to the representations and warranties in Clause 6.2 (Initial representations and warranties)) shall be deemed to be repeated by the Borrowers:
 

 (a)
on the date of service of the Drawdown Notice;
 

 (b)
on the Drawdown Date; and
 

 (c)
on each Interest Payment Date throughout the Security Period,
 
as if made with reference to the facts and circumstances existing on each such day.
 
7.
CONDITIONS PRECEDENT

7.1
Conditions precedent to the execution of this Agreement
 
The obligation of the Lender to make the Commitment or any part thereof available shall be subject to the condition that the Lender, shall have received, not later than two (2) Banking Days before the date of this Agreement, the following documents and evidence in form and substance satisfactory to the Lender:
 
42

 (a)
Constitutional Documents: a duly certified true copy of the Articles of Incorporation and By-Laws or the Memorandum and Articles of Association, or of any other constitutional documents, as the case may be, of each corporate Security Party;
 

 (b)
Certificates of incumbency: a recent certificate of incumbency of each corporate Security Party issued by the appropriate authority or, as appropriate, signed by the secretary or a director thereof, stating the officers and the directors of each of them;
 

 (c)
Shareholding: a statement to the Lender confirming the identity of the shareholder(s) of each of the Borrowers in line with “know your customer” procedures of the Lender for opening account purposes, who should be acceptable in all respects to the Lender; in the event that the Lender agrees (at its sole discretion) that the Borrower may have a corporate shareholder, the conditions set out in Sub-clauses (a) (Constitutional Documents), (b) (Certificates of incumbency), (d) (Resolutions) and (e) (Powers of Attorney) of this Clause 7.1 shall apply (mutatis mutandis) to such corporate shareholder;
 

 (d)
Resolutions: minutes of separate meetings of the directors and (if required) shareholders of each corporate Security Party at which there was approved (inter alia) the entry into, execution, delivery and performance of this Agreement, the other Finance Documents and any other documents executed or to be executed pursuant hereto or thereto to which the relevant corporate Security Party is or is to be a party;
 

 (e)
Powers of Attorney: the original of any power(s) of attorney and any further evidence of the due authority of any person signing this Agreement, the other Finance Documents, and any other documents executed or to be executed pursuant hereto or thereto on behalf of any corporate person;
 

 (f)
Consents: evidence that all necessary licences, consents, permits and authorisations (including exchange control ones) have been obtained by any Security Party for the execution, delivery, validity, enforceability, admissibility in evidence and the due performance of the respective obligations under or pursuant to this Agreement and the other Finance Documents;
 

 (g)
DOC:  a copy of the DOC applicable to the Technical Approved Managers certified as true and in effect;
 

 (h)
Fees:  evidence that the fees referred to in Clause 10.14 (Arrangement Fee) have been paid in full;
 

 (i)
Other documents: any other documents or recent certificates or other evidence which would be required by the Lender in relation to each Security Party evidencing that the relevant Security Party has been properly established, continues to exist validly and is in good standing;
 

 (j)
Management Agreements – Assignable Charterparty: a copy of each of the following documents certified as true and complete by the legal counsel of the Borrowers:
 

 (i)
each Management Agreement evidencing that the relevant Vessel is managed by the respective Approved Manager on terms acceptable to the Lender; and
 

 (ii)
any Assignable Charterparty;
 
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 (k)
Operating Accounts: evidence that the Operating Accounts have been duly opened and all mandate forms and other legal documents required for the opening of an account under any applicable law, as well as signature cards and properly adopted authorizations have been duly delivered to and have been accepted by the compliance department of the Lender.
 
7.2
Conditions precedent to the making of the Commitment
 
The obligation of the Lender to advance the Commitment (or any part thereof) is subject to the further condition that the Lender shall have received prior to the drawdown or, where this is not possible, simultaneously with the drawdown of the Commitment or the relevant part thereof on the Drawdown Date the following documents and evidence in form and substance satisfactory to the Lender:
 

 (a)
Conditions precedent: evidence that the conditions precedent set out in Clause 7.1 (Conditions precedent to the execution of this Agreement) remain fully satisfied;
 

 (b)
Drawdown Notice: the Drawdown Notice duly executed, issued and delivered to the Lender as provided in Clause 2.2 (Drawdown Notice and commitment to borrow);
 

 (c)
Security Documents:  the originals of the Accounts Pledge Agreement, Guarantees, Mortgages, General Assignments, Approved Manager’s Undertakings, any Charterparty Assignment relating to any Assignable Charterparty and Insurance Letters (and of each document to be delivered by each of them), each duly executed and where appropriate duly registered with the Registry or any other competent authority (as required);
 

 (d)
Title and no Security Interests:  evidence that, prior to or simultaneously with the drawdown, each Vessel will be duly registered in the ownership of the Owner thereof with the Registry and under the laws and flag of the Flag State free from any Security Interests save for those in favour of the Lender and otherwise as contemplated herein;
 

 (e)
Insurances: evidence in form and substance satisfactory to the Lender that each Vessel has been insured in accordance with the insurance requirements provided for in this Agreement and the Security Documents, including a MII, together with an opinion from insurance consultants (appointed by the Lender at the Borrowers’ expense) as to the adequacy of the insurances effected or to be effected in respect of that Vessel, to be followed by full copies of cover notes, policies, certificates of entry or other contracts of insurance and irrevocable authority is hereby given to the Lender at any time at its discretion to obtain copies of the policies, certificates of entry or other contracts of insurance from the insurers and/or obtain any information in relation to the Insurances relating to each Vessel;
 

 (f)
Insurers’ confirmations - Letters of Undertaking:  all necessary confirmations by insurers of each of the Vessels that they will issue letters of undertaking and endorse notice of assignment and loss payable clauses on the Insurances, in market standard form and - in the event of fleet cover - accompanied by waivers for liens for unpaid premium of other vessels managed by the Approved Manager(s) and which are not subject to any mortgage in favour of the Lender;
 

 (g)
MII: the MII shall have been effected by the Lender, but at the expense of the Borrowers as provided in Clause 10.9 (MII costs);
 
44

 (h)
Access to class records: due authorisation from the Drawdown Date in form and substance satisfactory to the Lender authorising the Lender to have access and/or obtain any copies of class records or other information at its discretion from the Classification Society of each Vessel, provided however, that the Lender shall not exercise such right unless and until an Event of Default has occurred and is continuing;
 

 (i)
Notices of assignment:  duly executed notices of assignment in the form prescribed by the Security Documents;
 

 (j)
Mortgage registration; evidence that each Mortgage on or before the Drawdown Date will be registered against the relevant Vessel through the Registry under the laws and flag of the Flag State;
 

 (k)
Trading certificates: upon issuance, copies of the trading certificates of the Relevant Vessel certified as true and complete by the legal counsel of the Borrowers evidencing the same to be valid and in force;
 

 (l)
Class confirmation:  evidence from the Classification Society that on the Drawdown Date each Vessel is classed with the class notation (referred to in the Mortgage relative thereto), with the Classification Society or to a similar standard with another classification society of like standing to be specifically approved by the Lender and remains free from any overdue requirements or recommendations affecting her class;
 

 (m)
Trim and stability booklet:  if so requested by the Lender, an extract of the trim and stability booklet certifying the lightweight of each Vessel, certified as true and complete by the legal counsel of the Borrowers;
 

 (n)
DOC and SMC: (i) a certified copy of the DOC issued to the Operator of each Vessel and (ii) a certified copy of the SMC for each Vessel;
 

 (o)
ISM Code Documentation: copies of such applications for ISM Code Documentation as the Lender may by written notice to the Borrowers have requested not later than five (5) days before the Drawdown Date certified as true and complete in all material respects by the Borrowers and the respective Technical Approved Manager;
 

 (p)
ISPS Code compliance:
 

 (i)
evidence satisfactory to the Lender that each Vessel is subject to a ship security plan which complies with the ISPS Code (such as proof that a security plan has been submitted to the recognized organisation for approval); and
 

 (ii)
a copy, certified as a true and complete copy of the ISSC for each Vessel delivered to the Lender prior to the Drawdown Date;
 

 (q)
Valuation:  charter free valuation of the Vessels satisfactory to the Lender, to be obtained by the Lender, at the Borrowers’ expense, made on the basis and in the manner specified in Clause 8.5(b) (Valuation of Vessels);
 

 (r)
Liquidity: evidence that  the Borrowers  have deposited their respective liquidity set out in Clause 8.1 (k) (Liquidity;)
 

 (s)
Security Parties’ process agent: a letter from each Security Party’s agent for receipt of service of proceedings referred to in each Security Document to which the relevant Security Party is a party, accepting its appointment under each of the relevant Security Documents;
 
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 (t)
Acknowledgement of Receipt: a receipt in writing in form and substance satisfactory to the Lender including an acknowledgement and admission of the Borrowers and the Corporate Guarantor to the effect that the Commitment or relevant part thereof (as the case may be) was drawn by the Borrowers and a declaration by the Borrowers and the Corporate Guarantor that all conditions precedent have been fulfilled, that there is no Event of Default and that all the representations and warranties are true and correct;
 

 (u)
Legal opinions: draft opinion from lawyers appointed by the Lender as to all the matters referred to in Clause 6.1(a) (Due Incorporation/Valid Existence) and Clause 6.1(b) (Due Corporate Authority) and all such aspects of law as the Lender shall deem relevant to this Agreement and the other Finance Documents and any other documents executed pursuant hereto or thereto and any further legal or other expert opinion as the Lender at its sole discretion may require;
 

 (v)
Flag State opinion:  draft opinion of legal advisers to the Lender on matters of the laws of the Flag State of each Vessel;
 

 (w)
Condition survey report: if the Lender so requires, a satisfactory to the Lender physical condition survey report on each Vessel together with a comprehensive record inspection from a surveyor appointed by the Lender, at the Borrowers’ expense; and
 

 (x)
MOA etc: in respect of the Friend Ship, a certified true and complete copy of the Memorandum of Agreement, bill of sale and other documents related to the purchase of such Vessel by the Friend Borrower.
 
7.3
No change of circumstances
 
The obligation of the Lender to advance the Commitment or any part thereof is subject to the further condition that at the time of the giving of the Drawdown Notice and on advancing the Commitment:
 

 (a)
Representations and warranties: the representations and warranties set out in Clause 6 (Representations and warranties) and in each of the other Finance Documents are true and correct on and as of each such time as if each was made with respect to the facts and circumstances existing at such time;
 

 (b)
No Event of Default:  no Event of Default shall have occurred and be continuing or would result from the drawdown;
 

 (c)
No change:  the Lender shall be satisfied that (i) there has been no change in the control of any of the Borrowers from that disclosed to the Lender at the negotiation of this Agreement and no change directly or indirectly in the ownership, beneficial ownership, or management of the Borrowers (or either of them), or any share therein or of the Vessels (or either of them) and (ii)  there has been no Material Adverse Change in the financial condition of any Security Party which (change) might, in the sole opinion of the Lender, be detrimental to the interests of the Lender; and
 

 (d)
No Market Disruption Event:  none of the circumstances contemplated by Clause 3.6 (Market disruption – Non Availability) has occurred and is continuing.
 
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7.4
Know your customer and money laundering compliance
 
The obligation of the Lender to advance the Commitment or any part thereof is subject to the further condition that the Lender, prior to or simultaneously with the drawdown, shall have received, to the extent required by any change in applicable law and regulation or any changes in the Lender’s own internal guidelines since the date on which the applicable documents and evidence were delivered to the Lender pursuant to Clause 8.9 (Know your customer and money laundering compliance), such further documents and evidence as the Lender shall require to identify the Borrowers and the other Security Parties and any other persons involved or affected by the transaction(s) contemplated by this Agreement.
 
7.5
Further documents
 
Without prejudice to the provisions of this Clause 7 each of the Borrowers hereby undertakes with the Lender to make or procure to be made such amendments and/or additions to any of the documents delivered to the Lender in accordance with this Clause 7 and to execute and/or deliver to the Lender or procure to be executed and/or delivered to the Lender such further documents as the Lender and its legal advisors may reasonably require to satisfy themselves that all the terms and requirements of this Agreement have been complied with.
 
7.6
Waiver of conditions precedent
 
The conditions specified in this Clause 7 are inserted solely for the benefit of the Lender and may be waived by the Lender in whole or in part and with or without conditions. Without prejudice to any of the other provisions of this Agreement, in the event that the Lender, in its sole and absolute discretion, makes the Commitment available to the Borrowers prior to the satisfaction of all or any of the conditions referred to in Clauses 7.1 (Conditions precedent to the execution of this Agreement), 7.2 (Conditions precedent to the making of the Commitment) and 7.3 (No change of circumstances), each of the Borrowers hereby covenants and undertakes to satisfy or procure the satisfaction of such condition or conditions by no later than ten (10) days after the Drawdown Date or within such longer period as the Lender may, in its sole and absolute discretion, agree to or specify.
 
8.
COVENANTS

8.1
General
 
Each of the Borrowers, jointly and severally with the other Borrower, undertakes with the Lender that, from the date of this Agreement and until the full and complete payment and discharge of the Outstanding Indebtedness, it will:
 

 (a)
Notice on Material Adverse Change or Default: promptly inform the Lender upon becoming aware of any occurrence which might have a Material Adverse Effect on the ability of any Security Party to perform its obligations under any of the Finance Documents and, without limiting the generality of the foregoing, will inform the Lender of any Default forthwith upon becoming aware thereof and will from time to time, if so requested by the Lender, confirm to the Lender in writing that, save as otherwise stated in such confirmation, no Default has occurred and is continuing;
 

 (b)
Notification of litigation:
 

 (i)
provide the Lender with details of any legal or administrative action involving that Borrower, the Vessel owned by it, the Earnings or the Insurances in respect of that Vessel, any Security Party or the Approved Manager, as soon as such action is instituted or it becomes apparent to that Borrower that it is likely to be instituted, unless it is clear that the legal or administrative action cannot be considered material in the context of any Finance Document, and each Borrower shall procure that all reasonable measures are taken to defend any such legal or administrative action; and
 
47

 (ii)
and shall procure that any bareboat charterer shall supply to the Lender promptly, to the extent permitted by law, details of any claim, action, suit, proceedings or investigation against it with respect to Sanctions by any Sanctions Authority;
 

 (c)
Consents and licenses: without prejudice to Clauses 6 (Representations and warranties) and 7 (Conditions precedent), obtain or cause to be obtained, maintain in full force and effect and comply in all material respects with the conditions and restrictions (if any) imposed in, or in connection with, every consent, authorisation, license or approval of governmental or public bodies or authorities or courts and do or cause to be done, all other acts and things which may from time to time be necessary or desirable under applicable law for the continued due performance of all the obligations of the Security Parties under each of the Finance Documents;
 

 (d)
Use of Loan proceeds: use the Loan exclusively for the purposes specified in Clause 1.1 (Amount and Purpose);
 

 (e)
Pari passu: ensure that its obligations under this Agreement shall, without prejudice to the provisions of this Clause 8.1, at all times rank at least pari passu with all its other present and future unsecured and unsubordinated Financial Indebtedness with the exception of any obligations which are mandatorily preferred by law and not by contract;
 

 (f)
Financial statements: send or procure that there are sent to the Lender:
 

 (i)
as soon as possible, but in no event later than 180 days after the end of each Financial Year of the Borrowers and the Corporate Guarantor, their annual –unaudited, in the case of the Borrowers and audited, in the case of the Corporate Guarantor- financial statements for that Financial Year (commencing with the financial statements for the Financial Year ending on 31st December 2020); and
 

 (ii)
promptly after each request by the Lender, such further financial or other information in respect of that Borrower, each Vessel, the Corporate Guarantor, the other Security Parties and the Group as may reasonably be requested by the Lender;
 

 (g)
Form of financial statements:  all accounts delivered under Clause 8.1(f) (Financial Statements) will:
 

 (i)
be prepared in accordance with all applicable laws, accounting principles, concepts, bases and policies generally adopted and accepted consistently applied and, in the case of any audited financial statements, be certified by a Director of the Borrowers and the Corporate Guarantor;
 

 (ii)
fairly represent the financial condition of each of the Borrowers and the Corporate Guarantor at the date of those accounts and of their profit for the period to which those accounts relate; and
 

 (iii)
fully disclose or provide for all significant liabilities of each Borrower, the Group and the Corporate Guarantor and each of it/their subsidiaries;
 
48

 (h)
Provision of further information: promptly, when requested, provide the Lender with such financial and other information and accounts relating to the business, undertaking, assets, liabilities, revenues, financial condition commitments, operations or affairs of the Borrowers and any Security Party and such other further general information relating to each Security Party as the Lender from time to time may reasonably require;
 

 (i)
Financial Information: provide the Lender from time to time as the Lender may reasonably request with information on the financial conditions, cash flow position, commitments and operations of the Borrowers including cash flow analysis and voyage accounts of each Vessel with a breakdown of income and running expenses showing net trading profit, trade payables and trade receivables, such financial details to be certified by an authorized signatory of the Borrowers as to their correctness;
 

 (j)
Information on the employment of the Vessels:  provide the Lender from time to time as the Lender may request with information on the employment of each Vessel, as well as on the terms and conditions of any charterparty, contract of affreightment, agreement or related document in respect of the employment of each Vessel, such information to be certified by one of the directors of the Borrowers as to their correctness;
 

 (k)
Liquidity: procure that upon drawdown of the Commitment and at all times during the Security Period:
 
 
(i)
each of the Lord Borrower and Squire Borrower shall maintain in their respective Operating Account average quarterly minimum free liquidity in an amount of Dollars five hundred thousand ($500,000) ;
 

 (ii)
the Friend Borrower shall maintain in its Operating  Account cash minimum liquidity of Five hundred thousand Dollars ($500,000) which amount will remain pledged in favour of the Lender throughout the Security Period; and
 

 (iii)
the Guarantor shall maintain cash including cash equivalents, restricted cash and term deposits (which, without limitation, shall include the balances standing in each Operating Account) in account(s) minimum free liquidity of Five hundred thousand Dollars ($500,000) per each ship owned by a Subsidiary of the Corporate Guarantor and the Corporate Guarantor shall provide on Lender’s demand evidence satisfactory to the Lender of such minimum free liquidity;
 

 (l)
Banking operations: ensure that all banking operations in connection with the Vessels are carried out through the Lending Office of the Lender;
 

 (m)
Subordination: ensure that all Financial Indebtedness of the Borrowers to their respective shareholders is fully subordinated to the rights of the Lender under the Finance Documents, all in a form acceptable to the Lender, and to subordinate to the rights of the Lender under the Finance Documents any Financial Indebtedness issued to it by its shareholders, all in a form acceptable to the Lender;
 

 (n)
Obligations under Finance Documents:  duly and punctually perform each of the obligations expressed to be assumed by it under the Finance Documents;
 

 (o)
Payment on demand: pay to the Lender on demand any sum of money which is payable by the Borrowers to the Lender under this Agreement but in respect of which it is not specified in any other Clause when it is due and payable;
 
49

 (p)
Compliance with Laws and Regulations: comply, or procure compliance with all laws or regulations relating to it and/or its Vessel, its ownership, operation and management or to the business of such Borrower and cause this Agreement and the other Finance Documents to comply with and satisfy all the requirements and formalities established by the applicable laws to perfect this Agreement and the other Finance Documents as valid and enforceable Finance Documents;
 

 (q)
Maintenance of Security Interests:
 

 (i)
at its own cost, do all that it reasonably can to ensure that any Finance Document validly creates the obligations and the Security Interests which it purports to create; and
 

 (ii)
without limiting the generality of paragraph (p)) above, at its own cost, promptly register, file, record or enrol any Finance Document with any court or authority in all Relevant Jurisdictions, pay any stamp, registration or similar tax in all Relevant Jurisdictions in respect of any Finance Document, give any notice or take any other step which may be or has become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates;
 

 (r)
Registered Office: maintain its registered office at the address referred to in the Recitals; and will not establish, or do anything as a result of which it would be deemed to have, a place of business in the United Kingdom or the United States of America; and
 

 (s)
Compliance with Covenants: duly and punctually perform all obligations under this Agreement and the other Finance Documents.
 
8.2
Negative undertakings
 
Each of the Borrowers, jointly and severally with the other Borrower, undertakes with the Lender that, from the date of this Agreement and until the full and complete payment and discharge of the Outstanding Indebtedness it will not, without the prior written consent of the Lender:
 

 (a)
Negative pledge:
 

 (i)
create or permit any Security Interest (other than a Permitted Security Interest) to subsist, arise or be created or extended over all or any part of its present or future undertakings, assets, rights or revenues to secure or prefer any present or future Financial Indebtedness or other liability or obligation of the Borrowers (or any of them) or any other person other than in the normal course of its business of owning, financing and operating vessels and owning or acquiring ship-owning companies; and
 

 (ii)
cease to hold the legal title to, and own the entire beneficial interest in its Vessel, its Insurances and Earnings, free from all Security Interests and other interests and rights of every kind, except for those created by the Finance Documents and the effect of the assignments contained in the relevant General Assignment and any other Finance Documents;
 

 (b)
No further Financial Indebtedness: incur any further Financial Indebtedness nor authorise or accept any capital commitments (other than that normally associated with the day to day operations and trading) nor enter into any agreement for payment on deferred terms or hire agreement;

50

 (c)
No merger:  merge or consolidate with any other person;
 

 (d)
No disposals:
 

 (i)
sell, transfer, abandon, lend, lease or otherwise dispose of or cease to exercise direct control over any part (being either alone or when aggregated with all other disposals falling to be taken into account pursuant to this Clause 8.2(d) material in the opinion of the Lender in relation to the undertakings, assets, rights and revenues of the Borrowers) of its present or future undertaking, assets, rights or revenues (otherwise than by transfers, sales or disposals for full consideration in the ordinary course of operations and trading) whether by one or a series of transactions related or not; and
 

 (ii)
transfer, lease or otherwise dispose of any debt payable to it or any other right (present, future or contingent right) to receive a payment, including any right to damages or compensation;
 
but paragraphs (i) and (ii) do not apply to:
 

 (aa)
any charter of a Vessel; and
 

 (bb)
any sale of a Vessel to a bona fide third party on arm’s length terms, otherwise than as provided in Clause 4.3(b) (Sale or refinancing of a Vessel);
 

 (e)
No acquisitions: not acquire any further assets other than its Vessel and rights arising under contracts entered into by or on behalf of that Borrower other than in the ordinary course of its business of owning, operating and chartering its Vessel;
 

 (f)
No other business: not undertake any type of business other than its current business of owning, financing and operating its Vessel and the chartering of its Vessel to third parties;
 

 (g)
No investments: make any investments in any person, asset, firm, corporation, joint venture or other entity;
 

 (h)
No other liabilities or obligations to be incurred:  incur any liability or obligation (including, without limitation, any Financial Indebtedness or any obligations under a guarantee or sale and leaseback transaction) except:
 

 (i)
liabilities and obligations under the Finance Documents to which it is or, as the case may be, will be a party; and
 

 (ii)
liabilities or obligations reasonably incurred in the normal course of its business of trading, operating and chartering, maintaining and repairing the Vessel owned by it (and for the purposes of this Clause 8.2(h) fees to be paid pursuant to the Management Agreement in respect of its Vessel shall be considered as permitted obligations under the Finance Documents) (including, without limitation, any Financial Indebtedness owing to its shareholder(s) or the Approved Manager, subject to the relevant Borrower ensuring on or prior to the the Drawdown Date, that the rights of the Lender thereunder are fully subordinated in writing pursuant to a subordination agreement acceptable to the Lender);
 
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 (i)
No borrowing: incur any Borrowed Money except for Borrowed Money pursuant to the Finance Documents or in the ordinary course of business of operating, maintaining and repairing a Vessel;
 

 (j)
No repayment of borrowings: repay the principal of, or pay interest on or any other sum in connection with, any of its Borrowed Money except for Borrowed Money pursuant to the Finance Documents or in the ordinary course of business;
 

 (k)
No Payments: unless otherwise provided in this Agreement and the other Finance Documents (and then only to the extent expressly permitted by the same) not pay out any funds (whether out of the Earnings or out of moneys collected under the relevant General Assignment and/or the other Finance Documents or not) to any person except in connection with the administration of such Borrower and the operation and/or maintenance and/or repair and/or trading of its Vessel;
 

 (l)
No guarantees: issue any guarantees or indemnities or otherwise become directly or contingently liable for the obligations of any person, firm, or corporation except pursuant to the Finance Documents and except for, in the case of such Borrowers, guarantees or indemnities from time to time required in the ordinary course of its business or by any protection and indemnity or war risks association with which its Vessel is entered, guarantees required to procure the release of its Vessel from any arrest, detention, attachment or levy or guarantees or undertakings required for the salvage of its Vessel;
 

 (m)
No loans:  make any loans or advances to, including (without limitation) any loan or advance or grant any credit (save for normal trade credit in the ordinary course of business) to any officer, director, stockholder or employee or any other company managed by the Approved Manager directly or through the Approved Manager of the Vessels or agree to do so, provided, always, that any loans of its shareholders to either Borrower shall be fully subordinated to that Borrower’s obligations under this Agreement and the other Finance Documents;
 

 (n)
No securities:  permit any Financial Indebtedness of the Borrowers (or any of them) to any person (other than the Lender) to be guaranteed by any person (save, in the case of any Borrower, for guarantees or indemnities from time to time required in the ordinary course of business or by any protection and indemnity or war risks association with which its Vessel is entered, guarantees required to procure the release of its Vessel from any arrest, detention, attachment or levy or guarantees or undertakings required for the salvage of its Vessel);
 

 (o)
No dividends or distribution: if an Event of Default has occurred and is continuing declare or pay any dividends or make any other distribution under any name or description upon any of the issued shares or effect any form of redemption, purchase or return of share capital or otherwise dispose of any of its present or future assets, undertakings, rights or revenues (which are all assigned to the Lender) to any of its shareholders;
 

 (p)
No Subsidiaries: form or acquire any Subsidiaries;
 

 (q)
No change of business structure: change the nature, organisation and conduct of the business of a Borrower as owner of its Vessel or carry on any business other than the business carried on at the date of this Agreement;
 

 (r)
No change of legal structure: (such consent not be unreasonably withheld) ensure that none of the documents defining the constitution of such Borrower shall be materially (in the Lender’s opinion) altered in any manner whatsoever;
 
52

 (s)
No Security Interest on assets: other than Permitted Security Interests, not allow any part of its undertaking, property, assets or rights, whether present or future, to be mortgaged, charged, pledged, used as a lien or otherwise encumbered without the prior written consent of the Lender;
 

 (t)
No amendment to Assignable Charterparty: not waive or fail to enforce, any Assignable Charterparty to which it is a party or any of its provisions, unless that waiver or failure to enforce does not create a Material Adverse Effect, and will promptly notify the Lender of any amendment or supplement to any Assignable Charterparty;
 

 (u)
No change of control: ensure that no change shall be made directly or indirectly in the ownership and the management of the Borrowers;
 

 (v)
Stock Exchange: the Corporate Guarantor remains a public listed company at the Nasdaq Stock Exchange and continue to be managed by the person(s) disclosed to the Lender at the negotiation of this Agreement;
 

 (w)
No US Tax Obligor:  procure that, unless otherwise agreed by the Lender, no Security Party shall become a US Tax Obligor; and
 

 (x)
No Master Agreement Derivatives:  not enter into any transaction in a derivative of any description whatsoever.
 
8.3
Undertakings concerning the Vessels
 
Each of the Borrowers, jointly and severally with the other Borrower, undertakes with the Lender that, from the date of this Agreement and until the full and complete payment and discharge of the Outstanding Indebtedness, it will:
 

 (a)
Conveyance on default: where a Vessel is (or is to be) sold in exercise of any power conferred on the Lender, execute, forthwith upon request by the Lender, such form of conveyance of that Vessel as the Lender may require;
 

 (b)
Mortgage: it will execute, and procure the registration of the relevant Mortgage over each Vessel under the laws and flag of the Flag State immediately upon the drawdown of the Loan;
 

 (c)
Chartering: not let or agree its Vessel to be let:
 

 (i)
on demise charter for any period; or
 

 (ii)
without the prior written consent of the Lender (such consent not to be unreasonably withheld) by any Assignable Charterparty; or
 

 (iii)
on terms whereby more than two (2) months’ hire (or the equivalent) is payable in advance; or
 

 (iv)
otherwise than on bona fide arm’s length terms at the time when its Vessel is fixed; or
 

 (v)
under any pooling or sharing agreement in respect thereof on terms whereby any and all the Earnings of either Vessel are pooled or shared with any other person;
 
53

 (d)
Laid-up: without the prior written consent of the Lender not de-activate or lay up its Vessel;
 

 (e)
No amendment to Assignable Charterparty: not waive or fail to enforce, any Assignable Charterparty to which it is a party or any of its provisions, and will promptly notify the Lender of any material amendment or supplement to any Assignable Charterparty;
 

 (f)
Approved Manager:  not without the prior written consent of the Lender (such consent not to be unreasonably withheld or delayed) agree or appoint a manager of its Vessel other than the Approved Manager;
 

 (g)
Ownership/Management/Control:  ensure that each Vessel is registered on the Drawdown Date in the ownership of the Owner thereof under the laws of the Flag State and thereafter ensure that each Vessel will maintain her registration, ownership, management, control and beneficial ownership;
 

 (h)
Class: ensure that each Vessel will remain in class free of overdue recommendations or average damage affecting class or permitted by the Classification Society and provide the Lender on demand with copies of all class and trading certificates of each Vessel;
 

 (i)
Insurances: ensure that all Insurances (as defined in the relevant Mortgage/General Assignment) of each Vessel is maintained and comply with all insurance requirements specified in this Agreement and in the relevant Mortgage and in case of failure to maintain either Vessel so insured, authorise the Lender (and such authorisation is hereby expressly given to the Lender) to have the right but not the obligation to effect such Insurances on behalf of the Owner (and in case that either Vessel remains in port for an extended period) to effect port risks insurances at the cost of the Borrowers which, if paid by the Lender, shall be Expenses; the Lender shall be entitled to obtain once per year at Borrowers’ expense an opinion from insurance consultants (appointed by the Lender at the Borrowers’ expense) as to the adequacy of the insurances effected or to be effected in respect of each Vessel, Provided that (i) if an Event of Default has occurred and is continuing or (ii) if there has been any change in the insurance placement within such year or (iii) if there has been a Material Adverse Change of the financial condition of any of the insurers of any of the Vessels at the Lender’s sole opinion, the Lender shall be entitled to obtain at Borrowers’ expense such opinion from such insurance consultants at any time it deems necessary;
 

 (j)
Transfer/Security Interests:  not without the prior written consent of the Lender agrees either Vessel or any share therein to be sold or otherwise disposed of or create or agree to create or permit to subsist any Security Interest over the Vessels (or either of them) (or any share or interest therein) other than Permitted Security Interests;
 

 (k)
Not imperil Flag, Ownership, Insurances: ensure that each Vessel is maintained and trades in conformity with the laws of the Flag State, of its owning company or of the nationality of the officers, the requirements of the Insurances and nothing is done or permitted to be done which could endanger the flag of such Vessel or its unencumbered (other than Security Interests in favour of the Lender and Security Interests permitted by this Agreement) ownership or its Insurances;
 
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 (l)
Mortgage Covenants: ensure that each Owner always comply with all the covenants provided for in the Mortgage registered over its Vessel;
 

 (m)
No assignment of Earnings:  ensure that neither of the Owners will assign or agree to assign otherwise than to the Lender the Earnings or any part thereof;
 

 (n)
No sharing of Earnings: ensure that neither of the Owners:
 

 (i)
(save  for agreements for the sharing of Earnings made between the Borrowers) will enter into any agreement or arrangement for the sharing of any Earnings; and/or
 

 (ii)
will enter into any agreement or arrangement for the postponement of any date on which any Earnings are due or the reduction of the amount of any Earnings or otherwise for the release or adverse alteration of any right of such Owner to any Earnings; and/or
 

 (iii)
will enter into any agreement or arrangement for the release of, or adverse alteration to, any guarantee or Security Interest relating to any Earnings.
 

 (o)
Assignable Charterparty:  ensure and procure that in the event of its Vessel being employed under an Assignable Charterparty:
 

 (i)
execute and deliver to the Lender promptly upon the signing thereof a specific assignment of all its rights, title and interest in and to such charter and any charter guarantee in the form of a Charterparty Assignment and a notice of such assignment addressed to the relevant charterer;
 

 (ii)
ensure (on a best effort basis) that the relevant charterer and any charter guarantor agree to acknowledge to the Lender the specific assignment of such charter and charter guarantee by executing an acknowledgement substantially in the form included in the relevant Charterparty Assignment;
 

 (iii)
in the case where such charter is a demise charter, ensure (on a best effort basis) that the relevant charterer shall (1)  comply with all of that Borrower’s undertakings with regard to the employment, insurances, operation, repairs and maintenance of its Vessel contained in this Agreement, the relevant Mortgage and the relevant General Assignment and (2) provide (inter alia) an assignment of its interest in the insurances of its Vessel in the form of a tripartite agreement in form and substance acceptable to the Lender, to be made between the Lender, that Borrower and such charterer;
 

 (p)
No freight derivatives: not enter into or agree to enter into any freight derivatives or any other instruments which have the effect of hedging forward exposures to freight derivatives without the Lender’s prior written consent;
 

 (q)
Vessels’ inspection: permit the Lender (i) by surveyors or other persons appointed by it in its behalf to board its Vessel once per year or in case an Event of Default has occurred and is continuing at any time that the Lender might consider to be necessary or useful (but in any event without interfering with the daily operations and the ordinary trading of its Vessel) for the purpose of inspecting her condition or for the purpose of satisfying itself with regard to proposed or executed repairs and to afford all proper facilities for such inspections and (ii) at any time by financial or insurance advisors or other persons appointed by the Lender to review the operating and insurance records of its Vessel and the Owner, and each  Borrower hereby duly authorises the Lender to review the insurance and operating records of that Borrower and the costs (as supported by vouchers) of any and all such inspections shall be borne by the Borrowers;
 
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 (r)
Trading: use its Vessel only for civil merchant trading;
 

 (s)
Compliance with ISM Code:  procure that the Approved Manager and any Operator will:
 

 (i)
will comply with and ensure that each Vessel and any Operator by no later than the Drawdown Date complies with the requirements of the ISM Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the Security Period;
 

 (ii)
promptly inform the Lender if there is any threatened or actual withdrawal of either Owner, the Approved Manager’s or an Operator’s DOC or the SMC in respect of either Vessel; and
 

 (iii)
promptly inform the Lender upon the issue to the relevant Owner, the Approved Manager or any Operator of a DOC and to a Vessel of an SMC or the receipt by either Owner, the Approved Manager or any Operator of notification that its application for the same has been realised;
 

 (t)
Compliance with ISPS Code:  procure that the Approved Manager or any Operator will:
 

 (i)
maintain at all times a valid and current ISSC in respect of the relevant Vessel;
 

 (ii)
immediately notify the Lender in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC in respect of the relevant Vessel; and
 

 (iii)
procure that the relevant Vessel will comply at all times with the ISPS Code;
 

 (u)
Compliance with Environmental Laws: comply with, and procure that all Environmental Affiliates  of any Relevant Party comply with, all Environmental Laws including without limitation, requirements relating to manning and establishment of financial responsibility and to obtain and comply with, and procure that all Environmental Affiliates such Relevant Party obtain and comply with, all Environmental Approvals and to notify the Lender forthwith:
 

 (i)
of any Environmental Claim for an amount or amounts in aggregate exceeding Six hundred fifty thousand Dollars ($650,000) made against any of the Vessels, any Relevant Ship and/or their respective Owners; and
 

 (ii)
upon becoming aware of any incident which may give rise to an Environmental Claim and to keep the Lender advised in writing of the relevant Owner’s response to such Environmental Claim on such regular basis and in such detail as the Lender shall require.
 

 (v)
War Risk Insurance cover: in the event of hostilities in any part of the world (whether war is declared or not), it will not cause or permit its Vessel to enter or trade to any zone which is declared a war zone by any government or by its Vessel’s war risks insurers unless the prior written consent of the Lender has been given and the relevant Owner has (at its expense) effected any special, additional or modified insurance cover which the Lender may approve or require.
 
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8.4
Validity of Securities - Earnings - Taxes etc.
 
Each of the Borrowers, jointly and severally with the other Borrower, undertakes with the Lender that, from the date of this Agreement and until the full and complete payment and discharge of the Outstanding Indebtedness, it will:
 

 (a)
Validity: ensure and procure that all governmental or other consents required by law and/or any other steps required for the validity, enforceability and legality of this Agreement and the other Finance Documents are maintained in full force and effect and/or appropriately taken;
 

 (b)
Earnings: ensure and procure that, unless and until directed by the Lender otherwise (i) all the Earnings of its Vessel shall be paid to its Operating Account and (ii) the persons from whom the Earnings are from time to time due are irrevocably instructed to pay them to the said Operating Account or to such account in the name of such Borrower as shall be from time to time determined by the Lender in accordance with the provisions hereof and of the relevant Security Documents;
 

 (c)
Taxes:  pay all Taxes, assessments and other governmental charges imposed on the Borrowers (or any of them) when the same fall due, except to the extent that the same are being contested in good faith by appropriate proceedings and adequate reserves have been set aside for their payment if such proceedings fail;
 

 (d)
Additional Documents: from time to time and within fifteen (15) days after the request of the Lender, execute and deliver to the Lender or procure the execution and delivery to the Lender of all such documents as shall be deemed desirable at the reasonable discretion of the Lender for giving full effect to this Agreement, and for perfecting, protecting the value of or enforcing any rights or securities granted to the Lender under any one or more of this Agreement, the other Finance Documents and any other documents executed pursuant hereto or thereto and in case that any conditions precedent (with the Lender’s consent) have not been fulfilled prior to the Drawdown Date, such conditions shall be complied with within fifteen (15) Banking Days after the Lender’s written request (unless the Lender agrees otherwise in writing) and failure to comply with this covenant shall be an Event of Default.
 
8.5
Secured Value to Security Requirement ratio - Valuation of the Vessels
 

 (a)
Security shortfall - Additional Security: If at any time during the Security Period, the Security Value shall be less than the Security Requirement, the Lender may give notice to the Borrowers requiring that such deficiency be remedied and then the Borrowers shall (unless the sole cause of such deficiency is the Total Loss of the relevant Vessel and the Owner thereof in full compliance with its obligations in relation to such Total Loss) either:
 

 (i)
prepay (in accordance with Clause 4.2 (Voluntary prepayment) (but without regard to the requirement for ten (10) days’ notice) within a period of thirty (30) Banking Days of the date of receipt by the Borrowers of the Lender’s said notice (the “Prepayment Date”) such sum in Dollars as will result in the Security Requirement after such prepayment (taking into account any other repayment of the Loan made between the date of the notice and the date of such prepayment) being at least equal to the Security Value; or
 
57

 (ii)
before the Prepayment Date constitute to the satisfaction of the Lender such further security for the Loan as shall be acceptable to the Lender having a value for security purposes (as determined by the Lender in its absolute discretion) at the date upon which such further security shall be constituted which, when added to the Security Value, shall not be less than the Security Requirement as at such date. Such additional security shall be constituted by:
 

 aa)
additional pledged cash deposits in favor of the Lender in an amount equal to such shortfall with the Lender and in an account and manner to be determined by the Lender; and/or
 

 bb)
any other security acceptable to the Lender at its absolute discretion to be provided in a manner determined by the Lender.
 
Any such additional security provided by the Lender shall be promptly released by the Lender once the Security Requirement ratio has been restored. The provisions of Clauses 4.3 (Compulsory Prepayment in case of Total Loss or sale of a Vessel) and 4.6 (Amounts payable on prepayment) shall apply to prepayments under Clause 8.5(a)(i).
 

 (b)
Valuation of Vessels: Each of the Vessels shall, for the purposes of this Clause 8.5, be valued in Dollars at least once a year and at any time that the Lender may reasonably require by one (1) Approved Shipbroker appointed by or as the case may be, acceptable to the Lender, (such valuation to be addressed to the Lender and made without, unless required by the Lender, physical inspection, and on the basis of a sale for prompt delivery for cash at arm’s length on normal commercial terms as between a willing buyer and a willing seller, without taking into account the benefit of any Assignable Charterparty or other engagement concerning the relevant Vessel. The Lender and the Borrowers agree to accept the valuation made by the Approved Shipbroker appointed as aforesaid as conclusive evidence of the Market Value of the relevant Vessel at the date of such valuation and that such valuation shall constitute the Market Value of the relevant Vessel for the purposes of this Clause 8.5.
 
The value of the relevant Vessel determined in accordance with the provisions of this Clause 8.5 shall be binding upon the Borrowers and the Lender until such time as any further such valuations shall be obtained.
 

 (c)
Information: The Borrowers undertake to the Lender to provide the Lender and any such Approved Shipbrokers such information concerning the relevant Vessel and its condition as such Approved Shipbrokers may reasonably require for the purpose of making any such valuation.
 

 (d)
Costs:  All costs in connection with:
 

 (i)
the Lender obtaining any valuation of the Vessels referred to in Clause 8.5(b) (Valuation of Vessels); and
 

 (ii)
any valuation of any additional security for the purposes of ascertaining the Security Value at any time or necessitated by the Borrowers electing to constitute additional security pursuant to Clause 8.5(a)(ii): and
 

 (iii)
all legal and other expenses incurred by the Lender in connection with any matter arising out of this Clause 8.5,
 
shall be borne by the Borrower.
 
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 (e)
Valuation of additional security: For the purpose of this Clause 8.5, the market value of any additional security provided or to be provided to the Lender shall be determined by the Lender in its absolute discretion without any necessity for the Lender assigning any reason thereto and if such security consists of a vessel shall be that shown by a valuation complying with the requirements of Clause 8.5(b) (Valuation of Vessels) (whereas the costs shall be borne by the Borrowers in accordance with Clause 8.5(d) (Costs)) or if the additional security is in the form of a cash deposit full credit shall be given for such cash deposit on a Dollar for Dollar basis.
 

 (f)
Release of additional security. Once the Security Value shall be equal to the Security Requirement for a period of at least thirty (30) days, and the Borrowers have previously provided additional security pursuant to this Clause 8.5, the Lender shall, as soon as reasonably practicable and subject to being indemnified by the Borrowers to its satisfaction against the cost of doing so, release any such additional security to the extent that the Security Requirement would be maintained following such release, provided that at the relevant time there is no Event of Default in existence.
 

 (g)
Documents and evidence: In connection with any additional security provided in accordance with this Clause 8.5, the Lender shall be entitled to receive such evidence and documents of the kind referred to in Clause 7.1 (Conditions precedent to the execution of this Agreement) as may in the Lender’s opinion be appropriate and such favourable legal opinions as the Lender shall in its absolute discretion require.
 
8.6
Sanctions
 

 (a)
Without limiting Clause 8.7 (Compliance with laws etc.), each of the Borrowers hereby undertakes with the Lender that, from the date of this Agreement and until the date that the Outstanding Indebtedness is paid in full, it shall ensure that none of the Vessels:
 

 (i)
will be used by or for the benefit of a Sanctions Restricted Person contrary to Sanctions; and/or
 

 (ii)
will be used in trading in any Sanctions Restricted Jurisdiction or in any manner contrary to Sanctions; and/or
 

 (iii)
will be traded in any manner which would trigger the operation of any sanctions limitation or exclusion clause (or similar) in the Insurances.
 

 (b)
Each Borrower shall:
 

 (i)
not directly or to its knowledge  indirectly use or permit to be used all or any part of the proceeds of the Loan, or lend, contribute or otherwise make available such proceeds directly or to its knowledge) indirectly, to any person or entity (i) to finance or facilitate any activity or transaction of or with any Sanctions Restricted Person contrary to Sanctions or in any Sanctions Restricted Jurisdiction, or (ii) in any other manner that would result in a violation of any Sanctions by any Party;
 

 (ii)
shall not fund all or part of any payment under the Loan out of proceeds derived directly or to its knowledge (after reasonable enquiry) indirectly from any activity or transaction with a Sanctions Restricted Person contrary to Sanctions or in a Sanctions Restricted Jurisdiction or which would otherwise cause any party to be in breach of any Sanctions; and
 

 (iii)
procure that no proceeds to its knowledge (after reasonable enquiry) from activities or business with a Sanctions Restricted Person contrary to Sanctions or in a Sanctions Restricted Jurisdiction are credited to any of the Accounts.
 
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8.7
Compliance with laws etc.
 

 (a)
Each of the Borrowers shall:
 

 (i)
comply, or procure compliance with all laws or regulations by the relevant Security Party:
 

 a)
relating to its respective business generally; and
 

 b)
relating to its Vessel, its ownership, employment, operation, management and registration including, but not limited to, the ISM Code, the ISPS Code, all Environmental Laws and the laws of the Flag State; and
 

 c)
all Sanctions;
 

 (ii)
obtain, comply with and do all that is necessary to maintain in full force and effect any Environmental Approvals; and
 

 (iii)
without limiting paragraph (i) above, not employ its Vessel 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 and all Environmental Laws which has or is likely to have a Material Adverse Effect on any of the Security Parties.
 

 (b)
Without prejudice to the generality of the foregoing paragraph (a) each of the Borrowers shall:
 

 (i)
comply with (i) the applicable from time to time environmental legislation, both on a national and EU level, as well as the international conventions for the maintenance, protection and improvement of the environment; and (ii) the applicable from time to time legislation which relates to the labor and employment conditions, the occupational health and safety and the public health, safety and security, in each case, where failure to do so has or is reasonably likely to have a Material Adverse Effect;
 

 (ii)
promptly upon becoming aware of the same, inform the Lender in writing of any claim against the Borrowers (or any of them) which is current, pending or threatened or any communication, notice or the imposition of any fine against the Borrowers (or any of them) in respect of any actual or alleged breach of, or liability under, any such law or regulation;
 

 (iii)
comply with any law or regulation applicable to it and pertaining on the protection of the individual from the processing of personal data where failure to do so has or is reasonably likely to have a Material Adverse Effect; and
 

 (iv)
promptly upon becoming aware of the same, inform the Lender in writing of any claim against the Borrowers (or any of them) which is current, pending or threatened or any communication, notice or the imposition of any fine against the Borrowers (or any of them) in respect of any actual or alleged breach of, or liability under, any such law or regulation.
 
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8.8
Covenants for the Securities Parties
 
Each of the Borrowers, jointly and severally with the other Borrower, undertakes with the Lender that, from the date of this Agreement and until the full and complete payment and discharge of the Outstanding Indebtedness, it will ensure and procure that all other Security Parties and each of them duly and punctually comply, with the covenants in Clauses 8.1 (General), 8.3 (Undertakings concerning the Vessels), 8.4 (Validity of Securities - Earnings - Taxes etc.), 8.5 (Secured Value to Security Requirement ratio - Valuation of the Vessels), 8.6 (Sanctions) and 8.7 (Compliance with laws etc.) which are applicable to them mutatis mutandis.
 
8.9
Know your customer and money laundering compliance
 
Each of the Borrowers, jointly and severally with the other Borrower, undertakes with the Lender that, from the date of this Agreement and until the full and complete payment and discharge of the Outstanding Indebtedness, it will provide the Lender, or procure the provision of, such documentation and other evidence as the Lender shall from time to time require, based on applicable law and regulations from time to time and the Lender’s own internal guidelines from time to time to identify the each of the Borrowers and the other Security Parties, including the disclosure in writing of the ultimate legal and beneficial owner or owners of such entities, and any other persons involved or affected by the transaction(s) contemplated by this Agreement in order for the 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.
 
9.
EVENTS OF DEFAULT

9.1
Events
 
There shall be an Event of Default if:
 

 (a)
Non‑payment: any Security Party fails to pay any sum payable by it under any of the Finance Documents at the time, in the currency and in the manner stipulated in the Finance Documents (and so that, for this purpose, sums payable on demand shall be treated as having been paid at the stipulated time if paid within five (5) Banking Days of demand and other sums due shall be treated as having been paid at the stipulated time if paid within three (3) Banking Days of its falling due); or
 

 (b)
Breach of Insurance and certain other obligations: any of the Borrowers fails to obtain and/or maintain the Insurances (as defined in, and in accordance with the requirements of, the Finance Documents) or if any insurer in respect of such Insurances cancels the Insurances or disclaims liability by reason, in either case, of mis‑statement in any proposal for the Insurances or for any other failure or default on the part of the Borrowers or any other person or the Borrowers commit any breach of or omit to observe any of the obligations or undertakings expressed to be assumed by them under Clause 8 (Covenants); or
 

 (c)
Breach of other obligations: any Security Party commits any breach of or omits to observe any of its obligations or undertakings expressed to be assumed by it under any of the Finance Documents (other than those referred to in Clauses 9.1(a) (Non‑payment) and 9.1(b) (Breach of Insurance and certain other obligations) above) and, in respect of any such breach or omission which in the opinion of the Lender is capable of remedy, such action as the Lender may require shall not have been taken within fifteen (15) Banking Days of the Lender notifying in writing the relevant Security Party of such default and of such required action; or
 
61

 (d)
Misrepresentation: any representation or warranty made or deemed to be made or repeated by or in respect of any Security Party in or pursuant to any of the Finance Documents or in any notice, certificate or statement referred to in or delivered under any of the Finance Documents is or proves to have been incorrect or misleading in any material respect; or
 

 (e)
Cross‑default:
 

 (i)
any Financial Indebtedness of (aa) a Borrower or a Security Party (other than the Corporate Guarantor) related to an amount exceeding the amount of Five hundred thousand Dollars ($500,000) and (bb) the Corporate Guarantor related to an amount exceeding the amount of Five million Dollars ($5,000,000) (in each case herein, the “Permitted Amount”) is not paid when due (unless contested in good faith)
 

 (ii)
any Financial Indebtedness of any of the Security Parties relating to the Permitted Amount (whether by declaration or automatically in accordance with the relevant agreement or instrument constituting the same) due and payable prior to the date when it would otherwise have become due (unless as a result of the exercise by the relevant Security Party or the relevant Group Member (as the case may be) of a voluntary right of prepayment), or
 

 (iii)
any creditor of any of the Security Parties becomes entitled to declare any such Financial Indebtedness due and payable, or
 

 (iv)
any facility or commitment available to any of the Security Parties relating to Financial Indebtedness relating to an amount exceeding the Permitted Amount is withdrawn, suspended or cancelled by reason of any default (however described) of the person concerned unless the relevant Security Party shall have satisfied the Lender that such withdrawal, suspension or cancellation will not affect or prejudice in any way the relevant Security Party’s (as the case may be) ability to pay its debts as they fall due, or
 

 (v)
any guarantee given by any of the Security Parties or any Group Member in respect of Financial Indebtedness relating to an amount exceeding the Permitted Amount  is not honoured when due and called upon; or
 

 (f)
Legal process: any judgment or order made or commenced in good faith by a person against any Security Party relating to an amount exceeding the Permitted Amount is not stayed or complied with within thirty (30) Banking  Days or a good faith creditor attaches or takes possession of, or a distress, execution, sequestration or other bonafide process is levied or enforced upon or sued out against, any of the undertakings, assets, rights or revenues of any Security Party and is not discharged , or bail is lodged in respect thereof, within thirty (30) Banking  Days within; or
 

 (g)
Insolvency: any Security Party becomes insolvent or stops or suspends making payments (whether of principal or interest) with respect to all or any class of its debts or announces an intention to do so; or
 

 (h)
Reduction or loss of capital: a meeting is convened by any corporate Security Party (other than the Corporate Guarantor) for the purpose of passing any resolution to purchase, reduce or redeem any of its share capital; or
 

 (i)
Winding up: any petition is presented or other step is taken for the purpose of winding up any corporate Security Party or an order is made or resolution passed for the winding up of any corporate Security Party or a notice is issued convening a meeting for the purpose of passing any such resolution; or
 
62

 (j)
Administration: any bonafide petition is presented or other step is taken for the purpose of the appointment of an administrator of any Security Party or the Lender believes that any such petition or other step is imminent or an administration order is made in relation to any Security Party; or
 

 (k)
Appointment of receivers and managers: any administrative or other receiver is appointed of any Security Party or any part of its assets and/or undertaking or any other steps are taken to enforce any Security Interest over all or any part of the assets of any such Security Party; or
 

 (l)
Compositions: any steps are taken, or negotiations commenced, by any Security Party or by any of its creditors with a view to the general readjustment or rescheduling of all or part of its indebtedness or to proposing any kind of composition, compromise or arrangement involving such company and any of its creditors provided, however, that if the Borrowers are able to provide such evidence as is satisfactory in all respects to the Lender that such rescheduling will not relate to any payment default or anticipated default the same shall not constitute an Event of Default; or
 

 (m)
Analogous proceedings: there occurs, in relation to any Security Party, in any country or territory in which any of them carries on business or to the jurisdiction of whose courts any part of their assets is subject, any event which, in the opinion of the Lender, appears in that country or territory to correspond with, or have an effect equivalent or similar to, any of those mentioned in Clauses 9.1(f) (Legal process) to (l) (Compositions) (inclusive) or any Security Party otherwise becomes subject, in any such country or territory, to the operation of any law relating to insolvency, bankruptcy or liquidation; or
 

 (n)
Cessation of business: any corporate Security Party suspends or ceases or threatens to suspend or cease to carry on its business; or
 

 (o)
Seizure: all or a material part of the undertaking, assets, rights or revenues of, or shares or other ownership interests in, any Security Party are seized, nationalised, expropriated or compulsorily acquired by or under the authority of any government; and the respective Security Party fails to procure for its release within a period of  forty five (45) days; or
 

 (p)
Consents:  any consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by any Security Party to authorise or otherwise in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of this Agreement and/or any of the other Security Documents or the performance by the Security Parties of their respective obligations under this Agreement and/or any of the other Finance Documents is modified in a manner unacceptable to the Mortgagee or is not granted or is revoked or terminated or expires and is not renewed or otherwise ceases to be in full force and effect; or
 

 (q)
Invalidity: any of the Finance Documents shall at any time and for any reason become invalid or unenforceable or otherwise cease to remain in full force and effect, or if the validity or enforceability of any of the Finance Documents shall at any time and for any reason be contested by any Security Party which is a party thereto, or if any such Security Party shall deny that it has any, or any further, liability thereunder; or
 
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 (r)
Unlawfulness: it becomes impossible or unlawful at any time for any Security Party, to fulfil any of the covenants and obligations expressed to be assumed by it in any of the Finance Documents or for the Lender to exercise the rights or any of them vested in it under any of the Finance Documents or otherwise; or
 

 (s)
Repudiation: any Security Party repudiates any of the Finance Documents or does or causes or permits to be done any act or thing evidencing an intention to repudiate any of the Finance Documents; or
 

 (t)
Security Interests enforceable: any Security Interest (other than Permitted Security Interest) in respect of any of the property (or part thereof) which is the subject of any of the Finance Documents becomes enforceable; or
 

 (u)
Arrest: any of the Vessels is arrested, confiscated, seized, taken in execution, impounded, forfeited, detained in exercise or purported exercise of any possessory lien or other claim or otherwise taken from the possession of its Owner and such Owner shall fail to procure the release of such Vessel within a period of sixty (60) days thereafter; or
 

 (v)
Registration:  the registration of any of the Vessels under the laws and flag of the relevant Flag State is cancelled or terminated without the prior written consent of the Lender; if the Vessel is only provisionally registered on the Drawdown Date and is not permanently registered under the laws and flag of the Flag State at least thirty (30) days prior to the deadline for completing such permanent registration; or
 

 (w)
Unrest: the Flag State of a Vessel becomes involved in hostilities or civil war or there is a seizure of power in such Flag State by unconstitutional means if, in any such case, (a) such event could in the opinion of the Lender reasonably be expected to have a Material Adverse Effect on the security constituted by any of the Finance Documents and (b) the relevant Owner has failed within sixty (60) days from receiving notice from the Lender to this effect to (i) delete the relevant Vessel from its Flag State and (ii) re-register that Vessel under another Flag State approved by the Lender in its sole discretion through a relevant Registry, in each case, at the Borrowers’ cost and expense; or
 

 (x)
Environment: any Relevant Party and/or any of their respective Environmental Affiliates fails to comply with any Environmental Law or any Environmental Approval or any of the Vessels or any Relevant Ship is involved in any incident which gives rise or which may give rise to any Environmental Claim, if in any such case, such non-compliance or incident or the consequences thereof could (in the reasonable opinion of the Lender) be expected to have a Material Adverse Change as described hereinbelow under paragraph (ff); or
 

 (y)
P&I: any Security Party or any other person fails or omits to comply with any requirements of the protection and indemnity association or other insurer with which any of the Vessels is entered for insurance or insured against protection and indemnity risks (including oil pollution risks) to the effect that any cover in relation to such Vessel (including without limitation, liability for Environmental Claims arising in jurisdictions where such Vessel operates or trades) is or may be liable to cancellation, qualification or exclusion at any time; or
 

 (z)
Ownership:  there has been a change of control directly or indirectly in the Borrowers (or any of them) or the management of the Borrowers any share therein or of any Vessel as a result of which any of the Borrowers ceases to 100% owned by the Corporate Guarantor or any of the Vessel ceases to be 100% owned by the Owner thereof; or
 
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 (aa)
Stock Exchange:  the common shares of the Corporate Guarantor cease to be listed at the Nasdaq Stock Exchange and the Corporate Guarantor cease to be managed by the person(s) disclosed to the Lender at the negotiation of this Agreement;
 

 (bb)
Change of Management: any Vessel ceases to be managed by the respective Approved Manager (for any reason other than the reason of a Total Loss or sale of such Vessel) without the approval of the Lender and the Owner thereof fails to appoint another Approved Manager prior to the termination of the mandate with the previous Approved Manager; or
 

 (cc)
Deviation of Earnings: any Earnings of any of the Vessels are not paid to the relevant Operating Account for any reason whatsoever (other than with the Lender’s prior written consent); or
 

 (dd)
ISM Code and ISPS Code: (without prejudice to the generality of Clause 9.1(c) (Breach of other obligations)) for any reason whatsoever the provisions of Clause 8.3(t) (Compliance with ISM Code) and Clause 8.3(u) (Compliance with ISPS Code) are not complied with and the relevant Vessel ceases to comply with the ISM Code or, as the case may be, the ISPS Code; or
 

 (ee)
Operating Account: any moneys are withdrawn from the Operating Accounts (or any of them) other than in accordance with Clauses 8.4(b) (Earnings) and 13 (Operating Accounts); or
 

 (ff)
Sanctions:  (without prejudice to the generality of sub-Clause 9.1(c) (Breach of other obligations)) for any reason whatsoever the provisions of Clause 8.6 (Sanctions) and Clause 8.7 (Compliance with laws etc.) are not complied with; or
 

 (gg)
Material Adverse Change: any other event or events (whether related or not) occurs or circumstance arises which constitutes a Material Adverse Change, from the position applicable as at the date of this Agreement, in the business, affairs or condition (financial or otherwise) of any Security Party) (including any such Material Adverse Change resulting from an Environmental Incident) the effect of which is likely, in the opinion of the Lender, to impair, delay or prevent the due fulfilment by any Security Party of any of its respective obligations or undertakings contained in this Loan Agreement or any of the other Finance Documents and/or materially and adversely to affect the security created by any of the Finance Documents; or
 

 (hh)
Corporate Guarantee: the Corporate Guarantor commits any breach of or omits to observe any of its obligations or undertakings expressed to be assumed by it/him under its Guarantee; or
 

 (ii)
Finance Documents: any other event of default (as howsoever described or defined therein) occurs under the Finance Documents (or any of them).
 
9.2
Consequences of Default – Acceleration
 
The Lender may without prejudice to any other rights of the Lender (which will continue to be in force concurrently with the following), at any time after the happening of an Event of Default which is continuing:
 

 (a)
by notice to the Borrowers declare that the obligation of the Lender to make the Commitment (or any part thereof) available shall be terminated, whereupon the Commitment shall be reduced to zero forthwith; and/or
 
65

 (b)
by notice to the Borrowers declare that the Loan and all interest accrued and all other sums payable under the Finance Documents have become due and payable, whereupon the same shall, immediately or in accordance with the terms of such notice, become due and payable without any further diligence, presentment, demand of payment, protest or notice or any other procedure from the Lender which are expressly waived by the Borrowers; and/or
 

 (c)
put into force and exercise all or any of the rights, powers and remedies possessed by the Lender under this Agreement and/or under any other Finance Document and/or as mortgagee of each of the Vessels, mortgagee, chargee or assignee or as the beneficiary of any other property right or any other security (as the case may be) of the assets charged or assigned to it under the Finance Documents or otherwise (whether at law, by virtue of any of the Finance Documents or otherwise);
 
9.3
Multiple notices; action without notice
 
The Lender may serve notices under sub-Clauses (a) and (b) of Clause 9.2 (Consequences of Default – Acceleration) simultaneously or on different dates and it may take any action referred to in that Clause if no such notice is served or simultaneously with or at any time after service of both or either of such notices, it being understood and agreed that the non-service of a notice in respect of an Event of Default hereunder, or under any of the Finance Documents (whether known to the Lender or not), shall not be construed to mean that the Event of Default shall cease to exist and bring about its lawful consequences.
 
9.4
Demand basis
 
If, pursuant to Clause 9.2(b), the Lender declares the Loan to be due and payable on demand, the Lender may by written notice to the Borrowers (a) call for repayment of the Loan on such date as may be specified whereupon the Loan shall become due and payable on the date so specified together with all interest accrued and all other sums payable under this Agreement or (b) withdraw such declaration with effect from the date specified in such notice.
 
9.5
Proof of Default
 
It is agreed that (i) the non-payment of any sum of money in time will be proved conclusively by mere passage of time and (ii) the occurrence of this (non-payment) shall be proved conclusively by a mere written statement of the Lender (save for manifest error).
 
9.6
Exclusion of Lender’s liability
 
Neither the Lender nor any receiver or manager appointed by the Lender, shall have any liability to the Borrowers or a Security Party:
 

 (a)
for any loss caused by an exercise of rights under, or enforcement of an Security Interest created by, a Finance Document or by any failure or delay to exercise such a right or to enforce such an Security Interest; or
 

 (b)
as mortgagee in possession or otherwise, for any income or principal amount which might have been produced by or realised from any asset comprised in such an Security Interest or for any reduction (however caused) in the value of such an asset,
 
except that this does not exempt the Lender or a receiver or manager from liability for losses shown to have been caused by the wilful misconduct of the Lender’s own officers and employees or (as the case may be) such receiver’s or manager’s own partners or employees.
 
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10.
INDEMNITIES - EXPENSES – FEES

10.1
Miscellaneous indemnities
 

 (a)
The Borrowers shall on demand (and it is hereby expressly undertaken by the Borrowers to) indemnify the Lender, without prejudice to any of the other rights of the Lender under any of the Finance Documents, against any loss (including loss of the applicable Margin and any Break Costs) or expense which the Lender shall certify as sustained or incurred as a consequence of:
 

 (i)
any default in payment by any of the Security Parties of any sum under any of the Finance Documents when due;
 

 (ii)
the occurrence of any Event of Default which is continuing;
 

 (iii)
any prepayment of the Loan or part thereof being made under Clauses 4.2 (Voluntary Prepayment) and 4.3 (Compulsory Prepayment in case of Total Loss or sale of a Vessel), 8.5(a) (Security shortfall-Additional Security), Clause 12.1 (Unlawfulness) or Clause 12.4 (Option to prepay) or any other repayment of the Loan or part thereof being made otherwise than on an Interest Payment Date relating to the part of the Loan prepaid or repaid; or
 

 (iv)
the Loan not being advanced for any reason (excluding any default by the Lender and any reason specified in Clauses 3.6 (Market disruption – Non Availability), 4.3(a) (Total Loss of a Mortgaged Vessel) or 12.1 (Unlawfulness) after the Drawdown Notice has been given, including, in any such case, but not limited to, any loss or expense sustained or incurred in maintaining or funding the Loan or any part thereof or in liquidating or re-employing deposits from third parties acquired to effect or maintain the Loan or any part thereof.
 

 (b)
The Borrowers shall fully indemnify the Lender on its demand, without prejudice to any of its other rights under any of the Finance Documents, in respect of all claims, liabilities, losses or other Expenses which may be made or brought against or sustained or incurred by the Lender, in any country, as a result of or in connection with:
 

 (i)
any action taken, or omitted or neglected to be taken, under or in connection with any Finance Document by the Lender or by any receiver appointed under a Finance Document;
 

 (ii)
investigating any event which the Lender reasonably believes constitutes an Event of Default; or
 

 (iii)
acting or relying on any notice, request or instruction which the Lender reasonably believes to be genuine, correct and appropriately authorised,
 
other than claims, liabilities, losses or other Expenses, which are shown to have been directly and mainly caused by the willful misconduct of the officers or employees of the Lender.
 
Without prejudice to its generality, this Clause 10.1 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, any Environmental Law and any Sanctions.
 
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10.2
Expenses
 
The Borrowers shall (and it is hereby expressly undertaken by the Borrowers to) pay to the Lender on demand:
 

 (a)
Initial and Amendment expenses:  all expenses (including reasonable legal, printing and out-of-pocket expenses) reasonably incurred by the Lender in connection with the negotiation, preparation and execution of this Agreement and the other Finance Documents and of any amendment or extension of or the granting of any waiver or consent under this Agreement and/or any of the Finance Documents and/or in connection with any proposal by the Borrowers to constitute additional security pursuant to Clause 8.5(a) (Security shortfall - Additional Security), whether any such security shall in fact be constituted or not;
 

 (b)
Enforcement expenses:  all expenses (including reasonable legal and out-of-pocket expenses) incurred by the Lender in contemplation of, or otherwise in connection with, the enforcement of, or preservation of any rights under, this Agreement and/or any of the other Finance Documents, or otherwise in respect of the moneys owing under this Agreement and/or any of the other Finance Documents or the contemplation or preparation of the above, whether they have been effected or not;
 

 (c)
Legal costs:  the legal costs of the Lender’s appointed lawyers, in respect of the preparation of this Agreement and the other Finance Documents as well as the legal costs of the foreign lawyers (if these are available) in respect of the registration of the Finance Documents or any search or opinion given to the Lender in respect of the Security Parties or the Vessels or the Finance Documents. The said legal costs shall be due and payable on the Drawdown Date; and
 

 (d)
Other expenses:  any and all other Expenses.
 
10.3
Value Added Tax
 
All fees and expenses payable pursuant to this Clause 10 shall be paid together with value added tax or any similar tax (if any) properly chargeable thereon. Any value added tax chargeable in respect of any services supplied by the Lender under this Agreement shall, on delivery of the value added tax invoice, be paid in addition to any sum agreed to be paid hereunder.
 
10.4
Stamp duty etc.
 
The Borrowers shall pay any and all stamp, registration and similar taxes or charges (including those payable by the Lender) imposed by governmental authorities in relation to this Agreement and any of the other Finance Documents, and shall indemnify the Lender against any and all liabilities with respect to, or resulting from delay or omission on the part of the Borrowers to pay such stamp taxes or charges.
 
10.5
Environmental Indemnity
 
The Borrowers shall indemnify the Lender on demand and hold the Lender harmless from and against all costs, expenses, payments, charges, losses, demands, liabilities, actions, proceedings (whether civil or criminal) penalties, fines, damages, judgements, orders, sanctions or other outgoings of whatever nature which may be suffered, incurred or paid by, or made or asserted against the Lender at any time, whether before or after the repayment in full of principal and interest under this Agreement, relating to, or arising directly or indirectly in any manner or for any cause or reason out of an Environmental Claim made or asserted against the Lender if such Environmental Claim would not have been, or been capable of being, made or asserted against the Lender if it had not entered into any of the Finance Documents and/or exercised any of its rights, powers and discretions thereby conferred and/or performed any of its obligations thereunder and/or been involved in any of the transactions contemplated by the Finance Documents.
 
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10.6
Currency Indemnity
 
If any sum due from the Borrowers under any of the Finance Documents or any order or judgement given or made in relation hereto has to be converted from the currency (the “first currency”) in which the same is payable under the relevant Finance Document or under such order or judgement into another currency (the “second currency”) for the purpose of (i) making or filing a claim or proof against the Borrowers or any other Security Party, as the case may be or (ii) obtaining an order or judgement in any court or other tribunal or (iii) enforcing any order or judgement given or made in relation to any of the Finance Documents, the Borrowers shall (and it is hereby expressly undertaken by the Borrowers to) indemnify and hold harmless the Lender from and against any loss suffered as a result of any difference between (a) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (b) the rate or rates of exchange at which the Lender may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgement, claim or proof. The term “rate of exchange” includes any premium and costs of exchange payable in connection with the purchase of the first currency with the second currency.
 
10.7
Maintenance of the Indemnities
 
The indemnities contained in this Clause 10 shall apply irrespective of any indulgence granted to the Borrowers or any other party from time to time and shall continue to be in full force and effect notwithstanding any payment in favour of the Lender and any sum due from the Borrowers under this Clause 10 will be due as a separate debt and shall not be affected by judgement being obtained for any other sums due under any one or more of this Agreement, the other Finance Documents and any other documents executed pursuant hereto or thereto.
 
10.8
MII costs
 
The Borrowers shall reimburse the Lender on demand for any and all costs incurred by the Lender (as conclusively certified by the Lender) in effecting and keeping effected a Mortgagee’s Interest Insurance (herein “MII”), which the Lender may at any time effect for an amount equal to 120% of the Loan and on such terms and with such insurers as shall from time to time be determined by the Lender, provided, however, that the Lender shall in its absolute discretion appoint and instruct in respect of any such MII policy the insurance brokers in respect of such Insurance and provided, further, that in the event that the Lender effects any such Insurance on the basis of any mortgagee’s open cover, the Borrowers shall pay on demand to the Lender its proportion of premium due in respect of the Vessel(s) for which such insurance cover has been effected by the Lender, and any certificate of the Lender in respect of any such premium due by the Borrowers shall (save for manifest error) be conclusive and binding upon the Borrowers.
 
10.9
Central Bank or European Central Bank reserve requirements indemnity
 
The Borrowers shall on demand promptly indemnify the Lender against any cost incurred or loss suffered by the Lender as a result of its complying with the minimum reserve requirements of the European Central Bank and/or with respect to maintaining required reserves with the relevant national Central Bank to the extent that such compliance relates to the Commitment or deposits obtained by it to fund the whole or part of the Loan and to the extent such cost or loss is not recoverable by such Lender under Clause 12.2 (Increased cost).
 
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10.10
Communications Indemnity
 
It is hereby agreed in connection with communications that:
 

 (a)
Express authority is hereby given by the Borrowers to the Lender to accept all tested or untested communications given by facsimile, or electronic mail or otherwise, regarding any or all of the notices (as defined in Clause 16.4 (Meaning of “notice”), requests, instructions or other communications under this Agreement, subject to any restrictions imposed by the Lender relating to such communications including, without limitation (if so required by the Lender), the obligation to confirm such communications by letter.
 

 (b)
The Borrowers shall recognise any and all of the said notices, requests, instructions or other communications as legal, valid and binding, when these notices, requests, instructions or communications come from the fax number or electronic address mentioned in Clause 17.1 (Notices) or any other fax or electronic address usually used by it or its managing company and are duly signed or in case of emails are duly sent by the person appearing to be sending such notice, request, instruction or other communication.
 

 (c)
The Borrowers hereby assume full responsibility for the execution of the said notices, requests, instructions or communications and promise and recognise that the Lender shall not be held responsible for any loss, liability or expense that may result from such notices, requests, instructions or other communications. It is hereby undertaken by the Borrowers to indemnify in full the Lender from and against all actions, proceedings, damages, costs, claims, demands, expenses and any and all direct and/or indirect losses which the Lender may suffer, incur or sustain by reason of the Lender following such notices, requests, instructions or communications.
 

 (d)
With regard to notices, requests, instructions or communications issued by electronic and/or mechanical processes (e.g. by facsimile or electronic mail), the risk of equipment malfunction, including, without limitation, paper shortage, transmission errors, omissions and distortions is assumed fully and accepted by the Borrowers, save in case of Lender’s gross misconduct.
 

 (e)
The risks of misunderstandings and errors resulting from notices, requests, instructions or communications being given as mentioned above, are for the Borrowers and the Lender will be indemnified in full pursuant to this Clause save in case of Lender’s gross misconduct.
 

 (f)
The Lender shall have the right to ask the Borrowers to furnish any information the Lender may require to establish the authority of any person purporting to act on behalf of the Borrowers for these notices, requests, instructions or communications but it is expressly agreed that there is no obligation for the Lender to do so.  The Lender shall be fully protected in, and the Lender shall incur no liability to the Borrowers for acting upon the said notices, requests, instructions or communications which were believed by the Lender in good faith to have been given by the Borrowers or by any of its authorised representative(s).
 
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 (g)
It is undertaken by the Borrowers to use its best endeavours to safeguard the function and the security of the electronic and mechanical appliance(s) such as fax(es) etc., as well as the code word list, if any, and to take adequate precautions to protect such code word list from loss and to prevent its terms becoming known to any persons not directly concerned with its use.  The Borrowers shall hold the Lender harmless and indemnified from all claims, losses, damages and expenses which the Lender may incur by reason of the failure of the Borrowers to comply with the obligations under this Clause 10.10.
 
10.11
Electronic communication
 
Any communication from the Lender made by electronic means will be sent unsecured and without electronic signature, however, the Borrowers may request the Lender at any time in writing to change the method of electronic communication from unsecured to secured electronic mail communication.
 

 (a)
The Borrowers hereby acknowledge and accept the risks associated with the use of unsecured electronic mail communication including, without limitation, risk of delay, loss of data, confidentiality breach, forgery, falsification and malicious software.  The Lender shall not be liable in any way for any loss or damage or any other disadvantage suffered by the Borrowers resulting from such unsecured electronic mail communication.
 

 (b)
If the Borrowers (or any of them) or any other Security Party wish to cease all electronic communication, they shall give written notice to the Lender accordingly after receipt of which notice the Parties shall cease all electronic communication.
 

 (c)
For as long as electronic communication is an accepted form of communication, the Parties shall:
 

 (i)
notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and
 

 (ii)
notify each other of any change to their respective addresses or any other such information supplied to them; and
 

 (iii)
in case electronic communication is sent to recipients with the domain <@seanergy.gr>, the parties shall without undue delay inform each other if there are changes to the said domain or if electronic communication shall thereafter be sent to individual e-mail addresses.
 
10.12
FATCA Deduction
 

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

 (b)
Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction), notify the Party to whom it is making the payment.
 
10.13
FATCA status
 

 (a)
Subject to Clause 10.13(c) below, each party shall, within ten Banking Days of a reasonable request by another party:
 
71

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

 (aa)
a FATCA Exempt Party; or
 

 (bb)
not a FATCA Exempt Party; and
 

 (ii)
supply to that other party such forms, documentation and other information relating to its status under FATCA (including its applicable passthru percentage or other information required under the Treasury Regulations or other official guidance including intergovernmental agreements) as that other party reasonably requests for the purposes of that other party’s compliance with FATCA.
 

 (b)
If a party confirms to another party pursuant to Clause 10.13(a)(i) 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)
Clause 10.13(a)(i) above shall not oblige the Lenders or the Lender to do anything which would or might in its reasonable opinion constitute a breach of:
 

 (i)
any law or regulation;
 

 (ii)
any policy of the relevant Lender;
 

 (iii)
any fiduciary duty; or
 

 (iv)
any duty of confidentiality.
 

 (d)
If a party fails to confirm its status or to supply forms, documentation or other information requested in accordance with Clause10.13(a) above (including, for the avoidance of doubt, where Clause 10.13(c) above applies), 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 the Finance 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 Finance 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 the requested confirmation, forms, documentation or other information.
 
10.14
Arrangement fee
 

 (a)
Arrangement fee: The Borrowers shall pay to the Lender an arrangement fee as follows: (i) an amount equal to 1% of the Tranche B payable on the Drawdown Date and (ii) the amount of Dollars Twenty five thousand ($25,000) payable on 31st December 2024 provided however that and in case of prepayment of the Tranche A on such date, the said amount of Dollars Twenty five thousand ($25,000) shall be cancelled in full.
 

 (b)
Non-refundable: The Arrangement Fee shall be payable by the Borrowers to the Lender irrespective of utilisation/cancellation in part or in whole of the Commitment and shall be non-refundable.
 
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11.
SECURITY, APPLICATION, SET-OFF

11.1
Securities
 
As security for the due and punctual repayment of the Loan and payment of interest thereon as provided in this Agreement and of all other Outstanding Indebtedness, the Borrowers shall ensure and procure that the Security Documents are duly executed and, where required, registered in favour of the Lender in form and substance satisfactory to the Lender at the time specified herein or otherwise as required by the Lender and ensure that such security consists, on the Drawdown Date in respect of Vessel, of the Security Documents relative thereto as provided in Clause 7 (Conditions Precedent).
 
11.2
Maintenance of Securities
 
It is hereby undertaken by the Borrowers that the Finance Documents shall both at the date of execution and delivery thereof and so long as any moneys are owing and/or due under this Agreement and/or under the other Finance Documents be valid and binding obligations of the respective Security Parties thereto and rights of the Lender enforceable in accordance with their respective terms and that they will, at the expense of the Borrowers, execute, sign, perfect and do any and every such further assurance, document, act, omission or thing as in the opinion of the Lender may be necessary or desirable for perfecting the security contemplated or constituted by the Finance Documents.
 
11.3
Application of Receipts
 

 (a)
Order of application:  Except as any Finance Document may otherwise provide, any sums which are received or recovered by the Lender under or pursuant to or by virtue of any of the Finance Documents and expressed to be applicable in accordance with this Clause 11.3 shall be applied by the Lender in the following manner:
 

 (i)
FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents in the following order and proportions:
 

 aa)
Firstly, in or towards satisfaction of all amounts then due and payable to the Lender under the Finance Documents other than those amounts referred to at paragraphs b) and c) below (including, but without limitation, all amounts payable by the Borrowers under Clauses 11 (Indemnities- Expenses-Fees), 5.1 (Payments – No set-off or counterclaims) or 5.3 (Gross Up) of this Agreement or by the Borrowers or any other Security Party under any corresponding or similar provision in any other Finance Document);
 

 a)
Secondly, in or towards payment of any default interest then due and payable to the Lender;
 

 bb)
Thirdly, in or towards payment of any arrears of interest (other than default interest) due and payable in respect of the Loan or any part thereof payable to the Lender under the Finance Documents;
 

 cc)
Fourthly, in or towards repayment of the Loan (whether the same is due and payable or not);
 

 (ii)
SECOND: in retention of an amount equal to any amount not then due and payable under any Finance Document but which the Lender, by notice to the Borrowers and the other Security Parties, states in its opinion will either or may become due and payable in the future and, upon those amounts becoming due and payable, in or towards satisfaction of them in accordance with the provisions of Clause 11.3(a); and
 
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 (iii)
THIRD: (subject to no Event of Default having occurred and being continuing) the surplus (if any), after the full and complete payment of the Outstanding Indebtedness, shall be paid to the Borrowers or to any other person appearing to be entitled to it.
 

 (b)
Notice of variation of order of application:  The Lender may, by notice to the Borrowers and the Security Parties, provide, at its sole discretion, for a different order of application from that set out in Clause 11.3(a) (Order of application) either as regards a specified sum or sums or as regards sums in a specified category or categories, without affecting the obligations of the Borrowers to the Lender.
 

 (c)
Effect of variation notice:  The Lender may give notices under Clause 11.3(b) (Notice of variation of order of application) from time to time; and such a notice may be stated to apply not only to sums which may be received or recovered in the future, but also to any sum which has been received or recovered on or after the third Banking Day before the date on which the notice is served.
 

 (d)
Insufficient balance: For the avoidance of doubt, in the event that such balance is insufficient to pay in full the whole of the Outstanding Indebtedness, the Lender shall be entitled to collect the shortfall from the Borrowers or any other person liable therefor.
 

 (e)
Appropriation rights overridden:  This Clause 11.3 and any notice which the Lender gives under Clause 11.3(b) (Notice of variation of order of application) shall override any right of appropriation possessed, and any appropriation made, by the Borrowers or any other Security Party.
 
11.4
Set off
 

 (a)
Application of credit balances: Express authority is hereby given by each Borrower to the Lender without prejudice to any of the rights of the Lender at law, contractually or otherwise, at any time after an Event of Default has occurred and is continuing, and without prior notice to the Borrowers:
 

 (i)
to apply any credit balance standing upon any account of each Borrower with any branch of the Lender (including, without limitation, the Operating Account and in whatever currency in or towards satisfaction of any sum due to the Lender from the Borrowers under this Agreement, the General Assignments and/or any of the other Finance Documents;
 

 (ii)
in the name of each of the Borrowers and/or the Lender to do all such acts and execute all such documents as may be necessary or expedient to effect such application; and
 

 (iii)
to combine and/or consolidate all or any accounts in the name of each Borrower with the Lender; and
 
for that purpose:
 

 aa)
to break, or alter the maturity of, all or any part of a deposit of the Borrowers (or either of them);
 
74

 bb)
to convert or translate all or any part of a deposit or other credit balance into Dollars, such conversion or translation to be made at the Lender’s market rate of exchange in its usual course of business for the purpose of the set-off; and
 

 cc)
to enter into any other transaction or make any entry with regard to the credit balance which the Lender considers appropriate.
 

 (b)
Existing rights unaffected: The Lender shall not be obliged to exercise any right given by this Clause; 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 Lender is entitled (whether under the general law or any document). For all or any of the above purposes authority is hereby given to the Lender to purchase with the moneys standing to the credit of any such account or accounts such other currencies as may be necessary to effect such application. The Lender shall notify the Borrowers forthwith upon the exercise of any right of set‑off giving full details in relation thereto.
 
12.
UNLAWFULNESS, INCREASED COST AND BAIL-IN

12.1
Unlawfulness
 
If any change in, or introduction of, any law, regulation or regulatory requirement or any request of any central bank, monetary, regulatory or other authority or any order of any court renders it unlawful or contrary to any such regulation, requirement, request or order for the Lender to advance the Commitment or the relevant part thereof (as the case may be) or to maintain or fund the Loan, notice shall be given promptly by the Lender to the Borrowers whereupon the Commitment shall be reduced to zero and the Borrowers shall be obliged to prepay the Loan either (i) forthwith or (ii) on a future specified date not being earlier than the latest date permitted by the relevant law or regulation, together with accrued interest thereon to the date of prepayment and all other sums payable by the Borrowers under this Agreement.
 
12.2
Increased Cost
 
If the result of any change in, or in the interpretation, implementation or application of, or the introduction of, any law or any regulation (whether or not having the force of law, but, if not having the force of law, with which the Lender or, as the case may be, its holding company habitually complies), including (without limitation) those relating to Taxation, capital adequacy, liquidity, reserve assets, cash ratio deposits and special deposits or other banking or monetary controls or requirements which affect the manner in which the Lender allocates capital resources to its obligations hereunder (including, without limitation, those resulting from the implementation or application of or compliance with the Basel II Accord or the Basel III Accord or any Basel II Regulation or the Basel III Accord or any Basel III Regulation or any subsequent accord, approach or regulation thereto) (collectively, “Capital Adequacy Law”) or compliance by the Lender with any such Capital Adequacy Law or , is to:
 

 (a)
increase the cost to, or impose an additional cost on, the Lender or its holding company in making or keeping the Commitment available or maintaining or funding all or part of the Loan; and/or
 

 (b)
subject the Lender to Taxes or change the basis of Taxation of the Lender with respect to any payment under any of the Finance Documents (other than Taxes or Taxation on the overall net income, profits or gains of the Lender imposed in the jurisdiction in which its principal or lending office under this Agreement is located); and/or
 
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 (c)
reduce the amount payable or the effective return to the Lender under any of the Finance Documents; and/or
 

 (d)
reduce the Lender’s or its holding company rate of return on its overall capital by reason of a change in the manner in which it is required to allocate capital resources to the Lender’s obligations under any of the Finance Document; and/or
 

 (e)
require the Lender or its holding company to make a payment or forgo a return on or calculated by references to any amount received or receivable by it under any of the Finance Documents is required; and/or
 

 (f)
require the Lender or its holding company to incur or sustain a loss (including a loss of future potential profits) by reason of being obliged to deduct all or part of the Commitment or the Loan from its capital for regulatory purposes,
 
then and in each case (subject to Clause 12.6 (Exception)):
 

 (a)
the Lender shall notify the Borrowers in writing of such event promptly upon its becoming aware of the same; and
 

 (b)
the Borrowers shall on demand pay to the Lender the amount which the Lender specifies (in a certificate and supporting documents setting forth and evidencing the basis of the computation of such amount but not including any matters which the Lender or its holding company regards as confidential) is required to compensate the Lender and/or (as the case may be) its holding company for such liability to Taxes, cost, reduction, payment, foregone return or loss whatsoever.
 
For the purposes of this Clause 12 “holding company” means the company or entity (if any) within the consolidated supervision of which the Lender is included.
 
12.3
Mitigation
 
If circumstances arise which would result in a notification under Clause 12.1 (Unlawfulness) or Clause 12.2 (Increased Cost), then, without in any way limiting the rights of the Lender under this Clause, the Lender shall use reasonable endeavours to transfer all the Lender’s obligations, liabilities and rights under this agreement and the Finance Documents to another office or financial institution not affected by the circumstances, but the Lender shall not be under any obligation to take any such action if, in its opinion, to do so would or might: (a) have an adverse effect on its business, operations or financial condition; or (b) involve it in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent with, any regulation; or involve it in any expense (unless indemnified to its satisfaction) or tax disadvantage.
 
12.4
Claim for increased cost
 
The Lender will promptly notify the Borrower of any intention to claim indemnification pursuant to Clause 12.2 (Increased Cost) and such notification will be a conclusive and full evidence binding on the Borrower as to the amount of any increased cost or reduction and the method of calculating the same and the Borrower shall be allowed to rebut such evidence by any means of evidence save for witness.  A claim under Clause 12.2 (Increased Cost) and must be discharged by the Borrowers on the next Interest Payment Date or alternatively within seven (7) days of demand by the Lender.  It shall not be a defence to a claim by the Lender under this Clause 12.4 that any increased cost or reduction could have been avoided by the Lender.  Any amount due from the Borrower under Clause 12.2 (Increased Cost) shall be due as a separate debt and shall not be affected by judgement being obtained for any other sums due under or in respect of this Agreement.
 
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12.5
Option to prepay
 

 (a)
Prepayment: If any additional amounts are required to be paid by the Borrower to the Lender by virtue of Clause 12.2 (Increased Cost), the Borrower shall be entitled, on giving the Lender not less than five (5) days prior notice in writing, to prepay (without premium or penalty) the Loan and accrued interest thereon, together with all other Outstanding Indebtedness, on the next Repayment Date. Any such notice, once given, shall be irrevocable.
 

 (b)
Application of prepayment:  Clause 4 (Repayment-Prepayment) shall apply in relation to the prepayment.
 
12.6
Exception
 
Nothing in Clause 12.2 (Increased Cost) shall entitle the Lender to receive any amount in respect of compensation for any such liability to Taxes, increased or additional cost, reduction, payment, foregone return or loss to the extent that the same is subject of an additional payment under Clause 5.3 (Gross Up).
 
12.7
Contractual recognition of bail-in
 
Notwithstanding any other term of any Finance Document or any other agreement, arrangement or understanding between the Parties, each Party acknowledges and accepts that any liability of any Party to any other Party under or in connection with the Finance Documents may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:
 

 (a)
any Bail-In Action in relation to any such liability, including (without limitation):
 

 (i)
a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;
 

 (ii)
a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and
 

 (iii)
a cancellation of any such liability; and
 

 (b)
a variation of any term of any Finance Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability.
 
13.
OPERATING ACCOUNTS

13.1
General
 
Each of the Borrowers undertakes with the Lender that it will:
 

 (a)
on or before the Drawdown Date open its Operating Account; and
 
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(b)          ensure and procure that all moneys payable to the Borrower in respect of the Earnings of the Vessel and the Insurances thereon shall, unless and until the Lender directs to the contrary pursuant to the General Assignment, be paid to the Operating Account, free from Security Interests and rights of set off other than those created by or under the Finance Documents and, shall be held there on trust for the Lender and shall be applied as provided in Clause 13.2 (Application of Earnings),
 
provided, always, that any moneys received in a currency other than Dollars, may be converted in Dollars by the Lender at the Lender’s spot rate of exchange.
 
13.2
Application of Earnings
 
Subject to the terms and conditions of the Accounts Pledge Agreement no monies shall be withdrawn from the Operating Accounts save as hereinafter provided. Subject to no Event of Default having occurred and being continuing, all monies paid to the Operating Accounts (whether being Earnings or not) after discharging the costs (if any) incurred by the Lender, in collecting such monies, shall be applied by the Lender as follows:
 

 (a)
First: in or towards payment of any arrears of interest and principal of the Loan due and payable and any and all other sums whatsoever which from time to time become due and payable to the Lender hereunder (such sums to be paid in such order as the Lender may in its sole discretion elect);
 
provided, however, that the Lender shall be entitled to withdraw the required amounts from the Operating Accounts or any time deposit substitute account under the same or different designation by breaking such time deposit in order to effect payment of any amount due under “First” above;
 

 (b)
Second: in or towards payment of the Operating Expenses; and
 

 (c)
Third: any credit balance shall be, subject to the provisions of this Agreement (including dividends restriction) and the Accounts Pledge Agreement,  available to the Borrowers to be used (unless the Lender otherwise direct at its discretion) for any purpose not inconsistent with the Borrowers’ other obligations under this Agreement.
 
13.3
Interest
 
Any amounts for the time being standing to the credit of the Operating Account shall bear interest at the rate from time to time offered by the Lender to its customers for Dollar deposits of similar amounts and for periods similar to those for which such amounts are likely to remain standing to the credit of the Operating Account. Such interest shall, provided that (a) the foregoing provisions of this Clause 13 shall have been complied with and (b) no Event of Default (or event which, with the giving of notice and/or lapse of time or other applicable condition, might constitute an Event of Default) shall have occurred and is continuing, be released to the Borrowers.
 
13.4
Drawings from Operating Accounts
 
After the occurrence of an Event of Default which is continuing the Lender shall not permit the Borrowers to make any drawings from their respective Operating Accounts.
 
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13.5
Authorisation
 
The Lender shall be entitled (but not obliged) at any time, and to this respect the Lender is hereby authorised by each of the Borrowers from time to time to debit its Operating Account, without notice to that Borrower, in order to discharge any amount due and payable to the Lender under the terms of this Agreement and the Security Documents or otherwise howsoever in connection with the Loan, including, without limitation, any payment of which the Lender has become entitled to demand under Clause 10 (Indemnities - Expenses – Fees). The Lender shall notify the relevant Borrower following any such discharge of any amount due and payable to the Lender giving the necessary details in relation thereto.
 
13.6
Obligations unaffected
 
Nothing in this Clause 13 contained shall be deemed to affect:
 

 (a)
the liability and absolute obligation of the Borrowers to pay interest on and to repay the Loan as provided in Clauses 3 (Interest) and 4 (Repayment-Prepayment) nor shall they constitute or be construed as constituting a manner of postponement thereof; or
 

 (b)
any other liability or obligation of the Borrowers or any other Security Party under any Finance Document.
 
13.7
Relocation of Operating Accounts
 
Each of the Borrowers, at its own costs and expenses, undertakes with the Lender to comply with or cause to be complied with any written requirement of the Lender from time to time as to the location or re-location of its Operating Account and will from time to time enter into such documentation as the Lender may require in order to create or maintain a security interest in such Operating Account.
 
13.8
Application on Event of Default
 
Upon the occurrence of an Event of Default or at any time thereafter (whether or not notice of default has been given to the Borrowers) when an Event of Default continues the Lender shall be entitled to set off and apply all sums standing to the credit of the Operating Accounts (or any of them) and accrued interest (if any) without notice to the Borrowers in the manner specified in Clause 11.3 (Application of Receipts) (and express and irrevocable authority is hereby given by each of the Borrowers to the Lender so to set off by debiting the Operating Accounts accordingly by the same.
 
13.9
No Security Interests
 
The Borrowers hereby jointly and severally covenant with the Lender that the Operating Accounts and any moneys therein shall not be charged, assigned, transferred or pledged nor shall there be granted by the Borrowers or suffered to arise any third party rights over or against the whole or any part of the Operating Accounts (or any of them) other than in favour of the Lender as promised herein and in the General Assignments.
 
13.10
Operation of Operating Accounts
 
Each Operating Account shall be operated by the relevant Borrower to the degree permitted by this Agreement and the relevant General Assignment in accordance with the Lender’s usual terms and conditions (full knowledge of which the Borrowers hereby acknowledges) and subject to the Lender’s usual charges levied on such accounts and/or transactions conducted on such accounts (as from time to time notified by the Lender to the Borrowers).
 
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13.11
Release
 
Upon payment in full of all the Outstanding Indebtedness in full, any balance then standing to the credit of any of the Operating Accounts shall be released and paid to the relevant Borrower or to whomsoever else may be entitled to receive such balance.
 
14.
ASSIGNMENT, TRANSFER, PARTICIPATION, LENDING OFFICE

14.1
Binding Effect
 
This Agreement shall be binding upon and inure to the benefit of the Lender and the Borrowers and their respective successors and assigns.
 
14.2
No Assignment by the Borrowers and other Security Parties
 
Neither the Borrowers nor any other Security Parties may assign or transfer any of its rights and/or obligations under this Agreement or any of the other Finance Documents or any documents executed pursuant to this Agreement and/or the other Finance Documents.
 
14.3
Assignment by the Lender
 
The Lender may at any time without the consent of, or consultation with, but upon prior 15 days notice to the Borrowers and the other Security Parties, cause all or any part of its rights, benefits and/or obligations under this Agreement and the other Finance Documents to be assigned or transferred to:
 

 (a)
another branch, any Subsidiary or Affiliate of, or company controlled by, the Lender,
 

 (b)
a member of the European Central Bank System, a credit institution, a financial services institution, a financial institution, an insurance company, a social security fund, a pension fund, an investment company/trust or a special purpose company established for the purposes of securitization,
 

 (c)
a capital investment company, hedge fund, financial intermediary or special purpose vehicle associated to any of them or
 

 (d)
a trust corporation, fund or other person which regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets of which are managed or serviced by the Lender
 
(in each case an “Assignee” or a “Transferee”),
 
provided that the Assignee or Transferee, shall deliver to the Lender such undertaking as the Lender may approve, whereby it becomes bound by the terms of this Agreement and agrees to perform all or, as the case may be, part of the Lender’s obligations under this Agreement; and
 
provided further that the liabilities of the Borrowers under this Agreement and any other Finance Document shall not be increased as a result of any such assignment or transfer and that in the event that the Borrowers’ liabilities (actual or contingent) are increased, the Borrowers shall not be liable for any such excess.
 
14.4
Participation
 
The Lender may at any time without the consent of, or consultation with, or notice to the Borrowers sub-participate all or any part of its rights, benefits and/or obligations under this Agreement and the other Finance Documents without the consent of, or consultation with or notice to the Borrowers and the other Security Parties, provided that the liabilities of the Borrowers under this Agreement and any other Finance Document shall not be increased as a result of any such sub-participation and that in the event that the Borrowers’ liabilities (actual or contingent) are increased, the Borrowers shall not be liable for any such excess.
 
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14.5
Cost
 
Any cost of such assignment or transfer or granting sub-participation shall be for the account of the Lender and/or the Assignee, Transferee or sub-participant unless any such assignment, transfer or sub-participation is undertaken at the request of the Borrowers, in which case any cost arising therefrom shall be for the account of the Borrowers.
 
14.6
Documenting assignments and transfers
 
If the Lender assigns, transfers or in any other manner grants participation in respect of all or any part of its rights or benefits or transfers all or any of its obligations as provided in this Clause 14.6 the Borrowers undertake, immediately on being requested to do so by the Lender, to enter at the expense of the Lender into and procure that each Security Party enters into such documents as may be necessary or desirable to transfer to the Assignee, Transferee or participant all or the relevant part of the interest of the Lender in the Finance Documents and all relevant references in this Agreement to the Lender shall thereafter be construed as a reference to the Lender and/or assignee, transferee or participant of the Lender to the extent of their respective interests and, in the case of a transfer of all or part of the obligations of the Lender, the Borrowers shall thereafter look only to the Assignee, Transferee or participant in respect of that proportion of the obligations of the Lender under this Agreement assumed by such assignee, transferee or participant. Subject to the provisions of Clause 14.3 (Assignment by the Lender), each of the Borrowers hereby expressly consents to any subsequent transfer of the rights and obligations of the Lender and undertakes that it shall join in and execute such supplemental or substitute agreements as may be necessary to enable the Lender to assign and/or transfer and/or grant participation in respect of its rights and obligations to another branch or to one or more banks or financial institutions in a syndicate or otherwise. The cost of any such assignment shall be borne by the Lender and/or the relevant Assignee or Transferee.
 
14.7
Disclosure of information
 
The Lender may disclose to a prospective assignee, substitute or transferee or to any other person who may propose entering into contractual relations with the Lender in relation to this Agreement such information about the Borrowers as the Lender shall consider appropriate if the Lender first procures that the relevant prospective assignee, substitute or transferee or other person (such person together with any prospective assignee, substitute or transferee being hereinafter described as the “Prospective Assignee”) shall undertake to the Lender to keep secret and confidential and shall not, without the consent of the Borrowers, disclose to any third party any of the information, reports or documents supplied by the Lender provided, however, that the Prospective Assignee shall be entitled to disclose such information, reports or documents in the following situations:
 

 (a)
in relation to any proceedings arising out of this Agreement or the other Finance Documents to the extent considered necessary by the Prospective Assignee to protect its interest; or
 

 (b)
pursuant to a court order relating to discovery or otherwise; or
 

 (c)
pursuant to any law or regulation or to any fiscal, monetary, tax, governmental or other competent authority; or
 

 (d)
to its auditors, legal or other professional advisers.
 
In addition the Prospective Assignee shall be entitled to disclose or use any such information, reports or documents if the information contained therein shall have emanated in conditions free from confidentiality, bona fide from some person other than the Lender or the Borrowers.
 
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14.8
Changes in constitution or reorganisation of the Lender
 
For the avoidance of doubt and without prejudice to the provisions of Clause 14.1 (Binding Effect), this Agreement shall remain binding on the Borrowers and the other Security Parties notwithstanding any change in the constitution of the Lender or its absorption in, or amalgamation with, or the acquisition of all or part of its undertaking or assets by, any other person, or any reconstruction or reorganisation of any kind, to the intent that this Agreement shall remain valid and effective in all respects in favour of any Assignee, Transferee or other successor in title of the Lender in the same manner as if such Assignee, Transferee or other successor in title had been named in this Agreement as a party instead of, or in addition to, the Lender.
 
14.9
Securitisation
 
The Lender may include all or any part of the Loan in a securitisation (or similar transaction) pursuant to Law 3156/2003, or any other relevant legislation introduced or enacted after the date of this Agreement, without the consent of, or consultation with, but after giving 30-Banking Days notice to the Borrowers. The Borrowers will assist the Lender as necessary to achieve a successful securitisation (or similar transaction) provided that the Borrowers shall not be required to bear any third party costs related to any such securitisation (or similar transaction) and that such securitisation (or similar transaction) shall not result in an increase of the Borrowers’ obligations under this Agreement and the other Security Documents and need only provide any such information which any third parties may reasonably require.
 
14.10
Lending Office
 
The Lender shall lend through its office at the address specified in the preamble of this Agreement or through any other office of the Lender selected from time to time by it through which the Lender wishes to lend for the purposes of this Agreement.  If the office through which the Lender is lending is changed pursuant to this Clause 14.10, the Lender shall notify the Borrowers promptly of such change and upon notification of any such transfer, the word “Lender” in this Agreement and in the other Finance Documents shall mean the Lender, acting through such branch or branches and the terms and provisions of this Agreement and of the other Finance Documents shall be construed accordingly.
 
15.
MISCELLANEOUS

15.1
Time of essence
 
Time is of the essence as regards every obligation of the Borrowers under this Agreement.
 
15.2
Cumulative Remedies
 
The rights and remedies of the Lender contained in this Agreement and the other Finance Documents are cumulative and neither exclusive of each other nor of any other rights or remedies conferred by law.
 
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15.3
No implied waivers
 
No failure, delay or omission by the Lender to exercise any right, remedy or power vested in the Lender under this Agreement and/or the other Finance Documents or by law shall impair such right or power, or be construed as a waiver of, or as an acquiescence in any default by the Borrowers, nor shall any single or partial exercise by the Lender of any power, right or remedy preclude any other or further exercise thereof or the exercise of any other power, right or remedy.  In the event of the Lender on any occasion agreeing to waive any such right, remedy or power, or consenting to any departure from the strict application of the provisions of this Agreement or of any other Finance Document, such waiver shall not in any way prejudice or affect the powers conferred upon the Lender under this Agreement and the other Finance Documents or the right of the Lender thereafter to act strictly in accordance with the terms of this Agreement and the other Finance Documents.  No modification or waiver by the Lender of any provision of this Agreement or of any of the other Finance Documents nor any consent by the Lender to any departure therefrom by any Security Party shall be effective unless the same shall be in writing and then shall only be effective in the specific case and for the specific purpose for which given.  No notice to or demand on any such party in any such case shall entitle such party to any other or further notice or demand in similar or other circumstances.
 
15.4
Integration of Terms
 
This Agreement contains the entire agreement of the parties and its provisions supersede the provisions of the Commitment Letter (save for the provisions thereof which relate to fees) and any and all other prior correspondence and oral negotiation by the parties in respect of the matters regulated by this Agreement.
 
15.5
Recourse to other security
 
The Lender shall not be obliged to make any claim or demand or to resort to any Finance Document or other means of payment now or hereafter held by or available to it for enforcing this Agreement or any of the other Finance Documents against the Security Parties (or any of them) or any other person liable and no action taken or omitted by the Lender in connection with any such Finance Document or other means of payment will discharge, reduce, prejudice or affect the liability of any Security Party under this Agreement and the other Finance Documents to which it is, or is to be, a party.
 
15.6
Amendments - No modification, waiver etc. unless in writing
 

 (a)
This Agreement and any other Finance Documents shall not be amended or varied in their respective terms by any oral agreement or representation or in any other manner other than by an instrument in writing of even date herewith or subsequent hereto executed by or on behalf of the parties hereto or thereto.
 

 (b)
No modification or waiver by the Lender of any provision of this Agreement or of any of the other Finance Documents nor any consent by the Lender to any departure therefrom by any Security Party shall be effective unless the same shall be in writing and then shall only be effective in the specific case and for the specific purpose for which given.  No notice to or demand on any such party in any such case shall entitle such party to any other or further notice or demand in similar or other circumstances.
 
15.7
Severability of provisions
 
In the event of any provision contained in one or more of this Agreement, the other Finance Documents and any other documents executed pursuant hereto or thereto being invalid, illegal or unenforceable in any respect under any applicable law in any jurisdiction whatsoever, such provision shall be ineffective as to that jurisdiction only without affecting the remaining provisions hereof or thereof.  If, however, this event becomes known to the Lender prior to the drawdown of the Commitment or of any part thereof the Lender shall be entitled to refuse drawdown until this discrepancy is remedied. In case that the invalidity of a part results in the invalidity of the whole Agreement, it is hereby agreed that there will exist a separate obligation of the Borrowers for the prompt payment to the Lender of all the Outstanding Indebtedness. Where, however, the provisions of any such applicable law may be waived, they are hereby waived by the parties hereto to the full extent permitted by the law to the intent that this Agreement, the other Finance Documents and any other documents executed pursuant hereto or thereto shall be deemed to be valid binding and enforceable in accordance with their respective terms.
 
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15.8
Language and genuineness of documents
 

 (a)
Language:  All certificates, instruments and other documents to be delivered under or supplied in connection with this Agreement or any of the other Finance Documents shall be in the Greek or the English language (or such other language as the Lender shall agree) or shall be accompanied by a certified Greek translation upon which the Lender shall be entitled to rely.
 

 (b)
Certification of documents:  Any copies of documents delivered to the Lender shall be duly certified as true, complete and accurate copies by appropriate authorities or legal counsel practicing in Greece or otherwise as will be acceptable to the Lender at the sole discretion of the Lender.
 

 (c)
Certification of signature:  Signatures on Board or shareholder resolutions, Secretary’s certificates and any other documents are, at the discretion of the Lender, to be verified for their genuineness by appropriate Consul or other competent authority.
 
15.9
Further assurances
 
Each of the Borrowers undertakes that the Finance Documents shall both at the date of execution and delivery thereof and so long as any moneys are owing under any of the Finance Documents be valid and binding obligations of the respective parties thereto and enforceable in accordance with their respective terms and that it will, at its expense, execute, sign, perfect and do, and will procure the execution, signing, perfecting and doing by each of the other Security Parties of, any and every such further assurance, document, act or thing as in the reasonable opinion of the Lender may be necessary or desirable for perfecting the security contemplated or constituted by the Finance Documents.
 
15.10
Counterparts
 
This Agreement may be executed in any number of counterparts and all such counterparts taken together shall be deemed to constitute but one and the same instrument.
 
15.11
Confidentiality
 

 (a)
Each of the parties hereto agree and undertake to keep confidential any documentation and any confidential information concerning the business, affairs, directors or employees of the other which comes into its possession in connection with this Agreement and not to use any such documentation, information for any purpose other than for which it was provided.
 

 (b)
The Borrowers acknowledge and accept that the Lender may be required by law or that it may be appropriate for the Lender to disclose information and deliver documentation relating to the Borrowers and the transactions and matters in relation to this Agreement and/or the other Finance Documents to governmental or regulatory agencies and authorities.
 
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 (c)
The Borrowers acknowledge and accept that in case of occurrence of any of the Events of Default the Lender may disclose information and deliver documentation relating to the Borrowers and the transactions and matters in relation to this Agreement and/or the other Finance Documents to third parties to the extent that this is necessary for the enforcement or the contemplation of enforcement of the Lender’s rights or for any other purpose for which in the opinion of the Lender, such disclosure would be useful or appropriate for the interests of the Lender or otherwise and the Borrowers expressly authorise any such disclosure and delivery.
 

 (d)
The Borrowers acknowledge and accept that the Lender may be prohibited or it may be inappropriate for the Lender to disclose information to the Borrowers by reason of law or duties of confidentiality owed or to be owed to other persons.
 

 (e)
This Clause 15.12 shall be: (i) in addition to all other duties of confidentiality imposed on the Lender and its professional advisers under applicable law; and (ii) subject to any other applicable provisions contained in this Agreement and the other Finance Documents.
 
15.12
Personal data
 

 (a)
Process of personal data: Each of the Borrowers hereby confirms that it has been informed that its personal data and/or the personal data of its director(s), officer(s) and legal representative(s) (together the “personal data”) contained in this Agreement or the personal data that have been or will be lawfully received by the Lender in relation to this Agreement and the Finance Documents will be included at the personal data database maintained by the Lender as processing agent (Υπεύθυνη Επεξεργασίας) and will be processed by the Lender for the purpose of properly serving, supporting and monitoring their current business relationship.
 

 (b)
Process of personal data to Teiresias: Each of the Borrowers hereby expressly gives its consent to the communication for process in the meaning of law 2472/97 by the Lender of its personal data contained in this Agreement, the Finance Documents, in the Operating Accounts for onwards communication thereof to an inter-banking database record called “Teiresias” kept and solely used by banks and financial institutions. Each of the Borrowers is entitled at any relevant time throughout the Security Period to revoke its consent given hereunder by written notice addressed to the Lender and the Registrar of “Teiresias A.E.” at 2, Alamanas street, 15125 Maroussi, Athens, Greece.
 

 (c)
Duration of the process: The personal data process shall survive the termination of this Agreement for such period as it is required by the applicable law.
 
16.
JOINT AND SEVERAL LIABILITY OF THE BORROWERS

16.1
Joint and several liability
 
All liabilities and obligations of the Borrowers under this Agreement shall, whether expressed to be so or not, be joint and several.
 
16.2
No impairment of Borrowers’ obligations
 
The liabilities and obligations of a Borrower shall not be impaired by:
 

 (a)
this Agreement being or later becoming void, unenforceable or illegal as regards the other Borrower;
 
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 (b)
the Lender entering into any rescheduling, refinancing or other arrangement of any kind with the other Borrower;
 

 (c)
the Lender releasing the other Borrower or any Security Interest created by a Finance Document; or
 

 (d)
any time, waiver or consent granted to, or composition with the other Borrower or other person;
 

 (e)
the release of the other Borrower or any other person under the terms of any composition or arrangement with any creditor thereof;
 

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

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

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

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

 (j)
any insolvency or similar proceedings; or
 

 (k)
any combination of the foregoing.
 
16.3
Principal debtor
 
Each Borrower declares that it is and will, throughout the Security Period, remain a principal debtor for all amounts owing under this Agreement and the Finance Documents and none of the Borrowers shall in any circumstances be construed to be a surety for the obligations of the other Borrower under this Agreement.
 
16.4
Subordination
 
Subject to Clause 16.5 (Borrowers’ required action), during the Security Period, none of the Borrowers shall:
 

 (a)
claim any amount which may be due to it from the other Borrower whether in respect of a payment made, or matter arising out of, this Agreement or any Finance Document, or any matter unconnected with this Agreement or any Finance Document; or
 

 (b)
take or enforce any form of security from the other Borrower for such an amount, or in any other way seek to have recourse in respect of such an amount against any asset of the other Borrower; or
 
86

 (c)
set off such an amount against any sum due from it to the other Borrower; or
 

 (d)
prove or claim for such an amount in any liquidation, administration, arrangement or similar procedure involving the other Borrower or other Security Party; or
 

 (e)
exercise or assert any combination of the foregoing.
 
16.5
Borrowers’ required action
 
If during the Security Period, the Lender, by notice to the Borrowers, requires it to take any action referred to in paragraphs (a) to (d) of Clause 16.4 (Subordination), in relation to the other Borrower, that Borrower shall take that action as soon as practicable after receiving the Lender’s notice.
 
16.6
Deferral of Borrowers’ rights
 
Until all amounts which may be or become payable by the Borrowers under or in connection with the Finance Documents have been irrevocably paid in full and unless the Lender otherwise directs, no Borrower will exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents:
 

 (a)
to be indemnified by the other Borrower; or
 

 (b)
to claim any contribution from the other Borrower in relation to any payment made by it under the Finance Documents.
 
17.
NOTICES AND COMMUNICATIONS

17.1
Notices
 
Every notice, request, demand or other communication under the Agreement or, unless otherwise provided therein, any of the other Finance Documents shall:
 

 (a)
be in writing delivered personally or by first-class prepaid letter (airmail if available), or shall be served through a process server or subject to Clause 10.10 (Communications Indemnity), Clause 10.11 (Electronic Communication) and Clause 17.6 (Effect of electronic communication) by fax or electronic mail;
 

 (b)
be deemed to have been received, subject as otherwise provided in this Agreement or the relevant Finance Document, in the case of fax or electronic mail, at the time of dispatch as per transmission report (provided, in either case, that if the date of despatch is not a business day in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day), and in the case of a letter when delivered or served personally or five (5) days after it has been put into the post; and
 

 (c)
be sent:
 

 (i)
if to be sent to any Security Party, to:
 
c/o SEANERGY MARITIME HOLDINGS CORP.
154 Vouliagmenis Avenue,
16674 Glyfada, Athens, Greece
 
Facsimile No: +30 210 9638404
Attention:  Chief Financial Officer
E-mail:  finance@seanergy.gr
legal@seanergy.gr

87
and
 

 (ii)
if to be sent to the Lender, to
 
ALPHA BANK S.A.
93 Akti Miaouli
185 38 Piraeus, Greece
Fax No.: +30210 42 90 268
Attention: The Manager
E-mail: shipdivision@alpha.gr
 
or to such other person, address fax number or electronic address as is notified by the relevant Security Party or the Lender (as the case may be) to the other parties to this Agreement and, in the case of any such change of address, or fax number or electronic address notified to the Lender, the same shall not become effective until notice of such change is actually received by the Lender and a copy of the notice of such change is signed by the Lender.
 
17.2
Effective date of notices
 
Subject to Clauses 17.3 (Service outside business hours) and 17.4 (Illegible notices):
 

 (a)
a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered; and
 

 (b)
a notice which is sent by fax or electronic mail shall be deemed to be served, and shall take effect, two hours after its transmission is completed.
 
17.3
Service outside business hours
 
However, if under Clause 17.2 (Effective date of notices) a notice would be deemed to be served:
 

 (a)
on a day which is not a Banking Day in the place of receipt; or
 

 (b)
on such a Banking Day, but after 5 p.m. local time,
 
the notice shall (subject to Clause 17.4 (Illegible notices)) be deemed to be served, and shall take effect, at 9 a.m. on the next day which is such a Banking Day.
 
17.4
Illegible notices
 
Clauses 17.2 (Effective date of notices) and 17.3 (Service outside business hours) do not apply if the recipient of a notice notifies the sender within one hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form which is illegible in a material respect.
 
17.5
Valid notices
 
A notice under or in connection with a Finance Document shall not be invalid by reason that its contents or the manner of serving it do not comply with the requirements of this Agreement or, where appropriate, any other Finance Document under which it is served if:
 
88

 (a)
the failure to serve it in accordance with the requirements of this Agreement or other Finance Document, as the case may be, has not caused any party to suffer any significant loss or prejudice; or
 

 (b)
in the case of incorrect and/or incomplete contents, it should have been reasonably clear to the party on which the notice was served what the correct or missing particulars should have been.
 
17.6
Effect of electronic communication
 

 (a)
Any communication to be made between any two Parties under or in connection with the Finance Documents may be made 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 Banking Days’ notice.
 

 (b)
Any such electronic communication as specified in paragraph 0(a) above to be made between a Security Party and the Lender 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.
 

 (c)
Any such electronic communication as specified in paragraph 0(a) above made between any two Parties will be effective only when actually received (or made available) in readable form and in the case of any electronic communication made by a Party to the Lender only if it is addressed in such a manner as the Lender shall specify for this purpose.
 

 (d)
Any electronic communication 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 is sent or made available has its address for the purpose of this Agreement shall be deemed only to become effective on the following Banking Day.
 

 (e)
Any reference in a Finance Document to a communication being sent or received shall be construed to include that communication being made available in accordance with this Clause 17.6.
 
18.
LAW AND JURISDICTION

18.1
Governing Law
 

 (a)
This Agreement and any non-contractual obligations connected with it shall be governed by and construed in accordance with English Law.
 

 (b)
For the purposes of enforcement in Greece, it is hereby expressly agreed that English law as the governing law of this Agreement will be proved by an affidavit of a solicitor from an English law firm to be appointed by the Lender and the said affidavit shall constitute full and conclusive evidence binding on the Borrowers but the Borrowers shall be allowed to rebut such evidence save for witness.
 
89
18.2
Jurisdiction
 

 (a)
The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement or any non-contractual obligations connected with it (including a dispute regarding the existence, validity or termination of this Agreement and including claims arising out of tort or delict) (a “Dispute”). Each of the Borrowers irrevocably and unconditionally submits to the jurisdiction of such courts.
 

 (b)
The Parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary and waives any objections to the inconvenience of England as a forum.
 

 (c)
This Clause 18.2 is for the benefit of the Lender only.  As a result, the Lender shall not be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Lender may take concurrent proceedings in any number of jurisdictions.
 
18.3
Process Agent for English Proceedings
 
Without prejudice to any other mode of service allowed under any relevant law each of the Borrowers irrevocably designates, appoints and empowers Messrs. E. J. C. Album Solicitors at their office for the time being at 47 Lyndale Avenue, London NW2 2QB, England (attention: Mr Edward Album, tel: +44 20 7794 6080, +44 20 7431 2942 and +44 7980 798659 and email: ejca@mitgr.com) (hereinafter called the “Process Agent for English Proceedings”), to receive for it and on its behalf, service of process issued out of the English courts in relation to any proceedings before the English courts in connection with any Finance Document, provided, however, that:
 

 (a)
each of the Borrowers hereby agrees and undertakes to maintain a Process Agent for English Proceedings throughout the Security Period and hereby agrees that in the event that  any Process Agent for English Proceedings is unable for any reason to act as agent for service of process, such Borrower must immediately (and in any event within ten (10) days of being notified of such event taking place) appoint another agent on terms acceptable to the Lender. Failing this, the Lender may appoint for this purpose a substitute Process Agent for English Proceedings and the Lender is hereby irrevocably authorised to effect such appointment on Borrowers’ behalf. The appointment of such Process Agent for English Proceedings shall be valid and binding from the date notice of such appointment is given by the Lender to the Borrowers in accordance with Clause 17.1 (Notices); and
 

 (b)
each of the Borrowers hereby agrees that failure by a Process Agent for English Proceedings to notify the Borrowers of the process will not invalidate the proceedings concerned.
 
18.4
Proceedings in any other country
 
If it is decided by the Lender that any such proceedings should be commenced in any other country, then any objections as to the jurisdiction or any claim as to the inconvenience of the forum is hereby waived by each of the Borrowers and it is agreed and undertaken by each of the Borrowers to instruct lawyers in that country to accept service of legal process and not to contest the validity of such proceedings as far as the jurisdiction of the court or courts involved is concerned and each of the Borrowers agrees that any judgment or order obtained in an English court shall be conclusive and binding on the Borrowers and shall be enforceable without review in the courts of any other jurisdiction.
 
90
18.5
Process Agent (antiklitos) in Greece
 
Mrs. Theodora Mitropetrou, an Attorney-at-Law, presently of c/o Seanergy 154 Vouliagmenis Avenue, 16674 Glyfada, Athens, Greece  (hereinafter called the “Process Agent for Greek Proceedings”) is hereby appointed by each of the Borrowers as agent to accept service, upon whom any judicial process in respect of proceedings in Greece may be served and any process notice, judicial or extra-judicial request, demand for payment, payment order, foreclosure proceedings, notarial announcement of claim, notice, request, demand or other communication under this Agreement or any of the Finance Documents. In the event that the Process Agent for Greek Proceedings (or any substitute process agent notified to the Lender in accordance with the foregoing) cannot be found at the address specified above (or, as the case may be, notified to the Lender), which will be conclusively proved by a deed of a process server to the effect that the Process Agent  for Greek Proceedings was not found at such address, any process notice, judicial or extra-judicial request, demand for payment, payment order, foreclosure proceedings, notarial announcement of claim or other communication to be sent to any Security Party may be validly served/notified in accordance with the relevant provisions of the Hellenic Code on Civil Procedure.
 
18.6
Third Party Rights
 
A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.
 
18.7
Meaning of “proceedings”
 
In this Clause 18 “proceedings” means proceedings of any kind, including an application for a provisional or protective measure.
 
[Remainder of page intentionally left blank]
 
91
SCHEDULE 1
 
Form of Drawdown Notice
(referred to in Clause 2.2)
 
To:
ALPHA BANK S.A.
93 Akti Miaouli
185 38 Piraeus, Greece
[●] , 2021
 
Re:
US$44,120,000 Loan Agreement (the “Loan Agreement”) dated [●] , 2021 made between (1) the Lender, as lender and (2) (a) FRIEND OCEAN NAVIGATION CO., of Liberia (b) LORD OCEAN NAVIGATION CO. of Liberia and (c) SQUIRE OCEAN NAVIGATION CO., of Liberia (the “Borrowers”), as joint and several borrowers.
 
1.
We refer to the Loan Agreement (terms defined in the Loan Agreement have their defined meanings when used in this Drawdown Notice) and hereby give you notice that we wish to draw the Commitment as follows:
 

 (i)
Loan: in the amount of forty four million one hundred twenty thousand Dollars ($44,120,000);
 

 (ii)
Drawdown Date: [●] , 2021;
 

 (iii)
duration of first Interest Period: duration of the first Interest Period in respect of the Loan shall be [●] months; and
 

 (iv)
Payment instructions: [in payment to the Operating Account of the Era  Borrower as per our instructions under separate cover for the purposes set out in Clause 1.1 (Amount and purpose) of the Loan Agreement].
 
2.
We confirm, represent and warrant that:
 

 (i)
no event or circumstance has occurred and is continuing which constitutes a Default or will result from the borrowing of the Loan;
 

 (ii)
the representations and warranties contained in Clause 6 (Representations and warranties) of the Loan Agreement and the representations and warranties contained in each of the other Finance Documents are true and correct at the date hereof as if made with respect to the facts and circumstances existing at such date;
 

 (iii)
the borrowing to be effected by the drawing of the Loan will be within our corporate powers, has been validly authorised by appropriate corporate action and will not cause any limit on our borrowings (whether imposed by statute, regulation, agreement or otherwise) to be exceeded;
 

 (iv)
there has been no change in the ownership, management, operations and no Material Adverse Change in our financial position or in the consolidated financial position of ourselves and the other Security Parties from that described by us to the Lender in the negotiation of the Loan Agreement.
 
3.
This Drawdown Notice cannot be revoked without the prior consent of the Lender.
 
92
SIGNED by
)
    
Mr.
)
    
for and on behalf of
)
    
FRIEND OCEAN NAVIGATION CO.,
)

 
of Liberia, in the presence of:
)
Attorney-in-fact
  
       
SIGNED by
)
    
Mr.
)
    
for and on behalf of
)
    
LORD OCEAN NAVIGATION CO.,
)
 
of Liberia,
)

 
in the presence of:
)
Attorney-in-fact
  
       
SIGNED by
)
    
Mr.
)
    
for and on behalf of
)
    
SQUIRE OCEAN NAVIGATION CO.,
)

 
of Liberia, in the presence of:
)
Attorney-in-fact
  

Witness:
    
Name:
[●]
Title:
Attorney-at-Law
Address:
[●],
 
Piraeus, Greece

93
Schedule 2

Form of Insurance Letter

 
To:
[P&I Club]
[●]
[●]

From:
[●]
[●],
[●]

[●] 20[●]
 
Dear Sirs
 
m.v. “[●]” (the “Vessel”)
 
We are obtaining loan finance from ALPHA BANK S.A. (the “Lender”) secured (inter alia) by a first ship mortgage over the Vessel.  The Vessel’s insurances will also be assigned to the Lender.
 
You are hereby authorised to send a copy of the Certificate of Entry for the Vessel to the Lender, c/o their lawyers, namely, Theo V. Sioufas & Co. Law Offices, of 13 Defteras Merarchias Street, 185 35 Piraeus, Greece.  Further, you are also irrevocably authorised to provide the Lender from time to time with any other information whatsoever which they may require relating to the entry of the Vessel in the association.
 
This letter is governed by, and shall be construed in accordance with, English law.
 
 
 
 
 
For and on behalf of
 
[●]
  

94
EXECUTION PAGE

IN WITNESS whereof the parties hereto have caused this Agreement to be duly executed on the date first above written.
 
SIGNED by
)
    
Mr. Stavros Gyftakis
)
 
for and on behalf of
)
/s/ Stavros Gyftakis

FRIEND OCEAN NAVIGATION CO.,
)

 
of Liberia, in the presence of:
)
Attorney-in-fact
  
       
SIGNED by
)
    
Mr. Stavros Gyftakis
)
 
for and on behalf of
)
 
LORD OCEAN NAVIGATION CO.
)
/s/ Stavros Gyftakis
  
of Liberia,
)

 
in the presence of:
)
Attorney-in-fact
  
       
SIGNED by
)
    
Mr. Stavros Gyftakis
)
 
for and on behalf of
)
/s/ Stavros Gyftakis

SQUIRE OCEAN NAVIGATION CO.
)

 
of Liberia, in the presence of:
)
Attorney-in-fact
  
       
Witness to all signature:  /s/ Angeliki Arkadi
      
Name:     Angeliki Arkadi

   
Address: 13 Defteras Merarchias
      
Piraeus, Greece
   
Occupation: .Attorney-at-Law
      

SIGNED by  E. D. MAKRI

)
/s/ E. D. MAKRI
  
Mr. Konstantinos Flokos
and
)

 
Mrs. Chryssanthi Papathanasopoulou
)
Attorney-in-fact
  
for and on behalf of
)
    
ALPHA BANK S.A.,
)
    
of Greece,
)
/s/ Chrissanthi Papathanasopoulou
  
in the presence of:
)
    

 
Attorney-in-fact
  
         
Witness:  /s/ Angeliki Arkadi
        
Name:     Angeliki Arkadi

     
Address: 13 Defteras Merarchias
        
Piraeus, Greece

     
Occupation:  Attorney-at-Law
        


95
Exhibit 4.60

First Supplemental Letter to Loan Agreement
 
TO:        (1)
FRIEND OCEAN NAVIGATION CO.
of the Republic of Liberia
(the “First Borrower”);

and
 

 (2)
LORD OCEAN NAVIGATION CO.
of the Republic of Liberia
(the “Second Borrower”);
 
and
 

 (3)
SQUIRE OCEAN NAVIGATION CO.
of the Republic of Liberia
(the “Third Borrower”);
 
and

 
(4)
SEANERGY MARITIME HOLDINGS CORP.
of the Republic of the Marshall Islands
(the “Corporate Guarantor”);

FROM:
ALPHA BANK S.A.
40 Stadiou Street, Athens GR 102 52, Greece,
acting through its office at 93 Akti Miaouli, Piraeus, Greece,
(the « Lender »)

Dated: 1 December 2021
Dear Sirs,
 
Re:
a loan agreement dated 9 August, 2021 (the “Principal Agreement”) and made between (1) (i) the First Borrower (ii) the Second Borrower and (iii) the Third Borrower (together hereinafter called the “Borrowers”), as joint and several borrowers, and (2) ALPHA BANK S.A., of Greece, as lender (the “Lender”)
 
WHEREAS:
 
(A)
pursuant to the terms and conditions of the Principal Agreement, the Lender agreed, among other things, to make and have made available to the Borrowers, as borrowers, upon and subject to the terms and conditions therein set forth, a loan facility in the amount of forty four million one hundred twenty thousand Dollars ($44,120,000), for the purposes referred to therein (the Principal Agreement as hereby amended and/or supplemented and as the same may hereinafter be further amended and/or supplemented called the “Loan Agreement);
 
(B)
As of today the principal amount owing by the Borrower to the Lender under the Loan Agreement is United States Dollars Forty Million Nine Hundred Twenty Thousand (US$ 40,920,000); and
 
(C)
the Second Borrower requested, and the Lender has provided their consent to (i) the appointment of SEANERGY SHIPMANAGEMENT CORP. of the Republic of the Marshall Islands as the new technical manager of the motor vessel “LORDSHIP” (hereinafter called the “Vessel”), duly registered in the name of the Second Borrower under and pursuant to the laws of the Republic of Liberia at the Port of Monrovia under Official No. 17745 and IMO No. 9519066, and (ii) the appointment of V.SHIPS LIMITED, of Cyprus as the new crew manager of the Vessel (together with SEANERGY SHIPMANAGEMENT CORP., the “New Managers”), and the Lender, relying upon each of the representations and warranties set out in Clause 2 (Representations and Warranties) hereof, hereby agree to enter into in this letter (“this Letter”) with the Borrowers and the Corporate Guarantor, that the Principal Agreement be amended and/or supplemented in the manner more particularly set out in Clause 4 (Variations to the Principal Agreement) hereof.
 
Unless the context otherwise requires, words and expressions defined in the Principal Agreement shall have the same meanings when used in this Letter.
 
“Effective Date” means the date hereof or such earlier or later date as the Lender may agree in writing, whereupon all the conditions contained in Clause 3 (Conditions Precedent) shall have been satisfied and this Supplemental Letter shall become effective.
 
1.
Acknowledgement of Indebtedness

Each of the Borrowers and the Corporate Guarantor hereby declares and acknowledges that as at the date hereof the outstanding principal amount of the Loan is United States Dollars Forty Million Nine Hundred Twenty Thousand (US$ 40,920,000).
 
2.
Representations and Warranties

The Borrowers and the Corporate Guarantor hereby represent and warrant to the Lender that:
 

 a.
the representations and warranties contained in Clause 6 (Representations and Warranties) of the Principal Agreement are true and correct on the date of this Letter as if all references therein to “this Agreement” were references to the Principal Agreement as amended by this Letter; and
 

 b.
this Letter contains the legal, valid and binding obligations of the Borrowers and the Corporate Guarantor enforceable in accordance with its terms.
 
3.
Conditions precedent

The agreement of the Lender contained in Recital (C) shall be expressly subject to the condition that the Lender shall have received on or before the Effective Date in form and substance satisfactory to the Lender and its legal advisers:
 

 a.
a recent certificate of incumbency of each of the Borrowers and the Corporate Guarantor stating the officers and the directors thereof;
 

 b.
such further agreements amendatory or supplemental to the Security Documents duly executed by the relevant parties thereto and/or opinions as requested at the sole discretion of the Lender;
 

 c.
signed letters of undertaking and subordination (and notices of assignment) granted by the New Managers to the Lender in relation to the Vessel;
 

 d.
true copies of the valid technical management agreement and crew management agreements of the Vessel under the New Managers;
 

 e.
true copies of the incorporation documents of the New Managers and documents evidencing its current directors, officers and recent goodstanding status.
 
4.
Variations to the Principal Agreement


4.1
The Lender and the Borrowers hereby agree that with effect from the Effective Date, the following definitions shall be inserted in Clause 1.2 (Definitions) of the Principal Agreement:
 
“Approved Crew Manager” in relation to the “LORDSHIP” means for the time being V.Ships Cyprus or any other person appointed by the Lord Borrower, with the prior written consent of the Lender not to be unreasonably withheld or delayed, as the crew manager of the LORDSHIP owned by it, and includes its successors in title;
 
“First Letter Supplemental to Loan Agreement” means the First Letter Supplemental to this Loan Agreement, dated 1 December 2021, being supplemental to this Agreement, executed and made between (inter alia) the Borrowers and the Lender, whereby this Agreement is amended as therein provided.”;
 

 4.2
With effect as from the Effective Date, the definition “Approved Technical Managers” in Clause 1.2 (Definitions) of the Principal Agreement shall be deleted and replaced by the following:
 
“Approved Technical Managers” in relation to: (i) the “FRIENDSHIP” and the “LORDSHIP” means for the time being V.Ships Greece and/or Seanergy Shipmanagement and (ii) the “SQUIRESHIP” means for the time being, V.Ships Cyprus, or any other person appointed by the Owner of such Vessel, with the prior written consent of the Lender not to be unreasonably withheld or delayed, as the technical manager of the Vessel owned by it, and includes its successors in title;
 

 4.3
With effect as from the Effective Date, the definition “Approved Managers” in Clause 1.2 (Definitions) of the Principal Agreement shall be deleted and replaced by the following:
 
“Approved Managers” means the Approved Commercial Managers, the Approved Technical Managers and the Approved Crew Manager.
 

 4.4
With effect as from the Effective Date, the definition “Approved Manager’s Undertaking” in Clause 1.2 (Definitions) of the Principal Agreement shall be deleted and replaced by the following:
 
“Approved Manager’s Undertaking(s)” means a letter/letters of undertaking and subordination to be executed by each of the Approved Managers, as commercial, or as the case may be, technical or crew manager of each Vessel respectively, in favour of the Lender, such Approved Manager’s Undertaking to be and in form and substance as the Lender may approve or require, as the same may from time to time be amended and/or supplemented (together, the “Approved Managers’ Undertakings”);
 

 4.5
With effect as from the Effective Date, the definition “Management Agreement” in Clause 1.2 (Definitions) of the Principal Agreement shall be deleted and replaced by the following:
 
“Management Agreement” in relation to a Vessel means the agreement made between the Owner thereof and the respective Approved Commercial, or as the case may be, Technical or Crew Manager providing (inter alia) for such Approved Manager to manage such Vessel, as amended and/or supplemented from time to time (together, the “Management Agreements”);
 

 4.6
With effect from the Effective Date all references in the Principal Agreement to “this Agreement”, “hereunder” and the like and in the Security Documents to the “Loan Agreement” shall be construed as references to the Principal Agreement as amended and supplemented by this Letter.
 
5.
Continuance of Principal Agreement and the Security Documents

Save for the alterations to the Principal Agreement and the Security Documents made or to be made pursuant to this Letter, the Borrowers and the other Security Parties hereby agree with the Lender that the provisions of the Loan Agreement and the Security Documents shall be and are hereby re-affirmed and remain in full force and effect and the security constituted by the Security Documents shall continue to remain valid and enforceable and the Lender reserves the right at any time to demand repayment in full of all sums made available to the Borrower under the Loan Agreement in accordance with the provisions of the Loan Agreement.
 
6.
Notices

The provisions of Clause 17.1 (Notices) of the Principal Agreement (as hereby amended) shall extend and apply to this Letter as if the same were (mutatis mutandis) herein expressly set forth.
 
7.
Law and Jurisdiction

This Letter and any non-contractual obligations connected with it shall be governed by and construed in accordance with English law and the provisions of Clause 18 (Law and Jurisdiction) of the Principal Agreement shall extend and apply to this Letter as if the same were (mutatis mutandis) herein expressly set forth.
 
Please confirm your acceptance to the foregoing terms and conditions by signing the acceptance at the foot of this Letter.
 
Yours faithfully,

For and on behalf of
ALPHA BANK S.A.

By: /s/ Aikaterini Damianidou
By: /s/ Chrysanthi Papathanasopoulou
Name: Aikaterini Damianidou
Name: Chrysanthi Papathanasopoulou
Title:
Title:

ACCEPTED AND AGREED

THE BORROWERS

For and on behalf of
For and on behalf of
FRIEND OCEAN NAVIGATION CO.
LORD OCEAN NAVIGATION CO.

By: /s/ Stavros Gyftakis
By: /s/ Stavros Gyftakis
Name: Stavros Gyftakis
Name: Stavros Gyftakis
Title: Attorney-in-fact
Title: Attorney-in-fact

For and on behalf of
SQUIRE OCEAN NAVIGATION CO.

By: /s/ Stavros Gyftakis
Name: Stavros Gyftakis
Title: Attorney-in-fact

THE CORPORATE GUARANTOR

For and on behalf of
SEANERGY MARITIME HOLDINGS CORP.

By: /s/ Stavros Gyftakis
Name: Stavros Gyftakis
Title: Attorney-in-fact

Witness:  /s/ Maria Moschopoulou
Name:  Maria Moschopoulou
Address: 154 Vouliagmenis Avenue,
16674 Glyfada, Greece
Occupation:  Attorney-at-Law

Exhibit 4.61

Dated 12 November 2021
 
US$16,850,000
 
SUSTAINABILITY-LINKED TERM LOAN FACILITY
 
WORLD SHIPPING CO.
as Borrower
 
and
 
SEANERGY MARITIME HOLDINGS CORP.
as Guarantor
 
and
 
PIRAEUS BANK S.A.
as Original Lender
 
FACILITY AGREEMENT
 
relating to the refinancing of part of the acquisition cost of
 m.v. “WORLDSHIP”



Index

Clause
Page
     
Section 1 Interpretation
2
1
Definitions and Interpretation
2
Section 2 The Facility
25
2
The Facility
25
3
Purpose
25
4
Conditions of Utilisation
25
Section 3 Utilisation
27
5
Utilisation
27
Section 4 Repayment, Prepayment and Cancellation
29
6
Repayment
29
7
Prepayment and Cancellation
29
Section 5 Costs of Utilisation
32
8
Interest
32
9
Interest Periods
35
10
Changes to the Calculation of Interest
36
11
Fees
37
Section 6 Additional Payment Obligations
38
12
Tax Gross Up and Indemnities
38
13
Increased Costs
41
14
Other Indemnities
43
15
Mitigation by the Lender
45
16
Costs and Expenses
46
Section 7 Guarantee
48
17
Guarantee and Indemnity
48
Section 8 Representations, Undertakings and Events of Default
52
18
Representations
52
19
Information Undertakings
59
20
Financial Covenants
61
21
General Undertakings
63
22
Insurance Undertakings
70
23
Ship Undertakings
75
24
Security Cover
 81
25
Accounts and application of Earnings
82
26
Events of Default
83
Section 9 Changes to the Parties
89
27
Changes to the Lender
89
28
Changes to the Transaction Obligors
90
Section 10 Administration
92
29
Payment Mechanics
92
30
Set-Off
94
31
Conduct of Business by the Lender
94
32
Bail-In
94
33
Notices
94
34
Calculations and Certificates
96
35
Partial Invalidity
97
36
Remedies and Waivers
97
37
Entire Agreement
97

38
Settlement or Discharge Conditional
97
39
Irrevocable Payment
98
40
Confidential Information
98
41
Confidentiality of Funding Rates
101
42
Amendments
101
43
Counterparts
102
Section 11 Governing Law and Enforcement
103
44
Governing Law
103
45
Enforcement
103

Schedules
  
   
Schedule 1 The Parties
104
Part A The Obligors
104
Part B The Original Lender
105
Schedule 2 Conditions Precedent
106
Part A Conditions precedent to Utilisation Request
106
Part B conditions precedent to Utilisation
109
Schedule 3 Requests
111
Part A Utilisation Request
111
Part B Selection Notice
113
Schedule 4 Timetables
114
Schedule 5 Form of Compliance Certificate
115
   
Execution
  
   
Execution Pages
116

THIS AGREEMENT is made on 12 November 2021
 
PARTIES
 
(1)
WORLD SHIPPING CO., a corporation incorporated in the Republic of the Marshall Islands with registration number 109649, whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 as borrower (the “Borrower”)
 
(2)
SEANERGY MARITIME HOLDINGS CORP., a corporation incorporated in the Republic of the Marshall Islands with registration number 27721, whose registered address is at the Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH 96960, Marshall Islands as guarantor (the “Guarantor “)
 
(3)
PIRAEUS BANK S.A., having its registered address at 4 Amerikis Street, 105 64 Athens, Greece acting through its office at 170 Alexandras Avenue, 11521 Athens 105 64, Greece as lender (the “Original Lender”)
 
BACKGROUND
 
(A)
The Lender has agreed to make available to the Borrower a facility not exceeding the lesser of (i) $16,850,000 and (ii) 50 per cent. of the Initial Market Value of the Ship for the purpose of refinancing part of the acquisition cost of the Ship.
 
(B)
The Lender may enter into interest rate swap transactions with the Borrower from time to time to hedge the Borrower’s exposure under this Agreement to interest rate fluctuations.
 
OPERATIVE PROVISIONS
 
SECTION 1

INTERPRETATION
 
1
DEFINITIONS AND INTERPRETATION
 
1.1
Definitions
 
In this Agreement:
 
“Account” means the Operating Account or the Pledged Deposit Account.
 
“Account Bank” means Piraeus Bank S.A. acting through its office at 4 Amerikis Street, 105 64 Athens, Greece or acting through its branch at 170 Alexandras Avenue, 115 21 Athens, Greece or any replacement bank or other financial institution as may be approved by the Lender in its discretion.
 
“Account Security” means a document creating Security over an Account, in agreed form.
 
“Affiliate” means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.
 
“Applicable Margin” means, at any time at which it falls to be determined, the Initial Margin as the same may be reduced by the Sustainability Pricing Adjustment in accordance with Clause 8.6 (Sustainability Pricing Adjustment).
 
“Approved Brokers” means any firm or firms of insurance brokers approved in writing by the Lender.
 
“Approved Classification” means 1A Bulk carrier BC(A) BIS BWM(T) COAT-PSPC(B) CSR ESP Grab (20 t) Holds (2, 4, 6 & 8)may be empty Recyclable TMON (oil lubricated) ER(EGS Open) with the Approved Classification Society or the equivalent classification with another Approved Classification Society.
 
“Approved Classification Society” means DNV or any other classification society being a member of the International Association of Classification Societies which is approved in writing by the Lender.
 
“Approved Commercial Manager” means:
 

 (a)
Seanergy Management Corp., a corporation incorporated in the Republic of the Marshall Islands with registration number 29849, whose registered address is at the Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH 96960, Marshall Islands;
 

 (b)
Fidelity Marine Inc., a corporation incorporated in the Republic of the Marshall Islands whose registered address is at the Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH 96960, Marshall Islands; or
 

 (c)
any other person approved in writing by the Lender as the commercial manager of the Ship.
 
“Approved Crew Manager” means:
 
2

 (a)
Anglo-Eastern Crew Management (Asia) Limited of 17/F Kingston International Centre, 19 Wang Chiu Road, Kowloon Bay, Kowloon, Hong Kong; or
 

 (b)
any other person approved in writing by the Lender as the crew manager of the Ship.
 
“Approved Flag” means the flag of the Republic of the Marshall Islands or such other flag and, if applicable, port of registry approved in writing by the Lender.
 
“Approved Manager” means the Approved Commercial Manager, the Approved Technical Manager or the Approved Crew Manager.
 
“Approved Technical Manager” means:
 

 (a)
V.Ships Greece Ltd. a corporation incorporated in Bermuda having a registered office at 3rd floor, Par-La-Ville Place, 14 Par-La-Ville Road, Hamilton HM 08, Bermuda;
 

 (b)
V.Ships Limited, a corporation incorporated and existing under the laws of Cyprus whose registered office is at Zenas Gunther, 16-18, Agia Triada, 3035 Limassol, Cyprus;
 

 (c)
Seanergy Shipmanagement Corp., a corporation incorporated in the Republic of the Marshall Islands with registration number 71736, whose registered address is at the Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH 96960, Marshall Islands; or
 

 (d)
any other person approved in writing by the Lender as the technical manager of the Ship.
 
“Approved Valuer” means any reputable firm or firms of independent sale and purchase shipbrokers approved in writing by the Lender in its discretion.
 
“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 the Existing Charter and any other time charterparty, consecutive voyage charter or contract of affreightment in respect of the Ship having a duration (or capable of having a duration) of more than 13 months and any guarantee of the obligations of the charterer under such charter in each case made on terms and with a charterer acceptable in all respects to the Lender.
 
“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 to and including 31 December 2021 or such later date as may be approved in writing by the Lender in its discretion.
 
“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;
 
3

 (b)
in relation to any state other than such an EEA Member Country and the United Kingdom, any analogous law or regulation from time to time which requires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation; and
 

 (c)
in relation to the United Kingdom, the UK Bail-In Legislation.
 
“Balloon Instalment” has the meaning given to it in Clause 6.1 (Repayment of Loan).
 
“Break Costs” means the amount (if any) by which:
 

 (a)
the interest which the Lender should have received for the period from the date of receipt of all or any part of 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 the Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the Relevant Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.
 
“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for general business in London and Athens and, in respect of a day on which a payment is required to be made under a Finance Document, also in New York.
 
“Charter” means any charter relating to the Ship, or other contract for its employment, whether or not already in existence, including (without limitation) the Existing Charter and 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 the assignment creating Security over the rights of the Borrower under any Assignable Charter and any Charter Guarantee relative thereto in agreed form.
 
“Code” means the US Internal Revenue Code of 1986.
 
“Commitment” means the amount of $16,850,000 to the extent not cancelled or reduced under this Agreement.
 
“Compliance Certificate” means a certificate in the form set out in Schedule 5 (Form of Compliance Certificate) or in any other form agreed between the Guarantor and the Lender.
 
“Confidential Information” means all information relating to any Transaction Obligor, the Group, the Finance Documents or the Facility of which the Lender becomes aware in its capacity as, or for the purpose of becoming, the Lender or which is received by the Lender in relation to, or for the purpose of becoming the Lender under, the Finance Documents or the Facility from any Transaction Obligor, 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 information that:
 
4

 (a)
is or becomes public information other than as a direct or indirect result of any breach by the Lender of Clause 40 (Confidential Information); or
 

 (b)
is identified in writing at the time of delivery as non-confidential by any Transaction Obligor, any member of the Group or any of its advisers; or
 

 (c)
is known by the Lender before the date the information is disclosed to it by any Transaction Obligor, any member of the Group or any of its advisers or is lawfully obtained by the Lender after that date, from a source which is, as far as the Lender is aware, unconnected with any Transaction Obligor or the Group and which, in either case, as far as the Lender is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality; and
 
“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 Lender.
 
“Default” means an Event of Default or a Potential Event of Default.
 
“Delegate” means any delegate, agent, attorney or co-trustee appointed by the Lender.
 
“Disruption Event” means either or both of:
 

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

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

 (i)
from performing its payment obligations under the Finance Documents to which it is a party; 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.
 
5
“Earnings” means all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Borrower or the Lender 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 Lender, 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 Lender 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.
 
“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.
 
6
“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 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.
 
“EEOI” means the energy efficiency operational indicator calculated as follows:
 
 
where:
 

 (a)
(gCO2) for voyage i is computed by multiplying the fuel consumption with the relevant carbon (CO2) factor of each type of fuel;
 

 (b)
Ton cargo is calculated based on the draft and displacement tables, subtracting Vessel weight and ballast water and fuel stock;
 

 (c)
Nm is the distance travelled on voyage i; and
 

 (d)
such calculation is based on all voyages performed over a Sustainability Period.
 
7
“EU Bail-In Legislation Schedule” means the document described as such and published by the LMA from time to time.
 
“Event of Default” means any event or circumstance specified as such in Clause 26 (Events of Default).
 
“Existing Charter” means a time charter in respect of the Ship dated 22 June 2021 made between the Borrower and the Existing Charterer with a duration of no less than 12 (twelve) months (commencing from 2 September 2021) a at a minimum daily rate of US$30,000, as amended by addendum No. 1 thereto dated 29 July 2021, addendum No. 2 thereto dated 6 October 2021, addendum no. 3 thereto dated 27 October 2021 and as from time to time further amended or supplemented in accordance with the terms of the Finance Documents.
 
“Existing Charterer” means Cargill International S.A., a company incorporated under the laws of Switzerland and having its registered office at Esplanade de-Normandie, 1206 Geneva Pont-Rouge 4, 1212 Grand-Lancy, Switzerland.
 
“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 through which the Lender 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 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.
 
“Fleet Vessels” means the vessels from time to time owned by the members of the Group and “Fleet Vessel” means any of them.
 
“Finance Document” means:
 

 (a)
this Agreement;
 

 (b)
any Hedging Agreement;
 

 (c)
the Utilisation Request;
 
8

 (d)
any Security Document;
 

 (e)
any Subordination Deed;
 

 (f)
any other document which is executed for the purpose of establishing any priority or subordination arrangement in relation to the Secured Liabilities; or
 

 (g)
any other document designated as such by the Lender and the Borrower.
 
“Financial Indebtedness” means any indebtedness for or in relation to:
 

 (a)
moneys borrowed;
 

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

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

 (d)
the amount of any liability in relation to any lease or hire purchase contract which would, in accordance with GAAP, be treated as a balance sheet liability;
 

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

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

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

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

 (i)
the amount of any liability in relation to any guarantee or indemnity for any of the items referred to in paragraphs (a) to (h) above.
 
“Funding Rate” means any individual rate notified by the Lender to an Obligor pursuant to any Finance Document.
 
“GAAP” means generally accepted accounting principles in the US or 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.
 
9
“Group” means the Guarantor and its Subsidiaries (including, for the avoidance of doubt, the Borrower) at any given time (which are consolidated for the purposes of its Financial Statements) and “member of the Group” shall be construed accordingly.
 
“Hedge Receipts” means all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Borrower under the Hedging Agreements.
 
“Hedging Agreement” means any master agreement, confirmation, transaction, schedule or other agreement in agreed form entered into or to be entered into by the Borrower and the Lender in accordance with Clause 8.5 (Hedging) for the purpose of hedging interest payable under this Agreement.
 
“Hedging Close-Out Liabilities” means, as at any relevant date, the amount certified by the Lender as the net aggregate amount in dollars which would be payable by the Borrower under any Hedging Agreement at the relevant determination date as a result of termination of closing out under the Hedging Agreements.
 
“Hedging Agreement Security” means a hedging agreement security creating Security over the Borrower’s rights and interests in any Hedging Agreement, in agreed form.
 
“Hedging Prepayment Proceeds” means any Hedge Receipts arising as a result of termination or closing out under the Hedging Agreements.
 
“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 determined in accordance with the valuation referred to in paragraph 5.1 of Part BA of Schedule 2 (Conditions Precedent).
 
“Insurances” means, in relation to the Ship:
 

 (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.
 
“Initial Margin” means 3.05 per cent. per annum.
 
“Interest Payment Date” has the meaning given to it in paragraph (a) of Clause 8.2 (Payment of interest).
 
10
“Interest Period” means, in relation to the Loan or any part of the Loan, each period determined in accordance with Clause 9.1 (Selection of Interest Periods) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 8.3 (Default interest).
 
“Interpolated Screen Rate” means, in relation to the Loan, any part of the Loan or any Unpaid Sum, the rate (rounded to the same number of decimal places as the two relevant Screen Rates) which results from interpolating on a linear basis between:
 

 (a)
the applicable Screen Rate for the longest period (for which that Screen Rate is available) which is less than the Interest Period of the Loan, or the relevant part of the Loan or that Unpaid Sum; and
 

 (b)
the applicable Screen Rate for the shortest period (for which that Screen Rate is available) which exceeds the Interest Period of the Loan, or the relevant part of the Loan or that Unpaid Sum,
 
each as of the Specified Time for dollars.
 
“ISM Code” means the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention (including the guidelines on its implementation), adopted by the International Maritime Organisation, as the same may be amended or supplemented from time to time.
 
“ISPS Code” means the International Ship and Port Facility Security (ISPS) Code as adopted by the International Maritime Organization’s (IMO) Diplomatic Conference of December 2002, as the same may be amended or supplemented from time to time.
 
“ISSC” means an International Ship Security Certificate issued under the ISPS Code.
 
“Lender” means:
 

 (a)
the Original Lender; and
 

 (b)
any bank, financial institution, trust, fund or other entity which has become the Lender in accordance with Clause 27 (Changes to the Lender),
 
which in each case has not ceased to be a Party in accordance with this Agreement.
 
“LIBOR” means, in relation to the Loan or any part of the Loan:
 

 (a)
the applicable Screen Rate as of the Specified Time for dollars and for a period equal in length to the Interest Period of the Loan or that part of the Loan; or
 

 (b)
as otherwise determined pursuant to Clause 10.1 (Unavailability of Screen Rate),
 
and if, in either case, that rate is less than zero, LIBOR shall be deemed to be zero.
 
“LMA” means the Loan Market Association 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.
 
11
“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 $750,000 or the equivalent in any other currency.
 
“Management Agreement” means the agreement entered into between the Borrower and an Approved Manager regarding the commercial and/or (as applicable) the technical management and/or (as applicable) the crew management of the Ship.
 
“Manager’s Undertaking” means the letter of undertaking from each Approved Manager, subordinating the rights of that Approved Manager against the Ship and the Borrower to the rights of the Lender and including (inter alia) a first priority assignment of that Approved Manager’s rights, title and interest in the Insurances of the Ship in agreed form.
 
“Market Value” means, in relation to the Ship or any other vessel, at any date, an amount determined by the Lender as being an amount equal to the market value of the Ship or vessel shown by a valuation prepared:
 

 (a)
as at a date not more than 14 days previously (and in respect of the Initial Market Value, 20 days previously);
 

 (i)
by an Approved Valuer (appointed by, and reporting to, the Lender);
 

 (ii)
with or without physical inspection of the Ship or such other vessel (as the Lender may require); and
 

 (iii)
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.
 
“Material Adverse Effect” means in the opinion of the Lender a material adverse effect on:
 

 (a)
the business, operations, property, condition (financial or otherwise) or prospects of any Transaction Obligor, 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 the Lender 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
 
12

 (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, preferred Approved Flag ship mortgage on the Ship (together with, if applicable, the deed of covenants collateral thereto) in agreed form.
 
“Obligor” means the Borrower or the Guarantor.
 
“Operating Account” means:
 

 (a)
an account in the name of the Borrower with the Account Bank designated “World Shipping Co. - Operating Account”;
 

 (b)
any other account in the name of the Borrower with the Account Bank which may, with the prior written consent of the Lender, be opened in the place of the account referred to in paragraph (a) above, irrespective of the number or designation of such replacement account; or
 

 (c)
any sub-account of any account referred to in paragraphs (a) or (b) above.
 
“Original Financial Statements” means the audited financial statements of the Guarantor for its financial year ending 31 December 2020.
 
“Original Jurisdiction” means, in relation to a Transaction Obligor, the jurisdiction under whose laws that Transaction Obligor is incorporated as at the date of this Agreement.
 
“Overseas Regulations” means the Overseas Companies Regulations 2009 (SI 2009/1801).
 
“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, 13 months plus a 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 (including, for the avoidance of doubt, the Existing Charter) which is approved in writing by the Lender.
 
13
“Permitted Financial Indebtedness” means:
 

 (a)
any Financial Indebtedness incurred under the Finance Documents;
 

 (b)
any Financial Indebtedness incurred in the Borrower’s or each Approved Manager’s course of ordinary business; and
 

 (c)
any Financial Indebtedness that is subordinated to all Financial Indebtedness incurred under the Finance Documents pursuant to a Subordination Deed 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:
 

 (a)
Security created by the Finance Documents;
 

 (b)
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;
 

 (c)
liens for salvage;
 

 (d)
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
 

 (e)
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 23.16 (Restrictions on chartering, appointment of managers etc.),
 
provided such liens do not secure amounts more than 30 days overdue (unless the overdue amount is being contested in good faith by appropriate steps and 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).
 
“Pledged Deposit” means the amount maintained in the Pledged Deposit Account pursuant to Clause 21.22 (Pledged deposit).
 
“Pledged Deposit Account” means:
 

 (a)
an account in the name of the Borrower with the Account Bank designated “World Shipping Co. – Pledged Deposit Account”;
 

 (b)
any other account in the name of the Borrower with the Account Bank which may, with the prior written consent of the Lender, 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.
 
14
“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.
 
“Prohibited Person” means any person (whether designated by name or by reason of being included in a class of persons) against whom Sanctions are directed.
 
“Quotation Day” means, in relation to any period for which an interest rate is to be determined, two Business Days before the first day of that period unless market practice differs in the Relevant Interbank Market in which case the Quotation Day will be determined by the Lender in accordance with market practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days).
 
“Receiver” means a receiver or receiver and manager or administrative receiver of the whole or any part of the Security Assets.
 
“Related Fund” in relation to a fund (the “first fund”), means a fund which is managed or advised by the same investment manager or investment adviser as the first fund or, if it is managed by a different investment manager or investment adviser, a fund whose investment manager or investment adviser is an Affiliate of the investment manager or investment adviser of the first fund.
 
“Relevant Interbank Market” means the London interbank market.
 
“Relevant Jurisdiction” means, in relation to a Transaction Obligor:
 

 (a)
its 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 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.
 
“Repayment Date” means each date on which a Repayment Instalment is required to be paid under Clause 6.1 (Repayment of Loan).
 
“Repayment Instalment” has the meaning given to it in Clause 6.1 (Repayment of Loan).
 
“Repeating Representation” means each of the representations set out in Clause 18 (Representations) except Clause 18.10 (Insolvency), Clause 18.11 (No filing or stamp taxes) and Clause 18.12 (Deduction of Tax), 18.13(c) (No Default) 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.
 
15
“Replacement Benchmark” means a benchmark rate which is:
 

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

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

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

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

 (c)
in the opinion of the Lender and the Borrower, an appropriate successor to a Screen Rate.
 
“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 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.
 
“Safekeeping Securities Account” means the account opened or to be opened by the Lender with the Shipping Branch located at 137-139 Filonos Street, Piraeus, Greece Lending Office for the safekeeping of the shares held by the Lender in the issued shares of the Borrower and which shall be pledged in favour of the Lender pursuant to the Shares Security.
 
“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.
 
16
“Sanctions” means any sanctions, embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment, exporting, financing or making assets available (or other activities similar to or connected with any of the foregoing):
 

 (a)
imposed by law or regulation of the United Kingdom, the Council of the European Union, the United Nations or its Security Council or the United States of America regardless of whether the same is or is not binding on any Transaction Obligor; or
 

 (b)
otherwise imposed by any law or regulation binding on a Transaction Obligor or a member of the Group or to which a Transaction Obligor or a member of a Group is subject (which shall include without limitation, any extra-territorial sanctions imposed by law or regulation of the United States of America).
 
“Screen Rate” means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for dollars for the relevant period displayed (before any correction, recalculation or republication by the administrator) on page LIBOR01 of the Thomson Reuters screen (or any replacement Thomson Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Thomson Reuters. If such page or service ceases to be available, the Lender may specify another page or service displaying the relevant rate after consultation with the Borrower.
 
“Screen Rate Replacement Event” means, in relation to a Screen Rate:
 

 (a)
the methodology, formula or other means of determining that Screen Rate has, in the opinion of the Lender and the Borrower materially changed;
 
(b)
(i)

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

 (B)
information is published in any order, decree, notice, petition or filing, however described, 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
 
17

 (c)
in the opinion of the Lender and the Borrower, that Screen Rate is otherwise no longer appropriate for the purposes of calculating interest under this Agreement.
 
“Secured Liabilities” means all present and future obligations and liabilities, (whether actual or contingent and whether owed jointly or severally or in any other capacity whatsoever) of each Transaction Obligor to the Lender under or in connection with each Finance Document.
 
“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 and any Third Party Manager which from time to time are, or are expressed to be, the subject of the Transaction Security.
 
“Security Cover Ratio” means the ratio of the Market Value of the Ship plus the Pledged Deposit and the net realisable value of any additional Security previously provided under Clause 24 (Security Cover) expressed as a percentage of the aggregate of (a) the  Loan and (b) the Hedging Close-Out Liabilities.
 
“Security Document” means:
 

 (a)
the Shares Security;
 

 (b)
any Account Security;
 

 (c)
the Mortgage;
 

 (d)
the General Assignment;
 

 (e)
any Charterparty Assignment;
 

 (f)
the Manager’s Undertaking;
 

 (g)
any Subordinated Debt Security;
 

 (h)
any other document (whether or not it creates Security) which is executed as security for the Secured Liabilities; or
 

 (i)
any other document designated as such by the Lender and the Borrower.
 
“Security Period” means the period starting on the date of this Agreement and ending on the date on which the Lender 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 Lender 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 Lender 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 Lender; and
 
18

 (c)
the Lender’s interest in any turnover trust created under the Finance Documents.
 
“Selection Notice” means a notice substantially in the form set out in Part B of Schedule 3 (Requests) given in accordance with Clause 9.1 (Selection of Interest Periods).
 
“Shares Security” means a document creating Security over (inter alia) the shares in the Borrower held in the Safekeeping Securities Account, in agreed form.
 
“Ship” means the 2012-built bulker vessel “WORLDSHIP having a gross tonnage of 93,074 tones and a net tonnage of 60,504 tones with IMO no 9624457 registered in the name of the Borrower under an Approved Flag (which at the date of this Agreement is the Marshall Islands flag) and everything now or in the future belonging to her on board and ashore.
 
“Specified Time” means a day or time determined in accordance with Schedule 4 (Timetables).
 
“Subordinated Creditor” means:
 
 
(i)
any Transaction Obligor; or
 

 (b)
any other person subject to the consent of the Lender who becomes a Subordinated Creditor in accordance with this Agreement.
 
“Subordinated Debt Security” means a Security over Subordinated Liabilities entered into or to be entered into by a Subordinated Creditor in favour of the Lender 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 any loan agreement made between (i) the Borrower and (ii) a Subordinated Creditor.
 
“Subordination Deed” means a subordination deed entered into or to be entered into by, inter alia, each Subordinated Creditor, the Borrower and the Lender, in agreed form.
 
“Subsidiary” means a subsidiary within the meaning of section 1159 of the Companies Act 2006.
 
“Sustainability Pricing Adjustment” has the meaning given to it in Clause 8.6 (Sustainability Pricing Adjustment).
 
“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).
 
19
“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).
 
“Termination Date” means the earlier of (a) the date falling on 60 months after the Utilisation Date and (b) 31 December 2026.
 
“Third Parties Act” has the meaning given to it in Clause 1.5 (Third party rights).
 
“Third Party Manager” means an Approved Manager if such Approved Manager is not a member of the Group.
 
“Total Loss” means:
 

 (a)
actual, constructive, compromised, agreed or arranged total loss of the Ship; or
 

 (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 any other type of Total Loss, the date (or the most likely date) on which it appears to the Lender that the event constituting the total loss occurred.
 
“Transaction Document” means:
 

 (a)
a Finance Document;
 

 (b)
a Subordinated Finance Document;
 

 (c)
the Management Agreement;
 

 (d)
any Charter;
 

 (e)
any related Charter Guarantee; or
 

 (f)
any other document designated as such by the Lender and the Borrower.
 
“Transaction Obligor” means an Obligor, each Approved Manager (other than any Third Party Manager) or any other member of the Group who executes a Transaction Document.
 
“Transaction Security” means the Security created or evidenced or expressed to be created or evidenced under the Security Documents.
 
20
“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).
 
“UK Establishment” means a UK establishment as defined in the Overseas Regulations.
 
“Unpaid Sum” means any sum due and payable but unpaid by a Transaction Obligor under the Finance Documents.
 
“US” means the United States of America.
 
“US Tax Obligor” means:
 

 (a)
a person which is resident for tax purposes in the US; or
 

 (b)
a person some or all of whose payments under the Finance Documents are from sources within the US for US federal income tax purposes.
 
“Utilisation” means the 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 Part A of Schedule 3 (Requests).
 
“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 the United Kingdom or in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in paragraph (a) 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 any other applicable Bail-In Legislation other than the UK Bail-In Legislation:
 

 (i)
any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers; and
 
21

 (ii)
any similar or analogous powers under that Bail-In Legislation; and
 

 (c)
in relation to the UK Bail-In Legislation, any powers under that UK Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that UK Bail-In Legislation that are related to or ancillary to any of those powers.
 
1.2
Construction
 
(a)
Unless a contrary indication appears, a reference in this Agreement to:
 

 (i)
the “Account Bank”, the “Lender”, any “Obligor”, any “Party”, any “Transaction Obligor” or any other person shall be construed so as to include its successors in title and permitted assigns;
 

 (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 “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, replaced, novated, supplemented, extended or restated;
 

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

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

 (ix)
“proceedings” means, in relation to any enforcement provision of a Finance Document, proceedings of any kind, including an application for a provisional or protective measure;
 
22

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

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

 (xii)
a provision of law is a reference to that provision as amended or re-enacted from time to time;
 

 (xiii)
a time of day is a reference to London time;
 

 (xiv)
any English legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall, in respect of a jurisdiction other than England, be deemed to include that which most nearly approximates in that jurisdiction to the English legal term;
 

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

 (xvi)
“including” and “in particular” (and other similar expressions) shall be construed as not limiting any general words or expressions in connection with which they are used.
 
(b)
The determination of the extent to which a rate is “for a period equal in length” to an Interest Period shall disregard any inconsistency arising from the last day of that Interest Period being determined pursuant to the terms of this Agreement.
 
(c)
Section, Clause and Schedule headings are for ease of reference only and are not to be used for the purposes of construction or interpretation of the Finance Documents.
 
(d)
Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under, or in connection with, any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.
 
(e)
A Potential Event of Default is “continuing” if it has not been remedied or waived and an Event of Default is “continuing” if it has not been waived.
 
1.3
Construction of insurance terms
 
In this Agreement:
 
“approved” means, for the purposes of Clause 22 (Insurance Undertakings), approved in writing by the Lender.
 
“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.
 
23
“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 which is a member of the International Group of protection and indemnity associations, 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 29 of the International Hull Clauses (1/11/03), clauses 24, 25 or 26 of the Institute Time Clauses (Hulls) (1/11/95) or clauses 23, 24 or 25 of the Institute Time Clauses (Hulls) (1/10/83) or any equivalent provision.
 
1.4
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 Lender); or
 
(b)
in any other form agreed in writing between the Borrower and the Lender.
 
1.5
Third party rights
 
(a)
Unless expressly provided to the contrary in a Finance Document, a person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 (the “Third Parties Act”) to enforce or to enjoy the benefit of any term of this Agreement.
 
(b)
Subject to paragraph (c) below but otherwise notwithstanding any term of any Finance Document, the consent of any person who is not a Party is not required to rescind or vary this Agreement at any time.
 
(c)
Any Affiliate or Receiver or Delegate or any other person described in paragraph (f) of Clause 14.2 (Other indemnities) 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.
 
24
SECTION 2

THE FACILITY
 
2
THE FACILITY
 
Subject to the terms of this Agreement, the Lender makes available to the Borrower a dollar term loan facility in a single advance in an amount not exceeding the lesser of (i) $16,850,000 and (ii) 50 per cent. of the Initial Market Value of the Ship.
 
3
PURPOSE
 
3.1
Purpose
 
The Borrower shall apply all amounts borrowed by it under the Facility only for the purpose of refinancing part of the acquisition cost of the Ship.
 
3.2
Monitoring
 
The Lender is not bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.
 
4
CONDITIONS OF UTILISATION
 
4.1
Initial conditions precedent
 
The Borrower may not deliver the Utilisation Request unless the Lender 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 Lender.
 
4.2
Further conditions precedent
 
The Lender will only be obliged to comply with Clause 5.4 (Loan) if:
 
(a)
on the date of the Utilisation Request and on the proposed Utilisation Date and before the Loan or part thereof is made available:
 

 (i)
no Default has occurred and is continuing or would result from the proposed Loan;
 

 (ii)
the Repeating Representations to be made by each Transaction Obligor are true;
 

 (iii)
no event described in paragraph (a) of Clause 7.5 (Change of control) has occurred;
 

 (iv)
the Ship has neither been sold nor become a Total Loss;
 

 (v)
no event or series of events has occurred which is likely to have a Material Adverse Effect;
 

 (vi)
no event has occurred which would give rise to the provisions of Clause 10.3 (Cost of funds); and
 
25
(b)
the Lender has received on or before the Utilisation Date, or is satisfied it will receive when the Loan or any part thereof is made available, all of the documents and other evidence listed in Part B of Schedule 2 (Conditions Precedent) in form and substance satisfactory to the Lender.
 
4.3
Notification of satisfaction of conditions precedent
 
The Lender shall notify the Borrower promptly upon being satisfied as to the satisfaction of the conditions precedent referred to in Clause 4.1 (Initial conditions precedent) and Clause 4.2 (Further Conditions precedent).
 
4.4
Waiver of conditions precedent
 
If the Lender, at its discretion, permits the Loan or any part thereof to be borrowed before any of the conditions precedent referred to in Clause 4.1 (Initial conditions precedent) or Clause 4.2 (Further conditions precedent) has been satisfied, the Borrower shall ensure that that condition is satisfied within five Business Days after the Utilisation Date or such later date as the Lender may agree in writing with the Borrower.
 
26
SECTION 3

UTILISATION
 
5
UTILISATION
 
5.1
Delivery of the Utilisation Request
 
The Borrower may make one Utilisation only under the Facility by delivery to the Lender of a duly completed Utilisation Request not later than the Specified Time.
 
5.2
Completion of the Utilisation Request
 
(a)
The Utilisation Request is irrevocable and will not be regarded as having been duly completed unless:
 

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

 (ii)
the currency and amount of the Loan comply with Clause 5.3 (Currency and amount);
 

 (iii)
all applicable deductible items have been completed; and
 

 (iv)
the proposed Interest Period complies with Clause 9.1 (Selection of Interest Periods).
 
(b)
Only one Utilisation may be requested in the Utilisation Request.
 
5.3
Currency and amount
 
(a)
The currency specified in the Utilisation Request must be dollars.
 
(b)
The amount of the proposed Loan must be an amount which is the lower of (i) $16,850,000 and (ii) 50 per cent. of the Initial Market Value of the Ship.
 
5.4
Loan
 
If the conditions set out in this Agreement have been met, the Lender shall make the Loan or part thereof available by the Utilisation Date through its Facility Office.
 
5.5
Cancellation of Commitment
 
On the earlier of the date on which the Loan has been made and the end of the Availability Period any Commitment which is then unutilised shall be cancelled.
 
5.6
Retentions and Payments to Borrowers
 
The Borrower irrevocably authorises the Lender:
 
(a)
to deduct from the proceeds of the Loan any fees then payable to the Lender in accordance with Clause 11 (Fees) and any other items listed as deductible items in the Utilisation Request and to apply them in payment of the items to which they relate; and
 
(b)
on the Utilisation Date, to pay to, or for the account of, the Borrower the balance (after any deduction made in accordance with paragraph (a) above) of the Loan. That payment shall be made to the account of the Borrower which the Borrower specifies in the Utilisation Request, subject to the provisions of Clause 4.2 (Further conditions precedent) and Clause 4.3 (Notification of satisfaction of conditions precedent).
 
27
5.7
Disbursement of Loan to third party
 
Payment by the Lender under Clause 5.6 (Retentions and Payments to Borrowers) to a person other than the Borrower shall constitute the making of the Loan and the Borrower shall at that time become indebted, as principal and direct obligors, to the Lender in an amount equal to the Loan.
 
28
SECTION 4

REPAYMENT, PREPAYMENT AND CANCELLATION
 
6
REPAYMENT
 
6.1
Repayment of Loan
 
The Borrower shall repay the Loan by 20 consecutive quarterly instalments, of which the first to the fourth such instalment shall be in an amount of $1,000,000 each, the fifth and sixth such instalments shall be in the amount of $750,000 each and the remaining seventh to twentieth such repayment instalments shall be in an amount of $375,000 each,  the first of which shall be repaid on the date falling 3 Months after the Utilisation Date, each subsequent instalment at three monthly intervals thereafter and the last, payable together with a balloon instalment in an amount of $6,100,000 (the “Balloon Instalment”), shall be repaid on the Termination Date, and each such instalment (including the Balloon Instalment) shall be a “Repayment Instalment”.
 
6.2
Reduction of Repayment Instalments
 
If any part of the Facility is cancelled, the Repayment Instalments falling after that cancellation shall be reduced pro rata by the amount cancelled.
 
6.3
Termination Date
 
On the Termination Date, the Borrower shall additionally pay to the Lender all other sums then accrued and owing under the Finance Documents.
 
6.4
Reborrowing
 
The Borrower may not reborrow any part of the Facility which is repaid.
 
7
PREPAYMENT AND CANCELLATION
 
7.1
Illegality
 
If it becomes unlawful in any applicable jurisdiction for the Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain all or any part of the Loan or it becomes unlawful for any Affiliate of the Lender for the Lender to do so:
 
(a)
the Lender shall promptly notify the Borrower upon becoming aware of that event and the Facility will be immediately cancelled; and
 
(b)
the Borrower shall prepay the Loan on the last day of the Interest Period for the Loan occurring after the Lender has notified the Borrower or, if earlier, the date specified by the Lender in the notice delivered to the Borrower (being no earlier than the last day of any applicable grace period permitted by law) and the Commitment shall be cancelled.
 
7.2
Automatic cancellation
 
The unutilised Commitment (if any) shall be automatically cancelled at close of business on the Utilisation Date.
 
29
7.3
Voluntary prepayment of Loan
 
(a)
The Borrower may, if it gives the Lender not less than 15 days (or such shorter period as the Lender may agree to) prior notice, prepay the whole or any part of the Loan (but, if in part, being an amount that reduces the amount of the Loan by a minimum amount of $100,000 or an integral multiple of that amount (or such other amount as the Lender may agree to)).
 
(b)
Any partial prepayment under this Clause 7.3 (Voluntary prepayment of Loan) shall be applied in inverse order of maturity or pro rata (at the Borrower’s discretion) against the Balloon Instalment and the remaining Repayment Instalments falling due after the day of such repayment.
 
7.4
Mandatory 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 prepay the Loan together with accrued interest, and all other amounts accrued under the Finance Documents. Such prepayment 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 120 days after the Total Loss Date and (ii) the date of receipt by the Lender of the proceeds of insurance relating to such Total Loss.
 
7.5
Change of control
 
(a)
If any person or group of persons acting in concert gains directly or indirectly control of the Guarantor:
 

 (i)
the Guarantor shall promptly notify the Lender upon becoming aware of that event; and
 

 (ii)
the Lender may, by not less than 10 Business Days’ notice to the Borrower, cancel the Facility and declare the Loan, together with accrued interest, and all other amounts accrued under the Finance Documents immediately due and payable, whereupon the Facility will be cancelled and the Loan and all such outstanding interest and other amounts will become immediately due and payable.
 
(b)
For the purpose of paragraph (a) above “control” means:
 

 (i)
the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:
 

 (A)
cast, or control the casting of, more than 50 per cent. of the maximum number of votes that might be cast at a general meeting of the Guarantor; or
 

 (B)
appoint or remove all, or the majority, of the directors or other equivalent officers of the Guarantor; or
 

 (C)
give directions with respect to the operating and financial policies of the Guarantor with which the directors or other equivalent officers of the Guarantor are obliged to comply; and/or
 
30

 (ii)
the holding beneficially of more than 50 per cent. of the issued share capital of the Guarantor (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital) (and, for this purpose, any Security over the share capital shall be disregarded in determining the beneficial ownership of such share capital).
 
(c)
For the purpose of paragraph (a) above “acting in concert” means a group of persons who, pursuant to an agreement or understanding (whether formal or informal), actively co-operate, through the acquisition directly or indirectly of shares in the Guarantor by any of them, either directly or indirectly, to obtain or consolidate control of the Guarantor.
 
7.6
Mandatory prepayment of Hedging Prepayment Proceeds
 
(a)
If at the relevant time an Event of Default has occurred and is continuing or the Security Cover Ratio required pursuant to Clause 24.1 (Minimum required security cover) is not maintained, any Hedging Prepayment Proceeds arising as a result of any cancellation or prepayment under this Agreement shall be applied on the last day of the Interest Period which ends on or after such payment in prepayment of the Loan and shall reduce the Repayment Instalments falling after that prepayment and the Balloon Instalment by the amount prepaid pro rata.
 
(b)
If, at any time, the aggregate notional amount of the transactions in respect of the Hedging Agreements exceeds or, as a result of any repayment or prepayment under this Agreement, will the Loan at that time, the Borrower must, at the request of the Lender, reduce the aggregate notional amount of those transactions by an amount and in a manner satisfactory to the Lender so that it no longer exceeds or will not exceed the Loan then or that will be outstanding.
 
(c)
Any Hedging Prepayment Proceeds pursuant to paragraph (b) above, following the occurrence of an Event of Default which is continuing, shall be paid to the Lender on the last day of the Interest Period which ends on or after such payment in prepayment of the Loan and shall reduce the Repayment Instalments falling after that prepayment and the Balloon Instalment by the amount prepaid pro rata.
 
7.7
Restrictions
 
(a)
Any notice of cancellation or prepayment given by any Party under this Clause 7 (Prepayment and Cancellation) shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to be made, the amount of that cancellation or prepayment and the order of application.
 
(b)
Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to the fee provided for in Clause 11.2 (Prepayment fee) and any Break Costs, without premium or penalty.
 
(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 Commitment except at the times and in the manner expressly provided for in this Agreement.
 
(e)
No amount of the Commitment cancelled under this Agreement may be subsequently reinstated.
 
31
SECTION 5

COSTS OF UTILISATION
 
8
INTEREST
 
8.1
Calculation of interest
 
The rate of interest on the Loan or any part of the Loan for each Interest Period is the percentage rate per annum which is the aggregate of:
 
(a)
the Applicable Margin; and
 
(b)
LIBOR.
 
8.2
Payment 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.
 
8.3
Default interest
 
(a)
If a Transaction Obligor fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the Unpaid Sum from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to paragraph (b) below, is 2.00 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 Lender. Any interest accruing under this Clause 8.3 (Default interest) shall be immediately payable by an Obligor on demand by the Lender.
 
(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 2.00 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 may be compounded with the Unpaid Sum on a six month basis commencing on the date that such Unpaid Sum becomes due and payable but  such default interest will remain immediately due and payable.
 
32
8.4
Notification of rates of interest
 
The Lender shall promptly notify the Borrower of the determination of a rate of interest under this Agreement.
 
8.5
Hedging
 
(a)
The Borrower and the Lender may enter into a Hedging Agreement on the date of this Agreement or at any time thereafter and shall after that date maintain such Hedging Agreement in accordance with this Clause 8.5 (Hedging).
 
(b)
The aggregate notional amount of the transactions in respect of the Hedging Agreements shall not exceed the aggregate amount of the Loan.
 
(c)
Each Hedging Agreement shall:
 

 (i)
be with the Lender or (subject to the Lender’s right of first refusal and with the Lender’s prior consent), with another bank or financial institution;
 

 (ii)
be for a term ending on no later than the Termination Date;
 

 (iii)
have settlement dates coinciding with the last day of each Interest Period;
 

 (iv)
be in agreed form;
 

 (v)
provide for two-way payments in the event of a termination of a transaction in respect of that Hedging Agreement, whether on a Termination Event (as defined each the Hedging Agreement) or on an Event of Default (as defined in each Hedging Agreement); and
 

 (vi)
provide that the Termination Currency (as defined in that Hedging Agreement) shall be dollars.
 
(d)
The rights of the Borrower under the Hedging Agreements shall be charged by way of security under a Hedging Agreement Security.
 
(e)
If, at any time, the aggregate notional amount of the transactions in respect of the Hedging Agreements exceeds or, as a result of any repayment or prepayment under this Agreement, will the Loan at that time, the Borrower must, at the request of the Lender, reduce the aggregate notional amount of those transactions by an amount and in a manner satisfactory to the Lender so that it no longer exceeds or will not exceed the Loan then or that will be outstanding.
 
(f)
Any reductions in the aggregate notional amount of the transactions in respect of the Hedging Agreements in accordance with paragraph (e) above will be apportioned as between those transactions pro rata.
 
(g)
Paragraph (e) above shall not apply to any transactions in respect of any Hedging Agreement under which the Borrower has no actual or contingent indebtedness.
 
33
8.6
 Sustainability Pricing Adjustment
 
(a)
Subject to paragraph (e) below, the Borrower or the Guarantor shall provide the Lender with a Sustainability Certificate within 90 (ninety) days of the end of each Sustainability Period.
 
(b)
If the EEOI (rounded to two decimal places) in respect of that Sustainability Period is lower than the Base EEOI by at least the Applicable Percentage, the Applicable Margin shall be reduced (or shall remain reduced, if it has already been reduced during the previous Pricing Adjustment Period) by 0.10 per cent. per annum (the “Sustainability Pricing Adjustment”). Such reduction shall apply on the first day of the new Pricing Adjustment Period and shall remain reduced for the whole such Pricing Adjustment Period.
 
(c)
The Sustainability Pricing Adjustment shall at no time exceed 0.10 per cent. per annum during the term of the Facility and shall not be reduced further during a later Pricing Adjustment Period.
 
(d)
If (i) the EEOI (rounded to two decimal places) in a given Sustainability Period is not lower than the Base EEOI by at least the Applicable Percentage or (ii) the Borrower or the Guarantor fails to furnish a Sustainability Certificate, the Sustainability Pricing Adjustment shall reset to 0.00 per cent. and the Initial Margin shall be charged from the first day after the expiry of the then current Pricing Adjustment Period.
 
(e)
The Borrower or the Guarantor may elect not to provide a Sustainability Certificate and such election will not constitute a Default or an Event of Default.
 
(f)
If an Event of Default occurs and is continuing, the Sustainability Pricing Adjustment shall reset to 0.00 per cent. and the Initial Margin shall be charged.
 
(g)
In this Clause 8.6 (Sustainability Pricing Adjustment):
 

 (i)
“Applicable Percentage” means, in respect of the Sustainability Period ending on:
 

 (A)
30 June 2023, 2 per cent.;
 

 (B)
30 June 2024, 4 per cent.;
 

 (C)
30 June 2025, 6 per cent.; and
 

 (D)
30 June 2026, 8 per cent.
 

 (ii)
“Base EEOI” means the EEOI in respect of the first Sustainability Period (ending on 30 June 2022).
 

 (iii)
“Pricing Adjustment Period” means the 12-month period commencing on the first day of the Interest Period after a Sustainability Certificate (other than Sustainability Certificate in respect of the Base EEOI) has been delivered to the Lender in accordance with paragraph (a) above and ending on the first anniversary thereof Provided that the last such period may be shorter than 12 months if it ends on the Termination Date.
 

 (iv)
“Sustainability Certificate” means a certificate signed by a director of the Borrower or the Chief Executive Officer or Chief Financial Officer of the Guarantor, in a form and substance satisfactory to the Lender which shows the calculation of the Vessel’s EEOI and sets forth the Sustainability Pricing Adjustment, certified by the approved classification society in respect of the Ship.
 
34

 (v)
“Sustainability Period” means the period commencing on the date of acquisition of the Vessel by the Borrower and ending on 30 June 2022 and each subsequent 12-month period thereafter.
 
9
INTEREST PERIODS
 
9.1
Selection of Interest Periods
 
(a)
The Borrower may select the first Interest Period for the Loan in the Utilisation Request. Subject to paragraph (f) below and Clause 9.2 (Changes to Interest Periods), the Borrower may select each subsequent Interest Period in respect of the Loan in a Selection Notice.
 
(b)
Each Selection Notice is irrevocable and must be delivered to the Lender by the Borrower not later than the Specified Time.
 
(c)
If the Borrower fails to select an Interest Period in the Utilisation Request or fails to deliver a Selection Notice to the Lender in accordance with paragraphs (a) and (b) above, the relevant Interest Period will, subject to paragraph (f) below and Clause 9.2 (Changes to Interest Periods), be three Months.
 
(d)
Subject to this Clause 9.1 (Selection of Interest Periods), the Borrower may select an Interest Period of 1, 3 or 6 Months or any other period requested by the Borrower and acceptable to the Lender.
 
(e)
An Interest Period in respect of the Loan shall not extend beyond the Termination Date.
 
(f)
In respect of a Repayment Instalment, the Borrower may request in the relevant Selection Notice that an Interest Period for a part of the Loan equal to such Repayment Instalment shall end on the Repayment Date relating to it and, subject to paragraph (d) above, select a longer Interest Period for the remaining part of the Loan.
 
(g)
The first Interest Period for the Loan shall start on the Utilisation Date and, subject to paragraph (h) below, each subsequent Interest Period shall start on the last day of the preceding Interest Period.
 
(h)
Except for the purposes of paragraph (f) above and Clause 9.2 (Changes to Interest Periods), the Loan shall have one Interest Period only at any time.
 
9.2
Changes to Interest Periods
 
(a)
In respect of a Repayment Instalment, prior to determining the interest rate for the Loan, the Lender may establish an Interest Period for a part of the Loan equal to such Repayment Instalment to end on the Repayment Date relating to it and the remaining part of the Loan shall have the Interest Period selected in the relevant Selection Notice, subject to paragraph (d) of Clause 9.1 (Selection of Interest Periods).
 
(b)
If the Lender makes any change to an Interest Period referred to in this Clause 9.2 (Changes to Interest Periods), it shall promptly notify the Borrower.
 
35
9.3
Non-Business Days
 
If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).
 
10
CHANGES TO THE CALCULATION OF INTEREST
 
10.1
Unavailability of Screen Rate
 
(a)
Interpolated Screen Rate:  If no Screen Rate is available for LIBOR for the Interest Period of the Loan or any part of the Loan, the applicable LIBOR shall be the Interpolated Screen Rate for a period equal in length to the Interest Period of the Loan or that part of the Loan.
 
(b)
Cost of funds:  If no Screen Rate is available for LIBOR for:
 

 (i)
dollars; or
 

 (ii)
the Interest Period of the Loan or any part of the Loan and it is not possible to calculate the Interpolated Screen Rate,
 
there shall be no LIBOR 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.
 
10.2
Market disruption
 
If (a) before close of business in London on the Quotation Day for the relevant Interest Period the Lender determines (in its sole discretion) that the cost to it of funding the Loan or the relevant part of the Loan from whatever source it may reasonably select would be in excess of LIBOR or (b) before close of business on the Quotation Day for the relevant Interest Period, deposits in dollars are not available to the Lender in the London Interbank Market in the ordinary course of business in sufficient amounts to fund the Loan (or the relevant part thereof) for that Interest Period, 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.
 
10.3
Cost of funds
 
(a)
If this Clause 10.3 (Cost of funds) applies, the rate of interest on the Loan or the relevant part of the Loan for the relevant Interest Period shall be the percentage rate per annum which is the sum of:
 

 (i)
the Applicable Margin; and
 

 (ii)
the rate notified to the Borrower by the Lender as soon as practicable and in any event before the date on which interest is due to be paid in respect of that Interest Period to be that which expresses as a percentage rate per annum the cost to the Lender of funding the Loan or that part of the Loan from whatever source it may reasonably select or, if such rate is less than zero, such rate shall be deemed to be zero.
 
(b)
If this Clause 10.3 (Cost of funds) applies and the Lender or the Borrower so require, the Lender and the Borrower shall enter into negotiations (for a period of not more than 15 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 42.1 (Replacement of Screen Rate), any substitute or alternative basis agreed pursuant to paragraph (b) above shall be binding on all Parties.
 
36
10.4
Break Costs
 
The Borrower shall, within three Business Days of demand by the Lender, pay to the Lender its Break Costs attributable to all or any part of the Loan or an Unpaid Sum being paid by the Borrower on a day other than the last day of an Interest Period for the Loan, the relevant part of the Loan or that Unpaid Sum.
 
11
FEES
 
11.1
Transaction fee
 
The Borrower shall pay to the Lender a non-refundable transaction fee equal to 0.9 per cent. of the Loan on the Utilisation Date.
 
11.2
Prepayment fee
 
(a)
If, on or before the second anniversary of the Utilisation Date, (i) all or any part of the Loan is refinanced, wholly or in part, by an entity (including any fund) other than the Lender or (ii) the Loan is prepaid in full as a result of the sale of the Ship (or a transfer of the shares of the Borrower) to any entity having any one or more of the same ultimate beneficial owner(s) as the Borrower, the Borrower must, on the date of the prepayment or refinancing, pay to the Lender a prepayment fee in the amount of zero point five per cent. (0.50%) of the amount prepaid.
 
For the avoidance of doubt, any prepayment/refinancing arising as a result of an assignment of the Lender pursuant to Clause 27.1 (Assignment by the Lender), illegality pursuant to Clause 7.1 (Illegality), failure to agree on a substitute basis or alternative basis for funding pursuant to Clause 10.3 (Cost of funds), as a result of a Replacement of Screen Rate pursuant to Clause 42.1 (Replacement of Screen Rate), a change of control pursuant to Clause 7.5 (Change of control), a total loss of the Ship or a sale to a third party pursuant to Clause 7.4 (Mandatory prepayment on sale or Total Loss), shall be excluded from paragraph (a) above and the Borrower shall not be liable for any prepayment fee if the Loan or any part thereof is refinanced as a result of such event or circumstance.
 
37
SECTION 6

ADDITIONAL PAYMENT OBLIGATIONS
 
12
TAX GROSS UP AND INDEMNITIES
 
12.1
Definitions
 
(a)
In this Agreement:
 
“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 the Lender under Clause 12.2 (Tax gross-up) or a payment under Clause 12.3 (Tax indemnity).
 
(b)
Unless a contrary indication appears, in this Clause 12 (Tax Gross Up and Indemnities) reference to “determines” or “determined” means a determination made in the absolute discretion of the person making the determination.
 
12.2
Tax gross-up
 
(a)
Each Obligor shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law.
 
(b)
The 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 Lender accordingly. Similarly, the Lender shall notify an Obligor on becoming so aware in respect of a payment payable to the Lender.
 
(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 Lender evidence reasonably satisfactory to the Lender that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.
 
12.3
Tax indemnity
 
(a)
The Obligors shall (within three Business Days of demand by the Lender) pay to the Lender an amount equal to the loss, liability or cost which the Lender determines will be or has been (directly or indirectly) suffered for or on account of Tax by the Lender in respect of a Finance Document.
 
38
(b)
Paragraph (a) above shall not apply:
 

 (i)
with respect to any Tax assessed on the Lender:
 

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

 (B)
under the law of the jurisdiction in which the Lender’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 the Lender; 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)
The Lender shall, if making, or intending to make, a claim under paragraph (a) above promptly notify the Borrower of the event which will give, or has given, rise to the claim.
 
12.4
Tax Credit
 
If an Obligor makes a Tax Payment and the Lender 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)
the Lender has obtained and utilised that Tax Credit,
 
the Lender shall pay an amount to that Obligor which the Lender 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 that Obligor.
 
12.5
Stamp taxes
 
The Obligors shall pay and, within three Business Days of demand, indemnify the Lender against any cost, loss or liability which the Lender incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document.
 
12.6
VAT
 
(a)
All amounts expressed to be payable under a Finance Document by any Party to the Lender 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, if VAT is or becomes chargeable on any supply made by the Lender to any Party under a Finance Document and the Lender is required to account to the relevant tax authority for the VAT, that Party must pay to the Lender (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 the Lender must promptly provide an appropriate VAT invoice to that Party).
 
39
(b)
Where a Finance Document requires any Party to reimburse or indemnify the Lender for any cost or expense, that Party shall reimburse or indemnify (as the case may be) the Lender for the full amount of such cost or expense, including such part of it as represents VAT, save to the extent that the Lender reasonably determines that it is entitled to credit or repayment in respect of such VAT from the relevant tax authority.
 
(c)
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).
 
(d)
In relation to any supply made by the Lender to any Party under a Finance Document, if reasonably requested by the Lender, that Party must promptly provide the Lender with details of that Party’s VAT registration and such other information as is reasonably requested in connection with the Lender’s VAT reporting requirements in relation to such supply.
 
12.7
FATCA Information
 
(a)
Subject to paragraph (c) below, each Party shall, within ten Business Days of a reasonable request by another Party:
 

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

 (A)
a FATCA Exempt Party; or
 

 (B)
not a FATCA Exempt Party;
 

 (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 the Lender 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;
 
40

 (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.
 
12.8
FATCA Deduction
 
(a)
Each Party may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.
 
(b)
Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction), notify the Party to whom it is making the payment.
 
13
INCREASED COSTS
 
13.1
Increased costs
 
(a)
Subject to Clause 13.3 (Exceptions), the Borrower shall, within three Business Days of a demand by the Lender, pay for the account of the Lender the amount of any Increased Costs incurred by the Lender 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;
 
41

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

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

 (ii)
“CRD IV” means:
 

 (A)
Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending regulation (EU) No. 648/2012, 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 the Lender’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 the Lender or any of its Affiliates to the extent that it is attributable to the Lender having entered into the Commitment or funding or performing its obligations under any Finance Document.
 
13.2
Increased cost claims
 
If the Lender intends to make a claim pursuant to Clause 13.1 (Increased costs) it shall notify the Borrower of the event giving rise to the claim.
 
13.3
Exceptions
 
Clause 13.1 (Increased costs) does not apply to the extent any Increased Cost is:
 
(a)
attributable to a Tax Deduction required by law to be made by an Obligor;
 
(b)
attributable to a FATCA Deduction required to be made by a Party;
 
(c)
compensated for by Clause 12.3 (Tax indemnity) (or would have been compensated for under Clause 12.3 (Tax indemnity) but was not so compensated solely because any of the exclusions in paragraph (b) of Clause 12.3 (Tax indemnity) applied);
 
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(d)
compensated for by any payment made pursuant to Clause 14.3 (Mandatory Cost); or
 
(e)
attributable to the wilful breach by the Lender or its Affiliates of any law or regulation.
 
14
OTHER INDEMNITIES
 
14.1
Currency indemnity
 
(a)
If any sum due from an Obligor under the Finance Documents (a “Sum”), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the “First Currency”) in which that Sum is payable into another currency (the “Second Currency”) for the purpose of:
 

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

 (ii)
obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,
 
that Obligor shall, as an independent obligation, on demand, indemnify the Lender against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (B) the rate or rates of exchange available to that person at the time of its receipt of that Sum.
 
(b)
Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.
 
14.2
Other indemnities
 
(a)
Each Obligor shall, on demand, indemnify the Lender and any Receiver and Delegate against:
 

 (i)
any cost, loss or liability incurred by it as a result of:
 

 (A)
the occurrence of any Event of Default;
 

 (B)
a failure by a Transaction Obligor to pay any amount due under a Finance Document on its due date;
 

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

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

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

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

 (G)
instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under the Finance Documents; and
 
43

 (ii)
any cost, loss or liability (including, without limitation, for negligence or any other category of liability whatsoever)  incurred by the Lender (otherwise than by reason of the Lender’s gross negligence or wilful misconduct) or, in the case of any cost, loss or liability pursuant to Clause 29.8 (Disruption to Payment Systems etc.) notwithstanding the Lender’s negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Lender in acting as Lender under the Finance Documents.
 
(b)
Each Obligor shall, on demand, indemnify the Lender, each Affiliate of the Lender and any Receiver and Delegate and each officer or employee of the Lender or its Affiliate or any Receiver or Delegate (as applicable) (each such person for the purposes of this Clause 14.2 (Other indemnities) an “Indemnified Person”), against any cost, loss or liability (including, without limitation, for negligence or any other category of liability whatsoever) 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)
No Party other than the Lender or the Receiver or Delegate (as applicable) may take any proceedings against any officer, employee or agent of the Lender or the Receiver or Delegate (as applicable) in respect of any claim it might have against the Lender or the Receiver or 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.
 
(d)
Without limiting, but subject to any limitations set out in paragraph (b) above, the indemnity in paragraph (b) above shall cover any cost, loss or liability incurred by each Indemnified Person in any jurisdiction:
 

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

 (ii)
in connection with any Environmental Claim.
 
(e)
Each Obligor shall, on demand, indemnify the Lender and every Receiver and Delegate against any cost, loss or liability (including, without limitation, for negligence or any other category of liability whatsoever) 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 Lender and each Receiver and Delegate by the Finance Documents or by law;
 
44

 (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)
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 Lender’s or Receiver’s or Delegate’s gross negligence or wilful misconduct).
 
(f)
Any Affiliate or Receiver or Delegate or any officer or employee of the Lender or of any of its Affiliates or any Receiver or Delegate (as applicable) may rely on this Clause 14.2 (Other indemnities) and the provisions of the Third Parties Act subject to Clause 1.5 (Third party rights) and the provisions of the Third Parties Act.
 
14.3
Mandatory Cost
 
The Borrower shall, on demand by the Lender, pay to the Lender, such amount which the Lender certifies in a notice to the Borrower to be its good faith determination of the amount necessary to compensate it for complying with:
 
(a)
if the Lender is 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)
if the Lender is 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 the Loan.
 
15
MITIGATION BY THE LENDER
 
15.1
Mitigation
 
(a)
The Lender shall, in consultation with the Borrower, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of Clause 7.1 (Illegality), Clause 12 (Tax Gross Up and Indemnities) or Clause 13 (Increased Costs) or paragraph (a) of Clause 14.3 (Mandatory Cost) including (but not limited to) assigning its rights under the Finance Documents to another Affiliate or Facility Office.
 
(b)
Paragraph (a) above does not in any way limit the obligations of any Transaction Obligor under the Finance Documents.
 
45
15.2
Limitation of liability
 
(a)
Each Obligor shall, on demand, indemnify the Lender for all costs and expenses reasonably incurred by the Lender as a result of steps taken by it under Clause 15.1 (Mitigation).
 
(b)
The Lender 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 the Lender (acting reasonably), to do so might be prejudicial to it.
 
16
COSTS AND EXPENSES
 
16.1
Transaction expenses
 
The Obligors shall, on demand, pay the Lender the amount of all costs and expenses (including, without limitation, fees, costs and expenses of legal advisors and insurance and other consultants and other advisors) reasonably incurred by it in connection with the negotiation, preparation, printing, execution and perfection of:
 
(a)
this Agreement and any other documents referred to in this Agreement or in a Security Document; and
 
(b)
any other Finance Documents executed after the date of this Agreement.
 
16.2
Amendment costs
 
If:
 
(a)
a Transaction Obligor requests an amendment, waiver or consent; or
 
(b)
an amendment is required either pursuant to Clause 29.6 (Change of currency) or to address the fact that the Screen Rate is not or is likely not to be, available for dollars; or
 
(c)
a Transaction Obligor requests, and the Lender agrees to, the release of all or any part of the Security Assets from the Transaction Security,
 
the Obligors shall, on demand, reimburse the Lender for the amount of all costs and expenses (including, without limitation, fees, costs and expenses of legal advisors and insurance and other consultants and other advisors) reasonably incurred by the Lender in responding to, evaluating, negotiating or complying with that request or requirement.
 
46
16.3
Enforcement and preservation costs
 
The Obligors shall, on demand, pay to the Lender the amount of all costs and expenses (including, without limitation, fees, costs and expenses of legal advisors and insurance and other consultants and other advisors) incurred by the Lender 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 the Lender as a consequence of it entering into a Finance Document, taking or holding the Transaction Security, or enforcing those rights, including (without limitation) any losses, costs and expenses which the Lender may from time to time sustain, incur or become liable for by reason of the Lender being mortgagee of the Ship and/or a lender to the Borrower, or by reason of the Lender being deemed by any court or authority to be an operator or controller, or in any way concerned in the operation or control, of the Ship.
 
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SECTION 7

GUARANTEE
 
17
GUARANTEE AND INDEMNITY
 
17.1
Guarantee and indemnity
 
The Guarantor irrevocably and unconditionally:
 
(a)
guarantees to the Lender 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 the Lender 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 the Lender that if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal, it will, as an independent and primary obligation, indemnify the Lender 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 the guarantee.
 
17.2
Continuing guarantee
 
This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by any Transaction Obligor under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part.
 
17.3
Reinstatement
 
If any discharge, release or arrangement (whether in respect of the obligations of any Transaction Obligor or any security for those obligations or otherwise) is made by the Lender 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.
 
17.4
Waiver 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 the Lender) including:
 
48
(a)
this Agreement being or later becoming void, unenforceable or illegal as regards the Borrower or the Guarantor;
 
(b)
the Lender entering into any rescheduling, refinancing or other arrangement of any kind with the Borrower or the Guarantor;
 
(c)
the Lender releasing the Borrower or the Guarantor or any Security created by a Finance Document;
 
(d)
any time, waiver or consent granted to, or composition with, any Transaction Obligor or other person;
 
(e)
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;
 
(f)
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;
 
(g)
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;
 
(h)
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;
 
(i)
any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security; or
 
(j)
any insolvency or similar proceedings.
 
17.5
Immediate recourse
 
The Guarantor waives any right it may have of first requiring the Lender (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person (including without limitation to commence any proceedings under any Finance Document or to enforce any Transaction Security) before claiming or commencing proceedings under this Clause 17 (Guarantee and Indemnity).  This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.
 
17.6
Appropriations
 
Until all amounts which may be or become payable by the Transaction Obligors under or in connection with the Finance Documents have been irrevocably paid in full, the Lender (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 the Lender (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
 
49
(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).
 
17.7
Deferral of Guarantor’s rights
 
All rights which the Guarantor at any time has (whether in respect of this guarantee, a mortgage or any other transaction) against the Borrower (including, without limitation, any right which the Guarantor may have against the Borrower in relation to any documented or undocumented intercompany loan or transfer of funds from the Guarantor in order to assist the Borrower with financing the acquisition cost of the Ship), any other Transaction Obligor or their respective assets shall be fully subordinated to the rights of the Lender under the Finance Documents and until the end of the Security Period and unless the Lender 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 Lender under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents by the Lender;
 
(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 the Lender.
 
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 Lender by the Transaction Obligors under or in connection with the Finance Documents to be repaid in full on trust for the Lender and shall promptly pay or transfer the same to the Lender or as the Lender may direct for application in accordance with Clause 29 (Payment Mechanics).
 
17.8
Additional 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 the Lender or any right of set-off or netting or right to combine accounts in connection with the Finance Documents.
 
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17.9
Applicability of provisions of Guarantee to other Security
 
Clauses 17.2 (Continuing Guarantee), 17.3 (Reinstatement), 17.4 (Waiver of Defences), 17.5 (Immediate Resource), 17.6 (Appropriations), 17.7 (Deferral of Guarantors’ 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.
 
51
SECTION 8

REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT
 
18
REPRESENTATIONS
 
18.1
General
 
The Obligor makes and procures that each other Transaction Obligor makes the representations and warranties set out in this Clause 18 (Representations) to the Lender on the date of this Agreement.
 
18.2
Status
 
(a)
Each Transaction Obligor is a corporation, duly incorporated and validly existing in good standing under the law of its Original Jurisdiction.
 
(b)
Each Transaction Obligor and, in the case of the Guarantor, each of its Subsidiaries has the power to own its assets and carry on its business as it is being conducted.
 
18.3
Shares and ownership
 
(a)
The Borrower is authorized to issue 500 registered shares of no par value common stock, all of which shares have been issued in registered form and are fully paid and non-assessable. The legal title to and beneficial interest in the shares of the Borrower are held by the Guarantor free of any Security (except for Permitted Security) or any other claim.
 
(b)
None of the shares in the Borrower is subject to any option to purchase, pre-emption rights or similar rights.
 
18.4
Binding obligations
 
The obligations expressed to be assumed by it in each Transaction Document to which it is a party are legal, valid, binding and enforceable obligations.
 
18.5
Validity, effectiveness and ranking of Security
 
(a)
Each Finance Document to which it is a party does now or, as the case may be, will upon execution and delivery and, where applicable, registration as provided for in that Finance Document 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)
The Transaction Security granted by it to the Lender has or will when created or intended to be created have first ranking priority or such other 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.
 
52
18.6
Non-conflict with other obligations
 
The entry into and performance by it of, and the transactions contemplated by, each Transaction Document to which it is a party do not and will not conflict with:
 
(a)
any law or regulation applicable to it;
 
(b)
the constitutional documents of any Transaction Obligor; or
 
(c)
any agreement or instrument binding upon it or any such Transaction Obligor or any such Transaction Obligor’s assets or constitute a default or termination event (however described) under any such agreement or instrument.
 
18.7
Power and authority
 
(a)
It has the power to enter into, perform and deliver, and has taken all necessary action to authorise:
 

 (i)
its entry into, performance and delivery of, each Transaction Document to which it is or will be a party and the transactions contemplated by those Transaction Documents; and
 

 (ii)
in the case of the Borrower, the registration of the Ship under the Approved Flag.
 
(b)
No limit on its powers will be exceeded as a result of the borrowing, granting of security or giving of guarantees or indemnities contemplated by the Transaction Documents to which it is a party.
 
18.8
Validity and admissibility in evidence
 
All Authorisations required or desirable:
 
(a)
to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Transaction Documents to which it is a party; and
 
(b)
to make the Transaction Documents to which it is a party admissible in evidence in its Relevant Jurisdictions,
 
have been obtained or effected and are in full force and effect.
 
18.9
Governing law and enforcement
 
(a)
The choice of governing law of each Transaction Document to which it is a party will be recognised and enforced in its Relevant Jurisdictions.
 
(b)
Any judgment obtained in relation to a Transaction Document to which it is a party in the jurisdiction of the governing law of that Transaction Document will be recognised and enforced in its Relevant Jurisdictions.
 
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18.10
Insolvency
 
No:
 
(a)
corporate action, legal proceeding or other procedure or step described in paragraph (a) of Clause 26.8 (Insolvency proceedings); or
 
(b)
creditors’ process described in Clause 26.9 (Creditors’ process),
 
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.
 
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 payable 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 be expected to result from the making of the 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 s or to which its assets are subject, which in each case would be expected to have a Material Adverse Effect.
 
(c)
No other event or circumstance is outstanding which constitutes a default or a termination event (however described) under any other agreement or instrument which is binding on its Subsidiaries or to which any of its Subsidiaries’ assets are subject, which in each case would be expected to have a Material Adverse Effect.
 
18.14
No misleading information
 
(a)
Any factual information provided by any Transaction Obligor for the purposes of this Agreement was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated.
 
(b)
The financial projections contained in any such information have been prepared on the basis of recent historical information and on the basis of reasonable assumptions.
 
54
(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.
 
(b)
The Original Financial Statements give a true and fair view of the Obligors’ financial condition as at the end of the relevant financial year and results of operations during the relevant financial year (consolidated in the case of the Guarantor).
 
(c)
There has been no material adverse change in the assets, business or financial condition of each Obligor (and of the assets, business or consolidated financial condition of the Group, in the case of the Guarantor) since the date of the Original Financial Statements.
 
(d)
Each Obligor’s most recent financial statements delivered pursuant to Clause 19.2 (Financial statements):
 

 (i)
have been prepared in accordance with Clause 19.3 (Requirements as to financial statements); and
 

 (ii)
give a true and fair view (if audited) and fairly represent (if unaudited) of its financial condition as at the end of the relevant financial year and operations during the relevant financial year.
 
(e)
Since the date of the most recent financial statements delivered pursuant to Clause 19.2 (Financial statements) there has been no material adverse change in its 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.
 
(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 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.
 
55
18.18
Validity and completeness of the Transaction Documents
 
(a)
Each of the Transaction Documents to which each Transaction Obligor is a party constitutes legal, valid, binding and enforceable obligations of that Transaction Obligor.
 
(b)
The copies of the Transaction Documents delivered to the Lender before the date of this Agreement are true and complete copies.
 
(c)
No amendments or additions to the Transaction Documents have been agreed nor have any rights under the Transaction Documents been waived.
 
18.19
Valuations
 
(a)
All information supplied by it or on its behalf to an Approved Valuer for the purposes of a valuation delivered to the Lender 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.
 
(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.
 
18.20
No breach of laws
 
It has not (and no other Transaction Obligor nor a member of the Group has) breached any law or regulation which breach has or is reasonably likely to have a Material Adverse Effect.
 
18.21
No Charter
 
The Ship is not subject to any Charter other than a Permitted Charter.
 
18.22
Validity and completeness of the Existing Charter
 
(a)
The Existing Charter constitutes legal, valid, binding and enforceable obligations of the Borrower and the Existing Charterer respectively.
 
(b)
The copy of the Existing Charter delivered to the Lender before the date of this Agreement is a true and complete copy.
 
(c)
No amendments or additions to the Existing Charter have been agreed nor has the Borrower or the Existing Charterer waived any of their respective rights under the Existing Charter.
 
18.23
Compliance with Environmental Laws
 
All Environmental Laws relating to the ownership, operation and management of the Ship and the business of each Transaction Obligor and each member of the Group (as now conducted and as anticipated to be conducted in the future) and the terms of all Environmental Approvals have been complied with.
 
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18.24
No Environmental Claim
 
No Environmental Claim has been made or threatened against any Transaction Obligor and any member of the Group or the Ship which might be expected to have a Material Adverse Effect.
 
18.25
No Environmental Incident
 
No Environmental Incident has occurred and no person has claimed that an Environmental Incident has occurred.
 
18.26
ISM and ISPS Code compliance
 
All requirements of the ISM Code and the ISPS Code as they relate to the Borrower, each Approved Manager and the Ship have been complied with.
 
18.27
Taxes paid
 
(a)
It is not 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 likely to be, made or conducted against it with respect to Taxes.
 
18.28
Financial Indebtedness
 
The Borrower does not have any Financial Indebtedness outstanding other than Permitted Financial Indebtedness.
 
18.29
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 Lender sufficient details to enable an accurate search against it to be undertaken by the Lender at the Companies Registry.
 
18.30
Good title to assets
 
(a)
Each Transaction Obligor 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.
 
18.31
Ownership
 
(a)
The Borrower is the sole legal and beneficial owner of the Ship, the Earnings and the Insurances and of all rights and interests under any Charter.
 
(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.
 
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(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.
 
18.32
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”), each Transaction Obligor’s centre of main interest (as that term is used in Article 3(1) of the Regulation) is situated at the address for communication stated in, Schedule 1, Part A (The Obligors) and it has no “establishment” (as that term is used in Article 2(10) of the Regulation) in any other jurisdiction.
 
18.33
Place of business
 
No Transaction Obligor has a place of business in any country other than the Hellenic Republic of Greece and its head office functions are carried out in each case at the address for communication stated in Schedule 1, Part A (The Obligors).
 
18.34
No employee or pension arrangements
 
No Obligor has any employees or any liabilities under any pension scheme.
 
18.35
Sanctions
 
(a)
None of the Transaction Obligors, any of their Subsidiaries, any director or officer or any employee, agent, or Affiliate of a Transaction Obligor or any of its Subsidiaries, nor any member of the Group or a Third Party Manager:
 

 (i)
is a Prohibited Person;
 

 (ii)
is owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person;
 

 (iii)
owns or controls a Prohibited Person; or
 

 (iv)
has a Prohibited Person serving as a director, officer or, to the best of its knowledge, employee.
 
(b)
No proceeds of the Loan shall be made available, directly or indirectly, to or for the benefit of a Prohibited Person nor shall they be otherwise directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions.
 
18.36
US Tax Obligor
 
No Obligor is a US Tax Obligor.
 
18.37
Funding of acquisition of Ship
 
The acquisition cost of the Ship has been paid by the Borrower to the Seller of the Ship exclusively by means of intercompany loans, documented or undocumented or transfer of funds from the Guarantor and from the proceeds of the Loan.  Any funding structure for the acquisition cost of the Ship shall be fully evident in the financial statements of the Borrower for the financial year ending on 31 December 2021 to be provided pursuant to Clause 19.2 (Financial statements).
 
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18.38
Repetition
 
The Repeating Representations are deemed to be made by each Obligor by reference to the facts and circumstances then existing on the date of 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 Lender otherwise permits.
 
19.2
Financial statements
 
As soon as they become available, but in any event within 180 days after the end of each of its financial years to which they relate:
 
(a)
the Borrower shall supply to the Lender its annual unaudited financial statements for that financial year; and
 
(b)
the Guarantor shall supply to the Lender its annual audited consolidated financial statements for that financial year.
 
19.3
Requirements as to financial statements
 
(a)
Each set of financial statements delivered by each Obligor pursuant to Clause 19.2 (Financial Statements) shall be certified by an officer of the relevant company as giving a true and fair view (if audited) or fairly representing (if unaudited) of its financial condition and operations as at the date as at which those financial statements were drawn up.
 
(b)
Each set of financial statements of each Obligor delivered pursuant to Clause 19.2 (Financial Statements) shall be prepared using GAAP, accounting practices and financial reference periods consistent with those applied in the preparation of the relevant Original Financial Statements unless, in relation to any set of financial statements, it notifies the Lender that there has been a change in GAAP, the accounting practices or reference periods and the Guarantor’s auditors deliver to the Lender:
 

 (i)
a description of any change necessary for those financial statements to reflect the GAAP, accounting practices and reference periods upon which the relevant Original Financial Statements were prepared; and
 

 (ii)
sufficient information, in form and substance as may be reasonably required by the Lender, to enable the Lender to make an accurate comparison between the financial position indicated in those financial statements and the relevant Original Financial Statements.
 
(c)
Any reference in this Agreement to those financial statements shall be construed as a reference to those financial statements as adjusted to reflect the basis upon which the Original Financial Statements were prepared.
 
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19.4
Information: miscellaneous
 
Each Obligor shall and shall procure that each other Transaction Obligor shall supply to the Lender:
 
(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 or in connection with any breach of any Sanctions) which are current, threatened or pending against any Transaction Obligor or 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 or other tribunal or any order or sanction of any governmental or other regulatory body which is made against any Transaction Obligor or 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, the Earnings and the Insurances;
 

 (ii)
the Security Assets;
 

 (iii)
compliance of the Transaction Obligors with the terms of the Finance Documents;
 

 (iv)
the financial condition, business, affairs, commitments and operations of any Transaction Obligor and any member of the Group irrespective of their shareholding structure,
 
as the Lender may reasonably request; and
 
(f)
promptly, such further information and/or documents as the Lender may reasonably request so as to enable the Lender to comply with any laws applicable to it or as may be required by any regulatory authority.
 
19.5
Notification of Default
 
(a)
Each Obligor shall, and shall procure that each other Transaction Obligor shall, notify the Lender 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 Lender, the Borrower shall supply to the Lender a certificate signed by two of its officers on its behalf certifying that no Default is continuing (or if a Default is continuing, specifying the Default and the steps, if any, being taken to remedy it).
 
19.6
DAC6
 
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(a)
In this Clause 19.6 (DAC6), “DAC6” means the Council Directive of 25 May 2018 (2018/822/EU) amending Directive 2011/16/EU or any replacement legislation applicable in the United Kingdom.
 
(b)
The Obligors shall supply to the Lender:
 

 (i)
promptly upon the making of such analysis or the obtaining of such advice, any analysis made or advice obtained on whether any transaction contemplated by the Transaction Documents or any transaction carried out (or to be carried out) in connection with any transaction contemplated by the Transaction Documents contains a hallmark as set out in Annex IV of DAC6; and
 

 (ii)
promptly upon the making of such reporting and to the extent permitted by applicable law and regulation, any reporting made to any governmental or taxation authority by or on behalf of any member of the Group or by any adviser to such member of the Group in relation to DAC6 or any law or regulation which implements DAC6 and any unique identification number issued by any governmental or taxation authority to which any such report has been made (if available).
 
19.7
“Know your customer” checks
 
If:
 
(a)
the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;
 
(b)
any change in the status of a Transaction Obligor (or the Holding Company of a Transaction Obligor) (including, without limitation, a change of ownership of a Transaction Obligor or the Holding Company of a Transaction Obligor) after the date of this Agreement; or
 
(c)
a proposed assignment by the Lender of any of its rights under this Agreement,
 
obliges the Lender (or, in the case of paragraph (c) above, any prospective assignee) 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 the Lender supply, or procure the supply of, such documentation and other evidence as is requested by the Lender at its absolute satisfaction (for itself or, in the case of the event described in paragraph (c) above, on behalf of any prospective assignee) in order for the Lender or, in the case of the event described in paragraph (c) above, any prospective assignee 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.
 
20
FINANCIAL COVENANTS
 
20.1
Financial Covenants of the Guarantor
 
(a)
Except as the Lenders may otherwise permit in writing (such permission not to be unreasonably delayed), the Guarantor shall ensure that at all times:
 

 (i)
it shall maintain Cash (which, without limitation, shall include the Pledged Deposit) and any contractually committed but undrawn parts of the Notes) in an amount not less than the product of (i) the number of Fleet Vessels and (ii) $500,000; and
 
61

 (ii)
the Leverage Ratio shall not exceed 85 per cent.
 
(b)
For the purposes of this Clause 20.1 (Financial covenants of the Guarantor):
 
“Accounting Period” means each consecutive 6-month period, during the Security Period ending on 31 December and 30 June of each financial year.
 
“Cash” shall have the meaning given to such term in the Latest Financial Statements (for the avoidance of doubt, including cash equivalents, restricted cash and term deposits).
 
“Fleet Market Value” means, in relation to the Fleet Vessels, as at the date of calculation, the aggregate Market Value thereof as most recently determined.
 
“Latest Financial Statements” means, as at the date of calculation or, as the case may be, in respect of an Accounting Period, the annual audited or (as the case may be) semi-annual unaudited (in respect of the Accounting Period  of each financial year) consolidated financial statements the Guarantor is obliged to deliver to the Lender pursuant to Clause 19.2 (Financial statements).
 
“Leverage Ratio” means, as at the date of calculation, the ratio (expressed as a percentage) of Net Debt to Market Value Adjusted Total Assets less Cash.
 
“Market Value Adjusted Other Assets” means, as at the date of calculation, the Fleet Market Value plus the book value (less depreciation and amortization computed in accordance with the Latest Financial Statements on a consolidated basis of all non-current assets of the Group (which, without limitation, shall exclude all Fleet Vessels)), as stated in the Latest Financial Statements.
 
“Market Value Adjusted Total Assets” means, as at the date of calculation, the aggregate of the Market Value Adjusted Other Assets and the Total Current Assets.
 
“Net Debt” means, as at the date of calculation, the Total Debt less any drawn amounts of the Notes less Cash, in each case as stated in the Latest Financial Statements.
 
“Notes” means, as at the date of calculation, the aggregate outstanding amount of certain notes issued or to be issued by the Guarantor to certain of its shareholders and held or to be held by those shareholders in exchange for loan made by those shareholders to the Guarantor which have been or are to be, on-lent to the Borrower and other members of the Group to assist them with their working capital requirements.
 
“Total Current Assets” means, the aggregate of the cash and marketable securities, trade and other receivables from persons (other than persons being members of the Group) plus inventories, prepaid expenses, voyage expenses and other current assets realisable within 1 year such amount to be determined on a consolidated basis less any discounts, allowances and activated goodwill, in each case as shown in the Latest Financial Statements.
 
“Total Debt” means, as at the date of calculation, the current portion of long-term debt, net of deferred finance costs and the long-term debt, net of current portion and deferred finance costs of the Group as shown in the Latest Financial Statements and any current Notes.
 
20.2
Testing
 
The financial covenants set out in this Clause 20 (Financial Covenants) shall be tested semi-annually by reference the relevant Compliance Certificate and (in respect of the second semester of each calendar year) to the annual financial statements of the Guarantor delivered pursuant to Clause 19.2 (Financial statements) and.
 
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20.3
Compliance Certificate
 
The Guarantor shall supply to the Lender annually together with its annual audited financial statements delivered pursuant to Clause 19.2 (Financial statements) a Compliance Certificate signed by an officer of the Guarantor setting out (in reasonable detail) computations as to compliance with Clause 20.1 (Financial Covenants of the Guarantor)  as at the date as at which those financial statements were drawn up.
 
20.4
Most favoured nation
 
The Guarantor undertakes to procure that the Lender shall receive equal treatment with creditors under any other financing which the Guarantor or any of its Subsidiaries have entered or will enter into in relation to any financial or other covenant which the Guarantor provides. Accordingly, should the Guarantor provide to any other creditor additional or more favourable financial or other covenants than those which the Lender has been provided under this or any other Finance Document, the  Guarantor shall promptly notify the Lender in writing and give to the Lender a reasonably detailed description of those financial or other covenants and shall, within 15 Business Days from notifying the Lender, enter into such documentation supplemental to the Finance Documents as the Lender may require in order to achieve parity with the lender or (as applicable) lenders under such other financing.
 
21
GENERAL UNDERTAKINGS
 
21.1
General
 
The undertakings in this Clause 20 (General Undertakings) remain in force throughout the Security Period except as the Lender 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 Lender 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:
 

 (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 and 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)
in the case of the Borrower, own and operate the Ship.
 
21.3
Compliance with laws
 
Each Obligor shall, and shall procure that each other Transaction Obligor and each Third Party Manager 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.
 
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21.4
Environmental compliance
 
Each Obligor shall, and shall procure that each other Transaction Obligor and each Third Party Manager will, and the Guarantor shall procure 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 and any member of the Group will (through the Guarantor), promptly upon becoming aware of the same, inform the Lender in writing of:
 
(a)
any Environmental Claim against any Transaction Obligor and 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 Transaction Obligor and any member of the Group,
 
where the claim, if determined against that Transaction Obligor or 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, pay and discharge all Taxes imposed upon it or its assets within the time period allowed without incurring penalties unless and only to the extent that:
 

 (i)
such payment is being contested in good faith;
 

 (ii)
adequate reserves are maintained for those Taxes and the costs required to contest them and both have been disclosed in its latest financial statements delivered to the Lender under Clause 19.2 (Financial statements); and
 

 (iii)
such payment can be lawfully withheld.
 
(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 Lender 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 Lender 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.
 
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21.8
No change to centre of main interests
 
No Obligor shall, and the Obligors shall procure that no other Transaction Obligor will, 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 18.32 (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 the Lender 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 owns the entire beneficial interest in the Ship, the Earnings and the Insurances.
 
(b)
With effect on and from its creation or intended creation, each Transaction 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 that Transaction Obligor.
 
21.11
Negative pledge
 
(a)
No Obligor shall, and the Obligors shall procure that no other Transaction Obligor will, create or permit to subsist any Security over any of its assets which are, in the case of the Transaction Obligors other than the Borrower, the subject of the Security created or intended to be created by the Finance Documents.
 
(b)
The Borrower shall not:
 

 (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.
 
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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, the Earnings or the Insurances).
 
(b)
Paragraph (a) above does not apply to any Charter as all Charters are subject to Clause 23.16 (Restrictions on chartering, appointment of managers etc.).
 
21.13
Merger
 
No Obligor shall, and the Obligors shall procure that no other Transaction Obligor will, enter into any amalgamation, demerger, merger, consolidation or corporate reconstruction unless, in the case of the Guarantor, the Guarantor is the surviving entity and no breach of  Clauses 7.5 (Change of control), 21.14 (Change of business) and 21.26 (NASDAQ listing) occurs or will occur as a result of such action.
 
21.14
Change of business
 
(a)
No Obligor shall, and the Obligors shall procure that no other Transaction Obligor will, make any substantial change to the general nature of its business from that carried on at the date of this Agreement.
 
(b)
No Obligor shall, and the Obligors shall procure that no other Transaction Obligor will, engage in any business other than the ownership, operation, chartering and management of the Ship or a Fleet Vessel.
 
21.15
Financial Indebtedness
 
The Borrower shall not 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, insuring, maintaining and repairing the Ship.
 
21.17
Share capital
 
The Borrower shall not:
 
(a)
purchase, cancel or redeem any of its shares;
 
(b)
increase or reduce its authorised shares;
 
(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 Lender and the terms of the Shares Security are complied with; or
 
(d)
appoint any further director or officer of the Borrower (unless the provisions of the Shares Security are complied with).
 
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21.18
Dividends
 
The Borrower shall not:
 
(a)
declare, make or pay any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (in cash or in kind) on or in respect of its shares; or
 
(b)
repay or distribute any dividend or share premium reserve;
 
(c)
pay any management, advisory or other fee to or to the order of any of its shareholders;
 
(d)
redeem repurchase, defease, retire or repay any of its shares or resolve to do so;
 
(e)
repay part of any Subordinated Liabilities,
 
at any time during the Security Period if a Default has occurred and is continuing or where the making or payment of such dividend or distribution, or as the case may be, any such other action or occurrence set out in paragraphs (a) through (e) above would result in the occurrence of an Event of Default.
 
21.19
Other transactions
 
No Obligor shall, and the Obligors shall procure that no other Transaction Obligor will:
 
(a)
be the creditor in respect of any loan or any form of credit to any person other than another Transaction Obligor or to a member of the Group which is a shipowning company and where such loan or form of credit is Permitted Financial Indebtedness;
 
(b)
give or allow to be outstanding any guarantee or indemnity to or for the benefit of any person in respect of any obligation of any other person or enter into any document under which that Transaction Obligor assumes any liability of any other person, other than (i) any guarantee or indemnity given under the Finance Documents, (ii) any guarantee or indemnity given by the Guarantor in respect of the Financial Indebtedness of a member of the Group which is a shipowning company, or (iii) any guarantee or indemnity given by any Approved Manager in the ordinary course of its business;
 
(c)
enter into any material agreement other than:
 

 (i)
the Transaction Documents; or
 

 (ii)
any other agreement expressly allowed under any other term of this Agreement,
 
other than, in respect of any Approved Manager, any agreements entered into in the ordinary course of its business;
 
(d)
enter into any transaction on terms which are, in any respect, less favourable to that Transaction Obligor than those which it could obtain in a bargain made at arms’ length; or
 
(e)
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.
 
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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;
 
(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
Further assurance
 
(a)
Each Obligor shall, and shall procure that each other Transaction Obligor will, promptly, and in any event within the time period specified by the Lender 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 Lender may specify (and in such form as the Lender may require in favour of the Lender or its nominee(s)):
 

 (i)
to create, perfect, vest in favour of the Lender or protect the priority of the Security or any right of any kind created or intended to be created under or evidenced by the Finance Documents (which may include the execution of a mortgage, charge, assignment or other Security over all or any of the assets which are, or are intended to be, the subject of the Transaction Security) or for the exercise of any rights, powers and remedies of the Lender or any Receiver or Delegate provided by or pursuant to the Finance Documents or by law;
 

 (ii)
to confer on the Lender 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 Lender to enter into any transaction to commence, defend or conduct any proceedings and/or to take any other action relating to any item of the Security Property.
 
(b)
Each Obligor shall, and shall procure that each other Transaction Obligor will, take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Security conferred or intended to be conferred on the Lender by or pursuant to the Finance Documents.
 
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(c)
At the same time as an Obligor delivers to the Lender any document executed by itself or another Transaction Obligor pursuant to this Clause 21.21 (Further assurance), that Obligor shall deliver, or shall procure that such other Transaction Obligor will deliver, evidence acceptable to the Lender that the Obligor’s or Transaction Obligor’s execution of such document has been duly authorised by it.
 
21.22
Pledged deposit
 
The Obligors shall ensure that, on and from the Utilisation Date and throughout the remainder of the Security Period, the amount of $850,000 shall be maintained in the credit of the Pledged Deposit Account.
 
21.23
Ownership and control
 
The Guarantor shall:
 
(a)
remain the direct owner of the shares of the Borrower and of the voting rights attaching to such shares; and
 
(b)
be the direct owner of shipping companies and of entities engaged in shipping related activities, all acceptable to the Lender.
 
21.24
Funding of acquisition of Ship
 
In the event that the acquisition cost of the Ship was funded by means of lending to the Borrower from any person or entity acceptable to the Lender, the Borrower shall ensure that the rights of such person or entity which funded the acquisition cost of the Ship shall be fully subordinated to all Financial Indebtedness incurred under the Finance Documents pursuant to a Subordination Deed and the Subordinated Liabilities under that Subordinated Agreement are assigned in favour of the Lender pursuant to a Subordinated Debt Security.
 
21.25
Use of proceeds
 
The Borrower shall ensure that no part of the proceeds of the Loan shall be used for the purposes of acquiring shares in the shares of the Lender or other banks and/or financial institutions or acquiring hybrid capital debentures of the Lender or other banks and/or financial institutions.
 
21.26
NASDAQ listing
 
The Guarantor shall maintain its listing on the NASDAQ Stock Exchange or any other stock exchange acceptable to the Lender.
 
21.27
No variation, release etc. of Existing Charter
 
The Borrower shall not, whether by a document, by conduct, by acquiescence or in any other way:
 
(a)
vary the Existing Charter in a material manner (and for the avoidance of doubt, but without limitation, any amendment in relation to the term, the hire rate, the termination events, the parties and the governing law of the Existing Charter is considered material);
 
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(b)
release, waive, suspend, subordinate or permit to be lost or impaired any interest or right of any kind which the Borrower has at any time to, in or in connection with, the Existing Charter or in relation to any matter arising out of or in connection with the Existing Charter; or
 
(c)
waive any person’s breach of the Existing Charter.
 
21.28
No change of CEO
 
The chief executive officer (the “CEO”) of the Guarantor as at the date of this Agreement will remain the CEO of the Guarantor throughout the Security Period.
 
22
INSURANCE UNDERTAKINGS
 
22.1
General
 
The undertakings in this Clause 22 (Insurance Undertakings) remain in force on and from the Utilisation Date and throughout the rest of the Security Period except as the Lender 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);
 
(b)
war risks;
 
(c)
protection and indemnity risks; and
 
(d)
any other risks against which the Lender considers, having regard to ship insurance or ship finance practices and other circumstances prevailing at the relevant time, it would be reasonable for the Borrower to insure and which are specified by the Lender by notice to the Borrower.
 
22.3
Terms of obligatory insurances
 
The Borrower shall effect such insurances:
 
(a)
in dollars;
 
(b)
in the case of fire and usual marine risks (including hull and machinery and excess risks) and war risks, in an amount on an agreed value basis at least the greater of:
 

 (i)
125 per cent. of aggregate of (A) Loan and (B) the Hedging Close-Out Liabilities; and
 

 (ii)
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 but such amount shall not be less than $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
 
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(f)
through Approved Brokers and with approved insurance companies and/or underwriters or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations (which are members of the International Group of Protection and Indemnity Associations).
 
22.4
Further protections for the Lender
 
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 Lender (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 Lender to collect or recover any moneys which at any time become payable in respect of the obligatory insurances;
 
(b)
whenever the Lender requires, name (or be amended to name) the Lender as additional named insured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Lender, but without the Lender being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;
 
(c)
name the Lender as loss payee with such directions for payment as the Lender may specify;
 
(d)
provide that all payments by or on behalf of the insurers under the obligatory insurances to the Lender 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 Lender; and
 
(f)
provide that the Lender 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:
 
71

 (i)
notify the Lender 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 Lender’s 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 Lender’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 Lender 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 Lender 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 Lender 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 Lender);
 

 (ii)
they will hold such policies, and the benefit of such insurances, to the order of the Lender in accordance with such loss payable clause;
 

 (iii)
they will advise the Lender 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 Lender 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 Lender 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 Lender.
 
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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 Lender with:
 
(a)
a 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 Lender; and
 
(c)
a 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 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 Lender.
 
22.10
Guarantee
 
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.
 
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 Lender 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 Lender 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.
 
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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 Lender 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 Lender, at the time of each such communication (other than communications of an entirely routine nature), with copies of all written communications between the Borrower and:
 
(a)
the Approved Brokers;
 
(b)
the approved protection and indemnity and/or war risks associations; and
 
(c)
the approved insurance companies and/or underwriters,
 
which relate directly or indirectly to:
 

 (i)
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 Lender (or any persons which it may designate) with any information which the Lender (or any such designated person) requests for the purpose of:
 
(a)
obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or
 
(b)
effecting, maintaining or renewing any such insurances as are referred to in Clause 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 Lender in respect of all fees and other expenses incurred by or for the account of the Lender in connection with any such report as is referred to in paragraph (a) above.
 
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22.16
Mortgagee’s interest and, additional perils insurances
 
(a)
The Lender 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 each in an amount of not less than 110 per cent. of the aggregate of (i) Loan and (ii) the Hedging Close-Out Liabilities and otherwise on such terms, through such insurers and generally in such manner as the Lender may from time to time consider appropriate.
 
(b)
The Borrower shall upon demand fully indemnify the Lender 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
SHIP UNDERTAKINGS
 
23.1
General
 
The undertakings in this Clause 23 (Ship Undertakings) remain in force on and from the Utilisation Date and throughout the rest of the Security Period except as the Lender may otherwise permit.
 
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 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 Lender shall approve or require; and
 

 (ii)
the execution of such other documentation amending and supplementing the Finance Documents as the Lender shall approve or require.
 
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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 with an Approved Classification Society free of overdue recommendations and conditions.
 
23.4
Classification society undertaking
 
If required by the Lender in writing, the Borrower shall instruct the Approved Classification Society (and procure that the Approved Classification Society undertakes with the Lender):
 
(a)
to send to the Lender, following receipt of a request from the Lender, certified true copies of all original class records held by the Approved Classification Society in relation to the Ship;
 
(b)
to allow the Lender (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 Lender immediately in writing if the Approved Classification Society:
 

 (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 Lender:
 

 (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 Lender in 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 without the prior consent of the Lender which shall not be unreasonably withheld in regards to modifications that will ensure compliance with existing or upcoming Environmental Laws and regulations.
 
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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 Lender; 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.
 
(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 Lender, provide the Lender, with copies of all survey reports.
 
23.8
Inspection
 
The Borrower shall permit the Lender (acting through surveyors or other persons appointed by and reporting to the Lender for that purpose and at the Borrower’s expense) to board the Ship, upon reasonable notice and without interfering with the Ship’s normal course of trading (such notice and non-interference obligation not to apply following the occurrence of an Event of Default which is continuing), to inspect its condition or to satisfy themselves about proposed or executed repairs and the Borrower 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, the Earnings or the Insurances;
 

 (ii)
all Taxes, dues and other amounts charged in respect of the Ship, the Earnings or the Insurances; and
 

 (iii)
all other outgoings whatsoever in respect of the Ship, the Earnings or the 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.
 
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23.10
Compliance with laws etc.
 
Each Obligor shall (and shall procure that each other Transaction Obligor and each Third Party Manager 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, the ISM Code, the ISPS Code, all Environmental Laws, all Sanctions and the laws of the Approved Flag;
 
(b)
obtain, comply with and do all that is necessary to maintain in full force and effect any Environmental Approvals; and
 
(c)
without limiting paragraph (a) above, not employ the Ship nor allow its employment, operation or management in any manner contrary to any law or regulation including but not limited to the ISM Code, the ISPS Code, all Environmental Laws and Sanctions.
 
23.11
ISPS Code
 
Without limiting paragraph (a) of Clause 23.10 (Compliance with laws etc.), the Borrower shall (and shall procure that each Approved Manager will):
 
(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 Lender immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC.
 
23.12
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;
 
(b)
that the Ship shall not be used in trading in any manner contrary to Sanctions (or which could be contrary to Sanctions if Sanctions were binding on each Transaction Obligor and each Third Party Manager);
 
(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)
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 of this Clause 23.12 (Sanctions and Ship trading) and which permits refusal of employment or voyage orders if compliance would result in a breach of Sanctions (or which would result in a breach of Sanctions if Sanctions were binding on each Transaction Obligor and/or each Third Party Manager).
 
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23.13
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 Lender has been given; and
 
(b)
the Borrower has (at its expense) effected any special, additional or modified insurance cover which the insurers and the Lender may require.
 
23.14
Provision of information
 
Without prejudice to Clause 19.4 (Information: miscellaneous) the Borrower shall promptly provide the Lender 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
 
(e)
its compliance, each Approved Manager’s compliance and the compliance of the Ship with the ISM Code and the ISPS Code and any Sanctions,
 
and, upon the Lender’s request, promptly provide copies of any current Charter or sub-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.
 
23.15
Notification of certain events
 
The Borrower shall immediately notify the Lender by fax and/or email, 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;
 
(g)
any Environmental Claim made against the Borrower or in connection with the Ship, or any Environmental Incident;
 
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(h)
any claim for breach of the ISM Code or the ISPS Code being made against the Borrower, any 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 Lender advised in writing on a regular basis and in such detail as the Lender shall require as to the Borrower’s, each Approved Manager’s or any other person’s response to any of those events or matters.
 
23.16
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, supplement or terminate any Management Agreement or any Assignable Charter (and for the avoidance of doubt, but without limitation, any amendment on the duration, the management fees, the termination provisions, the parties and the governing law of any Management Agreement is considered material) unless, in the case of termination, such Management Agreement is immediately replaced by another Management Agreement acceptable to the Lender with an Approved Manager and such Approved Manager provides a Manager’s Undertaking;
 
(d)
appoint a manager of the Ship other than an Approved Manager or agree to any material alteration to the terms of an Approved Manager’s appointment (and for the avoidance of doubt, but without limitation, any amendment on the duration, the management fees, the termination provisions, the parties and the governing law of any Management Agreement is considered material);
 
(e)
de activate or lay up the Ship; or
 
(f)
put the Ship into the possession of any person for the purpose of work being done upon it in an amount exceeding or likely to exceed $750,000 (or the equivalent in any other currency) unless that person has first given to the Lender and in terms satisfactory to it a written undertaking not to exercise any lien on the Ship or the Earnings for the cost of such work or for any other reason.
 
23.17
Notice of Mortgage
 
The Borrower shall keep the Mortgage registered against the Ship as a valid first priority or, as the case may be, 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 Lender.
 
23.18
Sharing of Earnings
 
The Borrower shall not enter into any agreement or arrangement for the sharing of any Earnings.
 
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23.19
Charterparty Assignment
 
If the Borrower enters into any Assignable Charter subject to obtaining the prior consent of the Lender in accordance with paragraph (b) of Clause 23.16 (Restrictions on chartering, appointment of managers etc.), the Borrower shall, at the request of the Lender, execute in favour of the Lender a Charterparty Assignment in respect of such Assignable Charter and shall deliver to the Lender any other documents as the Lender may require.
 
23.20
Notification of compliance
 
The Borrower shall promptly provide the Lender from time to time with evidence (in such form as the Lender requires) that it is complying with this Clause 23 (Ship Undertakings).
 
24
SECURITY COVER
 
24.1
Minimum required security cover
 
Clause 24.2 (Provision of additional security; prepayment) applies if the Lender notifies the Borrower that the Security Cover Ratio is below 130 per cent.
 
24.2
Provision of additional security; prepayment
 
(a)
If the Lender serves a notice on the Borrower under Clause 24.1 (Minimum required security cover), the Borrower shall, on or before the date falling 30 Business Days after the date on which the Lender’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, provide, or ensure that a third party has provided, additional security which, in the opinion of the Lender:
 

 (i)
has a net realisable value at least equal to the shortfall; and
 

 (ii)
is documented in such terms as the Lender 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) and which consists of Security 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.
 
24.5
Provision of information
 
(a)
The Borrower shall promptly provide the Lender and any Approved Valuer acting under this Clause 24 (Security Cover) with any information which the Lender or that Approved Valuer may request for the purposes of the valuation.
 
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(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 Approved Valuer or the Lender 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 7.3 (Voluntary prepayment of Loan); however, the application of such prepayment should be on a pro rata basis against the outstanding Repayment Instalments (including the Balloon Instalment).
 
24.7
Provision of valuations
 
(a)
The Lender shall at such times as the Lender shall deem necessary and, in any event, at least once during each calendar year, following the date of this Agreement, be provided with a valuation of the Ship and any other vessel over which additional Security has been created in accordance with Clause 24.2 (Provision of additional security; prepayment) to determine its Market Value, an Approved Valuer and on dates to be selected by the Lender, to enable the Lender to determine the Market Value of the Ship or any other vessel and for the purposes of determining the relevant percentage referred to in Clause 24 (Security Cover).
 
(b)
The cost of the valuations referred to in paragraph (a) above shall be borne by the Borrower but no more than four times in each calendar year unless an Event of Default has occurred which is continuing in which case the cost of all valuations shall be borne by the Borrower.
 
24.8
Release of additional security
 
If the Security Cover Ratio set out in Clause 24.1 (Minimum required security cover) shall at the relevant time exceed the percentage required pursuant to Clause 24.1 (Minimum required security cover) and the Borrower shall have previously provided further security pursuant to this Clause 24 (Security Cover), the Lender, after receiving a notice from the Borrower to do so (such notice to include evidence, at the cost of the Borrower, satisfactory to the Lender that the ratio specified in Clause 24.1 (Minimum required security cover) has been maintained (without taking into account the additional security which the Borrowers requests to be released) for a period of 60 consecutive days (or a shorter period as the Lender may accept) prior to such notice) will, subject to being indemnified to its satisfaction against the cost of doing so, irrevocably and unconditionally release any such further security specified by the Borrower to the extent that the relevant ratio shall continue to be at least the percentage required pursuant to Clause 24.1 (Minimum required security cover) at the relevant time following such release provided that at the relevant time no Event of Default has occurred and is continuing or will result from such release.
 
25
ACCOUNTS AND APPLICATION OF EARNINGS
 
25.1
Accounts
 
The Borrower may not, without the prior consent of the Lender, maintain any bank account other than the Accounts.
 
25.2
Payment of Earnings
 
The Borrower shall ensure that:
 
82
(a)
subject only to the provisions of the General Assignment, all the Earnings are paid into the Operating Account; and
 
(b)
all Hedge Receipts are paid into the Operating Account.
 
25.3
Application of Earnings
 
(a)
The Borrower shall procure that there is transferred from the Operating Account to the Lender:
 

 (i)
on each Repayment Date, the amount of the Repayment Instalment then due on that Repayment Date;
 

 (ii)
on the last day of each Interest Period, the amount of interest then due on that date; and
 

 (iii)
on any day on which an amount is otherwise due from the Borrower under a Finance Document, an amount necessary to meet that due amount,
 
and the Borrower irrevocably authorises and instructs:
 

 (A)
the Account Bank to make those transfers;
 

 (B)
the Lender to apply the transferred amounts in payment of the relevant Repayment Instalment, interest amount or other amount due.
 
(b)
The Earnings standing to the credit of the Operating Account shall, subject to the terms of the Account Security in respect of the Operating Account, be available to, and may be withdrawn by, the Borrower throughout the Security Period, unless there is an Event of Default which is continuing or unless an Event of Default would result from the withdrawal of any such balance (or any part thereof) from the Operating Account.
 
25.4
Location of Accounts
 
The Borrower shall promptly:
 
(a)
comply with any requirement of the Lender as to the location or relocation of either Account; and
 
(b)
execute any documents which the Lender specifies to create or maintain in favour of the Lender Security over (and/or rights of set-off, consolidation or other rights in relation to) either Account.
 
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 26.21 (Acceleration) and Clause 26.22 (Enforcement of security).
 
26.2
Non-payment
 
A Transaction Obligor or a Third Party Manager 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:
 
83
(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 or the date of demand.
 
26.3
Specific obligations
 
A breach occurs of Clause 4.4 (Waiver of conditions precedent), 20 (Financial Covenants), Clause 21.10 (Title), Clause 21.11 (Negative pledge), Clause 21.20 (Unlawfulness, invalidity and ranking; Security imperilled), 21.22 (Pledged deposit), 21.28 (No change of CEO), 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) and Clause 24 (Security Cover).
 
26.4
Other obligations
 
(a)
A Transaction Obligor or a Third Party Manager 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 10 Business Days of the Lender giving notice to the Borrower or (if earlier) any Transaction Obligor or any Third Party Manager becoming aware of the failure to comply.
 
26.5
Misrepresentation
 
Any representation or statement made or deemed to be made by a Transaction Obligor or a Third Party Manager 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.
 
26.6
Cross default
 
(a)
Any Financial Indebtedness of any Transaction Obligor is not paid when due nor within any originally applicable grace period.
 
(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).
 
84
(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 in relation to the Guarantor $5,000,000 (or its equivalent in any other currency).
 
26.7
Insolvency
 
(a)
A Transaction Obligor or a Third Party Manager:
 

 (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 the Lender in its capacity as such) with a view to rescheduling any of its indebtedness.
 
(b)
The value of the assets of any Transaction Obligor is less than its liabilities (taking into account contingent and prospective liabilities).
 
(c)
A moratorium is declared in respect of any indebtedness of any Transaction Obligor. 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, seeking bankruptcy protection, winding-up, dissolution, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of any Transaction Obligor or any Third Party Manager;
 

 (ii)
a composition, compromise, assignment or arrangement with any creditor of any Transaction Obligor or any Third Party Manager;
 

 (iii)
the appointment of a liquidator, receiver, administrator, administrative receiver, compulsory manager or other similar officer in respect of any Transaction Obligor or any Third Party Manager or any of its assets; or
 

 (iv)
enforcement of any Security over any assets of any Transaction Obligor or any Third Party Manager,
 
or any analogous procedure or step is taken in any jurisdiction.
 
(b)
Paragraph (a) above shall not apply to any winding-up petition or other proceeding which is frivolous or vexatious and is discharged, stayed or dismissed within 14 days of commencement.
 
85
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 (other than an arrest or detention of the Ship referred to in Clause 26.14 (Arrest)) and is not discharged within 10 days.
 
26.10
Ownership
 
The Borrower ceases to be 100% directly owned by the Guarantor.
 
26.11
Unlawfulness, invalidity and ranking
 
(a)
It is or becomes unlawful for a Transaction Obligor or a Third Party Manager to perform any of its obligations under the Finance Documents.
 
(b)
Any obligation of a Transaction Obligor a Third Party Manager under the Finance Documents is not or ceases to be legal, valid, binding or enforceable.
 
(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 the Lender) to be ineffective.
 
(d)
Any Transaction Security proves to have ranked after, or loses its priority to, any other Security.
 
26.12
Security imperilled
 
Any Security created or intended to be created by a Finance Document is in any way imperilled or in jeopardy.
 
26.13
Cessation of business
 
Any Transaction Obligor suspends or ceases to carry on (or threatens to suspend or cease to carry on) all or a material part of its business.
 
26.14
Arrest
 
Any arrest of the Ship or its detention in the exercise or the purported exercise of any lien or claim unless it is redelivered to the full control of the Borrower within 14 days of such arrest or detention.
 
26.15
Expropriation
 
(a)
The authority or ability of any Transaction Obligor or any Third Party Manager 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 Transaction Obligor or any of its assets, other than:
 
(b)
an arrest or detention of the Ship referred to in Clause 26.14 (Arrest); or
 
(c)
any Requisition.
 
86
26.16
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 or a Transaction Document or any of the Transaction Security otherwise ceases to remain in full force and effect for any reason.
 
26.17
Litigation
 
Any litigation, arbitration or administrative, governmental, regulatory or other investigations, proceedings or any investigations of, or before, any court, arbitral body or agency are commenced or threatened, or any judgment or order of a court, arbitral body, agency or tribunal or other tribunal or any order or sanction of any governmental or other regulatory body 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 their assets which if adversely determined:
 
(a)
has a Material Adverse Effect; or
 
(b)
is reasonably likely to have a Material Adverse Effect,
 
unless (i) the relevant member of the Group has taken active measures to dispute such proceedings or disputes and such proceedings or disputes are dismissed or withdrawn within 14 days of being made or presented, or (ii) the combined value of such proceedings or disputes in respect of such member of the Group (other than a Borrower) does not exceed $1,000,000 (or its equivalent in any other currency) in aggregate.
 
26.18
Material adverse change
 
Any event or circumstance occurs which has or is reasonably likely to have a Material Adverse Effect.
 
26.19
Termination of Existing Charter
 
The Existing Charter is terminated or rescinded or for any reason ceases to remain in full force and effect prior to its contractual termination date without the prior consent of the Lender.
 
26.20
Sanctions
 
(a)
Any of the Transaction Obligors, any Third Party Manager or a member of the Group becomes a Prohibited Person or becomes owned or controlled by, or acts directly or indirectly on behalf of, a Prohibited Person or any of such persons becomes the owner or controller of a Prohibited Person.
 
(b)
Any proceeds of the Loan is made available, directly or indirectly, to or for the benefit of a Prohibited Person or otherwise is, directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions.
 
(c)
Any Transaction Obligor or any Third Party Manager or a member of the Group is not in compliance with all Sanctions.
 
87
26.21
Replacement of Third Party Manager
 
No Event of Default will occur under this Clause 26 (Events of Default) in respect of a Third Party Manager if the Borrower replaces such Third Party Manager by another Approved Manager and delivers to the Lender the documents referred to at paragraph 2.4 of Part B of Schedule 2 (Conditions precedent) within 10 Business Days from the date of such occurrence.
 
26.22
Acceleration
 
On and at any time after the occurrence of an Event of Default which is continuing the Lender may by notice to the Borrower:
 
(a)
cancel the Commitment, whereupon it shall immediately be cancelled;
 
(b)
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
 
(c)
declare that all or part of the Loan be payable on demand, whereupon it shall immediately become payable on demand by the Lender,
 
and the Lender may serve notices under paragraphs (a), (b) and (c) above simultaneously or on different dates and the Lender may take any action referred to in Clause 26.22 (Enforcement of security) if no such notice is served or simultaneously with or at any time after the service of any of such notice.
 
26.23
Enforcement of security
 
On and at any time after the occurrence of an Event of Default which is continuing the Lender may take any action which, as a result of the Event of Default or any notice served under Clause 26.21 (Acceleration), the Lender is entitled to take under any Finance Document or any applicable law or regulation.
 
88
SECTION 9

CHANGES TO THE PARTIES
 
27
CHANGES TO THE LENDER
 
27.1
Assignment by the Lender
 
Subject to this Clause 27 (Changes to the Lender), the Lender (the “Existing Lender”) may assign all (but not part) of its rights under the Finance Documents to another person other than an individual (the “New Lender”).
 
27.2
Conditions of assignment
 
(a)
The consent of the Borrower is required for an assignment by the Existing Lender, unless the assignment is:
 

 (i)
to financial institution or bank which:
 

 (A)
has a dedicated ship finance lending desk and business; and
 

 (B)
is not a trust or fund or pension fund or insurance company or another entity engaged in or established for the purposes of making, purchasing or investing in loans, securities or other financial assets;
 

 (ii)
to an Affiliate of the Existing Lender;
 

 (iii)
if the Existing Lender is a fund, to a fund which is a Related Fund; or
 

 (iv)
made at a time when an Event of Default is continuing.
 
(b)
The consent of the Borrower to an assignment must not be unreasonably withheld or delayed.  The Borrower will be deemed to have given its consent ten Business Days after the Existing Lender has requested it unless consent is expressly refused by the Borrower within that time.
 
(c)
If:
 

 (i)
the Existing Lender assigns 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 or change occurs, a Transaction Obligor would be obliged to make a payment to the New Lender or the Existing 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),
 
then the New Lender or the Existing Lender acting through its new Facility Office is only entitled to receive payment under those Clauses to the same extent as the Existing Lender would have been if the assignment or change had not occurred.
 
(d)
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.
 
89
(e)
No costs or expenses in relation to such an assignment or transfer shall be borne by any Transaction Obligor.
 
27.3
Security over Lender’s rights
 
In addition to the other rights provided to the Lender under this Clause 27 (Changes to the Lender), the 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 the Lender including, without limitation:
 
(a)
any charge, assignment or other Security to secure obligations to a federal reserve or central bank; and
 
(b)
if the Lender is a fund, any charge, assignment or other Security granted to any holders (or trustee or representatives of holders) of obligations owed, or securities issued, by the Lender as security for those obligations or securities,
 
except that no such charge, assignment or Security shall:
 

 (i)
release the 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 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
Additional Subordinated Creditors
 
(a)
The Borrower may request that any person becomes a Subordinated Creditor, with the prior approval of the Lender, by delivering to the Lender:
 

 (i)
a duly executed Subordination Deed;
 

 (ii)
a duly executed Subordinated Debt Security; and
 

 (iii)
such constitutional documents, corporate authorisations and other documents and matters as the Lender may reasonably require, in form and substance satisfactory to the Lender, to verify that the person’s obligations are legally binding, valid and enforceable and to satisfy any applicable legal and regulatory requirements.
 
90
(b)
A person referred to in paragraph (a) above will become a Subordinated Creditor on the date the Lender enters into the Subordination Deed and the Subordinated Debt Security is delivered under paragraph (a) above.
 
91
SECTION 10

ADMINISTRATION
 
29
PAYMENT MECHANICS
 
29.1
Payments to the Lender
 
(a)
On each date on which a Transaction Obligor is required to make a payment under a Finance Document, that Transaction Obligor shall make an amount equal to such payment available to the Lender (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 Lender 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 Lender) and with such bank as the Lender, in each case, specifies.
 
29.2
Application of receipts; partial payments
 
(a)
If the Lender receives a payment that is insufficient to discharge all the amounts then due and payable by a Transaction Obligor under the Finance Documents, the Lender may apply that payment towards the obligations of that Transaction Obligor under the Finance Documents in any manner it may decide.
 
(b)
Paragraph (a) above will override any appropriation made by a Transaction Obligor.
 
29.3
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.
 
29.4
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.
 
29.5
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.
 
92
(c)
Any amount expressed to be payable in a currency other than dollars shall be paid in that other currency.
 
29.6
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 Lender (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 Lender (acting reasonably).
 
(b)
If a change in any currency of a country occurs, this Agreement will, to the extent the Lender (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 Interbank Market and otherwise to reflect the change in currency.
 
29.7
Currency conversion
 
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.
 
29.8
Disruption to Payment Systems etc.
 
If either the Lender determines (in its discretion) that a Disruption Event has occurred or the Lender is notified by the Borrower that a Disruption Event has occurred:
 
(a)
the Lender 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 Lender may deem necessary in the circumstances;
 
(b)
the Lender 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)
any such changes agreed upon by the Lender 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;
 
(d)
the Lender 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 Lender) arising as a result of its taking, or failing to take, any actions pursuant to or in connection with this Clause 29.8 (Disruption to Payment Systems etc.).
 
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30
SET-OFF
 
The Lender may set off any matured obligation due from a Transaction Obligor under the Finance Documents (to the extent beneficially owned by the Lender) against any matured obligation owed by the Lender 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 Lender may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.
 
31
CONDUCT OF BUSINESS BY THE LENDER
 
No provision of this Agreement will:
 
(a)
interfere with the right of the Lender to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;
 
(b)
oblige the Lender 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 the Lender to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax.
 
32
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;
 

 (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.
 
33
NOTICES
 
33.1
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, email or letter.
 
94
33.2
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); and
 
(b)
in the case of any other Transaction Obligor or the Lender, 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 Lender on or before the date on which it becomes a Party;
 
or any substitute address, fax number or department or officer as that Transaction Obligor may notify to the Lender (or the Lender may notify to the other Parties, if a change is made by the Lender) by not less than five Business Days’ notice.
 
33.3
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 33.2 (Addresses), if addressed to that department or officer.
 
(b)
Any communication or document to be made or delivered to the Lender will be effective only when actually received by it and then only if it is expressly marked for the attention of the department or officer of the Lender specified in Schedule 1 (The Parties) (or any substitute department or officer as the Lender shall specify for this purpose).
 
(c)
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.
 
(d)
Any communication or document which becomes effective, in accordance with paragraphs (a) to (c) above, after 5.00 p.m. in the place of receipt shall be deemed only to become effective on the following day.
 
33.4
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
 
95

 (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 the Lender 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 or document made or delivered by a Party to the Lender only if it is addressed in such a manner as the Lender shall specify for this purpose.
 
(d)
Any electronic communication or document 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 33.4 (Electronic communication).
 
33.5
English language
 
(a)
Any notice given under or in connection with any Finance Document must be in English.
 
(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 Lender, accompanied by a certified English translation prepared by a translator approved by the Lender and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document.
 
33.6
Hedging Agreement
 
Notwithstanding anything in Clause 1.1 (Definitions), references to the Finance Documents or a Finance Document in this Clause do not include any Hedging Agreement entered into by the Borrower in connection with the Facility.
 
34
CALCULATIONS AND CERTIFICATES
 
34.1
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 the Lender are prima facie evidence of the matters to which they relate.
 
96
34.2
Certificates and determinations
 
Any certification or determination by the Lender 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.
 
34.3
Day count convention
 
Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated 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 Interbank Market differs, in accordance with that market practice.
 
35
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.
 
36
REMEDIES AND WAIVERS
 
(a)
No failure to exercise, nor any delay in exercising, on the part of the Lender or any Receiver or Delegate, 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 the Lender or any Receiver or Delegate 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. The rights and remedies provided in each Finance Document are cumulative and not exclusive of any rights or remedies provided by law.
 
(b)
No variation or amendment of a Finance Document shall be valid unless in writing and signed by the Lender.
 
37
ENTIRE AGREEMENT
 
(a)
This Agreement, in conjunction with the other Finance Documents, constitutes the entire agreement between the Parties and supersedes all previous agreements, understandings and arrangements between them, whether in writing or oral, in respect of its subject matter.
 
(b)
Each Obligor acknowledges that it has not entered into this Agreement or any other Finance Document in reliance on, and shall have no remedies in respect of, any representation or warranty that is not expressly set out in this Agreement or in any other Finance Document.
 
38
SETTLEMENT OR DISCHARGE CONDITIONAL
 
Any settlement or discharge under any Finance Document between the Lender and any Transaction Obligor shall be conditional upon no security or payment to the Lender by any Transaction Obligor or any other person being set aside, adjusted or ordered to be repaid, whether under any insolvency law or otherwise.
 
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39
IRREVOCABLE PAYMENT
 
If the Lender 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 the Lender 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.
 
40
CONFIDENTIAL INFORMATION
 
40.1
Confidentiality
 
The Lender agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by Clause 40.2 (Disclosure of Confidential Information) 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.
 
40.2
Disclosure of Confidential Information
 
The Lender 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 the Lender 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 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 may potentially assign) all or any of its rights and/or obligations under one or more Finance Documents and 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 the Lender 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;
 

 (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;
 
98

 (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 the Lender charges, assigns or otherwise creates Security (or may do so) pursuant to Clause 27.3 (Security over Lender’s rights);
 

 (viii)
who is a Party, a member of the Group or any related entity of a Transaction Obligor;
 

 (ix)
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
 

 (x)
with the consent of the Borrower,
 
in each case, such Confidential Information as the Lender shall consider appropriate if:
 

 (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-paragraph (iv) 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 the Lender, it is not practicable so to do in the circumstances;
 
(c)
to any person appointed by the Lender 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 Lender;
 
99
(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.
 
40.3
DAC6
 
Nothing in any Finance Document shall prevent disclosure of any Confidential Information or other matter to the extent that preventing that disclosure would otherwise cause any transaction contemplated by the Finance Documents or any transaction carried out in connection with any transaction contemplated by the Finance Documents to become an arrangement described in Part II A 1 of Annex IV of Directive 2011/16/EU.
 
40.4
Entire agreement
 
This Clause 40 (Confidential Information) constitutes the entire agreement between the Parties in relation to the obligations of the Lender under the Finance Documents regarding Confidential Information and supersedes any previous agreement, whether express or implied, regarding Confidential Information.
 
40.5
Inside information
 
The Lender 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 the Lender undertakes not to use any Confidential Information for any unlawful purpose.
 
40.6
Notification of disclosure
 
The Lender 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 40.2 (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 40 (Confidential Information).
 
40.7
Continuing obligations
 
The obligations in this Clause 40 (Confidential Information) are continuing and, in particular, shall survive and remain binding on the Lender 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 the Commitment has been cancelled or otherwise ceased to be available; and
 
(b)
the date on which the Lender otherwise ceases to be the Lender.
 
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41
CONFIDENTIALITY OF FUNDING RATES
 
41.1
Confidentiality and disclosure
 
Each Obligor agrees to keep each Funding Rate confidential and not to disclose it to anyone.
 
41.2
Related obligations
 
(a)
Each Obligor acknowledges 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 each Obligor undertakes not to use any Funding Rate for any unlawful purpose.
 
(b)
Each Obligor agrees (to the extent permitted by law and regulation) to inform the Lender:
 

 (i)
of the circumstances of any disclosure made pursuant to Clause 41.1 (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 41 (Confidentiality of Funding Rates).
 
41.3
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 41 (Confidentiality of Funding Rates).
 
42
AMENDMENTS
 
42.1
Replacement of Screen Rate
 
If a Screen Rate Replacement Event has occurred in relation to the Screen Rate for Dollars, any amendment or waiver which relates to:
 
(a)
providing for the use of a Replacement Benchmark in relation to that currency in place of that Screen Rate; and
 
(b)
 

 (i)
aligning any provision of any Finance Document to the use of that Replacement Benchmark;
 

 (ii)
enabling that Replacement Benchmark to be used for the calculation of interest under this Agreement (including, without limitation, any consequential changes required to enable that Replacement Benchmark to be used for the purposes of this Agreement);
 

 (iii)
implementing market conventions applicable to that Replacement Benchmark;
 

 (iv)
providing for appropriate fallback (and market disruption) provisions for that Replacement Benchmark; or
 

 (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 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),
 
101
may be made with the consent of the Lender and the Borrower.
 
(c)
If, as at 1 January 2023, this Agreement provides that the rate of interest for the Loan in dollars is to be determined by reference to the Screen Rate for LIBOR, the Lender and the Borrower shall enter into negotiations in good faith with a view to agreeing the use of a Replacement Benchmark in relation to dollars in place of that Screen Rate from and including a date no later than 30 June 2023.
 
42.2
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
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.
 
102
SECTION 11

GOVERNING LAW AND ENFORCEMENT
 
44
GOVERNING LAW
 
This Agreement and any non-contractual obligations arising out of or in connection with it are governed by English law.
 
45
ENFORCEMENT
 
45.1
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 45.1 (Jurisdiction) is for the benefit of the Lender only. As a result, the Lender shall not be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Lender may take concurrent proceedings in any number of jurisdictions.
 
45.2
Service of process
 
(a)
Without prejudice to any other mode of service allowed under any relevant law, each Obligor (and the Obligors shall procure that each other Transaction Obligor, other than a Transaction Obligor incorporated in England and Wales):
 

 (i)
irrevocably appoints Shoreside Agents Ltd, presently at 11 The Timber Yard, Drysdale Street, London, N1 6ND (T: +44 (0)20 3771 8869, M: + 44 (0) 7591 440086, F: +44 (0)20 3771 8870, attention: Andrew Johnson) 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 Transaction 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 Transaction Obligors) must immediately (and in any event within 5 days of such event taking place) appoint another agent on terms acceptable to the Lender. Failing this, the Lender may appoint another agent for this purpose.
 
This Agreement has been entered into on the date stated at the beginning of this Agreement.
 
103
SCHEDULE 1

THE PARTIES
 
PART A

THE OBLIGORS
 
Name of Borrower
Place of Incorporation
Registration number (or equivalent, if any)
Address for Communication





World Shipping Co.
Republic of the Marshall Islands
109649
c/o 154 Vouliagmenis Avenue, 166 74 Glyfada, Greece
 
Attention: Stamatios Tsantanis/ Stavros Gyftakis
 
Email sgyftakis@seanergy.gr
finance@seanergy.gr
 
Tel.: +30 213 0181507
Name of Guarantor
Place of Incorporation
Registration number (or equivalent, if any)
Address for Communication





Seanergy Maritime Holdings Corp.
Republic of the Marshall Islands
27721
c/o 154 Vouliagmenis Avenue, 166 74 Glyfada, Greece
 
Attention: Stamatios Tsantanis/ Stavros Gyftakis
 
Email sgyftakis@seanergy.gr
finance@seanergy.gr
 
Tel.: +30 213 0181507
 
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PART B

THE ORIGINAL LENDER
 
Name of Original Lender
Address for Communication


PIRAEUS BANK S.A.
170, Alexandras Avenue
11521 Athens
Greece

Fax No: +30 210 3739783

For the attention of the manager

Email: shipping@piraeusbank.gr

105
SCHEDULE 2

CONDITIONS PRECEDENT
 
PART A

CONDITIONS PRECEDENT TO UTILISATION REQUEST
 
1
Transaction Obligors
 
1.1
A copy of the constitutional documents of each Obligor.
 
1.2
An original of a resolution of the board of directors of each Obligor (in the case of the Guarantor a certified copy of such resolutions):
 
(a)
approving the terms of, and the transactions contemplated by, the Finance Documents to which it is a party and resolving that it execute the Finance Documents to which it is a party;
 
(b)
authorising a specified person or persons to execute the Finance Documents to which it is a party on its behalf; and
 
(c)
authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices (including, if relevant, the Utilisation Request and each Selection Notice) to be signed and/or despatched by it under, or in connection with, the Finance Documents to which it is a party.
 
1.3
An original of the power of attorney of any Obligor authorising a specified person or persons to execute the Finance Documents to which it is a party.
 
1.4
A specimen of the signature or copy of the passport of each person authorised by the resolution referred to in paragraph 1.2 above.
 
1.5
A copy of a resolution signed by the holder(s) of the issued shares in each Obligor, approving the terms of, and the transactions contemplated by, the Finance Documents to which that Transaction Obligor is a party.
 
1.6
Up-to-date certificates of goodstanding in respect of each Obligor.
 
1.7
An original certificate of each Obligor (signed by a director and/or officer) confirming that borrowing or guaranteeing, as appropriate, the Commitment would not cause any borrowing, guaranteeing or similar limit binding on that Transaction Obligor to be exceeded.
 
1.8
An original certificate of each Obligor that is incorporated outside the UK (signed by a director) certifying either that (i) it has not delivered particulars of any UK Establishment to the Registrar of Companies as required under the Overseas Regulations or (ii) it has a UK Establishment and specifying the name and registered number under which it is registered with the Registrar of Companies.
 
1.9
An original certificate of an authorised signatory of the relevant Obligor confirming the names and offices of all the directors of that Transaction Obligor and certifying that each copy document relating to it specified in this Part A of Schedule 2 (Conditions Precedent) is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement and as at the Utilisation Date (as applicable).
 
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1.10
Up-to-date certificates of goodstanding and certificate of establishment in Greece (if applicable) in respect of any Approved Manager which is not a Third Party Manager.
 
2
Finance Documents
 
2.1
If applicable, duly executed original of the Subordination Deed and copies of each Subordinated Finance Document.
 
2.2
A duly executed original of any Finance Document not otherwise referred to in this Schedule 2 (Conditions Precedent).
 
2.3
A duly executed original of any other document required to be delivered by each Finance Document if not otherwise referred to this Schedule 2 (Conditions Precedent).
 
3
Security Documents
 
3.1
A duly executed original of each Account Security and the Shares Security (and of each document to be delivered under each of them).
 
3.2
A duly executed original of the Subordinated Debt Security.
 
4
Legal opinions
 
4.1
A legal opinion of Watson Farley & Williams, legal advisers to the Lender in England, substantially in the form obtained by the Lender before signing this Agreement.
 
4.2
If a Transaction Obligor is incorporated in a jurisdiction other than England and Wales, a legal opinion of the legal advisers to the Lender in the Relevant Jurisdiction, substantially in the form obtained by the Lender before signing this Agreement.
 
4.3
A legal opinion of the legal advisers to the Lender in the jurisdiction of the Approved Flag in which the Ship is registered, the jurisdiction of each Account and such other relevant jurisdictions as the Lender may require, substantially in the form obtained before signing this Agreement.
 
5
Other documents and evidence
 
5.1
A valuation of the Ship, at the Borrower’s cost, addressed to the Lender, stated to be for the purposes of this Agreement and dated not earlier than 20 days before the Utilisation Date from an Approved Valuer which shows that the amount of the Loan to be advance does not exceed 50 per cent. of the Initial Market Value of the Ship.
 
5.2
A copy of the Existing Charter duly executed by the parties thereto and of each document delivered pursuant to it, together with such documentary evidence as the Lender and its legal advisers may require in relation to the due authorisation and execution of the Existing Charter by each of the parties thereto.
 
5.3
Evidence that any process agent referred to in Clause 45.2 (Service of process), if not a Transaction Obligor, has accepted its appointment.
 
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5.4
A declaration of compliance in the agreed form given by the Borrower and addressed to the Lender undertaking the Borrower is, on the date of the declaration and shall, at all times during the Security Period, remain, compliant in all respects with all legislation and regulations in any Relevant Jurisdiction relating to the payment of master and crew wages, social costs and employment protection provisions generally.
 
5.5
A copy of any other Authorisation or other document, opinion or assurance which the Lender considers to be necessary or desirable (if it has notified the Borrower accordingly) in connection with the entry into and performance of the transactions contemplated by any Transaction Document or for the validity and enforceability of any Transaction Document.
 
5.6
The original of any mandates or other documents required in connection with the opening or operation of the each Account and Safekeeping Securities Account(s).
 
5.7
Evidence that the fees, costs and expenses then due from the Borrower pursuant to Clause 11 (Fees) and Clause 16 (Costs and Expenses) have been paid or will be paid by the Utilisation Date.
 
5.8
Such evidence as the Lender may require, prior to the execution of this Agreement, for it to be able to satisfy its “know your customer” or similar identification procedures in relation to the transactions contemplated by the Finance Documents.
 
5.9
Copies of the Original Financial Statements.
 
108
PART B

CONDITIONS PRECEDENT TO UTILISATION
 
1
Transaction Obligors
 
A certificate of an authorised signatory of the relevant Obligor certifying that each copy document which it is required to provide under this Part B of Schedule 2 (Conditions Precedent) is correct, complete and in full force and effect as at the Utilisation Date.
 
2
Ship and other security
 
2.1
A duly executed original of the General Assignment, the Charterparty Assignment in respect of the Existing Charter, the Manager’s Undertaking and of each document to be delivered under or pursuant to each of them.
 
2.2
A duly executed original of the Mortgage together with documentary evidence that (a) the Mortgage has been duly registered or recorded (as the case may be) as a valid first preferred or priority (as the case may be) ship mortgage in accordance with the laws of the jurisdiction of its Approved Flag and (b) the Ship is in the absolute and unencumbered ownership of the Borrower save as contemplated by the Finance Documents.
 
2.3
Documentary evidence that the Ship:
 
(a)
is definitively and permanently registered in the name of the Borrower under the Approved Flag;
 
(b)
maintains the Approved Classification with the Approved Classification Society free of all overdue recommendations and conditions of the Approved Classification Society; and
 
(c)
is insured in accordance with the provisions of this Agreement and all requirements in this Agreement in respect of insurances have been complied with.
 
2.4
Documents establishing that the Ship is managed commercially and technically by the Approved Commercial Manager and the Approved Technical Manager respectively on terms acceptable to the Lender, together with copies of the relevant Approved Manager’s Document of Compliance and of the Ship’s Safety Management Certificate (together with any other details of the applicable Safety Management System which the Lender requires) and of any other documents required under the ISM Code and the ISPS Code in relation to the Ship including without limitation an ISSC and any other trading certificates and evidence in respect of the lightweight of the Ship.
 
2.5
An opinion from an independent insurance consultant acceptable to the Lender on such matters relating to the Insurances as the Lender may require.
 
3
Legal opinions
 
Legal opinions of the legal advisers to the Lender in the jurisdiction of the Approved Flag of the Ship and such other relevant jurisdictions as the Lender may require.
 
109
4
Other documents and evidence
 
4.1
Evidence that the fees, costs and expenses then due from the Borrower pursuant to Clause 11 (Fees) and Clause 16 (Costs and Expenses) have been paid or will be paid by the Utilisation Date.
 
Evidence satisfactory to the Lender that the Pledged Deposit is standing to the credit of the Pledged Deposit Account in accordance with Clause 21.22 (Pledged deposit).
 
4.2
A copy of any other Authorisation or other document, opinion or assurance which the Lender considers to be necessary or desirable (if it has notified the Borrower accordingly) in connection with the entry into and performance of the transactions contemplated by any Transaction Document or for the validity and enforceability of any Transaction Document not previously supplied.
 
110
SCHEDULE 3

REQUESTS
 
PART A

UTILISATION REQUEST
 
From:    WORLD SHIPPING CO.
Trust Company Complex, Ajeltake Road
Ajeltake Island, Majuro
Marshall Islands MH 96960
as Borrower
 
To:         PIRAEUS BANK S.A.
170, Alexandras Avenue
11521 Athens
Greece
 
as Lender
 
Attention: Loans Administration
 
Dated: [●] 2021
 
Dear Sirs
 
World Shipping Co. - $16,850,000 Facility Agreement dated [●] 2021 (the “Agreement”)
 
1
We refer to the Agreement. This is the Utilisation Request. Terms defined in the Agreement have the same meaning in this Utilisation Request unless given a different meaning in this Utilisation Request.
 
2
We wish to borrow the Loan on the following terms:
 

 Proposed Utilisation Date:
[●] 2021 (or, if that is not a Business Day, the next Business Day)
 
Amount:
 $[●]


Interest Period: [1][3][6] Months



_____________]

3
We confirm that each condition specified in Clause 4.1 (Initial conditions precedent) and Clause 4.2 (Further conditions precedent) of the Agreement is satisfied on the date of this Utilisation Request.
 
4
The proceeds of the Loan should be applied as follows:
 
(a)
the amount of $850,000 shall be credited in the Pledged Deposit Account in satisfaction of our obligation under Clause 21.22 (Pledged deposit) of the Agreement;
 
111
(b)
the amount of $[●] corresponding to the transaction fee shall be paid to the Lender in satisfaction of the Borrower’s obligation under Clause 11.1 (Transaction fee) of the Agreement; and
 
(c)
the balance of $[●] shall be credited to the Operating Account.
 
5
We further confirm no part of the proceeds of the Loan shall be used for the purpose of acquiring shares in the share capital of the Lender or other banks and/or financial institutions or acquiring hybrid capital debentures of the Lender or other banks and/or financial institutions.
 
6
This Utilisation Request is irrevocable.
 
Yours faithfully

authorised signatory for
WORLD SHIPPING CO.

112
PART B

SELECTION NOTICE

From:    WORLD SHIPPING CO.
Trust Company Complex, Ajeltake Road
Ajeltake Island, Majuro
Marshall Islands MH 96960
 
as Borrower
 
To:         PIRAEUS BANK S.A.
170, Alexandras Avenue
11521 Athens
Greece
 
as Lender
 

Dated: [●]
 
Dear Sirs
 
World Shipping Co. - $16,850,000  Facility Agreement dated [●] 2021 (the “Agreement”)
 
1
We refer to the Agreement. This is a Selection Notice. Terms defined in the Agreement have the same meaning in this Selection Notice unless given a different meaning in this Selection Notice.
 
2
We request that, subject to paragraph (f) of Clause 9.1 (Selection of Interest Periods) of the Agreement, the next Interest Period for the Loan be [1][3][6] Months.
 
3
This Selection Notice is irrevocable.
 
Yours faithfully
 
authorised signatory for
WORLD SHIPPING CO.

113
SCHEDULE 4

TIMETABLES
 
Delivery of a duly completed Utilisation Request (Clause 5.1 (Delivery of the Utilisation Request)) or a Selection Notice (Clause 9.1 (Selection of Interest Periods))
  
Three Business Days before the intended Utilisation Date (Clause 5.1 (Delivery of the Utilisation Request)) or the expiry of the preceding Interest Period (Clause 9.1 (Selection of Interest Periods))



LIBOR is fixed
Quotation Day as of 11:00 am London time

114
SCHEDULE 5

FORM OF COMPLIANCE CERTIFICATE
 
To:         PIRAEUS BANK S.A.
170, Alexandras Avenue
11521 Athens
Greece
 
as Lender
 
From:    Seanergy Maritime Holdings Corp.
 
 
Dated: [●]
 
Dear Sirs
 
World Shipping Co.- $16,850,000 Facility Agreement dated [●] 2021 (the “Agreement”)
 
1
We refer to the Agreement.  This is a Compliance Certificate.  Terms defined in the Agreement have the same meaning when used in this Compliance Certificate unless given a different meaning in this Compliance Certificate.
 
2
We confirm that:
 
(a)
the Cash is $[●]; and
 
(b)
the Leverage Ratio is [●] per cent.
 
3
We confirm that no Default is continuing.
 
Signed:


Officer of
SEANERGY MARITIME HOLDINGS CORP.

115
EXECUTION PAGES
 
BORROWER

SIGNED by Stavros Gyftakis
)
for and on behalf of
)
WORLD SHIPPING CO.
) /s/ Stavros Gyftakis
in the presence of:
)


Witness’ signature:
) /s/ Maria Kalothetou
Witness’ name:
) Maria Kalothetou
Witness’ address:
) 154 Vouliagmenis Avenue
 
16674 Glyfada, Athens Greece

GUARANTOR

SIGNED by Stavros Gyftakis
)
duly authorised
)
for and on behalf of
) /s/ Stavros Gyftakis
SEANERGY MARITIME HOLDINGS CORP.
)
in the presence of:
)


Witness’ signature:
) /s/ Maria Kalothetou
Witness’ name:
) Maria Kalothetou
Witness’ address:
) 154 Vouliagmenis Avenue
 
16674 Glyfada, Athens Greece

ORIGINAL LENDER

SIGNED by
)
and by
)
duly authorised
) /s/ Maria Stamatiou, /s/ Athanasios Doudoulas
for and on behalf of
) Maria Stamatiou, Athanasios Doudoulas
PIRAEUS BANK S.A.
)
in the presence of:
)


Witness’ signature:
) /s/ Christopher Madoc-Jones
Witness’ name:
) Christopher Madoc-Jones
Witness’ address:
) 348 Syngrou Avenue, Kallithea 176 74
 
Athens, Greece


116
Exhibit 4.62

Dated 20 December 2021
 
US$15,000,000
 
TERM LOAN FACILITY
 
SEA GENIUS SHIPPING CO.
as Borrower
 
and
 
SEANERGY MARITIME HOLDINGS CORP.
as Guarantor
 
and
 
SINOPAC CAPITAL INTERNATIONAL (HK) LIMITED
 
as Original Lender
 
FACILITY AGREEMENT
 
relating to the financing of
 m.v. “Geniuship”


Index
 
Clause
Page
     
Section 1 Interpretation
2
1
Definitions and Interpretation
2
Section 2 The Facility
23
2
The Facility
23
3
Purpose
23
4
Conditions of Utilisation
23
Section 3 Utilisation
25
5
Utilisation
25
Section 4 Repayment, Prepayment and Cancellation
27
6
Repayment
27
7
Prepayment and Cancellation
27
Section 5 Costs of Utilisation
29
8
Interest
29
9
Interest Periods
30
10
Changes to the Calculation of Interest
30
11
Fees
31
Section 6 Additional Payment Obligations
33
12
Tax Gross Up and Indemnities
33
13
Increased Costs
36
14
Other Indemnities
38
15
Mitigation by the Lender
40
16
Costs and Expenses
41
Section 7 Guarantee
 42
17
Guarantee and Indemnity
 42
Section 8 Representations, Undertakings and Events of Default
 45
18
Representations
 45
19
Information Undertakings
 51
20
General Undertakings
 54
21
Insurance Undertakings
 60
22
Ship Undertakings
 65
23
Security Cover
 71
24
Events of Default
 72
Section 9 Changes to the Parties
 78
25
Changes to the Lender
 78
26
Changes to the Transaction Obligors
 79
Section 10 Administration
 81
28
Payment Mechanics
 81
29
Set-Off
 83
30
Conduct of Business by the Lender
 83
31
Bail-In
 83
32
Notices
 83
33
Calculations and Certificates
 85
34
Partial Invalidity
 86
35
Remedies and Waivers
 86
36
Entire Agreement
 86
37
Settlement or Discharge Conditional
 86
38
Irrevocable Payment
 86

39
Confidential Information
 87
40
Confidentiality of Funding Rates and Reference Banks Quotations
 89
41
Amendments
 91
42
Counterparts
 91
Section 11 Governing Law and Enforcement
 92
43
Governing Law
 92
44
Enforcement
 92
     
Schedules
  
     
Schedule 1 The Parties
 93

Part A The Obligors
 93

Part B The Original Lender
 94
Schedule 2 Conditions Precedent and Subsequent
 95

Part A Conditions precedent to Utilisation Request
 95
Part B Conditions precedent to Utilisation
 98

Part C Conditions Subsequent
 100
Schedule 3 Utilisation Request
 101
Schedule 4 Timetables
 103
Schedule 5 Form of Irrevocable Payment Instruction
 104
     
Execution
  
     
Execution Pages
 105

THIS AGREEMENT is made on 20 December 2021.
 
PARTIES
 
(1)
SEA GENIUS SHIPPING CO., a corporation incorporated in the Republic of the Marshall Islands (with registration number 71733) whose registered address is at the Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, the Marshall Islands as borrower (the “Borrower”)
 
(2)
SEANERGY MARITIME HOLDINGS CORP., a corporation incorporated in the Republic of the Marshall Islands (with registration number 27721) whose registered address is at the Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands as guarantor (the “Guarantor “)
 
(3)
SINOPAC CAPITAL INTERNATIONAL (HK) LIMITED having its registered address at Suites 3306, 33F, Tower 1, The Gateway, 25 Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong and acting through its office at 5F, No. 203, Bade Rd., Sec. 2, Taipei, Taiwan as lender (the “Original Lender”)
 
BACKGROUND
 
The Lender has agreed to make available to the Borrower a facility not exceeding the lesser of (i) $15,000,000 and (ii) 60 per cent. of the Initial Market Value of the Ship for the purpose of refinancing the Ship.
 
OPERATIVE PROVISIONS
 
SECTION 1
 
INTERPRETATION
 
1
DEFINITIONS AND INTERPRETATION
 
1.1
Definitions
 
In this Agreement:
 
“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.
 
“Approved Brokers” means Evmar Marine Inc., Arthur J. Gallagher & Co., Seascope Hellas S.A. and any firm or firms of insurance brokers approved in writing by the Lender.
 
“Approved Classification” means A1, Bulk Carrier, (no MP), BC-A (Holds Nos. 2, 4, 6 & 8 may be empty, ESP, AMS, ACCU, CRC(I), TCM, UWILD with the Approved Classification Society or the equivalent classification with another Approved Classification Society.
 
“Approved Classification Society” means American Bureau or any other classification society which a member of the International Association of Classification Societies is approved in writing by the Lender.
 
“Approved Commercial Manager” means:
 

 (a)
Fidelity Marine Inc., a corporation incorporated in the Republic of the Marshall Islands whose registered address is at the Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH 96960, Marshall Islands;
 

 (b)
Seanergy Management Corp., a corporation incorporated in the Republic of the Marshall Islands whose registered address is at the Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands;
 

 (c)
or any other person approved in writing by the Lender as the commercial manager of the Ship.
 
“Approved Flag” means the flag of the Republic of the Marshall Islands or such other flag and, if applicable, port of registry approved in writing by the Lender.
 
“Approved Manager” means the Approved Commercial Manager or the Approved Technical Manager.
 
“Approved Technical Manager” means:
 

 (a)
V.Ships Limited, a corporation incorporated and existing under the laws of Cyprus whose registered office is at Zenas Gunther, 16-18, Agia Triada, 3035 Limassol, Cyprus; or
 

 (b)
Seanergy Shipmanagement Corp., a corporation incorporated in the Republic of the Marshall Islands whose registered address is at the Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands;
 
2

 (c)
or any other person approved in writing by the Lender as the technical manager of that Ship.
 
“Approved Valuer” means Clarksons, Maersk Broker, Simpsons Spence and Young, Howe Robinson Partner, Arrow Shipbroking, Fearnleys Partner (or any Affiliate of such person through which valuations are commonly issued) or any reputable firm or firms of independent sale and purchase shipbrokers as agreed between the Lender and the Borrower from time to time.
 
“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 having a duration (or capable of having a duration) of more than (without taking into account any optional extensions) 12 months made on terms and with a charterer acceptable in all respects to the Lender.
 
“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 to and including the date falling three months thereafter or such later date as the Parties may agree.
 
“Bail-In Action” means the exercise of any Write-down and Conversion Powers.
 
“Bail-In Legislation” means:
 

 (a)
in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 BRRD, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time;
 

 (b)
in relation to any state other than such an EEA Member Country and the United Kingdom, any analogous law or regulation from time to time which requires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation; and
 

 (c)
in relation to the United Kingdom, the UK Bail-In Legislation.
 
“Balloon Instalment” has the meaning given to it in Clause 6.1 (Repayment of Loan).
 
“Break Costs” means the amount (if any) by which:
 

 (a)
the interest which the Lender should have received for the period from the date of receipt of all or any part of 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 the Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the Relevant Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.
 
3
“Borrower’s Bank” means Alpha Bank S.A. or any other bank or financial institution as the Lender may approve in writing from time to time.
 
“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for general business in Hong Kong, Taipei, London and Athens and, in respect of a day on which a payment is required to be made under a Finance Document, also in New York.
 
“Charter” means any charter relating to the Ship, consecutive voyage charter, contract of affreightment 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.
 
“Code” means the US Internal Revenue Code of 1986.
 
“Commitment” means the amount of $15,000,000 to the extent not cancelled or reduced under this Agreement.
 
“Confidential Information” means all information relating to any Transaction Obligor, the Group, the Finance Documents or the Facility of which the Lender becomes aware in its capacity as, or for the purpose of becoming, the Lender or which is received by the Lender in relation to, or for the purpose of becoming the Lender under, the Finance Documents or the Facility from any Transaction Obligor, 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:
 

 (a)
information that:
 

 (i)
is or becomes public information other than as a direct or indirect result of any breach by the Lender of Clause 39 (Confidential Information); or
 

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

 (iii)
is known by the Lender before the date the information is disclosed to it by any Transaction Obligor, any member of the Group or any of its advisers or is lawfully obtained by the Lender after that date, from a source which is, as far as the Lender is aware, unconnected with any Transaction Obligor or the Group and which, in either case, as far as the Lender is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality; and
 

 (b)
any Funding Rate or Reference Bank Quotation.
 
“Confidentiality Undertaking” means a confidentiality undertaking in substantially the appropriate form recommended by the LMA from time to time or in any other form agreed between the Borrower and the Lender.
 
“Default” means an Event of Default or a Potential Event of Default.
 
“Delegate” means any delegate, agent, attorney or co-trustee appointed by the Lender.
 
4
“Disruption Event” means either or both of:
 

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

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

 (i)
from performing its payment obligations under the Finance Documents to which it is a party; 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 Lender 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 Lender, 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 Lender 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;
 
5

 (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.
 
“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 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.
 
6
“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.
 
“Event of Default” means any event or circumstance specified as such in Clause 24 (Events of Default).
 
“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 through which the Lender 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 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.
 
“Finance Document” means:
 

 (a)
this Agreement;
 

 (b)
the Utilisation Request;
 

 (c)
any Security Document;
 

 (d)
any fee letters (if applicable);
 

 (e)
any Subordination Deed;
 

 (f)
any other document which is executed for the purpose of establishing any priority or subordination arrangement in relation to the Secured Liabilities; or
 

 (g)
any other document designated as such by the Lender and the Borrower.
 
7
“Financial Indebtedness” means any indebtedness for or in relation to:
 

 (a)
moneys borrowed;
 

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

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

 (d)
the amount of any liability in relation to any lease or hire purchase contract which would, in accordance with GAAP, be treated as a balance sheet liability;
 

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

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

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

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

 (i)
the amount of any liability in relation to any guarantee or indemnity for any of the items referred to in paragraphs (a) to (h) above.
 
“Funding Rate” means any individual rate notified by the Lender to an Obligor pursuant to any Finance Document.
 
“GAAP” means generally accepted accounting principles in the US or IFRS.
 
“General Assignment” means the general assignment creating Security over any Assignable Charter, any Charter Guarantee, the Earnings, the Insurances and any Requisition Compensation in agreed form.
 
“Group” means the Guarantor and its Subsidiaries at any given time (which are consolidated for the purposes of its Financial Statements) and “member of the Group” shall be construed accordingly.
 
“Holding Company” means, in relation to a person, any other person in relation to which it is a Subsidiary.
 
“IFRS” means international accounting standards within the meaning of the IAS Regulation 1606/2002 (as may be amended and/or updated from time to time) to the extent applicable to the relevant financial statements.
 
8
“Indemnified Person” has the meaning given to it in Clause 14.2 (Other indemnities).
 
“Initial Market Value” means the Market Value of the Ship determined in accordance with the valuation referred to in paragraph 5.1 of Part B of Schedule 2 (Conditions Precedent and Subsequent).
 
“Insurances” means, in relation to the Ship:
 

 (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 9.1 (Interest Periods) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 8.3 (Default interest).
 
“Interpolated Screen Rate” means, in relation to the Loan, any part of the Loan or any Unpaid Sum, the rate (rounded to the same number of decimal places as the two relevant Screen Rates) which results from interpolating on a linear basis between:
 

 (a)
the applicable Screen Rate for the longest period (for which that Screen Rate is available) which is less than the Interest Period of the Loan, or the relevant part of the Loan or that Unpaid Sum; and
 

 (b)
the applicable Screen Rate for the shortest period (for which that Screen Rate is available) which exceeds the Interest Period of the Loan, or the relevant part of the Loan or that Unpaid Sum,
 
each as of the Specified Time for dollars.
 
“Irrevocable Instructions” means the irrevocable instructions substantially in the form set out at Schedule 5 (Form of Irrevocable Payment Instructions).
 
“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.
 
9
“Lender” means:
 

 (a)
the Original Lender; and
 

 (b)
any bank, financial institution, trust, fund or other entity which has become the Lender in accordance with Clause 25 (Changes to the Lender),
 
which in each case has not ceased to be a Party in accordance with this Agreement.
 
“LIBOR” means, in relation to the Loan or any part of the Loan:
 

 (a)
the applicable Screen Rate as of the Specified Time for dollars and for a period equal in length to the Interest Period of the Loan or that part of the Loan; or
 

 (b)
as otherwise determined pursuant to Clause 10.1 (Unavailability of Screen Rate),
 
and if, in either case, that rate is less than zero, LIBOR shall be deemed to be zero.
 
“LMA” means the Loan Market Association 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.
 
“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 $1,000,000 or the equivalent in any other currency.
 
“Management Agreement” means the agreement entered into between the Borrower and an Approved Manager regarding the commercial and/or (as applicable) the technical management of the Ship.
 
“Manager’s Undertaking” means the letter of undertaking from each Approved Manager, subordinating the rights of that Approved Manager against the Ship and the Borrower to the rights of the Lender and including (inter alia) a first priority assignment of that Approved Manager’s rights, title and interest in the Insurances of the Ship in agreed form.
 
“Margin” means 3.50 per cent. per annum.
 
“Market Value” means, in relation to the Ship or any other vessel, at any date, an amount determined by the Lender as being an amount equal to:
 

 (a)
the market value of the Ship or vessel shown by a valuation prepared:
 

 (i)
as at a date not more than 14 days previously (and in respect of the Initial Market Value, 3 months  previously);
 

 (ii)
in United States Dollars;
 

 (iii)
on a charter free basis and on a desktop basis;
 

 (iv)
by an Approved Valuer (selected by, and reporting to, the Lender);
 
10

 (v)
with or without physical inspection of the Ship or such other vessel (as the Lender may require);
 

 (vi)
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; and
 

 (vii)
where any valuation comprises of a range of values, the midpoint of such range shall be used for the purposes of determining the arithmetic average.
 
“Material Adverse Effect” means in the opinion of the Lender a material adverse effect on:
 

 (a)
the business, operations, property, condition (financial or otherwise) or prospects of any Transaction Obligor; 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 the Lender 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, preferred Approved Flag ship mortgage on the Ship (together with, if applicable, the deed of covenants collateral thereto) in agreed form.
 
“Obligor” means the Borrower or the Guarantor.
 
“Original Financial Statements” means, in relation to:
 

 (a)
the Borrower, the unaudited balance sheet of the Borrower for its financial year ending 31 December 2020; and
 

 (b)
the Guarantor, the audited financial statements of the Guarantor for its financial year ending 31 December 2020.
 
11
“Original Jurisdiction” means, in relation to a Transaction Obligor the jurisdiction under whose laws that Transaction Obligor is incorporated as at the date of this Agreement.
 
“Overseas Regulations” means the Overseas Companies Regulations 2009 (SI 2009/1801).
 
“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, without taking into account any optional extensions, 12 months plus a 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 Lender (including any Assignable Charter).
 
“Permitted Financial Indebtedness” means:
 

 (a)
any Financial Indebtedness incurred under the Finance Documents;
 

 (b)
any trade debt incurred in the Borrower’s ordinary course of business; and
 

 (c)
any Financial Indebtedness that is subordinated to all Financial Indebtedness incurred under the Finance Documents pursuant to a Subordination Deed 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:
 

 (a)
Security created by the Finance Documents;
 

 (b)
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;
 

 (c)
liens for salvage;
 

 (d)
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
 

 (e)
any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of the Ship:
 
12

 (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 22.16 (Restrictions on chartering, appointment of managers etc.),
 
provided such liens do not secure amounts more than 30 days overdue (unless the overdue amount is being contested in good faith by appropriate steps and 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 24 (Events of Default) which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.
 
“Prohibited Person” means any person (whether designated by name or by reason of being included in a class of persons) against whom Sanctions are directed.
 
“Quotation Day” means, in relation to any period for which an interest rate is to be determined, two Business Days before the first day of that period unless market practice differs in the Relevant Interbank Market in which case the Quotation Day will be determined by the Lender in accordance with market practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days).
 
“Receiver” means a receiver or receiver and manager or administrative receiver of the whole or any part of the Security Assets.
 
“Reference Bank Quotation” means any quotation supplied to the Lender by a Reference Bank.
 
“Reference Bank Rate” means the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Lender at its request by the Reference Banks:
 

 (a)
if:
 

 (i)
the Reference Bank is a contributor to the Screen Rate; and
 

 (ii)
it consists of a single figure,
 
as the rate (applied to the relevant Reference Bank and the relevant currency and period) which contributors to the Screen Rate are asked to submit to the relevant administrator; or
 

 (b)
in any other case, as the rate at which the relevant Reference Bank could fund itself in dollars for the relevant period with reference to the unsecured wholesale funding market.
 
“Reference Banks” means the principal London offices of any banks from the ICE LIBOR panel or such other entities as may be appointed by the Lender in its absolute discretion.
 
“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.
 
13
“Relevant Interbank Market” means the London interbank market.
 
“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 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.
 
“Repayment Date” means each date on which a Repayment Instalment is required to be paid under Clause 6.1 (Repayment of Loan).
 
“Repayment Instalment” has the meaning given to it in Clause 6.1 (Repayment of Loan).
 
“Repeating Representation” means each of the representations set out in Clause 18 (Representations) except Clause 18.10 (Insolvency), 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.
 
“Replacement Benchmark” means a benchmark rate which is:
 

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

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

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

 (b)
in the opinion of the Lender and the Borrower, generally accepted in the international or any relevant domestic syndicated loan markets as the appropriate successor to that Screen Rate; or
 
14

 (c)
in the opinion of the Lender and the Borrower, an appropriate successor to a Screen Rate.
 
“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 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.
 
“Safety Management Certificate” has the meaning given to it in the ISM Code.
 
“Safety Management System” has the meaning given to it in the ISM Code.
 
“Sanctions” means any sanctions, embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment, exporting, financing or making assets available (or other activities similar to or connected with any of the foregoing):
 

 (a)
imposed by law or regulation of the United Kingdom, the Council of the European Union, the United Nations or its Security Council or the United States of America regardless of whether the same is or is not binding on any Transaction Obligor; or
 

 (b)
otherwise imposed by any law or regulation binding on a Transaction Obligor or to which a Transaction Obligor is subject (which shall include without limitation, any extra-territorial sanctions imposed by law or regulation of the United States of America).
 
“Screen Rate” means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for dollars for the relevant period displayed (before any correction, recalculation or republication by the administrator) on page LIBOR01 of the Thomson Reuters screen (or any replacement Thomson Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Thomson Reuters. If such page or service ceases to be available, the Lender may specify another page or service displaying the relevant rate after consultation with the Borrower.
 
15
“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 the Lender under or in connection with each Finance Document.
 
“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 or Third Party Manager which from time to time are, or are expressed to be, the subject of the Transaction Security.
 
“Security Cover Ratio” means, at any relevant time, the ratio of the Market Value of the Ship plus the net realisable value of any additional Security previously provided under Clause 23 (Security Cover) expressed as a percentage of the Loan.
 
“Security Document” means:
 

 (a)
the Shares Security;
 

 (b)
the Mortgage;
 

 (c)
the General Assignment;
 

 (d)
the Manager’s Undertaking;
 

 (e)
any Subordinated Debt Security;
 

 (f)
any other document (whether or not it creates Security) which is executed as security for the Secured Liabilities; or
 

 (g)
any other document designated as such by the Lender and the Borrower.
 
“Security Period” means the period starting on the date of this Agreement and ending on the date on which the Lender 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 Lender 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 Lender 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 Lender; and
 

 (c)
the Lender’s interest in any turnover trust created under the Finance Documents.
 
“Shares Security” means a document creating Security over the shares in the Borrower in agreed form.
 
“Ship” means 2010 built vessel m.v. “Geniuship” having a deadweight of approximately 170,057 with IMO no 9398759, registered in the name of the Borrower under an Approved Flag (which at the date of this Agreement is the Marshall Islands flag) and everything now or in the future belonging to her on board and ashore.
 
16
“Specified Time” means a day or time determined in accordance with Schedule 4 (Timetables).
 
“Subordinated Creditor” means:
 
 
(i)
any Transaction Obligor; or
 

 (b)
any other person subject to the consent of the Lender who becomes a Subordinated Creditor in accordance with this Agreement.
 
“Subordinated Debt Security” means a Security over Subordinated Liabilities entered into or to be entered into by a Subordinated Creditor in favour of the Lender 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 any loan agreement made between (i) the Borrower and (ii) a Subordinated Creditor.
 
“Subordination Deed” means a subordination deed entered into or to be entered into by, inter alia, each Subordinated Creditor, the Borrower and the Lender, 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).
 
“Termination Date” means the date falling on the fifth anniversary from the Utilisation Date.
 
“Third Parties Act” has the meaning given to it in Clause 1.5 (Third party rights).
 
“Third Party Manager” means any Approved Manager who is not a member of the Group.
 
“Total Loss” means:
 

 (a)
actual, constructive, compromised, agreed or arranged total loss of the Ship; or
 
17

 (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 any other type of Total Loss, the date (or the most likely date) on which it appears to the Lender that the event constituting the total loss occurred.
 
“Transaction Document” means:
 

 (a)
a Finance Document;
 

 (b)
a Subordinated Finance Document;
 

 (c)
a Management Agreement;
 

 (d)
any Permitted Charter;
 

 (e)
any related Charter Guarantee; or
 

 (f)
any other document designated as such by the Lender and the Borrower.
 
“Transaction Obligor” means an Obligor, each Approved Manager which is a member of the Group or any other member of the Group who executes a Finance Document.
 
“Transaction Security” means the Security created or evidenced or expressed to be created or evidenced under the Security Documents.
 
“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).
 
“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.
 
18
“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 the 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 the United Kingdom or in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in paragraph (a) 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 any other applicable Bail-In Legislation other than the UK Bail-In Legislation:
 

 (i)
any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers; and
 

 (ii)
any similar or analogous powers under that Bail-In Legislation; and
 

 (c)
in relation to the UK Bail-In Legislation, any powers under that UK Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that UK Bail-In Legislation that are related to or ancillary to any of those powers.
 
19
1.2
Construction
 
(a)
Unless a contrary indication appears, a reference in this Agreement to:
 

 (i)
the “Lender”, any “Obligor”, any “Party”, any “Transaction Obligor” or any other person shall be construed so as to include its successors in title and permitted assigns;
 

 (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 “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, replaced, novated, supplemented, extended or restated;
 

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

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

 (ix)
“proceedings” means, in relation to any enforcement provision of a Finance Document, proceedings of any kind, including an application for a provisional or protective measure;
 

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

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

 (xii)
a provision of law is a reference to that provision as amended or re-enacted from time to time;
 

 (xiii)
a time of day is a reference to London time;
 
20

 (xiv)
any English legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall, in respect of a jurisdiction other than England, be deemed to include that which most nearly approximates in that jurisdiction to the English legal term;
 

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

 (xvi)
“including” and “in particular” (and other similar expressions) shall be construed as not limiting any general words or expressions in connection with which they are used.
 
(b)
The determination of the extent to which a rate is “for a period equal in length” to an Interest Period shall disregard any inconsistency arising from the last day of that Interest Period being determined pursuant to the terms of this Agreement.
 
(c)
Section, Clause and Schedule headings are for ease of reference only and are not to be used for the purposes of construction or interpretation of the Finance Documents.
 
(d)
Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under, or in connection with, any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.
 
(e)
A Potential Event of Default is “continuing” if it has not been remedied or waived and an Event of Default is “continuing” if it has not been waived.
 
1.3
Construction of insurance terms
 
In this Agreement:
 
“approved” means, for the purposes of Clause 21 (Insurance Undertakings), approved in writing by the Lender.
 
“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 21 (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 which is a member of the International Group of protection and indemnity associations, 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 provision.
 
21
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 Lender); or
 
(b)
in any other form agreed in writing between the Borrower and the Lender.
 
1.5
Third party rights
 
(a)
Unless expressly provided to the contrary in a Finance Document, a person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 (the “Third Parties Act”) to enforce or to enjoy the benefit of any term of this Agreement.
 
(b)
Subject to paragraph (c) below but otherwise notwithstanding any term of any Finance Document, the consent of any person who is not a Party is not required to rescind or vary this Agreement at any time.
 
(c)
An amendment or waiver which adversely affects the rights or obligations of a Reference Bank may not be effected without the consent of that Reference Bank.
 
(d)
Any Affiliate or Receiver or Delegate or any other person described in paragraph (f) of Clause 14.2 (Other indemnities), Clause 27.1 (Role of Reference Banks) or Clause 27.2 (Third Party Reference Banks) 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.
 
22
SECTION 2
 
THE FACILITY
 
2
THE FACILITY
 
Subject to the terms of this Agreement, the Lender makes available to the Borrower a dollar term loan facility in a single advance in an amount not exceeding the lesser of (i) $15,000,000 and (ii) 60 per cent. of the Initial Market Value of the Ship.
 
3
PURPOSE
 
3.1
Purpose
 
The Borrower shall apply all amounts borrowed by it under the Facility only for the purpose of refinancing the Ship.
 
3.2
Monitoring
 
The Lender is not bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.
 
4
CONDITIONS OF UTILISATION
 
4.1
Initial conditions precedent
 
The Borrower may not deliver the Utilisation Request unless the Lender has received all of the documents and other evidence listed in Part A of Schedule 2 (Conditions Precedent and Subsequent) in form and substance satisfactory to the Lender.
 
4.2
Further conditions precedent
 
The Lender will only be obliged to comply with Clause 5.4 (Loan) 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 and is continuing or would result from the proposed Loan;
 

 (ii)
the Repeating Representations to be made by each Transaction Obligor are true;
 

 (iii)
the Ship has neither been sold nor become a Total Loss;
 

 (iv)
no event or series of events has occurred which is likely to have a Material Adverse Effect;
 

 (v)
no event has occurred which would give rise to the provisions of Clause 10.4 (Cost of funds); and
 
(b)
the Lender has received on or before the Utilisation Date, or is satisfied it will receive when the Loan or any part thereof is made available, all of the documents and other evidence listed in Part B of Schedule 2 (Conditions Precedent and Subsequent) in form and substance satisfactory to the Lender.
 
23
4.3
Conditions Subsequent
 
The Borrower undertakes to deliver or cause to be delivered to the Lender within one month after the Utilisation Date, the additional documents and other evidence listed in Part C of Schedule 2 (Conditions Precedent and Subsequent) in form and substance satisfactory to the Lender.
 
4.4
Notification of satisfaction of conditions precedent
 
The Lender shall notify the Borrower promptly upon being satisfied as to the satisfaction of the conditions precedent referred to in Clause 4.1 (Initial conditions precedent) and Clause 4.2 (Further Conditions precedent).
 
4.5
Waiver of conditions precedent
 
If the Lender, at its discretion, permits the Loan or any part thereof to be borrowed before any of the conditions precedent referred to in Clause 4.1 (Initial conditions precedent) or Clause 4.2 (Further conditions precedent) has been satisfied, the Borrower shall ensure that that condition is satisfied within five Business Days after the Utilisation Date or such later date as the Lender may agree in writing with the Borrower.
 
24
SECTION 3
 
UTILISATION
 
5
UTILISATION
 
5.1
Delivery of the Utilisation Request
 
The Borrower may make one Utilisation only under the Facility by delivery to the Lender of a duly completed Utilisation Request not later than the Specified Time.
 
5.2
Completion of the Utilisation Request
 
(a)
The Utilisation Request is irrevocable and will not be regarded as having been duly completed unless:
 

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

 (ii)
the currency and amount of the Loan comply with Clause 5.3 (Currency and amount);
 

 (iii)
all applicable deductible items have been completed; and
 

 (iv)
the proposed Interest Period complies with Clause 9.1 (Interest Periods).
 
(b)
Only one Utilisation may be requested in the Utilisation Request.
 
5.3
Currency and amount
 
(a)
The currency specified in the Utilisation Request must be dollars.
 
(b)
The amount of the proposed Loan must be an amount which is the lower of (i) $15,000,000 and (ii) 60 per cent. of the Initial Market Value of the Ship.
 
5.4
Loan
 
If the conditions set out in this Agreement have been met, the Lender shall make the Loan or part thereof available by the Utilisation Date through its Facility Office.
 
5.5
Cancellation of Commitment
 
On the earlier of the date on which the Loan has been made and the end of the Availability Period any Commitment which is then unutilised shall be cancelled.
 
5.6
Retentions and Payments to Borrower
 
The Borrower irrevocably authorises the Lender:
 
(a)
to deduct from the proceeds of the Loan any fees then payable to the Lender in accordance with Clause 11 (Fees) and any other items listed as deductible items in the Utilisation Request and to apply them in payment of the items to which they relate; and
 
(b)
on the Utilisation Date, to pay to, or for the account of, the Borrower the balance (after any deduction made in accordance with paragraph (a) above) of the Loan. That payment shall be made to the account of the Borrower which the Borrower specifies in the Utilisation Request, subject to the provisions of Clause 4.2 (Further conditions precedent) and Clause 4.3 (Notification of satisfaction of conditions precedent).
 
25
5.7
Disbursement of Loan to third party
 
Payment by the Lender under Clause 5.6 (Retentions and Payments to the Borrower) to a person other than the Borrower shall constitute the making of the Loan and the Borrower shall at that time become indebted, as principal and direct obligors, to the Lender in an amount equal to the Loan.
 
5.8
Advance of Loan
 
(a)
If requested by the Borrower in the Utilisation Request, the Lender shall arrange remittance to the Borrower’s Bank  to be held on an unallocated basis to the order of the Lender in accordance with the Irrevocable Payment Instruction one day prior to the Utilisation Date.
 
(b)
The Borrower shall procure that the Borrower’s Bank complies with the Irrevocable Payment Instruction and the Borrower hereby irrevocably and unconditionally undertakes that it shall not give any instructions to the Borrower’s Bank that are inconsistent therewith.
 
(c)
The Borrower shall procure that the Advance is immediately repaid to the account of the Lender mentioned in the Irrevocable Payment Instruction on the date on which the Borrower’s Bank is required to return funds in accordance with the Irrevocable Payment Instruction (regardless of whether the Borrower’s Bank has then carried out such instructions). In the event that this date is not a Business Day, the Advance will be repaid by the Borrower’s Bank to the account of the Lender the next Business Day.
 
5.9
Prepositioning of funds
 
If, in respect of the Loan, the Lender, at the request of the Borrower and on terms acceptable to the Lender and in its absolute discretion, prepositions funds with the Borrower’s Bank, the Borrower and the Guarantor:
 
(a)
agree to pay interest on the amount of the funds so prepositioned at the rate described in Clause 8.1 (Calculation of interest) on the basis of successive interest periods of one day and so that interest shall be paid together with the first payment of interest on the Loan after its Utilisation Date or, if such Utilisation Date does not occur, within three Business Days of demand by the Lender; and
 
(b)
shall, without duplication, indemnify the Lender against any costs, loss or liability it may incur in connection with such arrangement.
 
26
SECTION 4
 
REPAYMENT, PREPAYMENT AND CANCELLATION
 
6
REPAYMENT
 
6.1
Repayment of Loan
 
The Borrower shall repay the Loan by 20 consecutive quarterly instalments, of which the first to the fourth shall be in an amount of $530,000 each and the remaining fifth to twentieth such repayment instalments shall be in an amount of $385,000 each, the first of which shall be repaid on the date falling 3 Months after the Utilisation Date, each subsequent instalment at three monthly intervals thereafter and the last, payable together with a balloon instalment in an amount of $6,720,000 (the “Balloon Instalment”), shall be repaid on the Termination Date, and each such instalment (including the Balloon Instalment) shall be a “Repayment Instalment”.
 
6.2
Reduction of Repayment Instalments
 
If any part of the Facility is cancelled, the Repayment Instalments falling after that cancellation shall be reduced pro rata by the amount cancelled.
 
6.3
Termination Date
 
On the Termination Date, the Borrower shall additionally pay to the Lender all other sums then accrued and owing under the Finance Documents.
 
6.4
Reborrowing
 
The Borrower may not reborrow any part of the Facility which is repaid.
 
7
PREPAYMENT AND CANCELLATION
 
7.1
Illegality
 
If it becomes unlawful in any applicable jurisdiction for the Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain all or any part of the Loan or it becomes unlawful for any Affiliate of the Lender for the Lender to do so:
 
(a)
the Lender shall promptly notify the Borrower upon becoming aware of that event and the Facility will be immediately cancelled; and
 
(b)
the Borrower shall prepay the Loan on the last day of the Interest Period for the Loan occurring after the Lender has notified the Borrower or, if earlier, the date specified by the Lender in the notice delivered to the Borrower (being no earlier than the last day of any applicable grace period permitted by law) and the Commitment shall be cancelled.
 
7.2
Automatic cancellation
 
The unutilised Commitment (if any) shall be automatically cancelled at close of business on the Utilisation Date.
 
27
7.3
Voluntary prepayment of Loan
 
(a)
The Borrower may, if it gives the Lender not less than 10 Business Days’ (or such shorter period as the Lender may agree to) prior notice in writing, 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).
 
(b)
Any partial prepayment under this Clause 7.3 (Voluntary prepayment of Loan) shall be applied in inverse order of maturity or pro rata (at the Borrower’s discretion) against the Balloon Instalment and the remaining Repayment Instalments falling due after the day of such repayment.
 
7.4
Mandatory prepayment on sale or Total Loss
 
If the Ship is sold (without prejudice to paragraph (a) of Clause 20.12 (Disposals)) or becomes a Total Loss, the Borrower shall prepay the Loan together with accrued interest, and all other amounts accrued under the Finance Documents. Such prepayment 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 120 days after the Total Loss Date and (ii) the date of receipt by the Lender of the proceeds of insurance relating to such Total Loss.
 
7.5
Restrictions
 
(a)
Any notice of cancellation or prepayment given by any Party under this Clause 7 (Prepayment and Cancellation) shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to be made, the amount of that cancellation or prepayment and the order of application.
 
(b)
Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to the fee provided for in Clause 11.2 (Prepayment fee) and any Break Costs, without premium or penalty.
 
(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 Commitment except at the times and in the manner expressly provided for in this Agreement.
 
(e)
No amount of the Commitment cancelled under this Agreement may be subsequently reinstated.
 
28
SECTION 5
 
COSTS OF UTILISATION
 
8
INTEREST
 
8.1
Calculation of interest
 
The rate of interest on the Loan or any part of the Loan for each Interest Period is the percentage rate per annum which is the aggregate of:
 
(a)
the Margin; and
 
(b)
LIBOR.
 
8.2
Payment of interest
 
(a)
The 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.
 
8.3
Default interest
 
(a)
If a Transaction Obligor fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the Unpaid Sum from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to paragraph (b) below, is 2.00 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 Lender. Any interest accruing under this Clause 8.3 (Default interest) shall be immediately payable by an Obligor on demand by the Lender.
 
(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 2.00 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 may be compounded with the Unpaid Sum at the end of each Interest Period applicable to that Unpaid Sum but  such default interest will remain immediately due and payable.
 
29
8.4
Notification of rates of interest
 
The Lender shall promptly notify the Borrower of the determination of a rate of interest under this Agreement.
 
9
INTEREST PERIODS
 
9.1
Interest Periods
 
(a)
Subject to paragraph (b) below each Interest Period will be three Months.
 
(b)
No Interest Period shall 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.
 
9.2
Non-Business Days
 
If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).
 
10
CHANGES TO THE CALCULATION OF INTEREST
 
10.1
Unavailability of Screen Rate
 
(a)
Interpolated Screen Rate:  If no Screen Rate is available for LIBOR for the Interest Period of the Loan or any part of the Loan, the applicable LIBOR shall be the Interpolated Screen Rate for a period equal in length to the Interest Period of the Loan or that part of the Loan.
 
(b)
Reference Bank Rate:  If no Screen Rate is available for LIBOR for:
 

 (i)
dollars; or
 

 (ii)
the Interest Period of the Loan or any part of the Loan and it is not possible to calculate the Interpolated Screen Rate,
 
the applicable LIBOR shall be the Reference Bank Rate as of the Specified Time and for a period equal in length to the Interest Period of the Loan or that part of the Loan.
 
(c)
Cost of funds:  If paragraph (b) above applies but no Reference Bank Rate is available for dollars for the relevant Interest Period there shall be no LIBOR for the Loan or that part of the Loan (as applicable) and Clause 10.4 (Cost of funds) shall apply to the Loan or that part of the Loan for that Interest Period.
 
10.2
Calculation of Reference Bank Rate
 
(a)
Subject to paragraph (b) below, if LIBOR is to be determined on the basis of a Reference Bank Rate but a Reference Bank does not supply a quotation by the Specified Time, the Reference Bank Rate shall be calculated on the basis of the quotations of the remaining Reference Banks.
 
(b)
If at or about noon on the Quotation Day none or only one of the Reference Banks supplies a quotation, there shall be no Reference Bank Rate for the relevant Interest Period.
 
30
10.3
Market disruption
 
If (a) before close of business in London on the Quotation Day for the relevant Interest Period the Lender determines (in its sole discretion) that the cost to it of funding the Loan or the relevant part of the Loan from whatever source it may reasonably select would be in excess of LIBOR or (b) before close of business on the Quotation Day for the relevant Interest Period, deposits in dollars are not available to the Lender in the London Interbank Market in the ordinary course of business in sufficient amounts to fund the Loan (or the relevant part thereof) for that Interest Period, then Clause 10.4 (Cost of funds) shall apply to the Loan or that part of the Loan (as applicable) for the relevant Interest Period.
 
10.4
Cost of funds
 
(a)
If this Clause 10.4 (Cost of funds) applies, the rate of interest on the Loan or the relevant part of the Loan for the relevant Interest Period shall be the percentage rate per annum which is the sum of:
 

 (i)
the Margin; and
 

 (ii)
the rate notified to the Borrower by the Lender as soon as practicable and in any event before the date on which interest is due to be paid in respect of that Interest Period to be that which expresses as a percentage rate per annum the cost to the Lender of funding the Loan or that part of the Loan from whatever source it may reasonably select or, if such rate is less than zero, such rate shall be deemed to be zero.
 
(b)
If this Clause 10.4 (Cost of funds) applies and the Lender or the Borrower so require, the Lender and the Borrower shall enter into negotiations (for a period of not more than 15 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.
 
Subject to Clause 41.1 (Replacement of Screen Rate), any substitute or alternative basis agreed pursuant to paragraph (b) above shall be binding on all Parties.
 
10.5
Break Costs
 
The Borrower shall, within three Business Days of demand by the Lender, pay to the Lender its Break Costs attributable to all or any part of the Loan or an Unpaid Sum being paid by the Borrower on a day other than the last day of an Interest Period for the Loan, the relevant part of the Loan or that Unpaid Sum.
 
11
FEES
 
11.1
Arrangement fee
 
The Borrower shall pay to the Lender an arrangement fee equal to 1.25 per cent. of the Loan (a) prior to the Utilisation Date or (b) within seven Business Days after the date of this Agreement, whichever is the earlier.
 
11.2
Prepayment fee
 
(a)
Subject to paragraph (b) below, the Borrower must pay to the Lender a prepayment fee on the date of prepayment of all or any part of the Loan.
 
(b)
The amount of the prepayment fee is:
 
31

 (i)
if the prepayment occurs on or before the first anniversary of the Utilisation Date, 1.00 per cent. of the amount prepaid;
 

 (ii)
if the prepayment occurs after the first anniversary of the Utilisation Date but on or before the second anniversary of the Utilisation Date, 0.5 per cent. of the amount prepaid; and
 

 (iii)
if the prepayment occurs after the second anniversary of the Utilisation Date, no prepayment fee will apply.
 
(c)
For the avoidance of doubt, any prepayment/refinancing arising as a result of an assignment by the Lender to a new Lender pursuant to Clause 25.1 (Assignment by the Lender), illegality pursuant to Clause 7.1 (Illegality), Clause 7.5 (Mandatory prepayment on sale or Total Loss), failure to agree on a substitute basis or alternative basis for funding pursuant to Clause 10.4 (Cost of funds) or as a result of a Replacement of Screen Rate pursuant to Clause 41.1 (Replacement of Screen Rate), shall be excluded from paragraph (a) above and the Borrower shall not be liable for any prepayment fee if the Loan or any part thereof is refinanced as a result of such event or circumstance.
 
32
SECTION 6
 
ADDITIONAL PAYMENT OBLIGATIONS
 
12
TAX GROSS UP AND INDEMNITIES
 
12.1
Definitions
 
(a)
In this Agreement:
 
“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 the Lender under Clause 12.2 (Tax gross-up) or a payment under Clause 12.3 (Tax indemnity).
 
(b)
Unless a contrary indication appears, in this Clause 12 (Tax Gross Up and Indemnities) reference to “determines” or “determined” means a determination made in the absolute discretion of the person making the determination.
 
12.2
Tax gross-up
 
(a)
Each Obligor shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law.
 
(b)
The 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 Lender accordingly. Similarly, the Lender shall notify an Obligor on becoming so aware in respect of a payment payable to the Lender.
 
(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 Lender evidence reasonably satisfactory to the Lender that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.
 
12.3
Tax indemnity
 
(a)
The Obligors shall (within three Business Days of demand by the Lender) pay to the Lender an amount equal to the loss, liability or cost which the Lender determines will be or has been (directly or indirectly) suffered for or on account of Tax by the Lender in respect of a Finance Document.
 
33
(b)
Paragraph (a) above shall not apply:
 

 (i)
with respect to any Tax assessed on the Lender:
 

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

 (B)
under the law of the jurisdiction in which the Lender’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 the Lender; 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)
The Lender shall, if making, or intending to make, a claim under paragraph (a) above promptly notify the Borrower of the event which will give, or has given, rise to the claim.
 
12.4
Tax Credit
 
If an Obligor makes a Tax Payment and the Lender 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)
the Lender has obtained and utilised that Tax Credit,
 
the Lender shall pay an amount to that Obligor which the Lender 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 that Obligor.
 
12.5
Stamp taxes
 
The Obligors shall pay and, within three Business Days of demand, indemnify the Lender against any cost, loss or liability which the Lender incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document.
 
12.6
VAT
 
(a)
All amounts expressed to be payable under a Finance Document by any Party to the Lender 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, if VAT is or becomes chargeable on any supply made by the Lender to any Party under a Finance Document and the Lender is required to account to the relevant tax authority for the VAT, that Party must pay to the Lender (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 the Lender must promptly provide an appropriate VAT invoice to that Party).
 
34
(b)
Where a Finance Document requires any Party to reimburse or indemnify the Lender for any cost or expense, that Party shall reimburse or indemnify (as the case may be) the Lender for the full amount of such cost or expense, including such part of it as represents VAT, save to the extent that the Lender reasonably determines that it is entitled to credit or repayment in respect of such VAT from the relevant tax authority.
 
(c)
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).
 
(d)
In relation to any supply made by the Lender to any Party under a Finance Document, if reasonably requested by the Lender, that Party must promptly provide the Lender with details of that Party’s VAT registration and such other information as is reasonably requested in connection with the Lender’s VAT reporting requirements in relation to such supply.
 
12.7
FATCA Information
 
(a)
Subject to paragraph (c) below, each Party shall, within ten Business Days of a reasonable request by another Party:
 

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

 (A)
a FATCA Exempt Party; or
 

 (B)
not a FATCA Exempt Party;
 

 (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 the Lender 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;
 
35

 (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.
 
12.8
FATCA Deduction
 
(a)
Each Party may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.
 
(b)
Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction), notify the Party to whom it is making the payment.
 
13
INCREASED COSTS
 
13.1
Increased costs
 
(a)
Subject to Clause 13.3 (Exceptions), the Borrower shall, within three Business Days of a demand by the Lender, pay for the account of the Lender the amount of any Increased Costs incurred by the Lender 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;
 
36

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

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

 (ii)
“CRD IV” means:
 

 (A)
Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending regulation (EU) No. 648/2012, 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 the Lender’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 the Lender or any of its Affiliates to the extent that it is attributable to the Lender having entered into the Commitment or funding or performing its obligations under any Finance Document.
 
13.2
Increased cost claims
 
If the Lender intends to make a claim pursuant to Clause 13.1 (Increased costs) it shall notify the Borrower of the event giving rise to the claim.
 
13.3
Exceptions
 
Clause 13.1 (Increased costs) does not apply to the extent any Increased Cost is:
 
(a)
attributable to a Tax Deduction required by law to be made by an Obligor;
 
(b)
attributable to a FATCA Deduction required to be made by a Party;
 
(c)
compensated for by Clause 12.3 (Tax indemnity) (or would have been compensated for under Clause 12.3 (Tax indemnity) but was not so compensated solely because any of the exclusions in paragraph (b) of Clause 12.3 (Tax indemnity) applied);
 
37
(d)
compensated for by any payment made pursuant to Clause 14.3 (Mandatory Cost); or
 
(e)
attributable to the wilful breach by the Lender or its Affiliates of any law or regulation.
 
14
OTHER INDEMNITIES
 
14.1
Currency indemnity
 
(a)
If any sum due from an Obligor under the Finance Documents (a “Sum”), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the “First Currency”) in which that Sum is payable into another currency (the “Second Currency”) for the purpose of:
 

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

 (ii)
obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,
 
that Obligor shall, as an independent obligation, on demand, indemnify the Lender against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (B) the rate or rates of exchange available to that person at the time of its receipt of that Sum.
 
(b)
Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.
 
14.2
Other indemnities
 
(a)
Each Obligor shall, on demand, indemnify the Lender and any Receiver and Delegate against:
 

 (i)
any cost, loss or liability incurred by it as a result of:
 

 (A)
the occurrence of any Event of Default;
 

 (B)
a failure by a Transaction Obligor to pay any amount due under a Finance Document on its due date;
 

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

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

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

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

 (G)
instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under the Finance Documents; and
 
38

 (ii)
any cost, loss or liability (including, without limitation, for negligence or any other category of liability whatsoever)  incurred by the Lender (otherwise than by reason of the Lender’s gross negligence or wilful misconduct) or, in the case of any cost, loss or liability pursuant to Clause 28.8 (Disruption to Payment Systems etc.) notwithstanding the Lender’s negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Lender in acting as Lender under the Finance Documents.
 
(b)
Each Obligor shall, on demand, indemnify the Lender, each Affiliate of the Lender and any Receiver and Delegate and each officer or employee of the Lender or its Affiliate or any Receiver or Delegate (as applicable) (each such person for the purposes of this Clause 14.2 (Other indemnities) an “Indemnified Person”), against any cost, loss or liability (including, without limitation, for negligence or any other category of liability whatsoever) 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)
No Party other than the Lender or the Receiver or Delegate (as applicable) may take any proceedings against any officer, employee or agent of the Lender or the Receiver or Delegate (as applicable) in respect of any claim it might have against the Lender or the Receiver or 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.
 
(d)
Without limiting, but subject to any limitations set out in paragraph (b) above, the indemnity in paragraph (b) above shall cover any cost, loss or liability incurred by each Indemnified Person in any jurisdiction:
 

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

 (ii)
in connection with any Environmental Claim.
 
(e)
Each Obligor shall, on demand, indemnify the Lender and every Receiver and Delegate against any cost, loss or liability (including, without limitation, for negligence or any other category of liability whatsoever) 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 Lender and each Receiver and Delegate by the Finance Documents or by law;
 
39

 (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)
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 Lender’s or Receiver’s or Delegate’s gross negligence or wilful misconduct).
 
(f)
Any Affiliate or Receiver or Delegate or any officer or employee of the Lender or of any of its Affiliates or any Receiver or Delegate (as applicable) may rely on this Clause 14.2 (Other indemnities) and the provisions of the Third Parties Act subject to Clause 1.5 (Third party rights) and the provisions of the Third Parties Act.
 
14.3
Mandatory Cost
 
The Borrower shall, on demand by the Lender, pay to the Lender, such amount which the Lender certifies in a notice to the Borrower to be its good faith determination of the amount necessary to compensate it for complying with:
 
(a)
if the Lender is 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)
if the Lender is 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 the Loan.
 
15
MITIGATION BY THE LENDER
 
15.1
Mitigation
 
(a)
The Lender shall, in consultation with the Borrower, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of Clause 7.1 (Illegality), Clause 12 (Tax Gross Up and Indemnities) or Clause 13 (Increased Costs) or paragraph (a) of Clause 14.3 (Mandatory Cost) including (but not limited to) assigning its rights under the Finance Documents to another Affiliate or Facility Office.
 
(b)
Paragraph (a) above does not in any way limit the obligations of any Transaction Obligor under the Finance Documents.
 
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15.2
Limitation of liability
 
(a)
Each Obligor shall, on demand, indemnify the Lender for all costs and expenses reasonably incurred by the Lender as a result of steps taken by it under Clause 15.1 (Mitigation).
 
(b)
The Lender 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 the Lender (acting reasonably), to do so might be prejudicial to it.
 
16
COSTS AND EXPENSES
 
16.1
Transaction expenses
 
The Obligors shall, on demand, pay the Lender the amount of all costs and expenses (including, without limitation, fees, costs and expenses of legal advisors and insurance and other consultants and other advisors) reasonably incurred by it in connection with the negotiation, preparation, printing, execution and perfection of:
 
(a)
this Agreement and any other documents referred to in this Agreement or in a Security Document; and
 
(b)
any other Finance Documents executed after the date of this Agreement.
 
16.2
Amendment costs
 
If:
 
(a)
a Transaction Obligor requests an amendment, waiver or consent; or
 
(b)
an amendment is required either pursuant to Clause 28.6 (Change of currency) or to address the fact that the Screen Rate is not or is likely not to be, available for dollars; or
 
(c)
a Transaction Obligor requests, and the Lender agrees to, the release of all or any part of the Security Assets from the Transaction Security,
 
the Obligors shall, on demand, reimburse the Lender for the amount of all costs and expenses (including, without limitation, fees, costs and expenses of legal advisors and insurance and other consultants and other advisors) reasonably incurred by the Lender in responding to, evaluating, negotiating or complying with that request or requirement.
 
16.3
Enforcement and preservation costs
 
The Obligors shall, on demand, pay to the Lender the amount of all costs and expenses (including, without limitation, fees, costs and expenses of legal advisors and insurance and other consultants and other advisors) incurred by the Lender 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 the Lender as a consequence of it entering into a Finance Document, taking or holding the Transaction Security, or enforcing those rights, including (without limitation) any losses, costs and expenses which the Lender may from time to time sustain, incur or become liable for by reason of the Lender being mortgagee of the Ship and/or a lender to the Borrower, or by reason of the Lender being deemed by any court or authority to be an operator or controller, or in any way concerned in the operation or control, of the Ship.
 
41
SECTION 7
 
GUARANTEE
 
17
GUARANTEE AND INDEMNITY
 
17.1
Guarantee and indemnity
 
The Guarantor irrevocably and unconditionally:
 
(a)
guarantees to the Lender 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 the Lender 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 the Lender that if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal, it will, as an independent and primary obligation, indemnify the Lender 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 the guarantee.
 
17.2
Continuing guarantee
 
This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by any Transaction Obligor under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part.
 
17.3
Reinstatement
 
If any discharge, release or arrangement (whether in respect of the obligations of any Transaction Obligor or any security for those obligations or otherwise) is made by the Lender 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.
 
17.4
Waiver 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 the Lender) including:
 
42
(a)
this Agreement being or later becoming void, unenforceable or illegal as regards the Borrower or the Guarantor;
 
(b)
the Lender entering into any rescheduling, refinancing or other arrangement of any kind with the Borrower or the Guarantor;
 
(c)
the Lender releasing the Borrower or the Guarantor or any Security created by a Finance Document;
 
(d)
any time, waiver or consent granted to, or composition with, any Transaction Obligor or other person;
 
(e)
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;
 
(f)
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;
 
(g)
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;
 
(h)
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;
 
(i)
any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security; or
 
(j)
any insolvency or similar proceedings.
 
17.5
Immediate recourse
 
The Guarantor waives any right it may have of first requiring the Lender (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person (including without limitation to commence any proceedings under any Finance Document or to enforce any Transaction Security) before claiming or commencing proceedings under this Clause 17 (Guarantee and Indemnity).  This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.
 
17.6
Appropriations
 
Until all amounts which may be or become payable by the Transaction Obligors under or in connection with the Finance Documents have been irrevocably paid in full, the Lender (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 the Lender (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
 
43
(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).
 
17.7
Deferral of Guarantor’s rights
 
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 Lender under the Finance Documents and until the end of the Security Period and unless the Lender 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 Lender under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents by the Lender;
 
(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 the Lender.
 
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 Lender by the Transaction Obligors under or in connection with the Finance Documents to be repaid in full on trust for the Lender and shall promptly pay or transfer the same to the Lender or as the Lender may direct for application in accordance with Clause 28 (Payment Mechanics).
 
17.8
Additional 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 the Lender or any right of set-off or netting or right to combine accounts in connection with the Finance Documents.
 
17.9
Applicability of provisions of Guarantee to other Security
 
Clauses 17.2 (Continuing Guarantee), 17.3 (Reinstatement), 17.4 (Waiver of Defences), 17.5 (Immediate Resource), 17.6 (Appropriations), 17.7 (Deferral of Guarantors’ 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.
 
44
SECTION 8
 
REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT
 
18
REPRESENTATIONS
 
18.1
General
 
Each Obligor makes and shall procure that each other Transaction Obligor makes the representations and warranties set out in this Clause 18 (Representations) to the Lender on the date of this Agreement.
 
18.2
Status
 
(a)
Each Transaction Obligor is a corporation, duly incorporated and validly existing in good standing under the law of its Original Jurisdiction.
 
(b)
Each Transaction Obligor and, in the case of the Guarantor, each of its Subsidiaries has the power to own its assets and carry on its business as it is being conducted.
 
18.3
Shares and ownership
 
(a)
The Borrower is authorised to issue 500 registered shares of no par value common stock, all of which shares have been issued in registered form and are fully paid and non-assessable. The legal title to and beneficial interest in the shares of the Borrower are held by the Guarantor free of any Security (except for Permitted Security) or any other claim.
 
(b)
None of the shares in the Borrower is subject to any option to purchase, pre-emption rights or similar rights.
 
18.4
Binding obligations
 
The obligations expressed to be assumed by it in each Transaction Document to which it is a party are legal, valid, binding and enforceable obligations.
 
18.5
Validity, effectiveness and ranking of Security
 
(a)
Each Finance Document to which it is a party does now or, as the case may be, will upon execution and delivery and, where applicable, registration as provided for in that Finance Document 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)
The Transaction Security granted by it to the Lender has or will when created or intended to be created have first ranking priority or such other 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.
 
45
18.6
Non-conflict with other obligations
 
The entry into and performance by it of, and the transactions contemplated by, each Transaction Document to which it is a party do not and will not conflict with:
 
(a)
any law or regulation applicable to it;
 
(b)
the constitutional documents of any Transaction Obligor; or
 
(c)
any agreement or instrument binding upon it or any such Transaction Obligor or any such Transaction Obligor’s assets or constitute a default or termination event (however described) under any such agreement or instrument.
 
18.7
Power and authority
 
(a)
It has the power to enter into, perform and deliver, and has taken all necessary action to authorise:
 

 (i)
its entry into, performance and delivery of, each Transaction Document to which it is or will be a party and the transactions contemplated by those Transaction Documents; and
 

 (ii)
in the case of the Borrower, the registration of the Ship under the Approved Flag.
 
(b)
No limit on its powers will be exceeded as a result of the borrowing, granting of security or giving of guarantees or indemnities contemplated by the Transaction Documents to which it is a party.
 
18.8
Validity and admissibility in evidence
 
All Authorisations required or desirable:
 
(a)
to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Transaction Documents to which it is a party; and
 
(b)
to make the Transaction Documents to which it is a party admissible in evidence in its Relevant Jurisdictions,
 
have been obtained or effected and are in full force and effect.
 
18.9
Governing law and enforcement
 
(a)
The choice of governing law of each Transaction Document to which it is a party will be recognised and enforced in its Relevant Jurisdictions.
 
(b)
Any judgment obtained in relation to a Transaction Document to which it is a party in the jurisdiction of the governing law of that Transaction Document will be recognised and enforced in its Relevant Jurisdictions.
 
46
18.10
Insolvency
 
No:
 
(a)
corporate action, legal proceeding or other procedure or step described in paragraph (a) of Clause 24.8 (Insolvency proceedings); or
 
(b)
creditors’ process described in Clause 24.9 (Creditors’ process),
 
has been taken or, to its knowledge, threatened in relation to any Transaction Obligor; and none of the circumstances described in Clause 24.7 (Insolvency) applies to any Transaction Obligor.
 
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 payable 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)
On the date of this Agreement and on the Utilisation Date, no Event of Default is continuing or might reasonably be expected to result from the making of the 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 to which its assets are subject, which in each case would be expected to have a Material Adverse Effect.
 
18.14
No misleading information
 
(a)
Any factual information provided by any Transaction Obligor for the purposes of this Agreement was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated.
 
(b)
The financial projections contained in any such information have been prepared on the basis of recent historical information and on the basis of reasonable assumptions.
 
(c)
Nothing has occurred or been omitted from any such information and no information has been given or withheld that results in any such information being untrue or misleading in any material respect.
 
47
18.15
Financial Statements
 
(a)
The Original Financial Statements were prepared in accordance with GAAP consistently applied.
 
(b)
The Original Financial Statements give a true and fair view (if audited) and fairly represent (if unaudited) of the Obligors’ financial condition as at the end of the relevant financial year and results of operations during the relevant financial year (consolidated in the case of the Guarantor).
 
(c)
There has been no material adverse change in the assets, business or financial condition of each Obligor (and of the assets, business or consolidated financial condition of the Group, in the case of the Guarantor) since the date of the Original Financial Statements.
 
(d)
Each Obligor’s most recent financial statements delivered pursuant to Clause 19.2 (Financial statements):
 

 (i)
have been prepared in accordance with Clause 19.3 (Requirements as to financial statements); and
 

 (ii)
give a true and fair view (if audited) and fairly represent (if unaudited) of 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 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.
 
(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.
 
18.18
Validity and completeness of the Transaction Documents
 
(a)
Each of the Transaction Documents to which each Transaction Obligor is a party constitutes legal, valid, binding and enforceable obligations of that Transaction Obligor.
 
48
(b)
The copies of the Transaction Documents delivered to the Lender before the date of this Agreement are true and complete copies.
 
(c)
No amendments or additions to the Transaction Documents have been agreed (other than in accordance with the terms of this Agreement) nor have any rights under the Transaction Documents been waived.
 
18.19
Valuations
 
(a)
All information supplied by it or on its behalf to an Approved Valuer for the purposes of a valuation delivered to the Lender 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.
 
(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.
 
18.20
No breach of laws
 
It has not (and no other Transaction Obligor) breached any law or regulation which breach has or is reasonably likely to have a Material Adverse Effect.
 
18.21
No Charter
 
The Ship is not subject to any Charter other than a Permitted Charter.
 
18.22
Compliance with Environmental Laws
 
All Environmental Laws relating to the ownership, operation and management of the Ship and the business of each Transaction Obligor (as now conducted and as reasonably anticipated to be conducted in the future) and the terms of all Environmental Approvals have been complied with.
 
18.23
No Environmental Claim
 
No Environmental Claim has been made or threatened against any Transaction Obligor and any member of the Group or the Ship which might reasonably be expected to have a Material Adverse Effect.
 
18.24
No Environmental Incident
 
No Environmental Incident has occurred and no person has claimed that an Environmental Incident has occurred.
 
18.25
ISM and ISPS Code compliance
 
All requirements of the ISM Code and the ISPS Code as they relate to the Borrower, each Approved Manager and the Ship have been complied with.
 
49
18.26
Taxes paid
 
(a)
It is not 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 with respect to Taxes.
 
18.27
Financial Indebtedness
 
The Borrower does not have any Financial Indebtedness outstanding other than Permitted Financial Indebtedness.
 
18.28
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 Lender sufficient details to enable an accurate search against it to be undertaken by the Lender at the Companies Registry.
 
18.29
Good title to assets
 
(a)
Each Transaction Obligor 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.
 
18.30
Ownership
 
(a)
The Borrower is the sole legal and beneficial owner of the Ship, the Earnings and the Insurances and of all rights and interests under any Charter.
 
(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.
 
18.31
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”), each Transaction Obligor’s centre of main interest (as that term is used in Article 3(1) of the Regulation) is situated at the address for communication stated in, Schedule 1, Part A (The Obligors) and it has no “establishment” (as that term is used in Article 2(10) of the Regulation) in any other jurisdiction.
 
18.32
Place of business
 
No Transaction Obligor has a place of business in any country other than the Hellenic Republic of Greece and its head office functions are carried out in each case at the address for communication stated in Schedule 1, Part A (The Obligors).
 
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18.33
No employee or pension arrangements
 
No Obligor has any employees or any liabilities under any pension scheme.
 
18.34
Sanctions
 
(a)
None of the Transaction Obligors:
 

 (i)
is a Prohibited Person;
 

 (ii)
is owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person;
 

 (iii)
owns or controls a Prohibited Person; or
 

 (iv)
has a Prohibited Person serving as a director, officer or, to the best of its knowledge, employee.
 
(b)
No proceeds of the Loan shall be made available, directly or indirectly, to or for the benefit of a Prohibited Person nor shall they be otherwise directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions.
 
18.35
US Tax Obligor
 
No Transaction Obligor is a US Tax Obligor.
 
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 Lender otherwise permits.
 
19.2
Financial statements
 
As soon as they become available, but in any event within 180 days after the end of each of its financial years to which they relate:
 
(a)
the Borrower shall supply to the Lender its annual unaudited financial statements for that financial year; and
 
(b)
the Guarantor shall supply to the Lender its annual audited consolidated financial statements for that financial year.
 
19.3
Requirements as to financial statements
 
(a)
Each set of financial statements delivered by each Obligor pursuant to Clause 19.2 (Financial Statements) shall be certified by an officer of the relevant company as giving a true and fair view (if audited) or fairly representing (if unaudited)of its financial condition and operations as at the date as at which those financial statements were drawn up.
 
51
(b)
Each set of financial statements of each Obligor delivered pursuant to Clause 19.2 (Financial Statements) shall be prepared using GAAP accounting practices and financial reference periods consistent with those applied in the preparation of the relevant Original Financial Statements unless, in relation to any set of financial statements, it notifies the Lender that there has been a change in GAAP, the accounting practices or financial reference periods and the Guarantor’s auditors deliver to the Lender:
 

 (i)
a description of any change necessary for those financial statements to reflect the GAAP, accounting practices and financial reference periods upon which the relevant Original Financial Statements were prepared; and
 

 (ii)
sufficient information, in form and substance as may be reasonably required by the Lender, to enable the Lender to make an accurate comparison between the financial position indicated in those financial statements and the relevant Original Financial Statements.
 
(c)
Any reference in this Agreement to those financial statements shall be construed as a reference to those financial statements as adjusted to reflect the basis upon which the Original Financial Statements were prepared.
 
19.4
Information: miscellaneous
 
Each Obligor shall and shall procure that each other Transaction Obligor shall supply to the Lender:
 
(a)
all documents dispatched by the Borrower or the Guarantor 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 or in connection with any breach of any Sanctions) which are current, threatened or pending against any Transaction Obligor, and which might, if adversely determined reasonably, 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 or other tribunal or any order or sanction of any governmental or other regulatory body made against any Transaction Obligor which if adversely determined reasonably, 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, the Earnings and the Insurances;
 

 (ii)
the Security Assets;
 

 (iii)
compliance of the Transaction Obligors with the terms of the Finance Documents;
 
52

 (iv)
the financial condition, business, affairs, commitments and operations of any Transaction Obligor and any member of the Group irrespective of their shareholding structure,
 
as the Lender may reasonably request; and
 
(f)
promptly, such further information and/or documents as the Lender may reasonably request so as to enable the Lender to comply with any laws applicable to it or as may be required by any regulatory authority.
 
19.5
Notification of Default
 
(a)
Each Obligor shall, and shall procure that each other Transaction Obligor shall, notify the Lender 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 Lender, the Borrower shall supply to the Lender a certificate signed by two of its officers on its behalf certifying that no Default is continuing (or if a Default is continuing, specifying the Default and the steps, if any, being taken to remedy it).
 
19.6
DAC6
 
(a)
In this Clause 19.6 (DAC6), “DAC6” means the Council Directive of 25 May 2018 (2018/822/EU) amending Directive 2011/16/EU or any replacement legislation applicable in the United Kingdom.
 
(b)
The Obligors shall supply to the Lender:
 

 (i)
promptly upon the making of such analysis or the obtaining of such advice, any analysis made or advice obtained on whether any transaction contemplated by the Transaction Documents or any transaction carried out (or to be carried out) in connection with any transaction contemplated by the Transaction Documents contains a hallmark as set out in Annex IV of DAC6; and
 

 (ii)
promptly upon the making of such reporting and to the extent permitted by applicable law and regulation, any reporting made to any governmental or taxation authority by or on behalf of any member of the Group or by any adviser to such member of the Group in relation to DAC6 or any law or regulation which implements DAC6 and any unique identification number issued by any governmental or taxation authority to which any such report has been made (if available).
 
19.7
“Know your customer” checks
 
If:
 
(a)
the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;
 
(b)
any change in the status of a Transaction Obligor (or the Holding Company of a Transaction Obligor) (including, without limitation, a change of ownership of a Transaction Obligor or the Holding Company of a Transaction Obligor) after the date of this Agreement; or
 
53
(c)
a proposed assignment by the Lender of any of its rights under this Agreement,
 
obliges the Lender (or, in the case of paragraph (c) above, any prospective assignee) 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 the Lender supply, or procure the supply of, such documentation and other evidence as is requested by the Lender at its absolute satisfaction (for itself or, in the case of the event described in paragraph (c) above, on behalf of any prospective assignee) in order for the Lender or, in the case of the event described in paragraph (c) above, any prospective assignee 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.
 
20
GENERAL UNDERTAKINGS
 
20.1
General
 
The undertakings in this Clause 20 (General Undertakings) remain in force throughout the Security Period except as the Lender may otherwise permit.
 
20.2
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 Lender 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:
 

 (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 and 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)
in the case of the Borrower, own and operate the Ship.
 
20.3
Compliance with laws
 
Each Obligor shall, and shall procure that (i) each other Transaction Obligor and (ii) in the case of any Third Party Manager on a best effort basis, 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.
 
20.4
Environmental compliance
 
Each Obligor shall, and shall procure that (i) each other Transaction Obligor and (ii) in relation to any Third Party Manager on a best effort basis will:
 
(a)
comply with all Environmental Laws;
 
(b)
obtain, maintain and ensure compliance with all requisite Environmental Approvals;
 
54
(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.
 
20.5
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 Lender in writing of:
 
(a)
any Environmental Claim against any Transaction Obligor and 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 Transaction Obligor and any member of the Group,
 
where the claim, if determined against that Transaction Obligor or that member of the Group, has or is reasonably likely to have a Material Adverse Effect.
 
20.6
Taxation
 
(a)
Each Obligor shall, and shall procure that each other Transaction Obligor will, pay and discharge all Taxes imposed upon it or its assets within the time period allowed without incurring penalties unless and only to the extent that:
 

 (i)
such payment is being contested in good faith;
 

 (ii)
adequate reserves are maintained for those Taxes and the costs required to contest them and both have been disclosed in its latest financial statements delivered to the Lender under Clause 19.2 (Financial statements); and
 

 (iii)
such payment can be lawfully withheld.
 
(b)
No Obligor shall (and the Obligors shall procure that no other Transaction Obligor will), change its residence for Tax purposes.
 
20.7
Overseas companies
 
Each Obligor shall, and shall procure that each other Transaction Obligor  will, promptly inform the Lender 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 Lender 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.
 
20.8
No change to centre of main interests
 
No Obligor shall, and the Obligors shall procure that no other Transaction Obligor will, 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 18.31 (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.
 
55
20.9
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 the Lender 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.
 
20.10
Title
 
(a)
The Borrower holds the legal title to, and owns the entire beneficial interest in the Ship, the Earnings and the Insurances.
 
(b)
With effect on and from its creation or intended creation, each Transaction 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 that Transaction Obligor.
 
20.11
Negative pledge
 
(a)
No Obligor shall, and the Obligors shall procure that no other Transaction Obligor or Third Party Manager will, create or permit to subsist any Security over any of its assets which are, in the case of the Transaction Obligors other than the Borrower or Third Party Manager, the subject of the Security created or intended to be created by the Finance Documents.
 
(b)
The Borrower shall not:
 

 (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 Third Party Manager;
 

 (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.
 
20.12
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, the Earnings or the Insurances).
 
(b)
Paragraph (a) above does not apply to any Charter as all Charters are subject to Clause 22.16 (Restrictions on chartering, appointment of managers etc.).
 
20.13
Merger
 
No Obligor shall enter into any amalgamation, demerger, merger, consolidation or corporate reconstruction Provided that in the case of the Guarantor such amalgamation, demerger, merger, consolidation or corporate reconstruction is permitted without restrictions so long as (i) the Guarantor remains the surviving entity of any such process, (ii) no Default has occurred at the relevant time or would be triggered as a result of such process and (iii) the process of any such further amalgamation, demerger, merger, consolidation or corporate reconstruction is not reasonably likely to have a Material Adverse Effect.
 
56
20.14
Change of business
 
(a)
No Obligor shall, and the Obligors shall procure that no other Transaction Obligor will, make any substantial change to the general nature of its business from that carried on at the date of this Agreement.
 
(b)
No Obligor shall, and the Obligors shall procure that no other Transaction Obligor will, engage in any business other than the ownership, operation, chartering and management of the Ship.
 
20.15
Financial Indebtedness
 
The Borrower shall not incur or permit to be outstanding any Financial Indebtedness except Permitted Financial Indebtedness.
 
20.16
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.
 
20.17
Share capital
 
The Borrower shall not:
 
(a)
purchase, cancel, redeem or retire any of its issued shares;
 
(b)
increase or reduce the number of shares that it is authorized to issue or change the par value of such shares or create any new class of shares;
 
(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 Lender and the terms of the Shares Security are complied with; or
 
(d)
appoint any further director or officer of the Borrower (unless the provisions of the Shares Security are complied with).
 
20.18
Dividends
 
The Borrower shall not:
 
(a)
declare, make or pay any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (in cash or in kind) on or in respect of its shares; or
 
(b)
repay or distribute any dividend or share premium reserve;
 
(c)
pay any management, advisory or other fee to or to the order of any of its shareholders;
 
(d)
redeem repurchase, defease, retire or repay any of its shares or resolve to do so;
 
57
(e)
repay part of any Subordinated Liabilities,
 
at any time during the Security Period if a Default has occurred and is continuing or where the making or payment of such dividend or distribution, or as the case may be, any such other action or occurrence set out in paragraphs (a) through (e) above would result in the occurrence of an Event of Default.
 
20.19
Other transactions
 
The Borrower shall not:
 
(a)
be the creditor in respect of any loan or any form of credit to any person other than another Transaction Obligor or any member of the Group and where such loan or form of credit is Permitted Financial Indebtedness;
 
(b)
give or allow to be outstanding any guarantee or indemnity to or for the benefit of any person in respect of any obligation of any other person or enter into any document under which the Borrower assumes any liability of any other person other than any guarantee or indemnity given under the Finance Documents or any guarantee or indemnity issued in the ordinary course of its business of operating, trading and chartering the Ship owned by it;
 
(c)
enter into any material agreement other than:
 

 (i)
the Transaction Documents, the Management Agreements and the Permitted Charters;
 

 (ii)
any other agreement expressly allowed under any other term of this Agreement;
 
(d)
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
 
(e)
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.
 
20.20
Unlawfulness, invalidity and ranking; Security imperilled
 
No Obligor shall, and the Obligors shall procure that no other Transaction Obligor will, do (or fail to do) or cause or permit another person to do (or omit to do) anything which is likely to:
 
(a)
make it unlawful for a Transaction Obligor to perform any of its obligations under the Transaction Documents;
 
(b)
cause any obligation of a Transaction Obligor under the Transaction Documents to cease to be legal, valid, binding or enforceable;
 
(c)
cause any Transaction Document to cease to be in full force and effect;
 
(d)
cause any Transaction Security to rank after, or lose its priority to, any other Security; and
 
(e)
imperil or jeopardise the Transaction Security.
 
58
20.21
Further assurance
 
(a)
Each Obligor shall, and shall procure that each other Transaction Obligor will, promptly, and in any event within the time period specified by the Lender 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 Lender may specify (and in such form as the Lender may require in favour of the Lender or its nominee(s)):
 

 (i)
to create, perfect, vest in favour of the Lender or protect the priority of the Security or any right of any kind created or intended to be created under or evidenced by the Finance Documents (which may include the execution of a mortgage, charge, assignment or other Security over all or any of the assets which are, or are intended to be, the subject of the Transaction Security) or for the exercise of any rights, powers and remedies of the Lender or any Receiver or Delegate provided by or pursuant to the Finance Documents or by law;
 

 (ii)
to confer on the Lender 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 Lender to enter into any transaction to commence, defend or conduct any proceedings and/or to take any other action relating to any item of the Security Property.
 
(b)
Each Obligor shall, and shall procure that each other Transaction Obligor will, take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Security conferred or intended to be conferred on the Lender by or pursuant to the Finance Documents.
 
(c)
At the same time as an Obligor delivers to the Lender any document executed by itself or another Transaction Obligor pursuant to this Clause 20.21 (Further assurance), that Obligor shall deliver, or shall procure that such other Transaction Obligor will deliver, to the Lender evidence acceptable to it that that Obligor’s or Transaction Obligor’s execution of such document has been duly authorized by it.
 
20.22
Ownership and control
 
The Guarantor shall:
 
(a)
remain the direct owner of the shares of the Borrower and of the voting rights attaching to such shares; and
 
(b)
be the direct owner of shipping companies and of entities engaged in shipping related activities, all acceptable to the Lender.
 
59
20.23
Funding of acquisition of Ship
 
In the event that the acquisition cost of the Ship was funded by means of lending to the Borrower from any person or entity acceptable to the Lender, the Borrower shall ensure that the rights of such person or entity which funded the acquisition cost of the Ship shall be fully subordinated to all Financial Indebtedness incurred under the Finance Documents pursuant to a Subordination Deed and the Subordinated Liabilities under that Subordinated Agreement are assigned in favour of the Lender pursuant to a Subordinated Debt Security.
 
20.24
Use of proceeds
 
The Borrower shall ensure that no part of the proceeds of the Loan shall be used for the purposes of acquiring shares in the shares of the Lender or other banks and/or financial institutions or acquiring hybrid capital debentures of the Lender or other banks and/or financial institutions.
 
20.25
NASDAQ listing
 
The Guarantor shall maintain its listing on the NASDAQ Stock Exchange or any other stock exchange acceptable to the Lender.
 
21
INSURANCE UNDERTAKINGS
 
21.1
General
 
The undertakings in this Clause 21 (Insurance Undertakings) remain in force on and from the Utilisation Date and throughout the rest of the Security Period except as the Lender may otherwise permit.
 
21.2
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);
 
(b)
war risks;
 
(c)
protection and indemnity risks; and
 
(d)
any other risks against which the Lender considers, having regard to ship insurance or ship finance practices and other circumstances prevailing at the relevant time, it would be reasonable for the Borrower to insure and which are specified by the Lender by notice to the Borrower.
 
21.3
Terms of obligatory insurances
 
The Borrower shall effect such insurances:
 
(a)
in dollars;
 
(b)
in the case of fire and usual marine risks (including hull and machinery and excess risks) and war risks, in an amount on an agreed value basis at least the greater of:
 

 (i)
120 per cent. of aggregate of Loan; and
 
60

 (ii)
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 $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 (which are members of the International Group of Protection and Indemnity Associations).
 
21.4
Further protections for the Lender
 
In addition to the terms set out in Clause 21.3 (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 Lender (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 Lender to collect or recover any moneys which at any time become payable in respect of the obligatory insurances;
 
(b)
whenever the Lender requires, name (or be amended to name) the Lender as additional named insured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Lender, but without the Lender being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;
 
(c)
name the Lender as loss payee with such directions for payment as the Lender may specify;
 
(d)
provide that all payments by or on behalf of the insurers under the obligatory insurances to the Lender shall be made without set off, counterclaim or deductions or condition whatsoever;
 
61
(e)
provide that the obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Lender; and
 
(f)
provide that the Lender may make proof of loss if the Borrower fails to do so.
 
21.5
Renewal of obligatory insurances
 
The Borrower shall:
 
(a)
at least 14 days before the expiry of any obligatory insurance:
 

 (i)
notify the Lender 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 Lender’s approval to the matters referred to in sub-paragraph (i) above;
 
(b)
at least 7 days before the expiry of any obligatory insurance, renew that obligatory insurance in accordance with the Lender’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 Lender in writing of the terms and conditions of the renewal.
 
21.6
Copies of policies; letters of undertaking
 
The Borrower shall ensure that the Approved Brokers provide the Lender 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 Lender 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 21.4 (Further protections for the Lender);
 

 (ii)
they will hold such policies, and the benefit of such insurances, to the order of the Lender in accordance with such loss payable clause;
 

 (iii)
they will advise the Lender 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 Lender 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 Lender 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
 
62

 (vii)
they will arrange for a separate policy to be issued in respect of the Ship forthwith upon being so requested by the Lender.
 
21.7
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 Lender with:
 
(a)
a  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 Lender; and
 
(c)
a 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.
 
21.8
Deposit of original policies
 
The Borrower shall ensure that all policies relating to obligatory insurances are deposited with the Approved Brokers through which the insurances are effected or renewed.
 
21.9
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 Lender.
 
21.10
Guarantee
 
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.
 
21.11
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 21.6 (Copies of policies; letters of undertaking)) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Lender 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; and
 

 (iii)
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.
 
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21.12
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 unless it has obtained the written consent of the Lender (such consent not to be unreasonably withheld or delayed).
 
21.13
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 Lender to collect or recover any moneys which at any time become payable in respect of the obligatory insurances.
 
21.14
Provision of copies of communications
 
The Borrower shall provide the Lender, at the time of each such material  communication (other than communications of an entirely routine nature), with copies of all written communications between the Borrower and:
 
(a)
the Approved Brokers;
 
(b)
the approved protection and indemnity and/or war risks associations; and
 
(c)
the approved insurance companies and/or underwriters,
 
which relate directly or indirectly to:
 

 (i)
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.
 
21.15
Provision of information
 
The Borrower shall promptly provide the Lender (or any persons which it may designate) with any information which the Lender (or any such designated person) requests for the purpose of:
 
(a)
obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or
 
(b)
effecting, maintaining or renewing any such insurances as are referred to in Clause 21.16 (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 Lender in respect of all fees and other expenses incurred by or for the account of the Lender in connection with any such report as is referred to in paragraph (a) above.
 
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21.16
Mortgagee’s interest and, additional perils insurances
 
(a)
The Lender 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 each in an amount of not less than 120 per cent. of the aggregate of the Loan and otherwise on such terms, through such insurers and generally in such manner as the Lender may from time to time consider appropriate.
 
(b)
The Borrower shall upon demand fully indemnify the Lender 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.
 
22
SHIP UNDERTAKINGS
 
22.1
General
 
The undertakings in this Clause 22 (Ship Undertakings) remain in force on and from the Utilisation Date and throughout the rest of the Security Period except as the Lender may otherwise permit.
 
22.2
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 flag of the Ship shall be subject to:
 

 (i)
the written consent of the Lender;
 

 (ii)
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 Lender shall approve or require; and
 

 (iii)
the execution of such other documentation amending and supplementing the Finance Documents as the Lender shall approve or require.
 
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22.3
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 with an Approved Classification Society free of overdue recommendations and conditions.
 
22.4
Classification society undertaking
 
If required by the Lender in writing the Borrower shall instruct the Approved Classification Society (and procure that the Approved Classification Society undertakes with the Lender):
 
(a)
to send to the Lender, following receipt of a written request from the Lender, certified true copies of all original class records held by the Approved Classification Society in relation to the Ship;
 
(b)
to allow the Lender (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 Lender immediately in writing if the Approved Classification Society:
 

 (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 Lender:
 

 (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 Lender in 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.
 
22.5
Modifications
 
Unless with the prior written consent from the Lender (such consent not to be unreasonably withheld or delayed), 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.
 
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22.6
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 Lender; 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.
 
(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.
 
22.7
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 Lender, provide the Lender, with copies of all survey reports.
 
22.8
Inspection
 
The Borrower shall permit the Lender (acting through surveyors or other persons appointed by and reporting to the Lender for that purpose) to board the Ship to inspect its condition or to satisfy themselves about proposed or executed repairs and the Borrower shall afford all proper facilities for such inspections.  Prior to the occurrence of an Event of Default which is continuing, such inspections shall be at reasonable times and upon reasonable notice and without interfering with the Ship’s normal course of trading, and no more than one such inspection in each calendar year shall be at the Borrower’s expense.  If an Event of Default has occurred which is continuing the Lender may inspect the Ship as often as it deems necessary or desirable, without restriction, all at the Borrower’s expense.
 
22.9
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, the Earnings or the Insurances;
 

 (ii)
all Taxes, dues and other amounts charged in respect of the Ship, the Earnings or the Insurances; and
 

 (iii)
all other outgoings whatsoever in respect of the Ship, the Earnings or the 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.
 
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22.10
Compliance with laws etc.
 
Each Obligor shall (and shall procure that each other Transaction Obligor 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, the ISM Code, the ISPS Code, all Environmental Laws, all Sanctions and the laws of the Approved Flag;
 
(b)
obtain, comply with and do all that is necessary to maintain in full force and effect any Environmental Approvals; and
 
(c)
without limiting paragraph (a) above, not employ the Ship nor allow its employment, operation or management in any manner contrary to any law or regulation including but not limited to the ISM Code, the ISPS Code, all Environmental Laws and Sanctions.
 
22.11
ISPS Code
 
Without limiting paragraph (a) of Clause 22.10 (Compliance with laws etc.), the Borrower shall (and shall procure that each Approved Manager will):
 
(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 Lender immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC.
 
22.12
Sanctions and Ship trading
 
Without limiting Clause 22.10 (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;
 
(b)
that the Ship shall not be used in trading in any manner contrary to Sanctions (or which could be contrary to Sanctions if Sanctions were binding on each Transaction Obligor and Third Party Manager);
 
(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)
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 22.10 (Compliance with laws etc.) as regards Sanctions and of this Clause 22.12 (Sanctions and Ship trading) and which permits refusal of employment or voyage orders if compliance would result in a breach of Sanctions (or which would result in a breach of Sanctions if Sanctions were binding on each Transaction Obligor and/or Third Party Manager).
 
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22.13
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 Lender has been given; and
 
(b)
the Borrower has (at its expense) effected any special, additional or modified insurance cover which the insurers and the Lender may require.
 
22.14
Provision of information
 
Without prejudice to Clause 19.4 (Information: miscellaneous) the Borrower shall promptly provide the Lender 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
 
(e)
its compliance, each Approved Manager’s compliance and the compliance of the Ship with the ISM Code and the ISPS Code and any Sanctions,
 
and, upon the Lender’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.
 
22.15
Notification of certain events
 
The Borrower shall immediately notify the Lender by email 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;
 
(g)
any Environmental Claim made against the Borrower or in connection with the Ship, or any Environmental Incident;
 
69
(h)
any claim for breach of the ISM Code or the ISPS Code being made against the Borrower, any 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 Lender advised in writing on a regular basis and in such detail as the Lender shall require as to the Borrower’s, each Approved Manager’s or any other person’s response to any of those events or matters.
 
22.16
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, supplement, cancel or terminate any Management Agreement or an Assignable Charter (and for the avoidance of doubt, but without limitation, any amendment in relation to the parties, terms of hire, the time of the payment, the management fee is considered material provided that the Borrower may agree to increase in management fee once a year in line with market standard unless an Event of Default has occurred and is continuing);
 
(d)
appoint a manager of the Ship other than an Approved Manager or agree to any alteration to the terms of an Approved Manager’s appointment;
 
(e)
de activate or lay up the Ship; or
 
(f)
put the Ship into the possession of any person for the purpose of work being done upon it in an amount exceeding or likely to exceed $1,000,000 (or the equivalent in any other currency) unless that person has first given to the Lender and in terms satisfactory to it a written undertaking not to exercise any lien on the Ship or the Earnings for the cost of such work or for any other reason.
 
22.17
Notice of Mortgage
 
The Borrower shall keep the Mortgage registered against the Ship as a valid first priority or, as the case may be, 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 Lender.
 
22.18
Sharing of Earnings
 
The Borrower shall not enter into any agreement or arrangement for the sharing of any Earnings.
 
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22.19
Assignable Charter
 
If the Borrower enters into any Assignable Charter subject to obtaining the prior consent of the Lender in accordance with paragraph (b) of Clause 22.16 (Restrictions on chartering, appointment of managers etc.), the Borrower shall, at the request of the Lender, arrange service of notice of assignment to the relevant party and shall use reasonable commercial efforts to procure that the charterer provides the acknowledgement under the General Assignment.
 
22.20
Notification of compliance
 
The Borrower shall promptly provide the Lender from time to time with evidence (in such form as the Lender requires) that it is complying with this Clause 22 (Ship Undertakings).
 
23
SECURITY COVER
 
23.1
Minimum required security cover
 
Clause 23.2 (Provision of additional security; prepayment) applies if the Lender notifies the Borrower that the Security Cover Ratio is below 130 per cent.
 
23.2
Provision of additional security; prepayment
 
(a)
If the Lender serves a notice on the Borrower under Clause 23.1 (Minimum required security cover), the Borrower or the Guarantor shall, on or before the date falling 30 Business Days after the date on which the Lender’s notice is served (the “Prepayment Date”), prepay such part of the Loan as shall eliminate the shortfall.
 
(b)
The Borrower or the Guarantor may, instead of making a prepayment as described in paragraph (a) above, provide, or ensure that a third party has provided, additional security, including cash deposits pledged in favour of the lender which, in the opinion of the Lender:
 

 (i)
has a net realisable value at least equal to the shortfall; and
 

 (ii)
is documented in such terms as the Lender may approve or require,
 
before the Prepayment Date; and conditional upon such security being provided in such manner, it shall satisfy such prepayment obligation.
 
23.3
Value of additional vessel security
 
The net realisable value of any additional security which is provided under Clause 23.2 (Provision of additional security; prepayment) and which consists of Security over a vessel shall be the Market Value of the vessel concerned.
 
23.4
Valuations binding
 
Any valuation under this Clause 23 (Security Cover) shall be binding and conclusive as regards the Borrower.
 
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23.5
Provision of information
 
(a)
The Borrower shall promptly provide the Lender and any Approved Valuer acting under this Clause 23 (Security Cover) with any information which the Lender or that Approved Valuer 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 Approved Valuer or the Lender considers prudent.
 
23.6
Prepayment mechanism
 
Any prepayment pursuant to Clause 23.2 (Provision of additional security; prepayment) shall be made in accordance with the relevant provisions of Clause 7 (Prepayment and Cancellation) and shall be treated as a voluntary prepayment pursuant to Clause 7.3 (Voluntary prepayment of Loan); however, the application of such prepayment should be  applied against the outstanding Repayment Instalments (including the Balloon Instalment) in order of maturity commencing with the next Repayment Instalment due after the date of such prepayment.
 
23.7
Provision of valuations
 
(a)
The Lender shall at such times as the Lender shall deem necessary and, in any event, at least twice during each calendar year on 30 June and 31 December, following the date of this Agreement, be provided with a valuation of the Ship and any other vessel over which additional Security has been created in accordance with Clause 23.2 (Provision of additional security; prepayment) from an Approved Valuer selected by the Lender to enable the Lender to determine the Market Value of the Ship or any other vessel and for the purposes of determining the relevant percentage referred to in Clause 23 (Security Cover).
 
(b)
The cost of all such valuations shall be borne by the Borrower.
 
23.8
Release of additional security
 
If the Security Cover Ratio set out in Clause 23.1 (Minimum required security cover) shall at the relevant time at least equal to the percentage required pursuant to Clause 23.1 (Minimum required security cover) and the Borrower shall have previously provided further security pursuant to this Clause 23 (Security Cover), the Lender, after receiving a notice from the Borrower to do so (such notice to include evidence, at the cost of the Borrower, satisfactory to the Lender that the ratio specified in Clause 23.1 (Minimum required security cover) has been maintained for a period of 3 months prior to such notice) will, subject to being indemnified to its satisfaction against the cost of doing so, release any such further security specified by the Borrower to the extent that the relevant ratio shall continue to be at least the percentage required pursuant to Clause 23.1 (Minimum required security cover) at the relevant time following such release provided that at the relevant time no Event of Default has occurred and is continuing or will result from such release.
 
24
EVENTS OF DEFAULT
 
24.1
General
 
Each of the events or circumstances set out in this Clause 24 (Events of Default) is an Event of Default except for Clause 24.20 (Acceleration) and Clause 24.22 (Enforcement of security).
 
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24.2
Non-payment
 
A Transaction Obligor or Third Party Manager 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 or.
 
24.3
Specific obligations
 
A breach occurs of Clause 4.5 (Waiver of conditions precedent), Clause 20.10 (Title), Clause 20.11(a) (Negative pledge), Clause 20.20 (Unlawfulness, invalidity and ranking; Security imperilled), Clause 21.2 (Maintenance of obligatory insurances), Clause 21.3 (Terms of obligatory insurances), Clause 21.5 (Renewal of obligatory insurances) or save to the extent such breach is a failure to pay and therefore subject to Clause 24.2 (Non-payment), Clause 23 (Security Cover).
 
24.4
Other obligations
 
(a)
A Transaction Obligor or Third Party Manager does not comply with any provision of the Finance Documents (other than those referred to in Clause 24.2 (Non-payment) and Clause 24.3 (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 five (5) Business Days of the Lender giving notice to the Borrower or (if earlier) any Transaction Obligor or any Third Party Manager becoming aware of the failure to comply.
 
24.5
Misrepresentation
 
Any representation or statement made or deemed to be made by a Transaction Obligor or any Third Party Manager 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.
 
24.6
Cross default
 
(a)
Any Financial Indebtedness of any Transaction Obligor is not paid when due nor within any originally applicable grace period.
 
(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).
 
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(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 24.6 (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 in relation to the Guarantor $5,000,000 (or its equivalent in any other currency).
 
24.7
Insolvency
 
(a)
A Transaction Obligor or Third Party Manager:
 

 (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 the Lender in its capacity as such) with a view to rescheduling any of its indebtedness.
 
(b)
The value of the assets of any Transaction Obligor is less than its liabilities (taking into account contingent and prospective liabilities).
 
(c)
A moratorium is declared in respect of any indebtedness of any Transaction Obligor. If a moratorium occurs, the ending of the moratorium will not remedy any Event of Default caused by that moratorium.
 
24.8
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, seeking bankruptcy protection, winding-up, dissolution, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of any Transaction Obligor or any Third Party Manager;
 

 (ii)
a composition, compromise, assignment or arrangement with any creditor of any Transaction Obligor or any Third Party Manager;
 

 (iii)
the appointment of a liquidator, receiver, administrator, administrative receiver, compulsory manager or other similar officer in respect of any Transaction Obligor or any of its assets; or
 

 (iv)
enforcement of any Security over any assets of any Transaction Obligor or any Third Party Manager,
 
or any analogous procedure or step is taken in any jurisdiction.
 
(b)
Paragraph (a) above shall not apply to any winding-up petition or other proceeding which is frivolous or vexatious and is discharged, stayed or dismissed within 14 days of commencement.
 
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24.9
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 (other than an arrest or detention of the Ship referred to in Clause 24.14 (Arrest)) and is not discharged within 20 Business Days.
 
24.10
Ownership
 
The Borrower ceases to be (a) 100% directly owned by the Guarantor; or (b) directly or indirectly controlled by the Guarantor.
 
24.11
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.
 
(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 the Lender) to be ineffective.
 
(d)
Any Transaction Security proves to have ranked after, or loses its priority to, any other Security.
 
24.12
Security imperilled
 
Any Security created or intended to be created by a Finance Document is in any way imperilled or in jeopardy.
 
24.13
Cessation of business
 
Any Transaction Obligor suspends or ceases to carry on (or threatens to suspend or cease to carry on) all or a material part of its business.
 
24.14
Arrest
 
Any arrest of the Ship or its detention in the exercise or the purported exercise of any lien or claim unless it is redelivered to the full control of the Borrower within 45 days of such arrest or detention.
 
24.15
Expropriation
 
The authority or ability of any Transaction Obligor or any Third Party Manager 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 Transaction Obligor or any Third Party Manager or any of its assets, unless such Transaction Obligor or any Third Party Manager upon receiving notice of such event procures the release of the relevant assets and such assets are redelivered to the full control of that Transaction Obligor within 10 Business Days of such event, or any Third Party Manager other than:
 
75
(a)
an arrest or detention of the Ship referred to in Clause 24.14 (Arrest); or
 
(b)
any Requisition.
 
24.16
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 or a Transaction Document or any of the Transaction Security otherwise ceases to remain in full force and effect for any reason.
 
24.17
Litigation
 
Any litigation, arbitration or administrative, governmental, regulatory or other investigations, proceedings or any investigations of, or before, any court, arbitral body or agency are commenced or threatened, or any judgment or order of a court, arbitral body, agency or tribunal or other tribunal or any order or sanction of any governmental or other regulatory body 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 their assets which have or, if adversely determined, is reasonably likely to have a Material Adverse Effect, unless (i) the relevant member of the Group has taken active measures to dispute such proceedings or disputes and such proceedings or disputes are dismissed or withdrawn within 14 days of being made or presented or (ii) the combined value of such proceedings or disputes in respect of such member of the Group (other than a Borrower) does not exceed $1,000,000 (or its equivalent in any other currency) in aggregate.
 
24.18
Material adverse change
 
Any event or circumstance occurs which has or is reasonably likely to have a Material Adverse Effect.
 
24.19
Sanctions
 
(a)
Any of the Transaction Obligors, or any Third Party Manager or a member of the Group becomes a Prohibited Person or becomes owned or controlled by, or acts directly or indirectly on behalf of, a Prohibited Person or any of such persons becomes the owner or controller of a Prohibited Person.
 
(b)
Any proceeds of the Loan is made available, directly or indirectly, to or for the benefit of a Prohibited Person or otherwise is, directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions.
 
(c)
Any Transaction Obligor, or any Third Party Manager is not in compliance with all Sanctions.
 
24.20
Replacement of Manager
 
No Event of Default will occur under this Clause 24 (Events of Default) in respect of a Third Party Manager if the Borrower replaces such Third Party Manager with another Approved Manager and delivers to the Lender the documents referred in paragraphs 2.1 and 2.4 of Part B of Schedule 2 (Conditions Precedent and Subsequent) within 10 Business Days from the date of such occurrence.
 
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24.21
Acceleration
 
On and at any time after the occurrence of an Event of Default which is continuing the Lender may by notice to the Borrower:
 
(a)
cancel the Commitment, whereupon it shall immediately be cancelled;
 
(b)
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
 
(c)
declare that all or part of the Loan be payable on demand, whereupon it shall immediately become payable on demand by the Lender,
 
and the Lender may serve notices under paragraphs (a), (b) and (c) above simultaneously or on different dates and the Lender may take any action referred to in Clause 24.22 (Enforcement of security) if no such notice is served or simultaneously with or at any time after the service of any of such notice.
 
24.22
Enforcement of security
 
On and at any time after the occurrence of an Event of Default the Lender may take any action which, as a result of the Event of Default or any notice served under Clause 24.20 (Acceleration), the Lender is entitled to take under any Finance Document or any applicable law or regulation.
 
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SECTION 9
 
CHANGES TO THE PARTIES
 
25
CHANGES TO THE LENDER
 
25.1
Assignment by the Lender
 
Subject to this Clause 25 (Changes to the Lender), the Lender (the “Existing Lender”) may assign all (but not part) of its rights under the Finance Documents to another person other than an individual (the “New Lender”).
 
25.2
Conditions of assignment
 
(a)
The consent of the Borrower is required for an assignment by the Existing Lender, unless the assignment is:
 

 (i)
to financial institution or bank which:
 

 (A)
has a dedicated ship finance lending desk and business; and
 

 (B)
is not a trust or fund or pension fud or insurance company or another entity engaged in or established for the purposes of making, purchasing or investing in loans, securities or other financial assets;
 

 (ii)
to an Affiliate of the Existing Lender;
 

 (iii)
if the Existing Lender is a fund, to a fund which is a Related Fund; or
 

 (iv)
made at a time when an Event of Default is continuing.
 
(b)
The consent of the Borrower to an assignment must not be unreasonably withheld or delayed.  The Borrower will be deemed to have given its consent five Business Days after the Existing Lender has requested it unless consent is expressly refused by the Borrower within that time.
 
(c)
If:
 

 (i)
the Existing Lender assigns 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 or change occurs, a Transaction Obligor would be obliged to make a payment to the New Lender or the Existing 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),
 
then the New Lender or the Existing Lender acting through its new Facility Office is only entitled to receive payment under those Clauses to the same extent as the Existing Lender would have been if the assignment or change had not occurred.
 
(d)
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.
 
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(e)
No costs or expenses in relation to such an assignment or transfer shall be borne by any Transaction Obligor.
 
25.3
Security over Lender’s rights
 
In addition to the other rights provided to the Lender under this Clause 25 (Changes to the Lender), the 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 the Lender including, without limitation:
 
(a)
any charge, assignment or other Security to secure obligations to a federal reserve or central bank; and
 
(b)
if the Lender is a fund, any charge, assignment or other Security granted to any holders (or trustee or representatives of holders) of obligations owed, or securities issued, by the Lender as security for those obligations or securities,
 
except that no such charge, assignment or Security shall:
 

 (i)
release the 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 Lender under the Finance Documents.
 
26
CHANGES TO THE TRANSACTION OBLIGORS
 
26.1
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.
 
26.2
Additional Subordinated Creditors
 
(a)
The Borrower may request that any person becomes a Subordinated Creditor, with the prior approval of the Lender, by delivering to the Lender:
 

 (i)
a duly executed Subordination Deed;
 

 (ii)
a duly executed Subordinated Debt Security; and
 

 (iii)
such constitutional documents, corporate authorisations and other documents and matters as the Lender may reasonably require, in form and substance satisfactory to the Lender, to verify that the person’s obligations are legally binding, valid and enforceable and to satisfy any applicable legal and regulatory requirements.
 
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(b)
A person referred to in paragraph (a) above will become a Subordinated Creditor on the date the Lender enters into the Subordination Deed and the Subordinated Debt Security is delivered under paragraph (a) above.
 
27
THE REFERENCE BANKS
 
27.1
Role of Reference Banks
 
(a)
No Reference Bank is under any obligation to provide a quotation or any other information to the Lender.
 
(b)
No Reference Bank will be liable for any action taken by it under or in connection with any Finance Document, or for any Reference Bank Quotation, unless directly caused by its gross negligence or wilful misconduct.
 
(c)
No Party (other than the relevant Reference Bank) may take any proceedings against any officer, employee or agent of any Reference Bank in respect of any claim it might have against that Reference Bank or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document, or to any Reference Bank Quotation, and any officer, employee or agent of each Reference Bank may rely on this Clause 27.1 (Role of Reference Banks) subject to Clause 1.5 (Third party rights) and the provisions of the Third Parties Act.
 
27.2
Third Party Reference Banks
 
A Reference Bank which is not a Party may rely on Clause 27.1 (Role of Reference Banks), and Clause 40 (Confidentiality of Funding Rates and Reference Bank Quotations) subject to Clause 1.5 (Third party rights) and the provisions of the Third Parties Act.
 
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SECTION 10
 
ADMINISTRATION
 
28
PAYMENT MECHANICS
 
28.1
Payments to the Lender
 
(a)
On each date on which a Transaction Obligor is required to make a payment under a Finance Document, that Transaction Obligor shall make an amount equal to such payment available to the Lender (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 Lender 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 the payment account (as set out in a separate repayment letter issued by the Lender), or 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 Lender) and with such bank as the Lender, in each case, specifies in writing.
 
28.2
Application of receipts; partial payments
 
(a)
If the Lender receives a payment that is insufficient to discharge all the amounts then due and payable by a Transaction Obligor under the Finance Documents, the Lender may apply that payment towards the obligations of that Transaction Obligor under the Finance Documents in any manner it may decide.
 
(b)
Paragraph (a) above will override any appropriation made by a Transaction Obligor.
 
28.3
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.
 
28.4
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.
 
28.5
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.
 
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(c)
Any amount expressed to be payable in a currency other than dollars shall be paid in that other currency.
 
28.6
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 Lender (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 Lender (acting reasonably).
 
(b)
If a change in any currency of a country occurs, this Agreement will, to the extent the Lender (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 Interbank Market and otherwise to reflect the change in currency.
 
28.7
Currency conversion
 
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.
 
28.8
Disruption to Payment Systems etc.
 
If either the Lender determines (in its discretion) that a Disruption Event has occurred or the Lender is notified by the Borrower that a Disruption Event has occurred:
 
(a)
the Lender 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 Lender may deem necessary in the circumstances;
 
(b)
the Lender 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)
any such changes agreed upon by the Lender 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;
 
(d)
the Lender 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 Lender) arising as a result of its taking, or failing to take, any actions pursuant to or in connection with this Clause 28.8 (Disruption to Payment Systems etc.).
 
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29
SET-OFF
 
The Lender may set off any matured obligation due from a Transaction Obligor under the Finance Documents (to the extent beneficially owned by the Lender) against any matured obligation owed by the Lender 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 Lender may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.
 
30
CONDUCT OF BUSINESS BY THE LENDER
 
No provision of this Agreement will:
 
(a)
interfere with the right of the Lender to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;
 
(b)
oblige the Lender 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 the Lender to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax.
 
31
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;
 

 (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.
 
32
NOTICES
 
32.1
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 email or letter.
 
83
32.2
Addresses
 
The address, emails and telephone 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); and
 
(b)
in the case of any other Transaction Obligor or the Lender, 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 Lender on or before the date on which it becomes a Party;
 
or any substitute address, email and telephone number or department or officer as that Transaction Obligor may notify to the Lender (or the Lender may notify to the other Parties, if a change is made by the Lender) by not less than five Business Days’ notice.
 
32.3
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 32.2 (Addresses), if addressed to that department or officer.
 
(b)
Any communication or document to be made or delivered to the Lender will be effective only when actually received by it and then only if it is expressly marked for the attention of the department or officer of the Lender specified in Schedule 1 (The Parties) (or any substitute department or officer as the Lender shall specify for this purpose).
 
(c)
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.
 
(d)
Any communication or document which becomes effective, in accordance with paragraphs (a) to (c) above, after 5.00 p.m. in the place of receipt shall be deemed only to become effective on the following day.
 
32.4
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
 
84

 (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 the Lender 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 or document made or delivered by a Party to the Lender only if it is addressed in such a manner as the Lender shall specify for this purpose.
 
(d)
Any electronic communication or document 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 32.4 (Electronic communication).
 
32.5
English language
 
(a)
Any notice given under or in connection with any Finance Document must be in English.
 
(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 Lender, accompanied by a certified English translation prepared by a translator approved by the Lender and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document.
 
33
CALCULATIONS AND CERTIFICATES
 
33.1
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 the Lender are prima facie evidence of the matters to which they relate.
 
33.2
Certificates and determinations
 
Any certification or determination by the Lender 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.
 
85
33.3
Day count convention
 
Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated 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 Interbank Market differs, in accordance with that market practice.
 
34
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.
 
35
REMEDIES AND WAIVERS
 
(a)
No failure to exercise, nor any delay in exercising, on the part of the Lender or any Receiver or Delegate, 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 the Lender or any Receiver or Delegate 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. The rights and remedies provided in each Finance Document are cumulative and not exclusive of any rights or remedies provided by law.
 
(b)
No variation or amendment of a Finance Document shall be valid unless in writing and signed by the Lender.
 
36
ENTIRE AGREEMENT
 
(a)
This Agreement, in conjunction with the other Finance Documents, constitutes the entire agreement between the Parties and supersedes all previous agreements, understandings and arrangements between them, whether in writing or oral, in respect of its subject matter.
 
(b)
Each Obligor acknowledges that it has not entered into this Agreement or any other Finance Document in reliance on, and shall have no remedies in respect of, any representation or warranty that is not expressly set out in this Agreement or in any other Finance Document.
 
37
SETTLEMENT OR DISCHARGE CONDITIONAL
 
Any settlement or discharge under any Finance Document between the Lender and any Transaction Obligor shall be conditional upon no security or payment to the Lender by any Transaction Obligor or any other person being set aside, adjusted or ordered to be repaid, whether under any insolvency law or otherwise.
 
38
IRREVOCABLE PAYMENT
 
If the Lender 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 the Lender 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.
 
86
39
CONFIDENTIAL INFORMATION
 
39.1
Confidentiality
 
The Lender agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by Clause 39.2 (Disclosure of Confidential Information) 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.
 
39.2
Disclosure of Confidential Information
 
The Lender 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 the Lender 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 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 may potentially assign) all or any of its rights and/or obligations under one or more Finance Documents and 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 the Lender 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;
 

 (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;
 
87

 (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 the Lender charges, assigns or otherwise creates Security (or may do so) pursuant to Clause 25.3 (Security over Lender’s rights);
 

 (viii)
who is a Party, a member of the Group or any related entity of a Transaction Obligor;
 

 (ix)
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
 

 (x)
with the consent of the Borrower,
 
in each case, such Confidential Information as the Lender shall consider appropriate if:
 

 (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-paragraph (iv) 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 the Lender, it is not practicable so to do in the circumstances;
 
(c)
to any person appointed by the Lender 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 Lender;
 
(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.
 
88
39.3
DAC6
 
Nothing in any Finance Document shall prevent disclosure of any Confidential Information or other matter to the extent that preventing that disclosure would otherwise cause any transaction contemplated by the Finance Documents or any transaction carried out in connection with any transaction contemplated by the Finance Documents to become an arrangement described in Part II A 1 of Annex IV of Directive 2011/16/EU.
 
39.4
Entire agreement
 
This Clause 39 (Confidential Information) constitutes the entire agreement between the Parties in relation to the obligations of the Lender under the Finance Documents regarding Confidential Information and supersedes any previous agreement, whether express or implied, regarding Confidential Information.
 
39.5
Inside information
 
The Lender 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 the Lender undertakes not to use any Confidential Information for any unlawful purpose.
 
39.6
Notification of disclosure
 
The Lender 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 39.2 (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 39 (Confidential Information).
 
39.7
Continuing obligations
 
The obligations in this Clause 39 (Confidential Information) are continuing and, in particular, shall survive and remain binding on the Lender 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 the Commitment has been cancelled or otherwise ceased to be available; and
 
(b)
the date on which the Lender otherwise ceases to be the Lender.
 
40
CONFIDENTIALITY OF FUNDING RATES AND REFERENCE BANKS QUOTATIONS
 
40.1
Confidentiality and disclosure
 
(a)
Each Obligor agrees to keep each Funding Rate (and the Lender agrees to keep each Reference Bank Quotation) confidential and not to disclose it to anyone, save to the extent permitted by paragraphs (b), (d) and below.
 
89
(b)
The Lender may not disclose any Reference Bank Quotation to the Borrower.
 
(c)
The Lender may disclose any Reference Bank Quotation 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 Lender and the relevant Reference Bank.
 
(d)
The Lender may disclose any Reference Bank Quotation, 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 or Reference Bank Quotation 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 obligations to maintain the confidentiality of that Funding Rate or Reference Bank Quotation 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 or Reference Bank Quotation 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 Lender 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 or Reference Bank Quotation 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 Lender 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 Lender or Reference Bank, as the case may be.
 
40.2
Related obligations
 
(a)
Each Obligor acknowledges that each Funding Rate (and the Lender acknowledges that each Reference Bank Quotation) 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 each Obligor undertakes not to use any Funding Rate and the Lender undertakes not to use any Reference Bank Quotation for any unlawful purpose.
 
(b)
The Lender and each Obligor agree (to the extent permitted by law and regulation) to inform the Lender or the relevant Reference Bank, as the case may be:
 
90

 (i)
of the circumstances of any disclosure made pursuant to sub-paragraph (ii) of paragraph (d) of Clause 40.1 (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 40 (Confidentiality of Funding Rates and Reference Bank Quotations).
 
40.3
No Event of Default
 
No Event of Default will occur under Clause 24.4 (Other obligations) by reason only of an Obligor’s failure to comply with this Clause 40 (Confidentiality of Funding Rates and Reference Bank Quotations).
 
41
AMENDMENTS
 
41.1
Replacement of Screen Rate
 
(a)
On or before 31 March 2023, the Lender and the Borrower shall enter into negotiations in good faith with a view to agreeing a Replacement Benchmark in relation to dollars in place of the Screen Rate.
 
(b)
If by 31 June 2023, the Lender and the Borrower have not agreed, then the Lender may in its sole discretion decide and designate a Replacement Benchmark in place of the Screen Rate in relation to dollars.
 
(c)
The Lender shall be under no obligation what so ever to maintain the Loan hereunder until an alternative Replacement Benchmark has been decided accordingly.
 
41.2
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.
 
42
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.
 
91
SECTION 11
 
GOVERNING LAW AND ENFORCEMENT
 
43
GOVERNING LAW
 
This Agreement and any non-contractual obligations arising out of or in connection with it are governed by English law.
 
44
ENFORCEMENT
 
44.1
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)
To the extent allowed by law, this Clause 44.1 (Jurisdiction) is for the benefit of the Lender only.  As a result, the Lender shall not be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction.  To the extent allowed by law, the Lender may take concurrent proceedings in any number of jurisdictions.
 
44.2
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 Messrs Shoreside Agents Ltd, presently at 11 The Timber Yard, Drysdale Street, London, N1 6ND (T: +44 (0)20 3771 8869, M: + 44 (0) 7591 440086, F: +44 (0)20 3771 8870, attention: Andrew Johnson) 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 Lender.  Failing this, the Lender may appoint another agent for this purpose.
 
This Agreement has been entered into on the date stated at the beginning of this Agreement.
 
92
SCHEDULE 1
 
THE PARTIES
 
PART A
 
THE OBLIGORS
 
Name of Borrower
  
Place of Incorporation
  
Registration number (or equivalent, if any)
  
Address for Communication
SEA GENIUS SHIPPING CO.
  
Republic of the
Marshall Islands
  
71733
  
c/o 154 Vouliagmenis Avenue, 166 74 Glyfada, Greece
 
Attention: Stamatios Tsantanis/ Stavros Gyftakis
 
Email sgyftakis@seanergy.gr
finance@seanergy.gr
 
Tel.: +30 213 0181507
             
Name of Guarantor
  
Place of Incorporation
  
Registration number (or equivalent, if any)
  
Address for Communication
             
SEANERGY MARITIME HOLDINGS CORP.
  
Republic of the Marshall Islands
  
27721
  
c/o 154 Vouliagmenis Avenue, 166 74 Glyfada, Greece
 
Attention: Stamatios Tsantanis/
Stavros Gyftakis
 
Email sgyftakis@seanergy.gr
finance@seanergy.gr
 
Tel.: +30 213 0181507

93
PART B
 
THE ORIGINAL LENDER
 
Name of Original Lender
  
Commitment
  
Address for Communication
SINOPAC CAPITAL INTERNATIONAL (HK) LIMITED
  
$15,000,000
  
Having its registered address at Suites 3306, 33F, Tower 1, The Gateway, 25 Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong and acting through its office at 5F, No. 203, Bade Rd., Sec. 2, Taipei, Taiwan

Fax: +886 2 8161 2452
 
email:

allen.su@sinopac.com
ya.tsao@sinopac.com
L00488@sinopac.com

94
SCHEDULE 2
 
CONDITIONS PRECEDENT AND SUBSEQUENT
 
PART A
 
CONDITIONS PRECEDENT TO UTILISATION REQUEST
 
1
Transaction Obligors
 
1.1
A copy of the constitutional documents of each Obligor.
 
1.2
A copy of a resolution of the board of directors of each Obligor (in relation to the Guarantor, a copy of a resolution of the board of directors certified under the original certificate in paragraph 1.9):
 
(a)
approving the terms of, and the transactions contemplated by, the Finance Documents to which it is a party and resolving that it execute the Finance Documents to which it is a party;
 
(b)
authorising a specified person or persons to execute the Finance Documents to which it is a party on its behalf; and
 
(c)
authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices (including, if relevant, the Utilisation Request) to be signed and/or despatched by it under, or in connection with, the Finance Documents to which it is a party.
 
1.3
A copy of the power of attorney of each Obligor authorising a specified person or persons to execute the Finance Documents to which it is a party.
 
1.4
A specimen of the signature or copy of the passport of each person authorised by the resolution referred to in paragraph 1.2 above.
 
1.5
A copy of a resolution signed by the holder(s) of the issued shares in the Borrower, approving the terms of, and the transactions contemplated by, the Finance Documents to which the Borrower is a party.
 
1.6
Copies of up-to-date certificates of goodstanding in respect of each Obligor.
 
1.7
A copy of certificate of each Obligor (signed by a director or a secretary) confirming that borrowing or guaranteeing, as appropriate, the Commitment would not cause any borrowing, guaranteeing or similar limit binding on that Obligor to be exceeded.
 
1.8
A copy of certificate of each Obligor that is incorporated outside the UK (signed by a director) certifying either that (i) it has not delivered particulars of any UK Establishment to the Registrar of Companies as required under the Overseas Regulations or (ii) it has a UK Establishment and specifying the name and registered number under which it is registered with the Registrar of Companies.
 
1.9
A copy of certificate of an authorised signatory of the relevant Obligor confirming the names and offices of all the directors of that Obligor and certifying that each copy document relating to it specified in this Part A of Schedule 2 (Conditions Precedent and Subsequent) (including the resolution in paragraph 1.1) is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement and as at the Utilisation Date (as applicable).
 
95
2
Finance Documents
 
2.1
If applicable, duly executed original of the Subordination Deed and copies of each Subordinated Finance Document.
 
2.2
A duly executed copy of any Finance Document not otherwise referred to in this Schedule 2 (Conditions Precedent and Subsequent).
 
2.3
A duly executed copy of any other document required to be delivered by each Finance Document if not otherwise referred to this Schedule 2 (Conditions Precedent and Subsequent).
 
3
Security Documents
 
3.1
A duly executed copy of the Shares Security (and of each document to be delivered under each of them).
 
3.2
A duly executed copy of the Subordinated Debt Security.
 
4
Legal opinions
 
4.1
A legal opinion of Watson Farley & Williams LLP, legal advisers to the Lender in England, substantially in the form obtained by the Lender before signing this Agreement.
 
4.2
If an Obligor is incorporated in a jurisdiction other than England and Wales, a legal opinion of the legal advisers to the Lender in the Relevant Jurisdiction, substantially in the form obtained by the Lender before signing this Agreement.
 
4.3
A legal opinion of the legal advisers to the Lender in the jurisdiction of the Approved Flag in which the Ship is registered and such other relevant jurisdictions as the Lender may require, substantially in the form obtained before signing this Agreement.
 
5
Other documents and evidence
 
5.1
A valuation of the Ship, at the Borrower’s cost, addressed to the Lender, stated to be for the purposes of this Agreement and dated not earlier than 3 months before the Utilisation Date from an Approved Valuer which shows that the amount of the Loan to be advance does not exceed 60 per cent. of the Initial Market Value of the Ship.
 
5.2
If applicable, a copy of any Assignable Charter in respect of the Ship duly executed by the parties thereto and of each document delivered pursuant to it, together with such documentary evidence as the Lender and its legal advisers may require in relation to the due authorisation and execution of that Assignable Charter by each of the parties thereto.
 
5.3
Evidence that any process agent referred to in Clause 44.2 (Service of process), if not a Transaction Obligor, has accepted its appointment (if applicable).
 
5.4
A copy of any other Authorisation or other document, opinion or assurance which the Lender considers to be necessary or desirable (if it has notified the Borrower accordingly) in connection with the entry into and performance of the transactions contemplated by any Transaction Document or for the validity and enforceability of any Transaction Document.
 
96
5.5
Evidence that the fees, costs and expenses then due from the Borrower pursuant to Clause 11 (Fees) and Clause 16 (Costs and Expenses) have been paid or will be paid by the Utilisation Date.
 
5.6
Such evidence as the Lender may require, prior to the execution of this Agreement, for it to be able to satisfy its “know your customer” or similar identification procedures in relation to the transactions contemplated by the Finance Documents.
 
5.7
Copies of the Original Financial Statements of the Borrower and the Guarantor.

97
PART B
 
CONDITIONS PRECEDENT TO UTILISATION

1
Obligors
 
A copy of the certificate of an authorised signatory of the relevant Obligor certifying that each copy document which it is required to provide under this Part B of Schedule 2 (Conditions Precedent and Subsequent) is correct, complete and in full force and effect as at the Utilisation Date.
 
2
Ship and other security
 
2.1
A duly executed copy of the General Assignment, the Manager’s Undertaking and of each document to be delivered under or pursuant to each of them.
 
2.2
A duly executed copy of the Mortgage together with documentary evidence that (a) the Mortgage has been duly registered or recorded (as the case may be) as a valid first preferred or priority (as the case may be) ship mortgage in accordance with the laws of the jurisdiction of its Approved Flag and (b) the Ship is in the absolute and unencumbered ownership of the Borrower save as contemplated by the Finance Documents.
 
2.3
Documentary evidence that the Ship:
 
(a)
is definitively and permanently registered in the name of the Borrower under the Approved Flag;
 
(b)
maintains the Approved Classification with the Approved Classification Society free of all overdue recommendations and conditions of the Approved Classification Society; and
 
(c)
is insured in accordance with the provisions of this Agreement and all requirements in this Agreement in respect of insurances have been complied with.
 
2.4
Documents establishing that the Ship is managed commercially and technically by the Approved Commercial Manager and the Approved Technical Manager respectively on terms acceptable to the Lender, together with copies of the relevant Approved Manager’s Document of Compliance and of the Ship’s Safety Management Certificate (together with any other details of the applicable Safety Management System which the Lender requires) and of any other documents required under the ISM Code and the ISPS Code in relation to the Ship including without limitation an ISSC and any other trading certificates and evidence in respect of the lightweight of the Ship.
 
2.5
An opinion from an independent insurance consultant acceptable to the Lender on such matters relating to the Insurances as the Lender may require.
 
3
Legal opinions
 
Legal opinions of the legal advisers to the Lender in the jurisdiction of the Approved Flag of the Ship and such other relevant jurisdictions as the Lender may require.
 
98
4
Other documents and evidence
 
4.1
Evidence that the fees, costs and expenses then due from the Borrower pursuant to Clause 11 (Fees) and Clause 16 (Costs and Expenses) have been paid or will be paid by the Utilisation Date.
 
4.2
A copy of any other Authorisation or other document, opinion or assurance which the Lender considers to be necessary or desirable (if it has notified the Borrower accordingly) in connection with the entry into and performance of the transactions contemplated by any Transaction Document or for the validity and enforceability of any Transaction Document not previously supplied.
 
99
PART C
 
CONDITIONS SUBSEQUENT
 
1
Ship and other security
 
1.1
Within one month from the Utilisation Date:
 
(a)
A copy of all current insurance policies (including insurance policies in connection with Mortgagee’s interest and additional peril insurance, protection and indemnity, war risks, hull and machinery or any other obligatory insurances) in respect of the Ship;
 
(b)
A duly executed original (if applicable) of letter of undertaking in respect of the Ship from the Approved Brokers in relation to protection and indemnity, war risks, hull and machinery or any other obligatory insurances (including Mortgagee’s interest and additional peril insurance) placed or effected in a form acceptable to the Lender.
 
1.2
On the Utilisation Date, original certificate evidencing the registration of the first priority Mortgage over the Ship with the Public Registry in Marshall Islands.
 
1.3
Within 30 days of the Utilisation Date, an original of each document referred to at paragraphs 1.2 to 1.9, 2, 3 of Part A of Schedule 2 (Conditions Precedent and Subsequent) and at paragraphs 2.1 and 2.2 of Part B of Schedule 2 (Conditions Precedent and Subsequent); and
 
1.4
A copy of any other Authorisation or other document, opinion or assurance which the Lender considers to be necessary or desirable (if it has notified the Borrower accordingly) in connection with the entry into and performance of the transactions contemplated by any Transaction Document or for the validity and enforceability of any Transaction Document not previously supplied.
 
100
SCHEDULE 3
 
UTILISATION REQUEST
 
From:
SEA GENIUS SHIPPING CO.
 
Trust Company Complex, Ajeltake Road
Ajeltake Island, Majuro
Marshall Islands MH 96960
 
as Borrower
 
To:
SINOPAC CAPITAL INTERNATIONAL (HK) LIMITED
5F, No. 203, Bade Rd., Sec. 2, Taipei, Taiwan
 
Dated: [●] 2021
 
Dear Sirs
 
SEA GENIUS SHIPPING CO. –  $15,000,000 Facility Agreement dated [●] 2021 (the “Agreement”)
 
1
We refer to the Agreement. This is the Utilisation Request. Terms defined in the Agreement have the same meaning in this Utilisation Request unless given a different meaning in this Utilisation Request.
 
2
We wish to borrow the Loan on the following terms:
 
Proposed Utilisation Date:
[●] 2021 (or, if that is not a Business Day, the next Business Day)
   
Amount:
$[●]
   
Interest Period:
3 Months
                      ]
 
3
We confirm that each condition specified in Clause 4.1 (Initial conditions precedent) and Clause 4.2 (Further conditions precedent) of the Agreement is satisfied on the date of this Utilisation Request.
 
4
The proceeds of the Loan should be credited to [account].
 
5
This Utilisation Request is irrevocable.
 
101
Yours faithfully

SEA GENIUS SHIPPING CO.
   
By:
    
Name:
Title:

102
SCHEDULE 4
 
TIMETABLES
 
Delivery of a duly completed Utilisation Request (Clause 5.1 (Delivery of the Utilisation Request))
  
Two Business Days before the intended Utilisation Date (Clause 5.1 (Delivery of the Utilisation Request))
LIBOR is fixed
  
Quotation Day as of 11:00 am London time
Reference Bank Rate calculated by reference to available quotations in accordance with Clause 10.2 (Calculation of Reference Bank Rate)
  
Noon on the Quotation Day
 
103
SCHEDULE 5
 
FORM OF IRREVOCABLE PAYMENT INSTRUCTION
 
“The sum of US$[●] (the Funds) is remitted by swift MT103 to you for value on [●] 2021 to be held to the order of SinoPac Capital International (HK) Limited (the Lender) for the financing of SEA GENIUS SHIPPING CO. (the Owner) without allocation to any account. These Funds represent the refinancing of m.v. “Geniuship” IMO no 9398759 (the “Ship”). You are required to hold the Funds subject to the following irrevocable instructions:
 
If you receive instructions in the form of 1 copy of the Certificate of Ownership and Encumbrance issued by the Republic of the Marshall Islands Office of the Maritime Administrator evidencing the recordation of a first preferred Marshall Islands mortgage in favour of the Lender in relation to the Ship countersigned by one of the following on behalf of the Lender [name of the signatory with passport no.[●], name of the signatory with passport no.[●], name of the signatory with passport no.[●], the sum of US$[●] shall be irrevocably and unconditionally released to the order of the Borrower (account no. 960-01-5006033345 of the Owner held with Alpha Bank S.A.).
 
If you have not received such Certificate of Ownership and Encumbrance by the date falling five (5) days after the date of this instruction then unless you receive instructions to the contrary from us, you shall credit such sums to:
 

Account Bank:
[●]
   
SWIFT ID:
[●]
   
Account Name:
[●]
   
Account Number:
[●]
   
Reference:
[●]
 
These Funds and any non-contractual obligations arising out of or in connection with these Funds shall be governed by, and construed in accordance with, English law. The English courts have exclusive jurisdiction to settle any dispute arising out of, or in connection with, these Funds (including a dispute relating to non-contractual obligations arising out of, or in connection with, these Funds).”
 
104
EXECUTION PAGES
 
BORROWER

SIGNED by Stavros Gyftakis
 )

the attorney-in-fact
 )

for and on behalf of
 )
/s/ Stavros Gyftakis
SEA GENIUS SHIPPING CO.
 )

in the presence of:
 )

     
Witness’ signature:
 )
/s/ Marina Papadopoulou
Witness’ name:
 )
Marina Papadopoulou
Witness’ address:
 )
Watson Farley & Williams
 
348 Syngrou Avenue
 
Kallithea 176 74
 
Athens - Greece

GUARANTOR

SIGNED by Stavros Gyftakis
 )

the attorney-in-fact
 )

for and on behalf of
 )
/s/ Stavros Gyftakis
SEANERGY MARITIME HOLDINGS CORP.
 )

in the presence of:
 )

 
 
Witness’ signature:
 )
/s/ Marina Papadopoulou
Witness’ name:
 )
Marina Papadopoulou
Witness’ address:
 )
Watson Farley & Williams
 
348 Syngrou Avenue
 
Kallithea 176 74
 
Athens - Greece

ORIGINAL LENDER

SIGNED by Lin, CHIA-HENG
 )
and by
 )
duly authorised
 )
/s/ Lin, CHIA-HENG
for and on behalf of
 )
SINOPAC CAPITAL INTERNATIONAL (HK)
 )
LIMITED
)
in the presence of:
 )
 

Witness’ signature: /s/ Chen, Po-An
 )
Witness’ name: Chen, Po-An
 )
Witness’ address: 5F, No. 203, Bade Rd., Sec. 2
 )
Taipei 10491, Taiwan, R.O.C.
 


105
Exhibit 4.63
 
Dated 25th February, 2022
 
ARTEMIS LEASE 01 LIMITED
as Owner
 
- and –
 
PARTNER MARINE CO.
as Charterer
 
BAREBOAT CHARTER AGREEMENT
 
in respect of
one (1) 179,213 DWT Capesize Bulk Carrier m/v PARTNERSHIP
with IMO No. 9597848
 
Index



Clause
  
Page
1
Definitions and Interpretation
3
2
Agreement to Charter
17
3
Conditions Precedent
 18
4
Delivery, Acceptance and Title
 19
5
Extent of Owner’s Liability
 20
6
Charter Hire
20
7
Payments, Interest and Calculations
 23
8
Costs and Indemnities
 24
9
Taxation
 28
10
Representations and Warranties
 29
11
General Undertakings
 35
12
Registration, Possession and Sub-Chartering
 38
13
Operation and Maintenance
 39
14
Reports
 44
15
Insurance
 45
16
Loss, Damage and Compensation
 47
17
Minmum Value Clause
 49
18
Charterer’s Events of Default
 49
19
Owner’s Rights Following a Charterer’s Event of Default
 52
20
Owner Events of Termination and Charterer’s Rights
 54
21
Option to Purchase and Early Termination
 55
22
Transfer of Title to Vessel
 58
23
Costs and Expenses
 59
24
Notices
 59
25
Assignment
 60
26
Seller’s Credit
 60
27
Counterparts
 61
28
Governing Law
 61
29
Enforcement
 61
30
Miscellaneous
 61
   
Schedules
   64

2
THIS BAREBOAT CHARTER AGREEMENT (this “Agreement”) is made on ___ February 2022　
 
BETWEEN
 
(1)
ARTEMIS LEASE 01 LIMITED, a corporation organised and existing under the laws of the Republic of the Marshall Islands with its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960 (the “Owner”); and
 
(2)
PARTNER MARINE CO., a company duly incorporated and existing under the laws of the Republic of the Marshall Islands with its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960 (the “Charterer”).

IT IS AGREED AS FOLLOWS:
 
1
DEFINITIONS AND INTERPRETATION
 
1.1
In this Agreement (inclusive of the Schedules attached hereto), unless the context otherwise requires the following words and expressions shall have the following meanings:
 
“Acknowledgement and Consent” means acknowledgement and consent issued by the Charterer and the Guarantor respectively to assignment of Charter Hire BBC (Step-in-Right) and Guarantee substantially in the form attached hereto as Schedule 5.
 
“Affiliate” means, in relation to any person, any other person which, directly or indirectly, controls or is controlled by or is under common control with such person and for the purposes of this definition, “control” when used with respect to any specified person means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting rights, by contract or otherwise.
 
“Anti-Social Forces” means;-

 (a)
an organized crime syndicate;

(b)
a member of any organized crime syndicate;

(c)
an ex-member of any organized crime syndicate who left the syndicate less than five (5) years ago;

(d)
a quasi-member of any organized crime syndicate;

(e)
an entity affiliated with any organized crime syndicate;

(f)
a sokaiya corporate racketeer;

(g)
a blackmailer pretending to be a social movement activist;

(h)
an organized crime syndicate specialized in intellectual crime;

(i)
any entity or individual similar to any of above Item (a) through Item (h);

(j)
a person who is deemed to be controlled by a person who falls under any of above Item (a) through Item (i) (any such person, a “Member or Affiliate of a Criminal Syndicate”);

(k)
a person whose management is deemed to be substantially involved with a Member or Affiliate of a Criminal Syndicate;

(l)
a person who is deemed to utilize a Member or Affiliate of a Criminal Syndicate in order to pursue unlawful interests for itself or any third party or to inflict damage upon any third party;

(m)
a person who is deemed to provide funding or other support to a Member or Affiliate of a Criminal Syndicate; or

3

 (n)
an officer or other person substantially engaged in the management of the business of the Charterer, Guarantor or Owner (as applicable) who has a socially unacceptable relationship with a Member or Affiliate of a Criminal Syndicate;

(o)
Prohibited Person; or

(p)
owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person.

“Applicable Law” means any laws, regulation, consent, regulatory requirement, judgment, order or direction or any other act of any Government Entity of Japan, the United Kingdom, the Republic of the Marshall Islands or Singapore and, in relation to any other jurisdiction, any law, regulation, consent, regulatory requirement, judgement, order or direction or any other act of any Government Entity of such jurisdiction with which the Owner, the Charterer, any Approved Manager or the Guarantor is required to comply (whether or not having the force of law but, if not, with which it would, in the normal course of its business, comply and which would be generally applicable to such persons); applicable Law, for avoidance of doubt, includes Environment Law and Global Climate legislation.
 
“Approved Flag” means the Marshall Islands flag or any other flag jurisdiction reasonably approved by the Owner, such approval not to be unreasonably withheld or delayed).
 
“Approved Manager” means
 

 (a)
V.Ships Limited, a corporation incorporated and existing under the laws of Cyprus whose registered office is at Zenas Gunther, 16-18, Agia Triada, 3035 Limassol, Cyprus; or
 

 (b)
Seanergy Management Corp., a corporation incorporated in the Republic of the Marshall Islands, with registered address at the Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960 Marshall Islands; or
 

 (c)
Seanergy Shipmanagement Corp., a corporation incorporated in the Republic of the Marshall Islands, with registered address at the Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960 Marshall Islands; or
 

 (d)
Fidelity Marine Inc., a corporation incorporated in the Republic of the Marshall Islands, with registered address at the Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960 Marshall Islands; or
 
such other technical, crew and/or commercial manager reasonably acceptable to the Owner, provided, that in the event the Charterer wishes to change to a manager not named above, notice shall be provided to Owner in advance and approval sought before the Charterer shall be entitled to change manager (such approval not to be unreasonably withheld or delayed).
 
“Approved Valuers” means VesselValue Ltd., Simpson, Spence and Young and any other reputable and independent ship brokers that may be appointed by the Charterer, with the prior written consent of the Owner (such consent not to be unreasonably withheld or delayed).
 
“Assignment of Insurance” means an assignment by the Charterer and the Owner to the Lender of Hull & Machinery and War Risks insurances in respect of the Vessel in such terms and conditions satisfactory to the Lender.
 
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“Base Rate” means the SOFR / Lookback or such other rate adopted for determination or calculation of the Interest Rate pursuant to the terms of this Agreement.
 
“Break Costs” means any loss (including loss of margin or spread of interest) or cost or expense in excess of any interest incurred by the Lender, which the Lender shall certify as sustained or incurred by it as a consequence of (i) any default in payment by the Charterer of any sum under this Agreement or any of the Security Documents when due, (ii) any occurrence of any Charterer’s Event of Default (provided that such Break Costs have arisen by reason of action or omission of the Charterer or other causes not attributable to the Owner or the Lender).
 
“Business Day” means a day on which commercial banks are open for regular banking business in Tokyo, New York, London and Athens.
 
“Charter Hire” means the daily charter hire payable in accordance with Clause 6 (Charter Hire).
 
“Charter Protocol of Delivery and Acceptance” means a certificate in substantially the form set out in Schedule 2 (Form of Charter Protocol of Delivery and Acceptance).
 
“Charterer’s Event of Default” means any event or circumstance described in Clause 18 (Charterer’s Events of Default).
 
“Classification Society” means American Bureau of Shipping or any other classification society that is a member of the International Association of Classification Societies.
 
“Cancellation Date” means 16 March 2022 or such other date as the Owner and the Charterer may agree in writing.
 
“Delivery” means the delivery of the Vessel from the Owner as owner to the Charterer as bareboat charterer in accordance with the provisions of this Agreement.
 
“Delivery Date” means the Business Day on which the Owner shall deliver the Vessel to the Charterer and the Charterer shall accept the Vessel from the Owner under this Agreement.
 
“Delivery Date under the MOA” means the day when the Owner shall accept the delivery and obtain the title of the Vessel under the MOA.
 
“Document of Compliance” has the meaning given to it in the ISM Code.
 
“Dollar Account” means the Chugoku Bank, Ltd., SF Center Branch, ARTEMIS LEASE 01 LIMITED U.S. Dollar Ordinary Account NO. 1341612.
 
“Dollars”, “$” and “US$” mean the lawful currency, for the time being, of the United States of America.
 
“Environmental Approval” means any present or future permit, ruling, variance or other Authorisation required under Environmental Laws.
 
“Environmental Claim” means any claim by any governmental, judicial or regulatory authority or any other person which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law and, for this purpose, “claim” includes a claim for damages, compensation, contribution, injury, fines, losses and penalties or any other payment of any kind, including in relation to clean-up and removal, whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset.
 
5
“Environmental Incident” means:
 

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

 (b)
any incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, sea, land or soils (including the seabed) or surface water from a vessel other than 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 the Charterer, any Permitted Sub-charterer and/or any operator or manager (including any Approved 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, sea, 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 the Charterer, any Permitted Sub-charterer and/or any operator or manager of the Vessel (including any Approved Manager) 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 pollution or protection of 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 and any law, rule or international convention that shall oblige the shipowners, bareboat charters and/or ship managers to take certain measures to protect environment and/ or to prevent or improve pollution or other environment detriment.
 
“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.
 
“Environmental Licence” means any authorisation required at any time under Environmental Law.
 
“Excluded Payments” means all the right, title and interest of the Owner in and in respect of (i) any amounts payable under Clauses 8 (Costs and Indemnities), 9 (Taxation) and 23 (Costs and Expenses) or any other indemnities and similar amounts payable by the Charterer under this Agreement in respect of which there is no corresponding payment obligation between the Owner and the Lender under the Loan Agreement and (iii) any interest, overdue interest, currency indemnity or other amounts payable by the Charterer hereunder which are calculated on or by reference to any of the foregoing amounts.
 
6
“FATCA” means:


 (a)
Sections 1471 to 1474 of the US Internal Revenue Code of 1986 (the “Code”) or any associated regulations or other official guidance;
 

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

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

“FATCA Deduction” means a deduction or withholding from a payment under a finance document required by FATCA.

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

“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 finance or capital lease;
 

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

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

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

 (h)
any counter-indemnity obligation in relation to a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution; and
 
7

 (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.
 
“Global Climate Legislation” means law, rule, treaty or international convention enacted or to be hereafter enacted for the purpose of protecting detriment of global climate environment and/or to prevent detriment of global climate environment such as to reduce Co2 emission and/ or other harmful material and/ or to prevent or mitigate increase of global temperature.

“GAAP” means generally accepted accounting principles in the US.
 
“Government Entity” means and includes (whether having distinct legal personality or not) (i) any national government or local jurisdiction; (ii) any administrative body or agency of any entity referred to in (i) above; (iii) any association, organisation or institution (international or otherwise) of which any entity mentioned in (i) above is a member or to whose jurisdiction any thereof is subject or in whose activities any thereof is a participant and (iv) any entity (whether public or private) from time to time charged with the collection or imposition of Taxes.
 
“Guarantee” means the performance guarantee issued by the Guarantor to secure the performance, debts, obligations, undertakings, agreements and liabilities of the Charterer under this Agreement.
 
“Guarantor” means SEANERGY MARITIME HOLDINGS CORP. of the Republic of Marshall Islands.
 
“Hire Calculation Period” means three (3) months duration as more specifically;-
 
the successive periods for the calculation of the interest component to be accrued on the Owner’s Cost hereunder of each three-month period or such other duration or durations as the Owner may determine from time to time with prior consultation with the Charterer,  in the case of the 1st Hire Calculation Period, the period commencing on the Delivery Date and ending on the 1st Payment Date, and in the case of subsequent Hire Calculation Periods, the periods commencing on a Payment Date and ending on the next following Payment Date; provided that (x) if the last day of any Hire Calculation Period is not a Business Day, that Hire Calculation Period shall be ended on the next following Business Day unless such next following Business Day falls in the next calendar month in which event that Hire Calculation Period shall be ended on the last preceding Business Day and (y) the last Hire Calculation Period shall be such a period commencing upon the expiry of the immediately preceding Hire Calculation Period and ending on the final Payment Date.
 
“Hire Period” means a period of eight (8) years (unless the Agreement is terminated earlier in accordance with the terms hereof) commencing on the Delivery Date.
 
“Interest Component” has the meaning ascribed to such term in Clause 6.1A II.
 
“Interest Period” means three (3) months duration as more specifically;-
 
8
each three-month period or such other duration or durations as the Lender may determine from time to time with prior consultation with the Owner and the Charterer, in the case of the 1st Interest Period, the period commencing on the Drawdown Date and ending on the 1st Payment Date, and in the case of subsequent Interest Periods, the periods commencing on a Payment Date and ending on the next following Payment Date; provided that (x) if the last day of any Interest Period is not a Business Day, that Interest Period shall be ended on the next following Business Day unless such next following Business Day falls in the next calendar month in which event that Interest Period shall be ended on the last preceding Business Day and (y) the last Interest Period shall be such a period commencing upon the expiry of the immediately preceding Interest Period and ending on the final Payment Date).
 
“Interest Rate” means the annual rate of interest which is conclusively certified by the Lender to the Owner to be the following:
 
the aggregate of (i) the Margin and (ii) the Base Rate,
 
provided that in the case that any Base Rate prescribed above is not available to the Lender, such per annum rate reasonably determined by the Lender shall be used as the Base Rate.
 
“Insolvency Proceedings” means (i) bankruptcy proceedings under the bankruptcy laws of any country having jurisdiction over the Charterer or the Guarantor or their respective assets (the “Relevant Country”), (ii) corporate reorganization proceedings under the corporate reorganization laws of the Relevant Country, (iii) corporate rehabilitation proceedings under the corporate rehabilitation laws of the Relevant Country, (iv) special conciliation proceedings under special conciliation law of the Relevant Country, (v) special liquidation under the commercial code of the Relevant Country, (vi) proceedings equivalent or similar to any of the foregoing under any applicable law of other jurisdiction, (vii) any other proceedings in order to liquidate, wind up or dissolve a corporation, or cause or negotiate reduction, moratorium or rescheduling of debts of a corporation or otherwise remedy, solve or dispose of a corporation (or its business) in insolvency, under any other applicable law of the Relevant Country law or any applicable law of other jurisdiction.
 
“Indemnitee” shall have the meaning given to it in Clause 8 (Costs and Indemnities).
 
“Insurances” means, in relation to the Vessel:
 

 (a)
all policies and contracts of insurance, including certificate of entries of the Vessel in any protection and indemnity or war risks association, effected in relation to the Vessel or otherwise in relation to the Vessel 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.
 
“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.
 
9
“ISSC” means an International Ship Security Certificate issued under the ISPS Code.
 
“KYC Documents” means such documents as the Owner deems appropriate (in principal) issued by any relevant authority to identify (i) the Charterer, (ii) the Guarantor, (iii) any party to the Security Documents as the Owner deems necessary, (iv) intermediate and ultimate shareholder or substantially and ultimately controlling person, and directors and officers, of the entities described in (i),(ii) and (iii) above, and such other documents which the Owner requires.
 
“Lender” means The Chugoku Bank, Ltd. of Okayama City, Okayama Prefecture, Japan or its assignee, transferee or successors in whole or in part.
 
“Licenses” means all the approvals, licenses, permission, waivers, non-objection (in terms of the policy or otherwise) and reporting (including ex post facto filing of the commencement of vessel leasing business as required under the Marine Transportation Act (kaijyo unsoho) of Japan, in the case of the Owner) to, the relevant government authorities and central bank of any relevant country necessary (now or at any time hereafter during the Hire Period) for validity, enforceability, legality, admissibility in evidence and, performance by the Owner and the Charterer of this Agreement and the Security Documents and the Guarantor of the Guarantee  and exercise and enjoyment by the Owner of its rights, title, interest and benefit under this Agreement under the Security Documents, registration of the Vessel under the Marshall Islands flag and operation of the Vessel, and all matters herein and therein contemplated.
 
“Lien” means:
 

 (a)
any mortgage, charge (whether fixed or floating), pledge, lien, encumbrance, hypothecation, assignment or security interest of any kind securing any obligation of any person, any right or claim of any person or any type of preferential arrangement (including, without limitation, any conditional sale, title transfer and/or retention arrangements having a similar effect); and
 

 (b)
any arrangement or transaction entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset, to:
 

 (i)
sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased or chartered to or re-acquired by the Charterer;
 

 (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 an equivalent effect.
 
“Loan” means USD 21,300,000 to be made available to the Owner by the Lender pursuant to the Loan Agreement to enable the Owner to purchase the Vessel.
 
“Loan Agreement” means the Loan Agreement dated on or about the date of this Agreement and made between, inter alios, the Owner as borrower and The Chugoku Bank, Ltd. as Lender relating to a loan in Dollars to be made available to the Owner to assist in funding the purchase of the Vessel.
 
10
“Margin” means two point nine zero percent (2.90%) per annum.
 
“Major Casualty” means any casualty to the Vessel in relation to which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds US$1,500,000 (or the equivalent in any other currency).
 
“Management Agreement” means any commercial, crew and technical management agreement entered into from time to time between an Approved Manager and the Charterer.
 
“Manuals and Technical Records” means all manuals, handbooks, drawings and documentation that are required to be maintained under Applicable Laws or that are available on board the Vessel in compliance with the laws and regulations of the Approved Flag.
 
“Market Value” means the valuation of the Vessel by Simpson, Spence Young, or, to (i) the extent required by the Owner or (ii) in the event of a Charterer Event of Default, the average of the valuations of the Vessel obtained from two of the Approved Valuers.
 
“MARPOL” means the International Convention for the Prevention of Pollution from Ships 1973 (as modified in 1978 and 1997) and includes any amendments or extensions of it and any regulation issued pursuant to it.
 
“Material Adverse Effect” means a material adverse effect on:
 

 (a)
the business, operations, property, condition (financial or otherwise) or prospects of the Charterer, the Guarantor or the Owner; or
 

 (b)
the ability of the Charterer, the Guarantor, or the Owner to perform its obligations under the Relevant Documents to which it is a party; or
 

 (c)
the validity or enforceability of, or the effectiveness or ranking of any security interests granted or purporting to be granted pursuant to any of the Relevant Documents; or
 

 (d)
the purchase, operation, management and sale of the Vessel in accordance with the Relevant Documents.
 
“MOA” means a Memorandum of Agreement dated herewith and made between the Sellers, as an affiliate of the Charterer as seller and the Owner as buyer for the sale and purchase of the Vessel at the purchase price of USD 36,100,000 of which USD 14,800,000 has been agreed deferred pursuant to the terms of the Sellers’ Credit Deed.
 
“Mortgage” means the First Preferred Marshall Islands Ship Mortgage in favour of the Lender pursuant to the terms of the Loan Agreement and the security documents as therein defined.
 
“Original Financial Statements” means the audited consolidated financial statements of the Charterer and the Guarantor for its respective financial year ended December 31, 2020.
 
“Overdue Interest” means in respect of any payment due under this Agreement which is not paid on its due date a rate of 2% per cent p.a. above the Margin.
 
11
“Owner’s Cost” means US$ 21,300,000 or as the context requires, the outstanding amount  upon amortization as presented in Schedule 6 hereto.
 
“Owner Event of Termination” means any event or circumstance described in Clause 20 (Owner Events of Termination and Charterer’s Rights).
 
“Owner Lien” means with respect to the Vessel, any Lien or disposition of title arising as a result of:
 

 (a)
any claims against, or any act or omission of, the Owner which in any such case is not related to or contemplated by any of the Relevant Documents or any transactions contemplated thereby;
 

 (b)
any act or omission of the Owner, which constitutes a breach by the Owner of any of the terms of any of the Relevant Documents; or
 
provided that (i) it is acknowledged for the purposes of this Agreement that a Lien created or caused by a party to the Relevant Documents other than the Owner will not constitute an Owner Lien, (ii) none of the events referred to above shall constitute an Owner Lien, if and to the extent the same would not be created or caused or arise but for any Charterer’s Event of Default and (iii) none of the events referred to above shall constitute an Owner Lien, if and to the extent the same is not created or caused by, or arise from, any cause or event for which the Owner shall not be responsible under this Agreement.
 
“Payment Date” means the following successive quarterly dates; - the 1st Payment Date shall be the date of the third month after (and, for avoidance of doubt, such day being the numerically corresponding day of the third month after the Delivery Date) the Delivery Date and the 2nd and all subsequent Payment Dates shall be the corresponding dates of every three months thereafter.
 
provided that (i) the final Payment Date shall be the 8th anniversary of the Delivery Date, and (ii) if any such Payment Date is not a Business Day, the immediately succeeding Business Day shall be such Payment Date (unless such succeeding Business Day falls within the next calendar month, in which event such Payment Date shall be the immediately preceding Business Day) except in the case of the final Payment Date is not a Business Day, the immediately preceding Business Day shall be the final Payment Date, and (iii) in the event that any Payment Date shall be altered by reason of it not falling on a Business Day or otherwise, the next Payment Date and subsequent Payment Dates shall not be altered thereby.
 
“Permitted Lien” means with respect to the Vessel, title thereto or any interest therein:
 

 (a)
the rights of other persons under agreements or arrangements to the extent permitted by the terms of Clause 12 (Registration, Possession and Sub-Chartering) or Clause 13 (Operation and Maintenance);
 

 (b)
any Owner Lien;
 

 (c)
the respective rights of the Owner and the Charterer created by or pursuant to the Relevant Documents, and any Lien in favour of any such person created by or pursuant to, the Relevant Documents;
 
12

 (d)
Liens for salvage; and
 

 (e)
Liens on the Vessel for disbursement incurred in the ordinary course of trading, operation, repair or maintenance and any other Lien arising by operation of law (except for Liens referred to in the previous paragraphs of this definition), provided such Liens are discharged within thirty (30) days of their creation (or such longer period as the Owner may reasonably agree).
 
“Permitted Sub-charter” means any demise charter or time, voyage or consecutive voyage charter or any other employment in respect of the Vessel entered into or to be entered into by the Charterer and a Permitted Sub-charterer.
 
“Permitted Sub-charterer” means, in relation to the Vessel any present or future sub-charterer to enter into a Permitted Sub-charter with the Charterer.
 
“Prohibited Person” means any person (whether designated by name or by reason of being included in a class of persons) against whom Sanctions are directed.
 
“Published Rate” has the meaning ascribed to such term in Clause 6.1B (Unavailability or changes to reference rates).
 
“Published Rate Replacement Event” has the meaning ascribed to such term in Clause 6.1B (Unavailability or changes to reference rates).
 
“Purchase Option Date” means the date falling , in the case of the first Purchase Option Date, on the 8th Payment Date, in the case of the second Purchase Option Date, on the 12th Payment Date, in the case of the third Purchase Option Date, on the 16th Payment Date, in the case of the fourth Purchase Option Date, on the 20th Payment Date, in the case of the fifth Purchase Option Date, on the 24th Payment Date, in the case of the sixth Purchase Option Date, on the 28th Payment Date, and in the case of the seventh Purchase Option Date (the final Payment Date), on the 32th Payment Date, anniversary of the Delivery Date.
 
“Purchase Option Price” means:
 

 (a)
in respect of the first Purchase Option Date, US$31,980,400 (being US$17,180,400 net of Sellers’ Credit);
 

 (b)
in respect of the second Purchase Option Date, US$29,140,000 (being US$14,340,000 net of Sellers’ Credit);
 

 (c)
in respect of the third Purchase Option Date, US$26,776,000 (being US$11,976,000 net of Sellers’ Credit);
 

 (d)
in respect of the fourth Purchase Option Date, US$24,412,000 (being US$9,612,000 net of Sellers’ Credit);
 

 (e)
in respect of the fifth Purchase Option Date, US$22,024,000 (being US$7,224,000 net of Sellers’ Credit);
 

 (f)
in respect of the sixth Purchase Option Date, US$19,612,000 (being US$4,812,000 net of Sellers’ Credit); and
 
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 (g)
in respect of the seventh Purchase Option Date (the final Payment Date), US$17,188,000 (being US$2, 388,000 net of Sellers’ Credit).
 
“Quoted Tenor” shall have the meaning ascribed to such term in Clause 6.1B (Unavailability or changes to reference rates).
 
“Relevant Authority” means any relevant authority of the Republic of Marshall Islands or any other jurisdiction or country having jurisdiction over the Charterer or the Vessel.
 
“Relevant Documents” means:
 

 (a)
this Agreement, together with the Charter Protocol of Delivery and Acceptance;
 

 (b)
the MOA, together with the Bill of Sale;
 
the Security Documents; and
 

 (c)
any other document designated as such by the Charterer and the Owner.
 
“Relevant Nominating Body” shall have the meaning ascribed to such term in Clause 6.1B (Unavailability or changes to reference rates).
 
“Reference Rate” means, in relation to any Owner’s Cost:
 

 (a)
the applicable SOFR / Lookback; or
 

 (b)
as otherwise determined pursuant to Clause 6.1B (Unavailability or changes to reference rate),
 
and if, in either case, that rate is less than zero, the Reference Rate shall be deemed to be zero.
 
“Replacement Reference Rate” has the meaning ascribed to such term in Clause 6.1(B) (Unavailability or changes to reference rates).
 
“Safety Management Certificate” has the meaning given to it in the ISM Code.
 
“Safety Management System” has the meaning given to it in the ISM Code.
 
“Sanctions” means any financial, economic, or trade sanctions laws, regulations, rules, decisions, embargoes and/or restrictive measures imposed, administered or enforced by Greece, Japan, the United States, the United Nations Security Council, the European Union, the United Kingdom and/or the Republic of Marshall Islands.
 
“Sanctions Authority” means U.S.A., Japan, Greece, UK, EU, and UN.
 
“Sanctioned Person” means any person, vessel or aircraft: (a) listed on, and/or targeted by, any Sanctions; (b) resident, operating, or organised under the laws of, a comprehensively Sanctioned country or territory; or (c) who is directly or indirectly owned or controlled by any such person or person(s).
 
14
“Security Documents” means:
 

 (a)
the Assignment of Insurance;
 

 (b)
the Acknowledgement and Consent;
 

 (c)
the Performance Guarantee;
 

 (d)
the Seller’s Credit Deed; or
 

 (e)
any other document designated as such by the Owner and the Charterer.
 
“Seller” means Partner Shipping Co. Limited of Malta, registered as a Foreign Maritime Entity under the laws of the Republic of the Marshall Islands in its capacity as seller under the MOA.
 
“Sellers’ Credit” means the US$ 14,800,000 seller’s credit, which carries no interest, as set out in the seller’s credit deed dated even date herewith between the Seller as lender and the Owner as borrowers.
 
“Settlement Date” shall have the meaning given to it in Clause 16 (Loss, Damage and Compensation).
 
“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).
 
“SOFR / Lookback” means; such rate calculated in the formula of;
 
the daily cumulative compounded value of SOFR for the relevant Interest Period calculated  using the method of referring to the confirmed value published by Federal Reserve Bank of New York (or any other person which takes over the administration of that rate) as SOFR as of the Value Date on the US Government Securities Business Day immediately succeeding the Value Date ÷ Number of days during the relevant Interest Period * 360 (rounded off to the fifth decimal places), provided that a Non-US Government Securities Business Day in an Interest Period shall not be included for compound calculation.
 
“Value Date” means in relation to any Interest Period for which an interest rate is to be determined, ten (10) US Government Securities Business Days before the last day of that Interest Period.
 
“Stipulated Loss Value” means, with respect to any date, the amount in Dollars computed and payable as provided in Schedule 4 (Stipulated Loss Value) with reference to such date.
 
“Tax” shall have the meaning given to it in Clause 9 (Taxation) and “Taxes” and “Taxation” shall be construed accordingly.
 
“Tax Indemnitee” shall have the meaning given to it in Clause 9 (Taxation).
 
“Tax Residence” means, in relation to any person, the jurisdiction in which that person is principally resident for the purposes of paying Tax in relation to its capital or income, but, in relation to the Owner does not include any jurisdiction in which the Owner is resident for the purposes of paying Tax in relation to its capital or income only because:
 

 (a)
the Owner has entered into the transactions contemplated by this Agreement; or
 
15

 (b)
the Charterer has been grossly negligent or has wilfully defaulted in its obligations under this Agreement.
 
“Termination Date” means the date on which the Hire Period is to terminate or, as the context may require, terminates.
 
“Termination Value” means, with respect to any date, the amount in Dollars, computed and payable as provided in Schedule 3(Termination Value) with reference to such date.
 
“Third Parties Act” means the Contracts (Rights of Third Parties) Act 1999.
 
“Total Loss” means with respect to the Vessel any of the following events:
 

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

 (b)
requisition for title or other compulsory acquisition of the Vessel otherwise than by requisition for hire.
 
“Total Loss Date” means in relation to a Total Loss:
 

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

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

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

 (ii)
the date of any compromise, arrangement or agreement made by or on behalf of the Charterer or the Owner with the insurers in which the insurers agree to treat the Vessel as a total loss.
 
“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.
 
“Non-US Government Securities Business Day” means a day which is not a US Government Securities Business Day.
 
“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 this Agreement are from sources within the US for US federal income tax purposes.
 
16
“Vessel” means the 179,213 DWT Capesize Bulk Carrier M/V PARTNERSHIP with IMO number 9597848, including the Vessel’s equipment and where the context permits, any reference to the Vessel shall include the Manuals and Technical Records.
 
1.2
Clause headings and the table of contents are inserted for convenience of reference only, have no legal effect and shall be ignored in the interpretation of this Agreement.
 
1.3
In this Agreement, unless the context otherwise requires:
 
(a)
references to Clauses and Schedules are to be construed as references to the clauses of, and schedules to, this Agreement and references to this Agreement include its Schedules;
 
(b)
references to (or to any specified provision of) this Agreement, any other Relevant Document or any other document shall be construed as references to (or to any specified provision of) this Agreement, that other Relevant Document or that other document as in force for the time being and as from time to time amended in accordance with the terms thereof, or, as the case may be, with the agreement of the relevant parties and (where such consent is, by the terms of this Agreement, that other Relevant Document or that document, required to be obtained as a condition to such amendment being permitted) the prior written consent of any the relevant party to such Relevant Document or any combination of them;
 
(c)
references to a “regulation” include any present or future regulation, rule, official directive, requirement, request or guideline (whether or not having the force of law) of any Government Entity or supra-national authority;
 
(d)
words importing the plural shall include the singular and vice versa and words importing a gender shall include every gender;
 
(e)
references to a person shall be construed as including references to an individual, firm, company, corporation, unincorporated association or body of persons or any Government Entity;
 
(f)
references to any act, statute, ordinance or enactment shall be deemed to include references to such act, statute, ordinance or enactment as re-enacted, amended, extended, consolidated or replaced and any orders, decrees, proclamations, regulations, instruments or other subordinate legislation made and in force from time to time thereunder;
 
(g)
reference to any person shall be construed so as to include its successors, permitted transferees and permitted assigns;
 
(h)
a Charterer’s Event of Default is “continuing” if it has not been remedied or it has not been waived; and
 
(i)
reference to a party is to a party to this Agreement.
 
2
AGREEMENT TO CHARTER
 
The Owner shall let to the Charterer and the Charterer shall take the Vessel on bareboat charter, upon and subject to the terms and conditions of this Agreement, for the Hire Period.
 
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3
CONDITIONS PRECEDENT
 
3.1
The respective obligations of the Owner to let the Vessel and of the Charterer to take the Vessel on charter, under this Agreement, are subject to the respective conditions that:
 
(a)
prior to the Delivery Date, the Owner shall have received the documents specified in Section 1 of Part A of Schedule 1 (List of Documents and Evidence) and the Charterer shall have received the documents specified in Part B of Schedule 1 (List of Documents and Evidence); and
 
(b)
on the Delivery Date, the Owner shall have received the documents specified in Section 2 of Part A of Schedule 1(List of Documents and Evidence),
 
in each case in form and substance satisfactory to the Owner and/or the Charterer (both acting reasonably).
 
3.2
The Charterer and the Owner shall each use all reasonable endeavours to obtain and procure the issuance and execution of the documents, opinions and certificates which are to be obtained by the Owner and the Charterer respectively referred to in Part A and B of Schedule 1 (List of Documents and Evidence) prior to or on the Delivery Date.
 
3.3
The obligation of the Owner to charter the Vessel to the Charterer under this Agreement is subject to the further conditions that:
 
(a)
the representations and warranties in Clause 10 (Representations and Warranties) hereof shall be true and correct as if each was made with respect to the facts and circumstances existing immediately prior to the time when Delivery is to take place;
 
(b)
the representations and warranties given by the Guarantor in clause 11 (Representations and Warranties) of the Guarantee shall be true and correct as if each was made with respect to the facts and circumstances existing immediately prior to the time when Delivery is to take place;
 
(c)
no Charterer’s Event of Default shall have occurred and be continuing or would arise by reason of the Delivery taking place;
 
(d)
no event (including without limitation, any outstanding litigation) shall have occurred which would have a Material Adverse Effect;
 
(e)
Delivery shall have occurred on or prior to the Cancellation Date (unless otherwise agreed by the Owner and the Charterer); and
 
(f)
all of the documents received by the Owner as contemplated in Clause 3.1 are in full force and effect.
 
3.4
The obligation of the Charterer to take the Vessel on charter under this Agreement is subject to the further conditions that:
 
(a)
the representations and warranties of the Owner in Clause 10 (Representations and Warranties) hereof shall be true and correct as if each was made with respect to the facts and circumstances existing immediately prior to the time when Delivery takes place;
 
(b)
no Owner Event of Termination shall have occurred and be continuing or would arise by reason of the Delivery taking place; and
 
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(c)
delivery of the Vessel from the Sellers to the Owner under the MOA shall have occurred.
 
3.5
The conditions specified in Part A of Schedule 1 (List of Documents and Evidence) and Clause 3.3 may be waived in whole or in part and with or without conditions by the Owner, on or before Delivery and the conditions precedent in Part B of Schedule 1 (List of Documents and Evidence) and Clause 3.4 may be waived in whole or in part and with or without conditions by the Charterer on or before Delivery, in either case without prejudicing their respective rights to require fulfilment of such conditions (if such conditions are capable of later fulfilment) in whole or part at any time thereafter. Upon delivery of the Vessel from the Sellers to the Owner under the MOA, all conditions precedent shall automatically be deemed waived without conditions and this Agreement shall be in full force and effect.
 
4
DELIVERY, ACCEPTANCE AND TITLE
 
4.1
Title to the Vessel
 
(a)
Title to the Vessel shall pass to the Owner on the Delivery Date under the MOA (the exact timing of which as further set out in the Protocol of Delivery and Acceptance) and remain vested in the Owner after the Delivery Date pursuant to the terms of this Agreement and the MOA.
 
(b)
From the Delivery Date and throughout the Hire Period the Vessel shall be in the full possession and at the absolute disposal for all purposes of the Charterer and under its complete control in every respect.
 
4.2
Simultaneously with the transfer of title to the Vessel by the Seller to the Owner under the MOA, the Vessel shall be deemed, without any further act by the Charterer or the Owner, to have been delivered to the Charterer by the Owner and, subject to the terms of this Agreement, accepted by the Charterer for the purposes of this Agreement and the Hire Period shall commence. To evidence such delivery, the Charterer shall thereupon execute and deliver the Charter Protocol of Delivery and Acceptance to the Owner.
 
4.3
The Owner and the Charterer acknowledge that the condition, quality, suitability and fitness for purpose of the Vessel at Delivery shall be the sole responsibility of the Charterer, and (subject to Clauses 3.1, 3.3, and 3.4) once Delivery shall have occurred pursuant to Clause 4.2, the Owner shall not be entitled for any reason whatsoever to refuse to deliver, and the Charterer shall not be entitled for any reason whatsoever to refuse to accept delivery of, the Vessel or to refuse to execute and deliver the Charter Protocol of Delivery and Acceptance for the Vessel.
 
4.4
If, for any reason, the Vessel shall not have been delivered to and accepted by the Charterer in accordance with Clause 4.2 on or before 11:59 p.m. (Tokyo time) on the Cancellation Date or such later time as the Owner and the Charterer may agree in writing, then this Agreement shall be deemed nil and void without any further liability between the parties.
 
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5
EXTENT OF OWNER’S LIABILITY
 
The Charterer expressly agrees and acknowledges that the Vessel is chartered by demise to the Charterer hereunder on an “as is, where is” condition and that no condition, warranty or representation of any kind, express or implied, is or has or shall be deemed to have been given by or on behalf of the Owner in respect of the Vessel, and accordingly the Charterer confirms that, save only as expressly provided in this Agreement, it has not, in entering into this Agreement, relied on any condition, warranty or representation by the Owner, express or implied, whether arising by law or otherwise in relation to the Vessel, including, without limitation, warranties or representations as to the description, merchantability, fitness or suitability for any particular use or purpose, value, seaworthiness, condition, design, manufacture or operation of any kind or nature of the Vessel, or as to the absence of any latent or other defects whether or not discoverable, or as to the absence of any infringement of any patent, trademark or copyright, or as to the absence of any obligations based on strict liability in tort, and the benefit of any such condition, warranty or representation by the Owner is hereby irrevocably and unconditionally waived by the Charterer. No third party making any representation or warranty relating to the Vessel  is the agent of the Owner nor has any such third party authority to bind the Owner thereby. The acceptance by the Charterer of delivery of the Vessel pursuant to Clause 4 (Delivery, Acceptance and Title) shall constitute conclusive proof as between the Owner and the Charterer that the Vessel is in compliance with any requirements of this Agreement, is seaworthy in accordance with the specifications and is in good working order and repair and without defect or inherent or latent defect in title, seaworthiness, condition, design, operation or fitness for use, whether or not discoverable by the Charterer. The Owner shall not be liable for any loss or damage of any kind whatsoever, or any loss of profit, resulting directly or indirectly from any physical defect or alleged physical defect in the Vessel, and the Charterer shall not be entitled to make or assert any claim against the Owner or the Owner with respect to the condition of the Vessel.
 
At all times during the term Hire Period, the Owner shall have the right to create a mortgage or as the case may be mortgages (securing in total an amount which shall not exceed the total amount of the Purchase Price), over the Vessel in favour of the Lender as mortgagee. In the event that the title of the Vessel is transferred by the Owner to the Charterer in accordance with this Agreement, the Owner shall ensure that the mortgage(s) created pursuant to this Clause be fully and irrevocably discharged. The Owner undertakes and agrees to use its best efforts to procure from its mortgagee a fully executed quiet enjoyment letter in a form reasonably acceptable to Charterer.
 
6
CHARTER HIRE
 
6.1
The Charterer shall during the Hire Period pay Charter Hire to the Owner quarterly in arrears  on each Payment Date calculated on the number of days which shall elapse during the relevant period.
 
6.1A
Charter Hire shall be comprised of the aggregate of the following three portions;
 
I Amortization Component which shall be the amount described in Schedule 6 attached hereto corresponding to the relevant Payment Date;
 
II Interest Component which shall be the amount equal to interest that would accrue on the Owner’s Cost outstanding from time to time during the relevant Hire Calculation Period at the Interest Rate applicable to that Hire Calculation Period and payable quarterly in arrears on the Payment Date falling at the end of that Hire Calculation Period; and
 
III Administration cost which shall be an amount of USD 65 per day.
 
6.1B
Unavailability or changes to reference rates

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(A)
If a Published Rate Replacement Event has occurred in relation to any Published Rate, the Interest Component of the Charter Hire shall be calculated on the basis of a Replacement Reference Rate.

(B)
For the purposes of this Clause 6.1B, the following terms shall have the following meanings:
 

 (a)
“Published Rate” means SOFR or the SOFR / Lookback for any Quoted Tenor.
 

 (b)
“Published Rate Replacement Event” means, in relation to a Published Rate:
 

 (i)
the methodology, formula or other means of determining that Published Rate has, in the opinion of the Lender, materially changed;
 

 (ii)
(intentionally omitted)
 

 (A)
(intentionally omitted)
 

 (x)
the administrator of that Published Rate or its supervisor publicly announces that such administrator is insolvent; or
 

 (y)
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;
 

 (B)
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;
 

 (C)
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
 

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

 (iii)
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 the circumstance(s) or event(s) leading to such determination are not (in the opinion of the Lender) temporary;
 

 (iv)
in the opinion of the Lender, that Published Rate is otherwise no longer appropriate for the purposes of calculating interest under this Agreement; or
 

 (v)
in the opinion of the Lender, that Published Rate is no longer substantially similar to any successor reference rate in respect of the floating rate option of any related Hedging Agreement and any such successor reference rate applicable to the floating rate option of any related Hedging Agreement is not consistent with market practice.
 
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 (c)
“Quoted Tenor” means, in relation to SOFR / Lookback, any period for which that rate is customarily displayed on the relevant page or screen of an information service.
 

 (d)
“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;
 

 (e)
“Replacement Reference Rate” means a reference rate which is:
 

 (i)
formally designated, nominated or recommended as the replacement for a Published Rate by:
 

 (1)
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
 

 (2)
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 (2) above;
 

 (ii)
in the opinion of the Lender and the Owner, generally accepted in the international or any relevant domestic syndicated loan markets as the appropriate successor to a Published Rate;
 

 (iii)
in the opinion of the Lender and the Owner, an appropriate successor to a Published Rate; or
 

 (iv)
in the opinion of the Lender and the Owner, substantially similar to the successor reference rate in respect of the floating rate option of any related Hedging Agreement.
 
6.2
Following a Total Loss with respect to the Vessel, so long as the Charterer shall have performed its obligations and paid all amounts payable under Clause 16 (Loss, Damage and Compensation) in full, the Charterer’s obligation to pay Charter Hire with respect to the Vessel shall cease in accordance with the provisions of Clause 16 (Loss, Damage and Compensation).
 
6.3
The Charterer’s obligations to pay Charter Hire and make any other payments in accordance with this Agreement and the other Relevant Documents to which the Charterer is a party shall be “hell and high water basis” and absolute and unconditional irrespective of any circumstance or contingency whatsoever including (but not limited to):
 
(a)
the unavailability of the Vessel for any reason, including, but not limited to, any invalidity of title or any other defect in the merchantability, fitness for any purpose, condition, design or operation of any kind or nature of the Vessel; or
 
(b)
the ineligibility, lack of fitness or other defect whatsoever of the Vessel for any particular use or trade, or for want of registration or documentation under any Applicable Laws; or
 
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(c)
subject to Clause 6.2, the occurrence of a Total Loss or any other occurrence including the loss, destruction, confiscation, seizure, requisition of or damage to the Vessel, or the interruption or cessation in or prohibition of the use of possession or enjoyment of the Vessel by the Charterer for any reason whatsoever, unless such interruption or cessation in or prohibition of the use or enjoyment of the Vessel is directly or indirectly caused by the Owner; or
 
(d)
any failure or delay on the part of any party hereto or to any Relevant Document, whether with or without fault on its part, in performing or complying with any of the terms or covenants under this Agreement or any other Relevant Document; or
 
(e)
the occurrence of any Charterer’s Event of Default, Owner Event of Termination (unless and until the Termination Date specified in any notice by the Charterer in accordance with Clause 20.2) or any default or any insolvency, bankruptcy, extinction, liquidation, winding-up, reorganisation, reconstruction, arrangement, readjustment or rescheduling of debt, dissolution or similar proceedings by or against any Approved Manager, the Guarantor, the Charterer or any Permitted Sub-charterer; or
 
(f)
any invalidity or unenforceability of this Agreement or any other Relevant Document; or
 
(g)
any other cause which but for this provision would or might have the effect of terminating or in any way affecting any obligation of the Charterer hereunder or under any other Relevant Document to which the Charterer is a party; or
 
(h)
any right of set off, counterclaim, recoupment, defence or similar right (unless and to the extent the exercise of such right is required by law or agreed with the Owner).
 
7
PAYMENTS, INTEREST AND CALCULATIONS
 
7.1
All payments to be made by the Charterer under this Agreement or any other Relevant Document shall be made:
 

 (a)
on or before 11:00am Tokyo time on the due date in funds which are for same day settlement and, save as provided herein, without prior demand; and
 

 (b)
in Dollars to the Dollar Account for the account of the Owner to the extent the payment is not an Excluded Payment; and
 

 (c)
if an Excluded Payment, in the currency in which such payment is due for value on the day on which such amount is due to such account or accounts as the Owner shall specify by written notice given to the Charterer, including supporting evidence, prior to the due date for such payment.
 
7.2
When any payment under this Agreement would otherwise be due on a day that is not a Business Day, the due date for that payment shall be the immediately succeeding Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).
 
7.3
If the Charterer or the Owner fails to pay any sum on its due date for payment under this Agreement, the Charterer or, as the case may be, the Owner, shall pay to the Owner or, as the case may be, to the Charterer, on demand interest on such sum from the due date up to the date of actual payment (as well after as before any relevant judgment) at the Overdue Interest.
 
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7.4
Except as otherwise expressly provided herein, all interest payable under this Agreement shall accrue from day to day and shall be calculated, in respect of any payments due hereunder in any currency, on the basis of the actual number of days elapsed and a 360 day year.
 
7.5
Any demand for payment in the provisions contained in this Clause 7 (Payments, Interest and Calculations) shall be made in writing, except as otherwise specified, and shall be properly documented and provided to the Charterer.
 
8
COSTS AND INDEMNITIES
 
8.1
Subject to the exclusions stated in Clause 8.2, the Charterer agrees to indemnify, protect, defend and hold harmless on an after-tax basis, the Owner (each such person (and each of Charterer and the Guarantor with respect to Clause 8.5) being referred to in this Clause 8 (Costs and Indemnities) as an “Indemnitee”) from and against any and all liabilities, obligations, losses, damages, breakages, penalties, claims, injuries, demands, charges (including, without limitation, fuel, oil, port charges, fees and insurance premiums), expenses (including, without limitation, reasonable legal fees or victualing, crew, navigation, manning, operating and freight expenses), costs, actions or suits (whether or not on the basis of negligence (imputed or otherwise), strict or absolute liability or liability in tort) (all of which are collectively referred to as “Claims”) which are suffered by such Indemnitee (unless caused by the Indemnitee’s own actions) resulting from or arising out of the following if and to the extent that the claimant of any such Claim could demand payment from the Owner as well:
 

 (a)
the manufacture, design, structure, delivery, non-delivery, ownership, improvement, overhaul, charter, sub-charter, possession, use, control, maintenance, repair, operation, condition, import, export, storage, registration, negotiation, flagging, modification, alteration, replacement, return, redelivery, transfer or other disposition of the Vessel or loss thereof or damage thereto or relating to loss or destruction of any property or death or injury of or other loss of whatsoever nature suffered by any person caused by, relating to or arising from or out of (in each case whether directly or indirectly) any of the foregoing matters (including, without limitation, as a consequence of latent or other defects in the Vessel, whether or not discoverable);
 

 (b)
any infringement of any patent, trademark, copyright or other intellectual property right whatsoever relating to the Vessel;
 

 (c)
any loss, destruction, confiscation, seizure or requisition of the Vessel or any steps taken by an Indemnitee with a view to the prevention of any of the same (provided that due notice of the taking of such steps is first given to the Charterer in writing); or
 

 (d)
the occurrence of a default by the Charterer in the due and punctual performance of its obligations under this Agreement or any of the other Relevant Documents to which it is a party or the occurrence and continuance of any Charterer’s Event of Default.
 
8.2
The indemnity in Clause 8.1 shall not extend to any Claim by an Indemnitee:
 

 (a)
which represents ordinary and usual operating or overhead expenses of such Indemnitee other than to the extent such expenses are caused directly by the occurrence of a Charterer’s Event of Default; or
 
24

 (b)
without prejudice to Clause 8.3 (Costs and Expenses), which relates to legal, accounting or other expenses incurred by such Indemnitee in connection with the negotiation, preparation and execution of any Relevant Document; or
 

 (c)
to the extent such Claim results from or arises out of one or more of the following:
 

 (i)
any express representation or express warranty by such Indemnitee in any Relevant Document being incorrect (except to the extent such incorrectness is caused by or arises out of a Charterer’s Event of Default); or
 

 (ii)
the failure by such Indemnitee (and not by the Charterer, the Guarantor, any Approved Manager or any Permitted Sub-charterer) to perform or observe, or the breach by such Indemnitee (and not by the Charterer, the Guarantor, any Approved Manager or any Permitted Sub-charterer) of, any express undertaking, agreement, covenant or condition in any of the Relevant Documents to be performed or observed by it (other than any such failure is not attributable to a Charterer’s Event of Default); or
 

 (iii)
the fraudulent act, wilful misconduct or gross negligence of such Indemnitee under or in connection with the Relevant Documents; or
 

 (iv)
a disposition by such Indemnitee of all or any part of such Indemnitee’s interest in the Vessel or the Relevant Documents, other than in accordance with the terms of, or made or arising in connection with any enforcement of, the Relevant Documents; or
 

 (v)
acts or events which occur after the earlier of (a) the redelivery of the Vessel to the Owner pursuant to, and in full compliance with this Agreement, or (b) the sale, assignment, transfer or other disposition of the Vessel by the Owner, other than to the Charterer, under this Agreement (except that the Charterer shall be liable for claims which are attributable to acts or events occurring prior to the earlier of the redelivery of the Vessel to the Owner pursuant to, and in full compliance with, this Agreement or any such sale, assignment, transfer or other disposition of the Vessel by the Owner); or
 
(d)
which has been unconditionally and irrevocably indemnified under the Insurances
 
(e)
which the relevant Indemnitee has been unconditionally and irrevocably indemnified under any other provision of this Agreement and this applies in particular to loss of profit, which shall be deemed wholly compensated for by payment of the Stipulated Loss Value or Termination Value, as the case may be.
 
8.3
In the case of any Claim indemnified by the Charterer hereunder which is covered by the Insurances, the Indemnitee agrees to cooperate with the insurers in the exercise of their rights to investigate, defend or compromise such Claim as may be required to retain the benefits of the Insurances with respect to such Claim.
 
8.4
An Indemnitee shall as soon as is reasonably practicable after becoming aware thereof notify the Charterer of any Claim (whether or not covered by the Insurances) as to which indemnification is or is reasonably likely to be sought under this Clause 8  (Costs and Indemnities).
 
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8.5
Notwithstanding anything to the contrary above, if the Vessel be arrested or otherwise detained by reason of a claim or claims against the Owner, the Owner shall at their own expense take all necessary steps to promptly and as soon as possible secure that the Vessel is released, including the provision of bail. In such circumstances the Owner shall indemnify the Charterer and the Guarantor against any loss, damage or expense incurred by the Charterer or the Guarantor (including hire paid) as a direct consequence of such arrest or detention.
 
8.6
Conduct of Claims
 
(a)
If either of the parties shall become liable to indemnify any Indemnitee pursuant to this Clause 8 (Costs and Indemnities), the Charterer and the Owner shall consult in good faith and each of them shall use reasonable endeavours to avoid (or reduce the amount of) the Claim giving rise to such indemnification.
 
(b)
If a Claim shall be made against any Indemnitee for which a party is or may be required to indemnify the Indemnitee pursuant to this Clause 8 (Costs and Indemnities), the Indemnitee shall promptly notify the liable party in writing of that Claim and shall promptly provide the liable party with all such information available to the Indemnitee regarding the Claim as the liable party may reasonably request.  If a Claim shall be made against any Indemnitee for which the liable party may be required to indemnify the Indemnitee pursuant to this Clause 8 (Costs and Indemnities), and under Applicable Law of the relevant jurisdiction the liable party is allowed to contest directly that Claim in its own name, then, subject to the rights of insurers under any Insurances and without prejudice to the obligation of the liable party to pay any sum due to the Indemnitee pursuant to this Clause 8 (Costs and Indemnities) on its due date, the liable party shall be permitted, at its expense and in its own name, to contest the imposition of that Claim. The liable party shall not be permitted to contest the imposition of a Claim in the name of the Indemnitee other than as contemplated in Clauses 8.6 (b) and 8.6 (c).
 
(c)
If the liable party is prohibited by Applicable Law from contesting a Claim in its own name, or if it is a requirement of Applicable Law for an Indemnitee to join in or assist in the contesting by the liable party of any Claim, upon request from the liable party, the Indemnitee shall, subject to the provisions of Clause 8.6 (d), in good faith, at the liable party’s expense, contest or assist promptly in contesting the Claim. After considering any views offered by the Indemnitee and the Indemnitee’s counsel concerning the forum in which a Claim is most likely to be favourably contested, the liable party may, acting reasonably, select the forum for the contest and determine whether the contest shall be by (i) resisting the Claim, (ii) paying the Claim under protest, (iii) paying the Claim and seeking a refund or other repayment thereof, or (iv) seeking a reduction in the amount of the Claim.
 
(d)
In no event shall an Indemnitee be required to contest any Claim nor shall an Indemnitee be required to (i) join in or (ii) assist in contesting any Claim pursuant to this Clause 8 (Costs and Indemnities) unless:
 

 (i)
the liable party shall have agreed to pay the Indemnitee on demand, and indemnify such Indemnitee from, all costs, losses and expenses that the Indemnitee incurs in contesting or assisting in contesting the Claim or arising out of or relating to the contest or assistance (including, but not limited to, all out-of-pocket costs, expenses and legal fees);
 
26

 (ii)
the Indemnitee shall have reasonably determined that the action to be taken will not result in a sale, forfeiture or loss of the Vessel, or the creation of any Lien on the Vessel other than Permitted Liens or any risk of any criminal liability or penalty against any Indemnitee;
 

 (iii)
if a contest shall be conducted in a manner requiring the advance payment of the Claim, the liable party shall have advanced sufficient funds to make the payment required; and
 

 (iv)
the liable party shall have provided the Indemnitee and (if the Indemnitee is not the Owner or the Charterer as the case may be) the Owner or the Charterer, as the case may be, the grounds for such contest.
 
8.7
Upon payment in full of any Claim pursuant to this Clause 8 (Costs and Indemnities), the liable party, without any further action, shall be subrogated to any rights which the relevant Indemnitee may have relating thereto, provided that the liable party by virtue of such subrogation shall not become entitled to seek any indemnification or contribution from, or make any claim against, the Indemnitee in respect of any Claim indemnified against hereunder save in each case of fraudulent act, wilful misconduct or gross negligence of such Indemnitee. Each Indemnitee agrees to give, at the expense of the liable party, any reasonable further assurances and to enter into such reasonable agreements and to co-operate with and permit the liable party to pursue such subrogation rights as permitted hereunder, if any, to the extent reasonably requested by the liable party.
 
8.8
In the event that the liable party shall have paid an amount to an Indemnitee pursuant to this Clause 8 (Costs and Indemnities), and the Indemnitee subsequently shall be reimbursed in respect of the indemnified amount from any other person, the Indemnitee shall promptly pay the liable party an amount equal to the lesser of the amount of the reimbursement and the amount paid by the liable party (less any Taxes imposed in respect of the reimbursement and any costs of remittance thereof, provided always that the Indemnitee shall use its reasonable efforts to avoid or, if unavoidable, to reduce the amount of any such Taxes).
 
8.9
No payment to the Owner, the Charterer or any other Indemnitee under or pursuant to this Agreement or any other Relevant Document, pursuant to any judgment or order of any court or otherwise shall operate to discharge the obligations of any party in respect of which it was made unless and until payment shall have been received in the currency (the “Currency of Obligation”) in which such payment was required to be made hereunder and, to the extent that the amount of any such payment shall on actual conversion into the Currency of Obligation fall short of the amount of the relevant obligation expressed in the Currency of Obligation, the Owner, the Charterer or such other Indemnitee shall have a further separate cause of action against the liable party for the recovery of such sum as shall after conversion into the Currency of Obligation be equal to the amount of the shortfall. Without prejudice to the foregoing, to the extent that the amount of any payment referred to above shall on actual conversion into the Currency of Obligation exceed the amounts due and payable to the Owner, the Charterer or such other Indemnitee in the Currency of Obligation, the Owner, the Charterer or such other Indemnitee shall promptly reimburse such excess to the liable party (less any cost of remittance thereof).
 
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8.10
Subject to Clause 7 (Payments, Interest and Calculations), US$ is the currency of account for those sums stated to be denominated or due from the Charterer under this Agreement in such currency, provided that each payment in respect of costs, losses, Taxes or expenses shall be made in the currency in which the cost, loss, Tax or expense was incurred or imposed.
 
8.11
The Charterer and the Owner undertakes to the other to perform its undertakings under this Clause 8 (Costs and Indemnities) in respect of any Indemnitee not party to this Agreement as if that Indemnitee were party to this Agreement; provided in the event that an Indemnitee is a Kumiai-in, the Owner shall procure that the relevant Indemnitee shall comply with the terms of this Clause 8 (Costs and Indemnities) as if it were party to this Agreement. If the Charterer shall be expressed to be obliged to make any payment to or on behalf of any Indemnitee not party to this Agreement, the Charterer shall make the relevant payment as directed by the Owner.
 
9
TAXATION
 
9.1
Tax Gross-up
 
If at any time any deduction or withholding (including a FATCA Deduction) in respect of Taxes is required to be made from any payment made or to be made by the Charterer under this Agreement or any other Relevant Document, the Charterer shall pay to the relevant party such additional amounts as may be necessary to ensure that the relevant party receives (after such deduction or withholding and any deduction or withholding applicable to any additional amounts) an amount in the relevant currency equal to the full amount which it would have received had payment not been subject to any such withholding or deduction. In the event that the Charterer is required to make any such withholding or deduction, the Charterer shall obtain any receipt or certificates of payment from the appropriate tax authorities (if reasonably available) and such other documents as the relevant party may reasonably request and shall as soon as reasonably practicable provide copies of such certificates and documents to the relevant party.  The Owner agrees to co-operate with the Charterer to avoid or minimise, if possible, such withholding or deduction or to obtain, if possible, applicable refunds as to such withholding or deduction in the jurisdiction which required such withholding or deduction and to reimburse to the Charterer such refunds (less the costs of remittance thereof), if any up to the additional amount paid by the Charterer in respect of the withholding or deduction in respect of which the refund relates.  The Owner agrees, upon the request of the Charterer, to furnish such certificates and other documents as the Charterer may reasonably determine to be necessary to establish the Owner’s or Charterer’s (as agent of the Owner) entitlement (if any) to any exemption from or reduced rate of withholding or deduction under the Applicable Law of any country, or any applicable tax treaty.
 
9.2
If any party becomes aware of any circumstances which will give rise to an obligation on the part of the Charterer to make a payment of a material amount under Clause 9.1 (Tax Gross-up) it shall promptly advise the other party of such circumstances.
 
9.3
The provisions of Clause 8 (Costs and Indemnities) shall apply, mutatis mutandis, to this Clause 9 (Taxation).

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10
REPRESENTATIONS AND WARRANTIES
 
10.1
The Charterer represents and warrants to the Owner that as at the date hereof:
 
(a)
it is a limited liability company duly incorporated and validly existing under the laws of the Republic of the Marshall Islands;
 
(b)
the Relevant Documents to which it is a party constitute or will, when executed, constitute legal, valid and binding obligations of the Charterer and are and will be enforceable in accordance with their respective terms, except as such enforcement may be limited by any relevant bankruptcy, insolvency, administrative or similar laws affecting creditors’ rights generally and by general principles of equity;
 
(c)
the Charterer has the full power to carry on its business as such business is now being conducted and to own its property and assets;
 
(d)
the Charterer has the full power to execute, deliver and perform its obligations under this Agreement and each of the other Relevant Documents to which it is or is to be a party and the transactions contemplated by those Relevant Documents, and all necessary action has been taken to authorise the execution, on its behalf by the relevant signatory thereto, the delivery and performance of the same and its obligations hereunder and thereunder;
 
(e)
each Security Document to which the Charterer is a party does now or, as the case may be, will upon execution and delivery (and, where applicable, registration as provided for in that Security Document) confer the security it purports to confer over any assets to which such Security Document, by its terms, relates;
 
(f)
no third party has any Lien (except for Permitted Liens) over any asset to which a Security Document, by its terms, relates and the Charterer is the sole legal and beneficial owner of the respective assets over which it purports to grant security pursuant to the Security Documents;
 
(g)
all Licenses required or desirable:
 

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

 (ii)
to make the Relevant Documents to which the Charterer is a party admissible in evidence in its jurisdiction of incorporation (if so required),
 
have been obtained or effected and are in full force and effect;
 
(h)
to the best of its knowledge and belief no corporate action, legal proceeding or other procedure or step or creditors’ process as described, in each case, in Clause 18.1(m), has been taken, or, to the knowledge of the Charterer, threatened in relation to the Charterer or the Guarantor; and none of the circumstances described in Clause 18.1 (j), (k) and (l)applies to the Charterer or the Guarantor;
 
(i)
as at the date hereof, it is not required to make any deduction for or on account of Tax from any payment the Charterer may make under this Agreement or any other Relevant Document to which it is a party;
 
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(j)
the execution and delivery of, the performance of its obligations under, and compliance with the provisions of, this Agreement and any of the other Relevant Documents to which it is or is to be a party by the Charterer or the carrying out of the transactions hereby or thereby contemplated does not and will not contravene, conflict with, or result in, as appropriate:
 

 (i)
any law, decree, rule or regulation or any determination, order or award of any court or any governmental, judicial or public body or authority applicable to it;
 

 (ii)
any mortgage, agreement, other undertaking or instrument binding upon it or a default or termination event (howsoever described) under any such mortgage, agreement, other undertaking or instrument;
 

 (iii)
its constitutional documents or corporate rules; or
 

 (iv)
the creation or imposition or obligation of the Charterer to create any Lien on or over any of its undertaking, properties, assets, rights or revenues (other than any Lien arising pursuant to the Relevant Documents or any Permitted Lien);
 
(k)
it is not necessary or desirable to ensure the legality, validity, enforceability or admissibility in evidence of this Agreement or any of the Relevant Documents to which the Charterer or the Guarantor is a party that any of them or any other instrument be filed, recorded, registered or enrolled in any court, public office or elsewhere in the Republic of Marshall Islands or that any stamp, registration or similar tax be paid in the Republic of Marshall Islands or in relation to this Agreement or any of the Relevant Documents;
 
(l)
no Charterer’s Event of Default has occurred and is continuing or might reasonably be expected to result from the entry by the Charterer into this Agreement or the Relevant Documents;
 
(m)
no other event or circumstance is outstanding which constitutes a default or, with the giving of notice, lapse of time or other satisfaction of any condition would constitute, a default under any other agreement or instrument which is binding on the Charterer or to which the Charterer’s assets are subject which has or is reasonably likely to have a Material Adverse Effect;
 
(n)
the Charterer’s and the Guarantor’s Original Financial Statements were prepared in accordance with the applicable accounting principles consistently applied;
 
(o)
the Charterer’s and the Guarantor’s Original Financial Statements give a true and fair view of its financial condition and results of operations during the relevant financial year;
 
(p)
the Charterer’s and the Guarantor’s most recent financial statements delivered pursuant to Clause 14 (Reports):
 

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

 (ii)
give a true and fair view of (if audited) or fairly present (if unaudited) its consolidated financial condition as at the end of, and consolidated results of operations for, the period to which they relate;
 
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(q)
there has been no material adverse change in its assets, business, operations or financial condition (or the assets, business or consolidated financial condition of any of the Charterer or the Guarantor since 31 December 2021);
 
(r)
neither the Charterer nor any of its assets is entitled to any immunity from any legal action or proceeding on the grounds of sovereignty or otherwise (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement);
 
(s)
the Charterer has not entered into any deferred or conditional sale agreement with respect to the Vessel;
 
(t)
to the best of its knowledge and belief, no litigation, arbitration or administrative proceedings, investigations, other actions or proceedings or Environmental Claims have commenced or threatened by or before any court, governmental or administrative agency or arbitral body against the Charterer which, if adversely determined, are likely to have a Material Adverse Effect;
 
(u)
no Environmental Incident has occurred and no person has claimed that an Environmental Incident has occurred, which, if adversely determined, is likely to have a Material Adverse Effect;
 
(v)
the claims of the Owner against the Charterer under the Relevant Documents rank at least pari passu with the claims of all of the Charterer’s unsecured creditors save those whose claims are preferred by any bankruptcy, insolvency, liquidation or other similar laws of general application;
 
(w)
as at the date hereof, no Insolvency Proceedings relating to the Charterer have been commenced against the Charterer;
 
(x)
it has:
 

 (i)
complied with all Environmental Laws to which it may be subject;
 

 (ii)
obtained all Environmental Licences required in connection with its business; and
 

 (iii)
complied with the terms of those Environmental Licences,
 
in each case where failure to do so might have or constitute a Material Adverse Effect;
 
(y)
all Insurances required to be effected and maintained under this Agreement remain in full force and effect;
 
(z)
the Vessel has not suffered a Total Loss and is and will be on the Delivery Date in good working order free from any Liens (other than Permitted Liens);
 
(aa)
any factual information provided by the Charterer to the Owner and/or the Lender in connection with the negotiation and preparation of this Agreement and any of the other Relevant Documents was true and accurate in all material respects and not misleading, does not omit material facts and all reasonable enquiries have been made to verify the facts and statements contained therein; there are no other facts the omission of which would make any fact or statement therein materially misleading;
 
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(bb)
at the date of this Agreement, the Guarantor legally and beneficially owns 100 per cent. of the shares in the Charterer;
 
(cc)
none of the Charterer, the Guarantor or any of their Affiliates, nor any of their respective directors, officers or employees nor, to the knowledge of the Charterer, any persons acting on any of their behalf:
 

 (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;
 

 (iv)
is in breach of Sanctions; or
 

 (v)
has received notice of or is aware of any claim, action, suit, proceeding or investigation against it with respect to Sanctions by any Sanctions Authority;
 
(dd)
the Charterer, the Guarantor and each of their Affiliates and in each case their respective directors, officers or employees have conducted their businesses in compliance with applicable bribery and anti-corruption laws (including without limitation the United States Foreign Corrupt Practices Act, the UK Bribery Act 2010 and the OECD Convention);
 
(ee)
as at the date hereof, it is not a FATCA FFI or a US Tax Obligor; and
 
(ff)
none of the Charterer, Guarantor or any of their Affiliates, nor any of their respective directors, officers or employees nor, to the knowledge of the Charterer, any persons acting on any of their behalf belongs to, or have a direct or indirect relationship with, the Anti-Social Forces; and
 
(gg)
the Charterer and the Guarantor have executed each Relevant Document to which they are a party outside Japan.
 
(hh)
there are no Lien on the Vessel except for Permitted Liens;
 
10.2
The Owner hereby represents and warrants to the Charterer that as at the date hereof:
 
(a)
it is duly incorporated and validly existing under the laws of the Republic of the Marshall Islands  and has the power to carry on its business as such business is now being conducted and to own its property and assets and it is not a FATCA FFI or a US Tax Obligor;
 
(b)
its registered office is at Marshall Islands, its sole shareholders’ Tax Residence is in Japan and it does not carry on any trade or business in the Republic of Marshall Islands or Greece;
 
(c)
it has the power to execute, deliver and perform its obligations under this Agreement and each  of the Relevant Documents to which it is a party and all necessary corporate action has been taken to authorise the execution, delivery and performance of the same and its obligations hereunder and thereunder;
 
(d)
this Agreement and each Relevant Document to which it is a party constitute its legal, valid and binding obligations enforceable in accordance with their terms;
 
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(e)
the execution and delivery of, the performance of its obligations under, and in compliance with the provisions of, this Agreement and any of the Relevant Documents to which it is or is to be a party by the Owner or the carrying out of the transactions hereby or thereby contemplated does not and will not contravene, conflict with or result in, as appropriate:
 

 (i)
any law, decree, rule or regulation or any determination, order or award of any court or any governmental, judicial or public body or authority applicable to it;
 

 (ii)
any breach of any of the terms of, or constitute a default under, any agreement or other instrument or document to which it is a party or is subject or by which it or any of its property or assets is bound;
 

 (iii)
any provision of its constitutional documents or corporate rules; or
 

 (iv)
the creation or imposition of or its obligation to create any Lien on or over the Vessel or over any of its undertaking, properties, assets, rights or revenues (otherwise than as created or permitted by the Relevant Documents or any Permitted Lien (other than an Owner Lien));
 
(f)
except for (i) the routine ex post facto reporting to the Minister of Finance of Japan as required under the Foreign Exchange and Foreign Trade Law of Japan and (ii) the ex post facto filing of the commencement of vessel leasing business pursuant to Article 33 of the Marine Transportation Act of Japan, every consent of, or registration with, or declaration or notice to, every Government Entity in Japan, if any, required by it to authorise, or required by it in connection with, the execution, delivery, validity, priority, enforceability or effectiveness of this Agreement and the other Relevant Documents or the performance by it of its obligations under this Agreement and the other Relevant Documents has been duly obtained or made and is in full force and effect and there has been no default in the observance or performance of any of the conditions or restrictions (if any) imposed on, or in connection with, any of the same;
 
(g)
it is not necessary or desirable to ensure the legality, validity, enforceability or admissibility in evidence in Japan of this Agreement or any of the Relevant Documents to which it is a party that any of them or any other instrument be filed, recorded, registered or enrolled in any court, public office or elsewhere in Japan or, so long as this Agreement and the other Relevant Documents are executed and delivered outside Japan and there are no Applicable Laws that will require a change in the place of the execution or delivery of this Agreement and the other Relevant Documents, that no stamp, registration or similar tax are required to be paid in Japan on or in relation to this Agreement or any of the Relevant Documents to which it is a party;
 
(h)
neither an Owner Event of Termination has occurred or is continuing or might reasonably be expected to result from the entry by the Owner into this Agreement or the Relevant Documents nor has any other event or circumstance occurred and is continuing which, would (with the expiry of any, if granted, grace period, the giving of any notice or a combination of the foregoing or the making of any determination by the Charterer) pursuant to Clause 20 (Owner Events of Termination and Charterer’s Rights) constitute an Owner Event of Termination;
 
(i)
to the best of its knowledge and belief, there are no pending or threatened actions, proceedings or investigations by or before any court, governmental or administrative agency or arbitral body, in each case against the Owner which, if adversely determined, which is or which is likely to have a material adverse effect on its condition, business or operations or which could impair its ability to perform its obligations under this Agreement or any of the other Relevant Documents;
 
33
(j)
neither it nor any of its assets is entitled to any immunity from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement);
 
(k)
all Licenses required or desirable:
 

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

 (ii)
to make the Relevant Documents to which the Owner is a party admissible in evidence in its jurisdiction of incorporation (if so required),
 
have been obtained or effected and are in full force and effect;
 
(l)
no other event or circumstance is outstanding which constitutes a default or, with the giving of notice, lapse of time or other satisfaction of any condition would constitute, a default under any other agreement or instrument which is binding on the Owner or to which the Owner’s assets are subject which has or is reasonably likely to have a Material Adverse Effect;
 
(m)
every authorisation required by the Owner in connection with the conduct of its business and the ownership, use, exploitation or occupation of its property and assets has been obtained and is in full force and effect and there has been no default in the observance of the conditions and restrictions (if any) imposed in, or in connection with, any of the same and no circumstances have arisen whereby any remedial action is likely to be required to be taken by, or at the expense of, the Owner under or pursuant to any law or regulation applicable to the business, property or assets of the Owner;
 
(n)
none of the Owner, or any of its Affiliates, nor any of their respective directors, officers or employees nor, to the knowledge of the Owner, any persons acting on any of their behalf:
 

 (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;
 

 (iv)
is in breach of Sanctions; or
 

 (v)
has received notice of or is aware of any claim, action, suit, proceeding or investigation against it with respect to Sanctions by any Sanctions Authority;
 
(o)
the Owner and each of its Affiliates and in each case their respective directors, officers or employees have conducted their businesses in compliance with applicable bribery and anti-corruption laws (including without limitation the United States Foreign Corrupt Practices Act, the UK Bribery Act 2010 and the OECD Convention) and the Owner and each of its Affiliates have instituted and maintained policies and procedures designed to promote and achieve compliance with such laws;
 
34
(p)
none of the Owner or any of its Affiliates, nor any of their respective directors, officers or employees nor, to the knowledge of the Charterer, any persons acting on any of their behalf belongs to, or have a direct or indirect relationship with, the Anti-Social Forces; and
 
(q)
the Owner has executed each Relevant Document to which it is a party outside Japan.
 
10.3
The rights and remedies of the Owner in relation to any misrepresentation or breach of warranty on the part of the Charterer and the rights and remedies of the Charterer in relation to any misrepresentation or breach of warranty on the part of the Owner shall not be prejudiced by any investigation by or on behalf of the Owner into the affairs of the Charterer or by the Charterer into the affairs of the Owner, as the case may be, by the performance of this Agreement or any other Relevant Document or by any other act or thing which may be done or omitted to be done by the Owner or the Charterer under this Agreement and which would or might, but for this Clause 10.3, prejudice such rights and remedies.
 
11
GENERAL UNDERTAKINGS
 
11.1
The Charterer undertakes to the Owner that from the date of this Agreement until the date of performance in full by the Charterer of all of its obligations due or to become due under this Agreement or any other Relevant Document, unless as otherwise permitted by the Owner (such consent not to be unreasonably withheld or delayed):
 
(a)
it shall not engage in any business other than the chartering, pooling and operation of the Vessel and other ancillary activities;
 
(b)
it shall pay all licence fees, registration fees, charges and taxes which may now or hereafter be imposed in respect of the chartering, possession or use of the Vessel by the Charterer;
 
(c)
it will provide the Owner with a desktop valuation report from an Approved Valuer addressed to the Owner annually (no later than in March 31st of each year) unless a Charterer’s Event of Default has occurred and is continuing, in which event the Owner shall be entitled to obtain valuations at such times they or it, as the case may be, shall reasonably deem appropriate at the Charterer’s cost;
 
(d)
it shall not enter into any scheme of merger or consolidation with any other person under which the Charterer ceases to exist and/or all or substantially all of the assets or liabilities of the Charterer are vested in or assumed by any other person unless the Charterer can demonstrate that the ability of the Charterer to perform its material obligations under this Agreement or any other Relevant Document to which it is a party shall not be materially impaired thereby;
 
(e)
it shall not whether by a single transaction or series of transactions or a number of related or unrelated transactions and whether at one time or over a period of time, sell, transfer, lease out (other than by way of a Permitted Sub-charter to a Permitted Sub-charterer), lend or otherwise dispose of all or substantially all of its assets or of any parts of its assets which, either alone or when aggregated with all other disposals required to be taken into account thereunder, is substantial in relation to its assets taken as a whole;
 
(f)
it shall not become (and it shall procure that the Guarantor does not become) a FATCA FFI or a US Tax Obligor;
 
35
(g)
it, except with the Owner’s prior written consent (which shall not be unreasonably withheld), shall not create or permit to exist any Lien (other than any Permitted Lien), on or in respect of the Vessel;
 
(h)
it shall not do or permit to be done any act or thing which will jeopardise the Owner’s title in and to the Vessel;
 
(i)
immediately upon (and in any event no later than fifteen (15) Business days from) the Charterer becoming aware of the existence of the occurrence of any Charterer’s Event Default or a Material Adverse Effect, the Charterer will advise the Owner in writing thereof and of the action (if any) the Charterer is taking or proposing to take with respect thereto;
 
(j)
it shall not incur or allow to remain outstanding any Financial Indebtedness other than Financial Indebtedness incurred in the ordinary course of its business as charterer of the Vessel;
 
(k)
it shall not, and shall procure that its Affiliates shall not, provide funds directly or indirectly (or any collateral capable of being transferred into funds) to any person so that such person will assume or guarantee all or any part of the Charterer’s payment obligations under this Agreement or as collateral therefor;
 
(l)
it shall not enter into any deferred or conditional sale agreement with respect to the Vessel or in any manner deliver, transfer or relinquish possession of the Vessel to any person other than as permitted by this Agreement;
 
(m)
it will, at its own cost and expense, cause any Lien created by any of the Relevant Documents to which it is a party to be perfected and remain perfected by effecting any necessary recording, filing, re-recording or re-filing (including, without limitation, filing and re-filing of financing and continuation statements) (to the extent applicable);
 
(n)
it will duly perform and observe those provisions of this Agreement and the other Relevant Documents to which it is a party;
 
(o)
it will ensure that the claims of the Owner against the Charterer under the Relevant Documents to which it is a party will rank at least pari passu with the claims of all of the Charterer’s unsecured creditors save those whose claims are preferred by any bankruptcy, insolvency, liquidation or other similar laws of general application;
 
(p)
it will, on all occasions when the ownership of the Vessel is relevant, make clear to third parties that such title is held by the Owner subject to the Relevant Documents;
 
(q)
it will comply with all Applicable Laws by which it or its assets are bound in connection with the transactions contemplated by the Relevant Documents and otherwise comply in all material respects with all Applicable Laws binding on it or its assets;
 
(r)
without prejudice to any other provisions hereof, it will make payment of claims, pay and discharge, or cause to be paid and discharged, when due and payable, or make adequate provision by way of security or otherwise for, or contest in good faith, all debts, damages, claims, taxes and liabilities which may have given or may reasonably be expected to give rise to any Lien (other than a Permitted Lien) over or affecting the Vessel;
 
36
(s)
it will ensure that all financial and other information which is furnished in writing by it or on its behalf under or in connection with this Agreement or any other Relevant Documents to which it is a party will be true and not misleading in any material respect and shall not omit any material fact or consideration;
 
(t)
it shall ensure that neither the Guarantor nor any of their respective Affiliates will, directly or indirectly, make any proceeds derived from the Loan Agreement available to, or for the benefit of, a Prohibited Person or permit or authorise any such proceeds to be applied in a manner or for a purpose prohibited by Sanctions; and
 
(u)
it shall not change the location of its centre of main interest or create any “establishment” (as defined in the European Union Regulation (EC) No2015/8848) in any other jurisdiction.
 
(v)
The Charterer shall supply to the Owner;
 
(a) promptly upon becoming aware of them, the details of any litigation, arbitration, administrative, environmental or other proceedings of which claim amount is in excess of USD 50 million and which are current, threatened or pending against the Charterer or the Guarantor,(b) promptly following despatch, copies of all communications which are despatched to its shareholders or creditors or any class of them generally.
 
11.2
The Owner hereby undertakes and agrees with the Charterer that:
 
(a)
it shall not create or permit to exist any Owner Lien on or with respect to the Vessel, title thereto or any interest therein and that it will promptly, at its own expense, take such action as may be necessary duly to discharge any such Owner Lien;
 
(b)
unless a Charterer’s Event of Default is continuing, the Charterer shall not be disturbed or interfered with in its quiet, peaceful and continuing full possession, use, complete control  and enjoyment of the Vessel due to any act or failure to act on the part of the Owner or any person claiming through or under the Owner; provided always that the Owner shall not be liable to the Charterer or any other person for any interruption or disturbance to the Charterer’s or such other person’s quiet, peaceful use, or continued enjoyment of the Vessel as a result of
 

 (i)
a defect in the Owner’s ownership of or title to the Vessel as transferred to the Owner by the Seller;
 

 (ii)
any act or failure to act on the part of the Charterer or such other person (which act or failure itself gave rise to or caused such interruption or disturbance); or
 

 (iii)
compliance by the Owner with any Applicable Law,
 
provided that if the Owner becomes aware that there has been or there is pending a change in any Applicable Law which would result in any such interruption or disturbance to the Charterer’s or such other person’s quiet, peaceful use, or continued enjoyment of the Vessel, the Owner shall immediately notify the Charterer of the nature of such change or pending change. The existence or (save in the case of an Owner Lien) enforcement of a Permitted Lien shall not constitute a breach of this Clause 11.2(b);
 
37
(c)
it will limit its business and activities to the transactions contemplated or permitted by the Relevant Documents and matters incidental thereto;
 
(d)
it shall not have a Tax Residence or a place of business in any country other than Japan except in circumstances where the same is deemed to have occurred solely by reason of its entering into or performing any of the Relevant Documents or consummating any of the transactions contemplated thereby;
 
(e)
it will obtain, make and maintain in full force and effect, promptly renew from time to time and comply with the terms of all consents, which may from time to time be required under Applicable Law in Japan;
 
(f)
it shall:
 

 (i)
obtain, comply with, renew and do all that is necessary to maintain in full force and effect; and
 

 (ii)
supply certified copies to the Charterer (if so required),
 
of any authorisations required under any law or regulation of its jurisdiction of incorporation to enable it to perform its obligations under the Relevant Documents and to ensure the legality, validity, enforceability or admissibility in evidence in its jurisdiction of incorporation of any Relevant Document to which it is a party;
 
(g)
it will duly perform and observe those provisions of this Agreement and the other Relevant Documents to which it is a party;
 
(h)
it shall not enter into any deferred or conditional sale agreement with respect to the Vessel or in any manner deliver, transfer or relinquish title, interest and/or possession of the Vessel to any person other than as permitted by this Agreement; and
 
(i)
it shall not take any actions that it knows or ought to have known would result in the termination or cancellation of the Insurances except as required by any Relevant Document.
 
12
REGISTRATION, POSSESSION AND SUB-CHARTERING
 
12.1
The Charterer shall not make or cause to be made the registration of the Vessel or its bareboat chartering under any flag other than the Approved Flag, without a prior written consent of the Owner (which shall not be unreasonably withheld or delayed).
 
12.2
The Charterer shall not without the prior written consent of the Owner (which shall not be unreasonably withheld or delayed) appoint a manager of the Vessel other than an Approved Manager.
 
12.3
The Charterer shall promptly discharge:
 
(a)
all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Vessel;
 
(b)
all Taxes, dues and other amounts charged in respect of the Vessel or the Insurances; and
 
(c)
all other outgoings whatsoever in respect of the Vessel or the Insurances.
 
38
12.4
The Charterer shall immediately upon receiving notice of the arrest of the Vessel or of its detention in exercise or purported exercise of any lien or claim, procure its release by providing bail or otherwise as the circumstances may require.
 
12.5
No delivery, transfer or other relinquishment of possession of the Vessel shall in any way discharge or diminish any of the Charterer’s obligations to the Owner hereunder or the rights of the Owner under the Relevant Documents.
 
12.6
The Charterer further undertakes with the Owner that throughout the Hire Period it shall promptly do all acts and things which the Owner may reasonably require to evidence the interest of the Owner in the Vessel, or to protect that interest against the claims of any person.
 
13
OPERATION AND MAINTENANCE
 
13.1
Subject to the other terms and conditions of this Agreement and the other Relevant Documents, the Charterer shall (save as herein provided) have the full and exclusive use and possession, complete control and command of the Vessel during the Hire Period and may operate the Vessel or employ it throughout the world in any lawful trade for which it is suitable provided such operation or employment is permitted by the terms of the Insurances.
 
13.2
The Charterer shall have the right to fit additional equipment and to make severable improvements and additions in the Vessel at their expense provided that (i) such improvements and additions to the Vessel shall immediately become the property of the Owner; however the Purchase Option Price shall not be increased or otherwise affected and (ii) in the case of repossession of the Vessel by the Owner due to the Charterer’s Event of Default, then the Owner shall not be obligated to make any reimbursement or payment to the Charterer in respect of such improvements and additions
 
13.3
The Charterer shall also have the right to make non-major structural or non-severable improvements and additions to the Vessel at their own time, cost and expense provided that such improvements and additions do not diminish the market value of the Vessel in any material respect and are not reasonably likely to diminish the market value of the Vessel in any material respect during or at the end of the Hire Period and do not in any way affect or prejudice the marketability of the Vessel in any material respect and are not reasonably likely to affect or prejudice the marketability of the Vessel in any material respect during or at the end of the Hire Period.
 
13.4
The Charterer undertakes with the Owner that from the date of this Agreement until it has acquired title to the Vessel pursuant to Clause 22 (Transfer of Title to Vessel) or complied with all its obligations under Clause 10 it will:
 
(a)
comply, or procure compliance with all applicable laws or regulations:
 

 (i)
relating to its business generally; or
 

 (ii)
relating to the Vessel, its ownership, employment, operation, management and registration,
 
including, but not limited to, the ISM Code, the ISPS Code, all Environmental Laws, all Sanctions and the laws of the Approved Flag;
 
39
(b)
obtain, comply with and do all that is necessary to maintain in full force and effect any Environmental Approvals;
 
(c)
without limiting paragraph (a) above, not employ the Vessel 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 all Sanctions;
 
(d)
not permit the Vessel to carry any nuclear material or any nuclear waste;
 
(e)
not knowingly cause or permit the Vessel to be employed, used or operated in any area which is excluded from coverage or in the carriage or storage of any goods prohibited by any Insurance unless special insurance or extension of cover is in force;
 
(f)
not cause or permit the Vessel to enter or trade to any port, place or zone which is declared a war zone by any government or by the Vessel’s war risks insurers unless:
 

 (i)
the Charterer has (at its expense) effected any special, additional or modified insurance cover;
 
(g)
ensure that the Vessel is operated properly at all times in accordance with its design requirements and subject to any limitations placed on such operation by that design, by a yard or repairer of the Vessel;
 
(h)
pay all tolls, dues and other outgoings whatsoever in respect of the Vessel and the Insurances and keep proper books of account in respect of then Vessel;
 
(i)
promptly provide the Owner with any information which it reasonably requests regarding:
 

 (i)
the Vessel, its employment, position and engagements;
 

 (ii)
any towages and salvages of the Vessel; and
 

 (iii)
its compliance, each Approved Manager’s compliance and the compliance of the Vessel with the ISM Code and the ISPS Code, all Environmental Laws and all Sanctions,
 
and, upon the Owner’s request, provide copies of the Vessel’s Safety Management Certificate and any relevant Document of Compliance;
 
(j)
notify the Owner as soon as reasonably possible by email (thereafter confirmed by letter if specifically requested) of:
 

 (i)
any requirement or recommendation made by any insurer or by any competent authority which is not, or cannot be, complied with in accordance with its terms;
 

 (ii)
any Environmental Claim made against the Charterer, or the Owner or in connection with the Vessel, or any Environmental Incident;
 

 (iii)
any other event which occurs in connection with the Vessel which affects or is reasonably likely to materially affect the rights of the Owner or the Charterer in and to the Vessel;
 
40

 (iv)
the details of any material legal or administrative action involving the Charterer, the Vessel or any Relevant Documents;
 

 (v)
any casualty to the Vessel which is or is likely to become a Major Casualty;
 

 (vi)
any occurrence as a result of which the Vessel has become or is, by the passing of time or otherwise, likely to become a Total Loss;
 

 (vii)
any requisition of the Vessel for hire;
 

 (viii)
any requirement or recommendation made in relation to the Vessel by any  classification society or by any competent authority which cannot be complied with;
 

 (ix)
any arrest or detention of the Vessel, that exceed a period of ten (10) Business Days or any exercise or purported exercise of any lien on the Vessel;
 

 (x)
any claim for breach of the ISM Code or the ISPS Code being made against the Charterer, the Owner, any Approved Manager or otherwise in connection with the Vessel; or
 

 (xi)
any other material 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,
 
(k)
take such steps as are reasonably practicable to ensure that the Vessel  will be safe and without risk to health when properly used and will (without prejudice to the generality of the foregoing):
 

 (i)
take such steps to ensure that any defects in the Vessel which could be or cause a danger to safety and/or a risk to health shall be made good;
 

 (ii)
take such action to see that appropriate safety measures are adopted; and
 

 (iii)
not use or permit the Vessel or any constituent parts thereof to be used beyond their limits and capacities;
 
(l)
with respect to the Mortgage:
 

 (i)
place and maintain in a conspicuous place in the navigation room and the Master’s cabin of the Vessel a framed printed notice in plain type in English of such size that the paragraph of reading matter shall cover a space not less than 6 inches wide and 9 inches high reading as follows:
 
“NOTICE OF MORTGAGE
 
This Vessel is covered by a First Priority Mortgage to The Chugoku Bank, Ltd, as , Mortgagee under authority Chapter 3 of Title 47 of Marshall Islands code as amended.  Under the terms of the said Mortgage neither the Owner nor the Charterer nor the master of this Vessel nor any other person has any right, power or authority to create, incur or permit to be imposed upon this Vessel any lien whatsoever other than for crew’s wages and salvage”;
 
(m)
ensure that:
 
41

 (i)
it will comply with all Applicable Laws of (x) the jurisdiction of the Approved Flag and the rules of the shipping registry of the Approved Flag applicable to the Vessel and the laws of any other jurisdiction in which the Vessel may from time to time be registered, operated, chartered and/or maintained, and (y) any country or state in which the Vessel is from time to time located or to which the Vessel may trade or be employed, where non-compliance would prejudice the interests of the Owner in the Vessel or the interest of the Lender as mortgagee of the Vessel;
 

 (ii)
the Owner will be compliant with (x) all Applicable Laws of the jurisdiction of the Approved Flag and the rules of the shipping registry of the Approved Flag applicable to the Vessel and the laws of any other jurisdiction in which the Vessel may from time to time be registered, operated, chartered and/or maintained or any country or state in which the Vessel is from time to time located or to which the Vessel may trade or be employed (and shall ensure that the Owner will be advised of any steps, actions or things that the Owner needs to take or do under such Applicable Laws) and (y) the terms and conditions of the Relevant Documents, in each case in connection with the registration, flagging, ownership, operation, chartering, certification and/or maintenance of the Vessel;
 
(n)
comply and do or cause to be done all things necessary to comply with all national and international conventions, laws and the rules and regulations thereunder, applicable to the Charterer and/or the Vessel, including, according to any limitation in force generally under such conventions, laws, rules and regulations (i) The International Convention on Civil Liability for Oil Pollution Damage, (ii) (if the Vessel is operated in waters under the jurisdiction of the United States) the United States Oil Pollution Act of 1990 (including, according to any limitation, in force generally under such conventions, laws, rules and regulations and according to practicality reasonable by good trade standards, the manning requirements and the requirements relating to the establishment of financial responsibility), the United States Comprehensive Environmental Response Compensation and Liability Act and other United States federal and state laws, (iii) MARPOL, (iv) other international conventions, laws, rules and regulations relating to the environmental matters, discharges of oil, petroleum, petroleum products and distillates, pollutants and other substances, and (v) all other Applicable Laws in respect of the operation of the Vessel;
 
(o)
ensure that the Vessel is at all times:
 

 (i)
subject to a Safety Management System in compliance with the ISM Code and the ISPS Code and in possession of a valid Safety Management Certificate and operated by an operator in possession of a valid and appropriate Document of Compliance;
 

 (ii)
in possession of a valid ISSC; and
 

 (iii)
in possession of a valid International Air Pollution Prevention Certificate (IAPPC) under Annex VI (Regulations for the Prevention of Air Pollution from Ships) to MARPOL;
 
(p)
from time to time as soon as practicably possible, upon request by the Owner, and/or the Lender, furnish such person (or any other person which such person may direct) with all such reasonable information as such person may from time to time reasonably require regarding the Vessel’s compliance with the ISM Code and the ISPS Code;
 
42
(q)
promptly notify the Owner of any actual or threatened withdrawal, suspension, cancellation or modification of a Safety Management Certificate pursuant to the ISM Code, an International Ship Security (ISS) Certificate pursuant to the ISPS Code or an International Air Pollution Prevention Certificate (IAPPC) pursuant to Annex VI (Regulations for the Prevention of Air Pollution from Ships) to MARPOL;
 
(r)
procure that the Owner is not at any time represented as carrying goods in or providing any other service from the Vessel, or as being in any way connected or associated with any operation of carriage or other service which may be undertaken by the Charterer, or as having any operational interest in, or responsibility for, the Vessel;
 
(s)
not do or allow to be done anything as a result of which the registration of the Vessel might be suspended, cancelled or imperilled, and not to change or cause to be changed the name of the Vessel without the prior written consent of the Owner (such consent not to be unreasonably withheld);
 
(t)
permit the Owner (acting through surveyors or other persons appointed by them for that purpose) to board the Vessel to inspect its condition or to satisfy themselves about proposed or executed repairs (provided that the Owner or the Lender as the case may be shall bear all costs for such inspections) and satisfy themselves that the Vessel is being properly repaired and maintained, and that the Charterer is otherwise in compliance with the terms of this Agreement and take copies of the Manuals and Technical Records; provided that unless a Charterer’s Event of Default has occurred and is continuing, the same shall be with reasonable prior written notice to the Charterer by the Owner and without interfering, preventing, hindering or delaying the normal operations of the Vessel, the Charterer and/or or any relevant Permitted Sub-charterer; such inspections shall not take place more than once in every twenty four (24) month period. Any inspection, examination or survey in dry-dock shall only be made when the Vessel is dry-docked by (or on behalf of) the Charterer; provided that the Owner shall have the right to require the Vessel to be dry-docked for inspection, examination or survey if the Charterer is not docking her as required by the Classification Society. The Charterer shall give all reasonable assistance in connection with any inspection, examination or survey pursuant to the terms of this Clause 13.4 (t);
 
(u)
will not operate the Vessel in any area and/or countries banned or boycotted by the UN, the EU and the United States of America, and shall act fully in accordance with all applicable sanctions/trading restrictions whether issued by the UN, the EU and the United States of America.
 
13.5
The Charterer further undertakes with the Owner that until it has acquired title to the Vessel pursuant to Clause 22 (Transfer of Title to Vessel) or the Vessel is declared a Total Loss it shall:
 
(a)
at all times throughout the Hire Period and at its own expense, maintain and preserve the Vessel in accordance with the requirements of the Classification Society free of overdue recommendations and conditions;
 
(b)
keep the Vessel in a good and safe condition and state of repair:
 

 (i)
consistent with first class ship ownership and management practice;
 

 (ii)
so as to maintain the Classification free of overdue recommendations and conditions;
 
43

 (iii)
and up to date records of all the locations of the Vessel and of all maintenance, repairs, alterations, modifications and additions to the Vessel;
 
(c)
during the Hire Period and at its own expense, submit the Vessel to annual survey, intermediate survey and special survey (Hull) in accordance with the rules of the Classification Society and such other periodical or other surveys which may be required for classification purposes and shall comply with all requirements and recommendations of the Classification Society by which the Vessel shall then be classed and shall keep the Vessel’s continuous machinery survey certificate current at all times and, upon request by the Owner, provide to the Owner copies of all survey reports and certificates issued in respect thereof;
 
(d)
not, throughout the Hire Period, (without the prior consent in writing of the Owner, which shall not be unreasonably withheld) make any modification or repairs or replacements to the Vessel or equipment installed on it which would or might materially alter the structure, type or performance characteristics of the Vessel, materially reduce its value or jeopardise the rights and interests of the Lender as first priority mortgagee in respect of the Vessel;
 
(e)
if the Charterer shall pay any expenses, necessary or useful, whether or not such payment is for goods or services which are likely to preserve or increase the value of the Vessel or its equipment or appurtenances, not have any right to any recovery or indemnification from the Owner therefor, and the Charterer hereby irrevocably waives the benefit of any law which would otherwise entitle the Charterer to such recovery or indemnification. Even though the value of the Vessel is increased by the alteration of the Vessel by the Charterer pursuant to the foregoing provisions, the amount of the Charter Hire or any other amount payable by the Charterer hereunder shall not be increased or decreased thereby;
 
13.6
All costs and expenses incurred by the Charterer in the performance of its obligations under this Clause 13 (Operation and Maintenance) shall be for the account of the Charterer.
 
13.7
Notwithstanding any other provision herein or in any other Relevant Document to the contrary, the charter under this Agreement is a triple net charter; accordingly, whether or not it shall so state herein, the Charterer shall be responsible for all costs associated with the operation, maintenance, insurance, use and storage of the Vessel.
 
14
REPORTS
 
14.1
The Charterer shall, during the Hire Period, provide to the Owner and/or the Lender:
 
(a)
as soon as they are available, but in any event within one hundred and eighty (180) days after the end of each financial year of (i) the Guarantor’s audited consolidated financial statements for that financial year and (ii)  the Charterer’s unaudited financial statements for that financial year; and
 
(b)
as soon as they are available, but in any event within ninety (90) days after the end of each of the semi-annual periods of each financial year of the Charterer and the Guarantor, their respective semi-annual financial statements (unconsolidated for the Charterer and consolidated for the Guarantor) for such semi-annual period.
 
14.2
The Charterer shall procure that each set of financial statements of the Charterer and the Guarantor delivered pursuant to Clause 14.1is prepared using the applicable GAAP accounting practices and financial reference periods consistently applied.
 
44
15
INSURANCE
 
15.1
The Charterer shall throughout the Hire Period (if not otherwise agreed with the Owner in writing):
 
(a)
keep the Vessel insured in accordance with best industry practice at its expense against:
 

 (i)
hull and machinery and/or increased value and any other usual marine risks (including excess risks);
 

 (ii)
war risks (including the London Blocking and Trapping addendum or its equivalent); and
 

 (iii)
protection and indemnity risks (including liability for oil pollution for an amount of no less than US$1,000,000,000 and excess war risk P&I cover) on standard Club Rules, covered by a Protection and Indemnity association which is a member of the International Group of Protection and Indemnity Associations (or, if the International Group of Protection and Indemnity Associations ceases to exist, any other leading protection and indemnity association or other leading provider of protection and indemnity insurance);
 
(b)
to effect such insurances:
 

 (i)
in Dollars;
 

 (ii)
in the case of hull and machinery and usual marine risks, war risks and excess risk, in an amount on an agreed value basis at least the greater of:
 

 (A)
110 per cent. of the Stipulated Loss Value; and
 

 (B)
the Market Value of the Vessel then in effect;
 

 (iii)
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 but such amount shall not be less than US$ 1,000,000,000;
 

 (iv)
in the case of protection and indemnity risks, in respect of the full tonnage of the Vessel; and
 

 (v)
in the case of the hull and machinery insurance, on the basis that the deductible is not higher than US$500,000;
 

 (vi)
in the case where the Vessel is insured on a fleet policy, on the basis that each vessel insured on that fleet policy is deemed to be insured on an individual basis.;
 

 (vii)
on terms approved by the Owner; and
 
(c)
through insurance brokers and with approved insurance companies and/or underwriters or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations;
 
45
(d)
In addition to the terms set out in paragraph (b) above, to procure that the obligatory insurances shall:
 

 (i)
subject always to sub-paragraph (ii), name the Owner as named insured or co-assured and assure that the interests of every other named insured is limited:
 

 (A)
in respect of any obligatory insurances for hull and machinery and war risks;
 

 (1)
to any provable out-of-pocket expenses that it has incurred and which form part of any recoverable claim on underwriters; and
 

 (2)
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
 

 (B)
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 or co-assured has undertaken in writing to the Owner (in such form as it requires) that any deductible shall be apportioned between the Owner 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 Lender to collect or recover any moneys which at any time become payable in respect of the obligatory insurances;
 

 (ii)
whenever the Lender requires, name (or be amended to name) itself as additional named insured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Lender, but without the Lender being liable to pay (but having the right to pay) where commercially available, premiums, calls or other assessments in respect of such insurance;
 
(e)
to:
 

 (i)
at least seven (7) days before the expiry of any obligatory insurance:
 

 (A)
notify the Owner of any protection and indemnity or war risks association through or with which the Charterer proposes to renew that obligatory insurance and of the proposed terms of renewal; and
 

 (B)
procure that the insurance brokers (or other insurers) and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Owner in writing of the terms and conditions of the renewal.
 
(f)
to punctually pay all premiums or other sums payable in respect of the obligatory insurances and produce all relevant receipts when so required by the Owner;
 
(g)
to ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect;
 
46
(h)
not to do or omit to do (nor permit to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable under an obligatory insurance repayable in whole or in part.
 
(i)
without limiting paragraph (h) above, to:
 

 (i)
take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances;
 

 (ii)
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;
 
(j)
to:
 

 (i)
not settle, compromise or abandon any claim under any obligatory insurance for a Total Loss or for a Major Casualty, without the Owner’s consent; and
 

 (ii)
do all things necessary and provide all documents, evidence and information to enable the Lender or the Owner to collect or recover any moneys which at any time become payable in respect of the obligatory insurances;
 
15.2
The Lender shall be entitled from time to time to effect, maintain and renew:
 
(a)
mortgagee’s interest insurance in an amount equal to 110 per cent. of the Stipulated Loss Value; and
 
(b)
mortgagee’s interest additional perils insurance in an amount equal to 110 per cent. of the Stipulated Loss Value.
 
15.3
The Charterer covenants and confirms herewith to have neither assigned, mortgaged, charged, pledged or otherwise disposed of all or any of the Insurances to anyone other than the Owner and that it will not assign, mortgage, charge, pledge or otherwise dispose of the same to anyone other than the Lender (acting for the benefit of the Lenders).
 
16
LOSS, DAMAGE AND COMPENSATION
 
16.1
From the Delivery Date, and without prejudice to the rights of the Charterer to its quiet, peaceful and continuing possession, use and enjoyment of the Vessel pursuant to Clause 11.2 (b) of this Agreement, the Charterer shall bear the full risk of any loss, destruction, theft, condemnation, confiscation, seizure or requisition of or damage to the Vessel which shall deprive the Charterer of the use, possession or enjoyment thereof, unless caused directly or indirectly by an act or omission of the Owner or the Lender.
 
16.2
Following the occurrence of the Total Loss with respect to the Vessel, the chartering of the Vessel to the Charterer hereunder shall cease and the Charterer shall forthwith upon becoming aware of the Total Loss give the Owner and the Lender written notice of the Total Loss and shall pay to the Owner on the earlier of (a) (i) in the case of a Total Loss arising from the arrest, capture, seizure or detention of the Vessel on the Total Loss Date and (ii) in all other cases, the 180th day following the Total Loss Date and (b) the date on which insurance proceeds under the Insurances or other proceeds have been paid for such Total Loss (such date or the date of payment of such proceeds, as the case may be, is hereinafter called the “Settlement Date”) the sum (which shall be advised to the Charterer by the Owner in writing) of:
 
47

 (a)
the amount equal to the Stipulated Loss Value computed as of the Settlement Date; and
 

 (b)
all aggregate Charter Hire and other amounts payable under this Agreement which have fallen due and payable and have not been paid as at and up to the date on which the Total Loss occurred.
 
Any insurance proceeds received by the Owner in respect of the Total Loss shall be paid to the Owner (or the Lender as assignees thereof) and shall be applied as follows:
 

 (a)
FIRSTLY, in or towards payment to the Owner (to the extent that the Owner has not already received the same in full) of a sum equal to the aggregate of the Owner’s Cost and the accrued and unpaid Interest Component of the Charter Hire calculated based on actual numbers of days elapsed from the first day following the occurrence of the Total Loss to and including the Settlement Date, provided, always that any amount payable under this sub-paragraph (a) shall in aggregate be limited to the Stipulated Loss Value then applicable.
 

 (b)
SECONDLY, in or towards payment to third party claimants (not including the Owner or the Lender) that have lawful claim against insurance proceeds of a Total Loss or compensation of compulsory requisition;
 

 (c)
THIRDLY, in payment of any surplus to the Seller to settle the Sellers’ Credit or any part thereof; and
 

 (d)
FOURTHLY, in payment of any surplus to the Charterer by way of compensation for early termination.
 
16.3
At such time as the Owner shall have received in full all amounts payable by the Charterer on the Settlement Date in accordance with Clause 16.2 then:
 
(a)
title to the Vessel shall be transferred to the Charterer in the manner provided in Clause 22 (Transfer of Title to Vessel) and thereupon this Agreement shall terminate immediately without further act; and
 
(b)
the Owner shall at the request of the Charterer cooperate with the Charterer with a view to enabling the Charterer to bring all claims against third parties for damage relating to the Vessel arising from the Total Loss.
 
16.4
In the event of the Requisition of the Vessel after the Delivery Date, all moneys or other compensation received by the Owner or the Charterer in respect of the Vessel shall be retained by or paid to the Owner and shall be retained by the Owner as security for the discharge of the Charterer’s obligation to pay any amount as provided in Clause 16.2, provided that the Charterer shall remain obliged to pay all amounts specified in Clause 16.2 and, subject to the rights of the Owner to retain from such moneys any amounts due from the Charterer under this Agreement, upon any such payment any relevant moneys held by the Owner as security for such payment shall be returned by the Owner to the Charterer.
 
48
16.5
If the Vessel is requisitioned for use or hire during the Hire Period in circumstances not amounting to a Total Loss then, unless and until following such requisition the Vessel becomes a Total Loss, the chartering of the Vessel to the Charterer under this Agreement shall continue in full force and effect for the remainder of the Hire Period and the Charterer shall remain responsible for the due compliance with all its obligations under this Agreement except to the extent that the performance or observance of any maintenance, repair, overhaul or similar obligation by the Charterer shall be prevented or delayed by such requisition, and provided that the Charterer’s obligations for the payment of Charter Hire and other amounts due hereunder shall not be reduced or delayed by such requisition. The Charterer shall be entitled to receive all requisition hire paid in respect to such requisition and the Owner shall pay-back any such requisition hire received by it to the Charterer promptly upon receipt thereof (but less any Taxes imposed in respect of such requisition hire and any costs of remittance thereof).
 
17
MINIMUM VALUE CLAUSE
 
17.1
The outstanding Owner’s Cost shall be equal to or lower than 83.3% of the Market Value (based on the valuation(s) provided yearly to) and the Market Value shall be equal to or higher than 120% of Owner’s Cost then outstanding.
 
17.2
If the minimum value clause is not met, the Charterer shall remedy same by either (and at its option):
 

 (i)
prepay the Amortisation Component of the Charter Hire; or
 

 (ii)
make available to the Owner a cash collateral,
 
required to restore the aforesaid ratio.
 
The prepayment of the Amortisation Component of the Charter Hire or provision of the cash collateral as set out above shall be made on next following Payment Date, provided, however, that if the next following Payment Date is less than 30 days after notification of the breach of the minimum value clause, then the payment shall be made no later than on the second Payment Date thereafter. In the event of a prepayment of the Amortisation Component of the Charter Hire, future Charter Hire payments shall be adjusted accordingly pro rata, reflecting the new outstanding Amortisation Component.
 
If the Market Value, including the value of the cash collateral previously provided by the Charterer exceeds or is equal to 120% of Owner’s Cost, the Owner, after receiving a notice from the Charterer to do so (such notice to include evidence, at the cost of the Charterer, satisfactory to the Owner that the ratio specified in Clause 17.1 has been maintained for a period of 3 months prior to such notice) will release any such cash collateral specified by the Charterer to the extent that the relevant ratio shall continue to be at least the percentage required pursuant to Clause 17.1 at the relevant time following such release.
 
18
CHARTERER’S EVENTS OF DEFAULT
 
18.1
The following events and/or circumstances shall constitute a Charterer’s Event of Default and shall entitle the Owner to the measures and remedies set out in Clause 19 (Owner’s Rights Following a Charterer’s Event of Default) unless such event is caused by or arises out of (i) an Owner Event of Default or (ii) any act or omission of the Owner in which case such event shall not constitute a Charterer’s Event of Default:
 
49
(a)
the Charterer shall fail (i) to make any payment of Charter Hire within five (5) Business Days after receipt of Owner’s notification that such payment has become due or (ii) to pay any other amount due and payable under this Agreement or any other Relevant Document within fifteen (15) Business Days of its due date; or
 
(b)
the Charterer fails to obtain and/or maintain the Insurances (in accordance with the requirements of Clause 15 (Insurance); or
 
(c)
the Charterer or the Guarantor:
 

 (i)
becomes a Prohibited Person or becomes owned or controlled by, or acts directly or indirectly on behalf of, a Prohibited Person or any of such persons becomes the owner or controller of a Prohibited Person; or
 

 (ii)
fails to comply with any Sanctions.
 
(d)
the Purchase Price as proceeds derived from the Loan Agreement are made available by the Charterer, the Guarantor or any of their respective Affiliates, directly or indirectly, to or for the benefit of a Prohibited Person or otherwise are, directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions; or
 
(e)
the Charterer or the Guarantor materially failing to comply with any provision of the Relevant Documents to which it is a party (other than those provisions specifically referred to elsewhere in this Clause 18.1), provided that, no Charterer’s Event of Default under this sub-paragraph will occur if the failure to comply is capable of remedy and is remedied within twenty (20) days of the Owner giving notice to the Charterer of such failure; or
 
(f)
any material representation, warranty or statement made by the Charterer or the Guarantor in this Agreement and/or any other Relevant Document to which they are a party or in any notice, certificate, instrument or document contemplated hereby or thereby or made or delivered or furnished pursuant thereto is untrue, incorrect or misleading in any material respect when made, provided that, no Charterer’s Event of Default under this sub-paragraph will occur if the failure to comply is capable of remedy and is remedied within fifteen (15) days of the Owner giving notice to the Charterer of such failure; or
 
(g)
any authorisation from any Governmental Authority in favour of the Charterer necessary to enable the Charterer to comply with any provision under any Relevant Document is not granted, expires without being renewed or is withdrawn, cancelled, suspended, revoked or modified so that it would materially and adversely affect the Charterer’s ability to perform its obligations under the Relevant Documents provided that, no Charterer’s Event of Default under this sub-paragraph will occur if the failure to comply is capable of remedy and is remedied within fifteen (15) days of the Owner giving notice to the Charterer of such failure; or
 
(h)
any of the following occurs in relation to any Financial Indebtedness of the Charterer and where any applicable grace period has expired:
 

 (i)
any such Financial Indebtedness is not paid when due or, if so payable, on demand; or
 
50

 (ii)
any such Financial Indebtedness becomes due and payable or capable of being declared due and payable prior to its stated maturity date as a consequence of any event of default; or
 

 (iii)
any Lien securing any such Financial Indebtedness becomes enforceable,
 

 (iv)
provided that this paragraph (h) only applies in respect of Financial Indebtedness exceeding US$5,000,000 and further provided that, no Charterer’s Event of Default under this sub-paragraph will occur if the failure to comply is capable of remedy and is remedied within fifteen (15) days of the Owner giving notice to the Charterer of such failure; or
 
(i)
the Charterer:
 

 (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  with a view to rescheduling any of its indebtedness; or
 
(j)
a moratorium is declared in respect of any indebtedness of the Charterer or the Guarantor.  If a moratorium occurs, the ending of the moratorium will not remedy any Charterer’s Event of Default caused by that moratorium; or
 
(k)
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 the Charterer or the Guarantor;
 

 (ii)
a composition, compromise, assignment or arrangement with any creditor of the Charterer or the Guarantor;
 

 (iii)
the appointment of a liquidator, receiver, administrator, administrative receiver, compulsory manager or other similar officer in respect of the Charterer or the Guarantor or any of its assets; or
 
or any analogous procedure or step is taken in any jurisdiction, provided that this Clause 18.1(k) shall not apply to any winding-up petition which is frivolous or vexatious and is discharged, stayed or dismissed within sixty (60) days of commencement; or
 
(l)
the authority or ability of any member of the Charterer or the Guarantor to conduct its respective 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 the Charterer, the Guarantor or any of their respective assets; or
 
(m)
the Charterer ceases to be a 100% (directly or indirectly) owned Subsidiary of the Guarantor; or
 
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(n)
the Charterer or the Guarantor ceases or, suspends all or substantial part of its business as presently conducted or any Government Entity or other competent authority takes any action with a view to the cessation of such business as presently conducted; or
 
(o)
the Charterer or the Guarantor repudiates its obligations under a Relevant Document to which it is a party or does or causes or permits to be done any act or thing evidencing an intention to repudiate its obligations under a Relevant Document to which it is a party; or
 
(p)
the Vessel is the subject of any form of execution, attachment, injunction, sequestration or distress and the same is not released within sixty (60) days of the occurrence thereof; or
 
(q)
any Lien, exceeding the amount of US$ 5,000,000, in respect of the Vessel becomes enforceable unless such enforcement is caused solely by the Owner or the Lender; or
 
(r)
there is any “major non-conformity” as defined in the Guidelines issued by the International Chamber of Shipping and the International Shipping Federation on the application of the ISM Code, which is not remedied within thirty (30) Business days; or
 
(s)
any event or circumstance occurs which has a Material Adverse Effect; or
 
(t)
any Security Document is breached by the Charterer or ceases to be legal, valid, binding, enforceable or effective due to any act or omission by the Charterer or the Guarantor or the Mortgage ceases to rank prior to, or loses its priority to, other Liens other than Permitted Liens.
 
19
OWNER’S RIGHTS FOLLOWING A CHARTERER’S EVENT OF DEFAULT
 
19.1
If a Charterer’s Event of Default occurs, the Owner may:
 
(a)
at any time after the occurrence of that Charterer’s Event of Default and so long as the same is continuing, by notice to the Charterer terminate the Hire Period on the Termination Date specified in such notice (which Termination Date may be the date of such notice or any later date) and the Hire Period shall terminate on that Termination Date; and/or
 
(b)
the Owner may exercise any right or remedy which may be available under the Relevant Documents or Applicable Law or proceed by appropriate court or other action to enforce performance by the Charterer of the applicable covenants and provisions of this Agreement or any other Relevant Document or to recover damages for the breach thereof.
 
19.2
If the Owner terminates the Agreement in accordance with this Clause 19, the Charterer shall have the right to exercise its option to purchase the Vessel within thirty (30) days after the termination in accordance with Clause 21, it being understood and agreed that the Charterer’s exercise of such option shall be construed and considered as a remedy of the relevant termination and no other costs or fees shall be payable by the Charterer.
 
19.3
If the Charterer does not exercise its option to purchase the Vessel within thirty (30) days after the Owner’s termination, then:
 
(a)
the Hire Period in respect of the Vessel shall terminate on the date specified in such notice (which shall be the Termination Date), and the Charterer shall:
 

 (i)
at the Charterer’s expense, return the Vessel to the order of the Owner substantially in the same condition and class as that in which she was delivered under this Agreement, fair wear and tear not affecting class excepted, following which, the Owner shall;
 
52

 (A)
either market the Vessel for sale (with the co-operation of the Charterer, if need be), and within 90 days thereafter, accept the highest bid in net proceeds received for the Vessel. Closing and delivery of the Vessel to new owner and payment in full of the purchase price (the “Sale Price”) shall occur no later than 30 days thereafter; or
 

 (B)
retain the ownership of the Vessel based on a purchase price equal to the Market Value of the Vessel at the Termination Date (the “Retention Price”).
 

 (ii)
The Sale Price or the Retention Price (as the case may be) shall, following payment of the brokerage fee and other documented costs incurred in connection with the sale or retention process described in sub-paragraph (i) above, be applied by the Owner as follows:
 
FIRSTLY, to the extent that the Owner has not already received the same in full, in or towards payment of the Termination Compensation; and
 
SECONDLY, to any lawful third party claimants; and
 
THIRDLY, in payment of any surplus to the Charterer.
 

 (iii)
If the Sale Price or the Retention Price (as the case may be) is not sufficient to cover the Termination Compensation in full, then the Charterer will remain liable and obligated to pay any such shortfall no later than ten (10) Business Days following a written demand from the Owner.
 

 (iv)
All arrangements and expenses relating to the settling of wages, disembarkation and repatriation of the Charterers’ Master, officers and crew shall be the sole responsibility of the Charterer.
 

 (v)
Notwithstanding the above, the Charterer may at any time until an agreement is reached with a new owner or new charterer (including if the Vessel is to be retained by the Owner) for the sale and purchase or time charter or bareboat charter of the Vessel, pay the Termination Compensation in full upon which the title and ownership of the Vessel shall be transferred to the Charterer. The Termination Compensation shall be paid by the Charterer to an escrow account and provide an irrevocable instruction to the escrow agent to release the Termination Compensation upon Owner transferring the legal title and ownership of the Vessel to the Charterer free and clear of any security or lien, including for the avoidance of doubt the Mortgage, the Assignment of Insurances and any other security provided by the Charterer. Upon payment of the Termination Compensation to an escrow account, the Charterer’s obligation to pay Charter Hire or other fees or costs to the Owner or the Lender (as the case may be) shall immediately cease.
 

 (vi)
“Termination Compensation” shall mean the aggregate of (A) the applicable Purchase Option Price amount less the original Sellers’ Credit amount of US$ 14,800,000 together with default interest at the Overdue Interest accrued from the Termination Date until payment is made in full, (B) any other sums due and payable by the Charterer, but unpaid, under this Agreement, and (C) any Break Cost payable under the Loan incurred due to the Termination Event; and (D) any reasonable and direct costs, if any, incurred by the Owner to take redelivery, repossession, custody, navigation, operation, lay-up, management of the Vessel; and (E) all legal fees and other costs and expenses incurred by reason of the occurrence of the Charterer’s Event of Default or the exercise of the Owner’s remedies with respect thereto.
 
53

 (vii)
For the avoidance of doubt and notwithstanding anything herein to the contrary, except for the Termination Compensation, the Owner shall not have any right to claim further compensation from the Charterer to recover any other direct or indirect, punitive or consequential, loss or damage to the Owner caused by the termination of this Agreement in accordance with the applicable laws. The Owner will take and will procure that its Affiliates take all such reasonable steps and action as are reasonably necessary or as the Charterer may reasonably require in order to mitigate any claims or losses or damages under this Agreement. Nothing in this Agreement shall be deemed to relieve the Owner or any of their Affiliates of any common law or other duty to mitigate any losses incurred by it.
 
20
OWNER EVENTS OF TERMINATION AND CHARTERER’S RIGHTS
 
20.1
Any of the following events shall constitute an Owner Event of Termination unless such event is caused by or arises out of (i) a Charterer’s Event of Default, (ii) any act or omission of the Charterer or the Guarantor in which case such event shall not constitute an Owner Event of Termination:
 
(a)
the Owner does not comply with any provision of the Relevant Documents to which it is a party (other than those provisions specifically referred to elsewhere in this Clause 20.1), provided that no Owner Event of Termination under this sub-paragraph will occur if the failure to comply is capable of remedy and is remedied within fourteen (14) days of the earlier of:
 

 (i)
the Charterer giving notice of such failure to the Owner; and
 

 (ii)
the Owner becoming aware of the failure to comply; or
 
(b)
any representation or warranty of the Owner in this Agreement or any other Relevant Document to which it is a party, shall be untrue, inaccurate, incorrect or misleading in each case as of the date when made, deemed made or repeated and such untrue, inaccurate, incorrect or misleading (as the case may be) representation or warranty would have a material adverse effect on the ability of the Owner to perform its obligations under the Relevant Documents to which it is a party or the rights of the Charterer under the Relevant Documents, provided that no Owner Event of Termination under this sub-paragraph will occur if such untrue, inaccurate, incorrect or misleading (as the case may be) representation or warranty is, together with its consequences, capable of being remedied, that representation or warranty shall have been remedied within fourteen (14) days of the earlier of:
 

 (i)
the Charterer giving notice of such misrepresentation or breach of warranty to the Owner; and
 

 (ii)
the Owner becoming aware of the existence of such misrepresentation or breach of warranty; or
 
54
(c)
the Owner:
 

 (i)
is unable or admits inability to pay its debts as they fall due, suspends making payments on any of its debts or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness;
 

 (ii)
applies for or consents to the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or the like of it or of all or a substantial part of their assets;
 

 (iii)
makes a general assignment for the benefit of, or a composition or arrangement with, their creditors generally;
 

 (iv)
is adjudicated or declared by any competent authority to be bankrupt or insolvent; or
 

 (v)
files or acquiesces in the filing of, or fails to have dismissed within thirty (30) days after the filing against them in an involuntary case, any petition filed under any Applicable Law relating to bankruptcy, suspension of payments, insolvency, re-organisation, liquidation, winding-up or composition or adjustment of debts; or
 
(d)
an order, judgment or decree is entered by any court of competent jurisdiction:
 

 (i)
for the liquidation, reorganisation, dissolution, winding up, or composition or readjustment of debts of the Owner; or
 

 (ii)
appointing a trustee, receiver, custodian, liquidator or the like of the Owner, or of all or substantially all of any of their respective properties.
 
20.2
At any time after the occurrence of any Owner Event of Termination and so long as the same is continuing the obligation of the Charterer to pay Charter Hire shall cease immediately, and the Charterer may:
 
(a)
proceed by appropriate court action to enforce performance by the Owner of its obligations, covenants or undertakings of this Agreement and the other Relevant Documents and to recover damages for the breach thereof; and/or
 
(b)
terminate the Hire Period by written notice to the Owner, and the Hire Period shall terminate on the Termination Date specified in such notice. On such Termination Date, the Owner shall transfer title and ownership to the Vessel to the Charterer in the manner provided in Clause 22 (Transfer of Title to Vessel) in exchange for the Charterer’s payment to the Owner an amount equal to the sum of (i) the Termination Value as of the Termination Date, (ii) any unpaid aggregate Charter Hire in respect of the Vessel due and payable on or prior to the Termination Date and (iii) all other amounts due and payable that remain outstanding and owing by the Charterer to the Owner or any Indemnitee (but not solely in their capacity as indemnitees) under this Agreement or any other Relevant Document.
 
21
OPTION TO PURCHASE AND EARLY TERMINATION
 
21.1
Voluntary Option to Purchase
 
55
(a)
The Charterer shall have the right to purchase the Vessel at any time after the first Purchase Option Date and throughout the Hire Period on a strictly “as is” basis (physically), exercisable by providing three (3) months’ irrevocable written notice to the Owner (copied to the Lender).
 
(b)
If such notice is given by the Charterer, the Hire Period shall terminate on payment by the Charterer of:
 

 (i)
the Purchase Option Price less the original Sellers’ Credit amount of US$ 14,800,000 (calculated pro-rata in the event the written notice is given in between Purchase Option Dates);
 

 (ii)
all aggregate Charter Hire then due and payable; and
 

 (iii)
all other amounts then due and payable by the Charterer to the Owner under this Agreement or any other Relevant Document,
 
and upon receipt by the Owner of all such amounts title to the Vessel shall be transferred to the Charterer in the manner provided in Clause 22 (Transfer of Title to Vessel).
 
(c)
If such written notice is not given by the Charterer before the date falling one hundred (100) days prior to the final Payment Date (the “Final Purchase Option Notification Date”), or the Charterer elects on or before the Final Purchase Option Notification Date not to exercise its purchase option, the Hire Period shall end on the final Payment Date and the Owner shall be entitled, by written notice to the Charterer at any time after the Final Purchase Option Notification Date to remarket the Vessel for the purpose of:
 

 (i)
selling the Vessel on or after the final Payment Date; and/or
 

 (ii)
transferring the Vessel and its rights for the remainder of the Hire Period,
 
subject to the terms and conditions of this Agreement, subject to the prior written consent of the Lender (acting on the instructions of all Lenders).
 
21.2
Early termination as a result of additional payments
 
(a)
Notwithstanding anything in this Agreement to the contrary, if the Charterer shall become obliged to make additional payments to the Owner under Clause 9.1 (Tax Gross-up), then, and unless, in the case of any additional payment under Clause 9.1 (Tax Gross-up), the Owner shall not waive its right for such payment, the Charterer shall be entitled, by notice to the Owner, to terminate the Hire Period in respect of the Vessel on the date specified in such notice (which shall be the Termination Date), being not earlier than, twenty (20) Business Days after the date of such notice.
 
(b)
The Charterer shall, on the Termination Date determined in accordance with the foregoing paragraph, pay to the Owner the Termination Value (if the relevant indemnity or additional payment arises under the laws of Japan) or the Stipulated Loss Value (if otherwise) as at the Termination Date, together with all other amounts then due and payable by the Charterer to the Owner under this Agreement or any other Relevant Document, and if the Termination Date is a Payment Date, the aggregate Charter Hire and all other amounts payable on that date.
 
56
(c)
At such time as the Owner shall have received the amounts payable by the Charterer in accordance with Clause 21.2(b) in full, the obligation of the Charterer to pay aggregate Charter Hire hereunder after such date shall cease and title to the Vessel shall be transferred to the Charterer in the manner provided in Clause 22 (Transfer of Title to Vessel).
 
21.3
Early termination as a result of unlawfulness
 
(a)
Notwithstanding anything in this Agreement to the contrary, if it becomes or is likely to become unlawful or illegal under any Applicable Law or contrary to any consent or regulation for any person to participate, or continue to participate, in the transactions contemplated by the Relevant Documents or for any relevant person to perform a material obligation thereunder; then, upon or at any time after the expiry of any period of consultation required by Clause 21.3 (d) or 21.3 (e) in the circumstances referred to above, either the Owner or the Charterer shall be entitled, by notice to the other, to terminate the Hire Period in respect of the Vessel on the date specified in such notice (which shall be the Termination Date).
 
(b)
The Charterer shall, on the Termination Date determined in accordance with the foregoing paragraph, pay to the Owner the Termination Value (if the relevant event giving rise to the termination is the illegality under the laws of Japan) or the Stipulated Loss Value (if otherwise) as at the Termination Date, together with all other amounts then due and payable by the Charterer to the Owner under this Agreement or any other Relevant Document, and if the Termination Date is a Payment Date, the aggregate Charter Hire and all other amounts payable on that date.
 
(c)
At such time as the Owner shall have received the amounts payable by the Charterer in accordance with Clause 21.3(b) in full, the obligation of the Charterer to pay Charter Hire hereunder after such date shall cease and title to the Vessel shall be transferred to the Charterer in the manner provided in Clause 22 (Transfer of Title to Vessel).
 
(d)
Subject always to the rights of the parties hereto to terminate the Hire Period in respect of the Vessel pursuant to any other provision of this Agreement other than Clause 22 (Transfer of Title to Vessel), if any of the parties hereto becomes aware of any circumstances which will give rise to any unlawfulness or illegality or being contrary to any consent or regulation of the kind referred to in Clause 21.3(a) or if any Relevant Document becomes null and void or invalid or unenforceable in whole or in part, it shall promptly advise the other party of such circumstances and the parties hereto shall (without prejudice to the Charterer’s or the Owner’s obligations under any provision of this Agreement) forthwith negotiate with each other in good faith for a period of sixty (60) days or such shorter period ending not less than seven (7) days prior to the circumstances giving rise to such unlawfulness or illegality becoming effective, such consent or regulation being breached or such Relevant Document becoming null and void or invalid or unenforceable or in either case such shorter period as the parties shall agree (but shall not be obliged to do so thereafter) with a view to making arrangements and restructuring this transaction in such a manner as shall be lawful so as to continue the leasing of the Vessel contemplated hereby and so as to achieve substantially the same results as would have been achieved in the absence of such unlawfulness or illegality, being contrary to any consent or regulation or such Relevant Document becoming null and void or invalid or unenforceable.
 
(e)
Notwithstanding anything to the contrary, no arrangements or restructuring shall be agreed or implemented under Clause 21.3(d) without the consent of the Owner and unless the Owner shall have received tax and legal opinions and the Charterer shall have reimbursed the Owner for all costs incurred by it (including without limitation reasonable legal counsel and tax counsel fees) in respect thereof, in each case to its satisfaction.
 
57
21.4
Survival of Terms
 
The Charterer’s and the Owner’s rights and obligations under this Clause 21 (Option to Purchase and Early Termination) and under Clauses 4 (Delivery, Acceptance and Title), 5 (Extent of Owner’s Liability), 6 (Charter Hire), 7 (Payments, Interest and Calculations), 8 (Costs and Indemnities), 9 (Taxation), 19 (Owner’s Rights Following a Charterer’s Event of Default), 20(Owner Events of Termination and Charterer’s Rights), 22(Transfer of Title to Vessel) and 23 (Costs and Expenses) shall survive any termination of the Hire Period or any termination of this Agreement or any other Relevant Document.
 
22
TRANSFER OF TITLE TO VESSEL
 
22.1
At such time as the Charterer shall have paid all amounts payable by the Charterer in accordance with any of Clauses 16.2, 19, 20.2 (b), 21.1(Voluntary Option to Purchase), 21.2(Early termination as a result of additional payments) or 21.3(Early termination as a result of unlawfulness), the Owner shall procure that all of the right, title and interest of the Owner in and to the Vessel shall be transferred from the Owner to the Charterer, in each case, without recourse or warranty (other than as to the absence of Owner Liens) and without further act, and on an “as-is, where-is” basis, and if requested by the Charterer the Owner shall promptly execute and deliver a bill of sale or bills of sale (as appropriate) in respect of the Vessel and such other documents and instruments as the Charterer shall reasonably request to evidence (on the public record of the Vessel’s Approved flag or the Charterer’s intended new flag or otherwise) such transfer and the vesting of all right, title and interest of the Owner in and to the Vessel in the Charterer, free and clear of any Owner Lien.
 
22.2
Other than as referred to in this Clause 22.2, the Owner does not make or will make any warranties, guarantees or representations of any kind, express or implied, statutory or otherwise, with regard to the Vessel including, but not limited to, the condition of the Vessel, and the Charterer hereby waives and agrees to, waive all remedies, warranties, representations, guarantees, express or implied arising by law or otherwise, including without limitation any obligation of the Owner with respect to fitness for any purpose, merchantability or consequential damages. The Owner warrants that there shall be vested in the Charterer such title to the Vessel as was transferred to the Owner by the Seller pursuant to the MOA and that the Vessel will (provided that the amounts referred to in Clause 22.1 have been paid in full) be free and clear of all Owner Liens, the Mortgage and any Lien created pursuant to the Mortgage. The Charterer hereby expressly waive all claims in respect of the Vessel, if any, against the Owner under any product liability law or similar law, statute or in equity, of any jurisdiction.
 
22.3
All costs, charges, stamp duties, taxes, legal fees and other costs and expenses whatsoever associated with delivery of, and the transfer of title to the Vessel, including, without limitation, any registration or any release of any Security Document as a result, shall be borne by the Charterer.
 
58
23
COSTS AND EXPENSES
 
23.1
Each of the Owner and the Charterer shall bear the costs and expenses they incur in connection with the negotiation, preparation and execution of this Agreement and the other Relevant Documents, provided, however, that Charterer accepts to cover legal fees and other costs and expenses incurred by Owner and/or the Lender, limited to an amount of USD 100,000 and actual disbursements.
 
23.2
In addition to coverage of costs as set out in Clause 23.1 above and all other sums payable by the Charterer hereunder or the Relevant Documents, the Charterer shall also pay to the Owner a handling cost of USD 106,500 (that is the amount equal to 0.5% of the initial Owner’s Cost).
 
23.3
The Charterer shall upon the Owner’s first written demand pay all costs and expenses (including, but not limited to legal fees and disbursements of counsel to the Owner) following the occurrence of a Charterer’s Event of Default.
 
24
NOTICES
 
24.1
Every notice, request, demand or other communication under this Agreement shall:
 
(a)
be in writing delivered personally or by prepaid letter (airmail if international or courier) or electronic mail;
 
(b)
be deemed to have been received, subject as otherwise provided in this Agreement:
 

 (i)
in the case of a letter, when delivered personally; and
 

 (ii)
in the case of electronic mail, when actually received (or made available) in readable form, whichever shall first occur;
 
(c)
be sent:
 

 (i)
in the case of any notice, request, demand or other communication to the Owner to:
 
Tokyo Sanno Law Office
 
25th Floor, Ark Hills Segokuyama Mori Tower, Roppongi 1-chome, 9-10, Tokyo, Japan 106-0032
E-mail:
yandn@gol.com/yamashita@tokyosanno.com/a.yamaguchi@harukalegal.com/kudo@tokyosanno.com/fujii@harukalegal.com
Attention:          Nobuto Yamaguchi/Daiki Yamashita/Ayako Yamaguchi/Norihiro Kudo/Yuta Fujii


 (ii)
in the case of any notice, request, demand or other communication to the Charterer, to:
 
SEANERGY MARITIME HOLDINGS CORP.,
c/o 154 Vouliagmenis Avenue,
16674, Glyfada, Athens, Greece
E-mail: finance@seanergy.gr & legal@seanergy.gr
Tel: +30 213 0181520
Attention: Mr. Stavros Gyftakis
 
59
or, in each case, to such other address or facsimile number as is notified by one party to the other by five (5) Business Days prior notice in writing under this Agreement.
 
(d)
Copies of every such notice, request, demand or other communication shall be sent simultaneously to:
 
The Chugoku Bank, Ltd
1-15-20, Marunouchi, Kita-ku, Okayama, Japan
Email: matsuwaka_hiroshi@chugin.co.jp
Attention: Hiroshi Matsuwaka

and
 
Fearnleys Japan, Ltd.
3-12-1, Kyobashi, Chuo-ku, Tokyo, Japan 104-0031
Email: a.hiro@feranleys.com
Attention: Hiroyuki Anji

24.2
All demands, documents, notices, communications, evidence, reports, opinions and other documents (other than those set forth in item 1(a) of Part B of Schedule 1 (List of Documents and Evidence)) given or to be given under this Agreement, unless made in the English language, shall be accompanied by an English translation for each copy of the foregoing so given; provided that the English version or translation of all such documents, notices, communications, evidences, reports, opinions and other documents shall prevail in the event of any conflict with the non-English version thereof.
 
25
ASSIGNMENT
 
Save in accordance with the provisions of this Agreement and the other Relevant Documents, neither party to this Agreement may assign or otherwise transfer any of its rights under this Agreement or under any of the other Relevant Documents without the prior written consent of the other.
 
26
SELLER’S CREDIT
 
The Memorandum of Agreement dated February 25, 2022 (the “MOA”) has been concluded between the Owner (in the MOA, the Owner is referred to as the “Buyers”) and the Seller (as the “Sellers”) for the sale and purchase of the Vessel. The purchase price of the Vessel under the MOA is USD 36,100,000 of which USD 21,300,000 is the net purchase price and USD 14,800,000 is granted by way of a non-interest bearing seller’s credit by the Seller to the Buyers (the “Sellers’ Credit”), such Seller’s Credit being set-off against the Purchase Option Price which are based on the gross purchase price payable by the Charterer. The Parties further agree that if for any reason whatsoever, the Sellers’ Credit deed becomes (or have the similar effect of becoming) invalid, unenforceable or illegal to maintain, so that the Owner shall be exempt from the obligation to pay the Sellers’ Credit or any parts thereof under the deed, contract, at law or in equity, the Purchase Option Price will immediately be reduced by an amount equal to the original Sellers’ Credit amount of US$ 14,800,000.
 
60

 a)
The terms of the Seller’s Credit are further regulated in a seller’s credit deed entered into between the Seller, the Charterer and the Buyer.
 
27
COUNTERPARTS
 
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.
 
28
GOVERNING LAW
 
This Agreement and any non-contractual obligations arising out of or in connection with it are governed by and shall be construed in accordance with English law.
 
29
ENFORCEMENT
 
(a)
The Owner and the Charterer irrevocably agree that any dispute, controversy, difference, claim, suit, action or proceeding which may arise out of or in connection with this Agreement (including a dispute regarding the existence, validity, interpretation, performance, breach or termination of this Agreement) or any non-contractual obligation arising out of or in connection with this Agreement and/or any of the other Relevant Documents to which the Owner and the Charterer are parties and, for such purposes, 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.
 
(b)
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.
 
(c)
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 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 gives 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 the sole arbitrator had been appointed by agreement.
 
(d)
In cases where neither the claim nor any counterclaim exceeds the sum of US$200,000 the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at  the time when the arbitration proceedings are commenced.
 
30
MISCELLANEOUS
 
30.1
The Owner and the Charterer each agrees to keep the terms and conditions of this Agreement and the other Relevant Documents confidential and not to disclose such terms and conditions to any person other than:
 
61
(a)
the Lender, any person to (or through) whom a Lender assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Relevant Documents or which succeeds (or which may potentially succeed) the Lender  and its respective Affiliates and their respective legal and other professional advisers (including, without limitation, insurance brokers, insurers and underwriters, legal counsel and auditors);
 
(b)
any Relevant Authority or Government Entity or other person to whom any such person is required by Applicable Law or to whom it is customary in any dealing to disclose such information;
 
(c)
as considered by the Owner, the Charterer or any such person aforesaid to be reasonably necessary for the purposes of any legal or arbitral proceedings or to protect, preserve or enforce its rights under any Relevant Document;
 
(d)
as required by Applicable Law;
 
(e)
to any taxation or fiscal authority;
 
(f)
if such disclosure is necessary or advisable for the purpose of obtaining any consent of, or exemption from, any governmental or public body or authority or any relevant stock exchange;
 
(g)
to the auditors, accountants, legal advisors of the Charterers or the Guarantor;
 
(h)
as otherwise may be required by the laws of regulations applicable to the Charterer or the Guarantor, including but not limited to any stock exchange and/or Securities and Exchange Commission laws and regulations;
 
(i)
if the information in question is already in the public domain other than as a result of a breach of this Agreement; or
 
(j)
with the prior written consent of the other party.
 
30.2
The terms and conditions of this Agreement shall not be varied otherwise than by an instrument in writing executed by or on behalf of the Owner and the Charterer.
 
30.3
No failure or delay on the part of the Owner or the Charterer in exercising any right, power or remedy under this Agreement or any Relevant Document shall operate as a waiver thereof nor shall any single or partial exercise by the Owner or the Charterer of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy.
 
30.4
Any provision hereof prohibited by or unlawful or unenforceable under any Applicable Law actually applied by any court of competent jurisdiction shall (to the extent required by such law) be severed from this Agreement and rendered ineffective so far as is possible without modifying the remaining provisions of this Agreement. Where however the provisions of any such Applicable Law may be waived, they are hereby waived by the parties to the full extent permitted by such law, to the end that this Agreement shall be a valid and binding agreement enforceable in accordance with its terms.
 
30.5
Subject to any applicable grace period contained in Clause 18.1 (a) the time for payment of all sums payable by the Charterer hereunder shall be of the essence of this Agreement.
 
62
30.6
Each of the Owner and the Charterer undertakes to and agrees with the other that it will not seek to vary or amend, or consent to the variation or amendment of any Relevant Document to which one but not the other is a party without the prior written consent of the other, which consent shall not be unreasonably withheld or delayed in the case of any variation or amendment which does not prejudice the position of the other.
 
30.7
The rights and remedies of the Owner and the Charterer provided in this Agreement and the other Relevant Documents are cumulative and are in addition to, and not exclusive of, any rights and remedies provided by law.
 
30.8
Any person which is an Indemnitee or a Tax Indemnitee from time to time and is not a party to this Agreement shall be entitled to enforce such terms of this Agreement as provide for the obligations of the Charterer to such Indemnitee or Tax Indemnitee, as the case may be, in each case, subject to the provisions of Clauses 28 (Governing Law) and 29 and the Third Parties Act.  The Third Parties Act applies to this Agreement as set out in this Clause 30.8.  Save as provided above, a person who is not a party to this Agreement has no right to use the Third Parties Act to enforce any term of this Agreement and, subject to the other provisions of the other Relevant Documents, the parties to this Agreement do not require the consent of any third party (including, without limitation, any Indemnitee or Tax Indemnitee who is not a party to this Agreement) to amend or rescind this Agreement at any time.
 
30.9
Until one (1) year and one (1) day after all present and future obligations and liabilities (whether actual or contingent) of the Owner to the Charterer under or in connection with the this Agreement have been unconditionally and irrevocably paid and discharged in full to the Charterer, the Charterer shall not file an application for any bankruptcy proceedings (hasan tetsuzuki), civil rehabilitation proceedings (minji saisei tetsuzuki), special conciliation proceedings (tokutei chotei tetsuzuki), dissolution, or any other Insolvency Proceedings (whether under Japanese law or not) with respect to the Owner’s assets, and the Charterer hereby waives the right to file such application.
 
IN WITNESS WHEREOF the parties have caused this Agreement to be duly executed the day and year first above written.

63
SCHEDULE 1

LIST OF DOCUMENTS AND EVIDENCE
 
PART A
 
Section 1
 
The Owner having received prior to the Delivery Date:
 
(a)
a copy, certified as a true, correct and up-to-date copy by a duly authorised officer, director or secretary (as appropriate), of the constitutional documents of each of the Charterer and the Guarantor (including a copy of the certificate of good standing in respect of the Guarantor dated not earlier than three (3) months);
 
(b)
a copy, certified as a true copy by a duly authorised director or secretary, of the resolutions of the board of directors of each of the Charterer and the Guarantor:
 

 (i)
approving the terms of, and the transactions contemplated by, the Relevant Documents to which it is a party and resolving that it execute the Relevant Documents to which it is a party;
 

 (ii)
authorising a specified person or persons to execute the Relevant Documents to which it is a party on its behalf; and
 

 (iii)
authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices to be signed and/or despatched by it under, or in connection with, the Relevant Documents to which it is a party;
 
(c)
a copy of a certificate from a duly authorised officer, director or secretary (as appropriate) of each of the Charterer and the Guarantor setting out the names of its directors and officers and the specimen signature of each person authorised by the resolutions referred to in paragraph (b) above;
 
(d)
if applicable, a copy, certified as a correct and complete copy by a duly authorised officer, director or secretary (as appropriate), of the power of attorney, appointing one or more attorneys to act on their behalf (each an “Authorised Representative”) of each of the Charterer and the Guarantor under which any Relevant Documents are to be executed or transactions undertaken;
 
(e)
a copy of each of the Relevant Documents, together with copies of all notices and acknowledgements (if any) required in connection therewith, duly executed by each of the parties thereto other than the Owner;
 
(f)
a copy of a certificate from a duly authorised director or secretary of the Charterer certifying that:
 

 (i)
no Charterer’s Event of Default is continuing; and
 

 (ii)
the Vessel exists and is free from any Liens (other than Permitted Liens);
 
64
(g)
a copy of a certificate from a duly authorised director or secretary of each of the Charterer and the Guarantor certifying that no corporate action has been taken by it, nor have any steps been taken or legal proceedings been initiated or threatened against it for its winding-up, dissolution, administration or reorganisation or for the appointment of a receive, administrator, administrative receiver trustee or similar officer by it or any or all of its assets or revenues which would cause an material adverse change in its financial condition;
 
(h)
a copy of certificate from a duly authorised officer, director or secretary (as appropriate) of each of the Charterer and the Guarantor certifying that each copy document relating to it specified in this Section 1 A of Schedule 1 (List of Documents and Evidence) is correct, complete and in full force and effect as at the date thereof.
 
(i)
a copy, certified as a true copy by a duly authorised officer, director or secretary (as appropriate) of each of the Charterer and the Guarantor, of all consents, Licenses, licences and approvals (if any) required by it to authorise, or required by it to in connection with, the execution, delivery, validity, enforceability and admissibility in evidence of the Relevant Documents to which it is a party and the performance by it of its obligations under the Relevant Documents to which it is a party;
 
(j)
a copy of a certificate signed by a duly authorised director or secretary of the Charterer certifying that (i) the Vessel exists, is in good working order and free from any Security (other than Permitted Security) and (ii) no casualty has occurred
 
(k)
a copy of the valuation of the Vessel dated not earlier than seventy five (75) days prior to the Delivery Date under the MOA; and
 
(l)
For the avoidance of doubt, any Relevant Documents requiring the signature of the Charterer and/or the Guarantor may be signed by an Authorised Representative of the Charterer and/or Guarantor as the case may be.
 
Section 2
 
The Owner having received on the Delivery Date:
 
(a)
evidence that the insurances required to be maintained pursuant to Clause 15 (Insurance) are in place and that all requirements in this Agreement in respect of insurances have been complied with;
 
(b)
a copy of the commercial invoice for the Vessel issued by the Seller in favour of the Owner in relation to the payment of the Purchase Price under the MOA;
 
(c)
copy of the executed Bill of Sale;
 
(d)
a copy of the following classification and trading certificates relating to the Vessel:
 

 (i)
certificate of class issued by the Classification Society, free of any overdue recommendations and conditions;
 

 (ii)
Document of Compliance under the ISM Code issued in the name of the Approved Manager operating the Vessel;
 
65

 (iii)
Safety Management Certificate issued under the ISM Code, together with any other details of the applicable Safety Management System which the Owner requires and any other documents required under the ISM Code in relation to the Vessel;
 

 (iv)
International Ship Security (ISS) Certificate issued under the ISPS Code and any other documents required under the ISPS Code in relation to the Vessel;
 

 (v)
International Air Pollution Prevention Certificate pursuant to Annex VI (Regulations for the Prevention of Air Pollution from Ships) to MARPOL;
 

 (vi)
International Load Line Certificate;
 

 (vii)
International Tonnage Certificate;
 

 (viii)
Safety Construction Certificate;
 

 (ix)
Safety Equipment Certificate; and
 

 (x)
Safety Radio Certificate.
 
PART B
 
The Charterer having received prior to the Delivery Date:
 
(a)
a copy, certified as a true, correct and up-to-date copy by a duly authorised officer, director or secretary (as appropriate), of the constitutional documents of the Owner;
 
(b)
a copy, certified as a true copy by a duly authorised director or secretary, of, the resolutions of the board of directors of the Owner:
 

 (i)
approving the terms of, and the transactions contemplated by, the Relevant Documents to which it is a party and resolving that it execute the Relevant Documents to which it is a party;
 

 (ii)
authorising a specified person or persons to execute the Relevant Documents to which it is a party on its behalf; and
 

 (iii)
authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices to be signed and/or despatched by it under, or in connection with, the Relevant Documents to which it is a party;
 
(c)
a copy of a certificate from a duly authorised officer, director or secretary (as appropriate) of each the Owner setting out the names of its directors and officers and the specimen signature of each person authorised by the resolutions referred to in paragraph (b) above;
 
(d)
if applicable, a copy, certified as a correct and complete copy by a duly authorised officer, director or secretary (as appropriate), of the power of attorney, appointing one or more attorneys to act on its behalf of the Owner under which any Relevant Documents are to be executed or transactions undertaken; and
 
66
(e)
a copy of each of the Relevant Documents to which the Charterer is a party, duly executed by each of the parties thereto other than the Charterer.
 
PART C
 
The Owner shall receive:
 

 a)
simultaneously with the delivery of the Vessel to the Charterer at Delivery, a copy of the Charter Protocol of Delivery and Acceptance, duly executed and delivered by the Charterer or its Authorised Representative;
 

 b)
on the Delivery Date, a copy of the transcript of registry in respect of the Vessel issued by the Marshall Islands Shipping Registry, evidencing that the Vessel is registered in the name of the Owner and showing the particulars of the Vessel;
 

 c)
within five (5) Business Days following the date of Delivery, a letter of undertaking from each insurance broker and/or Insurer satisfying the requirements of the Assignment of Insurance;
 

 d)
within thirty (30) Business Days following the date of Delivery (or such later date as the Owner may in its discretion agree on request of the Charterer), originals of each Relevant Document to which the Charterer is a party, executed by the Charterer (to the extent not yet delivered to the Owner pursuant to Part A and Part B of this Schedule 1);
 

 e)
within thirty (30) days following the Delivery Date, evidence satisfactory to it that all reports, registrations, recordings in connection with the transactions contemplated by the Relevant Documents were properly submitted and filed and all other actions which are necessary to be taken in connection therewith with the Approved Flag and the Republic of Marshall Islands or any other relevant jurisdiction.
 
67
SCHEDULE 2

FORM OF CHARTER PROTOCOL OF DELIVERY AND ACCEPTANCE
 
PROTOCOL OF DELIVERY AND ACCEPTANCE
UNDER BAREBOAT CHARTERPARTY DATED as of
25th February, 2022

Date: 9th March 2022
Time:[           ] Tokyo time
Place:[                           ]

ARTEMIS LEASE 01 LIMITED with registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands (the “Owner”) hereby delivers to PARTNER MARINE CO. of Trust Company Complex, Ajeltake Road, Ajeltake Islands, Majuro, Marshall Islands (the “Charterer”) the Marshall Islands flagged M.V. “PARTNERSHIP” with IMO no. 9597848 (the “Vessel”) and the Charterer hereby accepts delivery of the Vessel on the date and at the time and place referred to in this Protocol pursuant to the terms and conditions of the Bareboat Charter Agreement dated as of 25th February 2022 (the “Bareboat Charter Agreement”) made between (1) the Owner as owner and (2) the Charterer as bareboat charterer.


This protocol of delivery and acceptance is the “Charter Protocol of Delivery and Acceptance” set out in Schedule 2 of the Bareboat Charter Agreement.

This protocol of delivery and acceptance and any non-contractual obligations arising out of or in connection with it are governed by and shall be construed in accordance with English law.


For and on behalf of
ARTEMIS LEASE 01 LIMITED
Name:
Title: Director
For and on behalf of
PARTNER MARINE CO.
Name:
Title:


68
SCHEDULE 3
TERMINATION VALUE
 
Payment Date
Termination Value
2022/03/07
$21,300,000.00
2022/06/07
$20,709,000.00
2022/09/07
$20,118,000.00
2022/12/07
$19,527,000.00
2023/03/07
$18,936,000.00
2023/06/07
$18,345,000.00
2023/09/07
$17,754,000.00
2023/12/07
$17,163,000.00
2024/03/07
$16,572,000.00
2024/06/07
$15,981,000.00
2024/09/07
$15,390,000.00
2024/12/07
$14,799,000.00
2025/03/07
$14,208,000.00
2025/06/07
$13,617,000.00
2025/09/07
$13,026,000.00
2025/12/07
$12,435,000.00
2026/03/07
$11,844,000.00
2026/06/07
$11,253,000.00
2026/09/07
$10,662,000.00
2026/12/07
$10,071,000.00
2027/03/07
$9,480,000.00
2027/06/07
$8,889,000.00
2027/09/07
$8,298,000.00
2027/12/07
$7,707,000.00
2028/03/07
$7,116,000.00
2028/06/07
$6,525,000.00
2028/09/07
$5,934,000.00
2028/12/07
$5,343,000.00
2029/03/07
$4,752,000.00
2029/06/07
$4,161,000.00
2029/09/07
$3,570,000.00
2029/12/07
$2,979,000.00
2030/03/07
$2,388,000.00

69
SCHEDULE 4

STIPULATED LOSS VALUE
 
Payment Date
Termination Value
2022/03/07
$23,430,000.00
2022/06/07
$22,779,900.00
2022/09/07
$22,129,800.00
2022/12/07
$21,479,700.00
2023/03/07
$20,829,600.00
2023/06/07
$20,179,500.00
2023/09/07
$19,529,400.00
2023/12/07
$18,879,300.00
2024/03/07
$18,229,200.00
2024/06/07
$17,579,100.00
2024/09/07
$16,929,000.00
2024/12/07
$16,278,900.00
2025/03/07
$15,628,800.00
2025/06/07
$14,978,700.00
2025/09/07
$14,328,600.00
2025/12/07
$13,678,500.00
2026/03/07
$13,028,400.00
2026/06/07
$12,378,300.00
2026/09/07
$11,728,200.00
2026/12/07
$11,078,100.00
2027/03/07
$10,428,000.00
2027/06/07
$9,777,900.00
2027/09/07
$9,127,800.00
2027/12/07
$8,477,700.00
2028/03/07
$7,827,600.00
2028/06/07
$7,177,500.00
2028/09/07
$6,527,400.00
2028/12/07
$5,877,300.00
2029/03/07
$5,227,200.00
2029/06/07
$4,577,100.00
2029/09/07
$3,927,000.00
2029/12/07
$3,276,900.00
2030/03/07
$2,626,800.00

70
SCHEDULE 5

FORM OF ACKNOWLEDGEMENT AND CONSENT
 
To:  THE CHUGOKU BANK, LTD. (the “Assignee”)
 
ARTEMIS LEASE 01 LIMITED
 
ACKNOWLEDGMENT AND CONSENT
 
Date: [  ] 　　  , 2022
 
1.
We, PARTNER MARINE CO., without prejudice to our rights under the BBC and to the extent that our position as bareboat charterers according to the terms of the BBC shall not be prejudiced and must be hereby reserved expressly, hereby acknowledge receipt of the attached notice of assignment (the “Notice”) and agree to the terms of the Notice.
 
2.
We further hereby irrevocably agree with the Assignee:
 

 (1)
Provided that an Owner Event of Termination (as defined in the BBC) which is capable of being remedied occurs, the Bareboat Charterer shall, prior to terminating the BBC, give the Assignee 14 days to remedy such default (such remedy period to run in parallel with the Owner’s right to remedy such default), upon which:
 
a) the Assignee may by written notice (“Take-Over Notice”) to the Bareboat Charterer, assume all rights and obligations of the Assignor as “Owner” under the BBC or
 
b) any nominee of the Assignee may, subject the Bareboat Charterer’s prior written confirmation, which shall not be unreasonably withheld (it being understood that such nominee, which cannot be one of our competitors, must have (i) the legal capacity, (ii) technical competence and (iii) financial capability to fulfil the requirements of the “Owner” under the BBC), by a Take-Over Notice to the Bareboat Charterer, assume all rights and obligations of the Assignor as “Owner” under the BBC,
 
in each case provided that the same is subject to the Assignee or its nominee having entered into any and all required documents and taken all actions necessary to assume and give effect to the same (including but not limited to any documents required for the registration of the Vessel under the name of the Assignee or its nominee).
 

 (2)
We further also hereby confirm that following an Event of Default (as defined in the Facility Agreement) occurs under the facility agreement dated 7th March, 2022 (the “Facility Agreement”) between the Assignee as lender and the Assignor as borrower, the Assignee or the Assignee’s nominee may also (without obligation to do so) take over the position of the Assignor in and under the said BBC pursuant to the same terms and conditions as mentioned above under (1).
 
71

 (3)
Upon and subject to fulfillment of Clause 2(1) above by the Assignee or its nominee, the position of the Assignor, including all its right, title, interest, benefit and obligations, in and under the BBC shall be forthwith and automatically transferred and assigned to the Assignee (without execution by any party of any novation agreement or other document) and the said BBC shall thereafter be binding upon the Assignee (or the Assignee’s nominee) as disponent owner and us as bareboat charterer.
 
3.
This Acknowledgment and Consent is governed by the laws of England, and disputes shall be referred to arbitration in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. Clause 29 of the BBC shall apply mutatis mutandis.
 
PARTNER MARINE CO.




By

Name:

Title:

72
ACKNOWLEDGEMENT AND CONSENT
 
Date: [             ] [  ], 2022

To:          THE CHUGOKU BANK, LTD. (the “Assignee”)
 
ARTEMIS LEASE 01 LIMITED (the “Assignor”)
 
We, SEANERGY MARITIME HOLDINGS CORP. of the Republic of the Marshall Islands hereby accept and acknowledge receipt of the attached notice of assignment (the “Notice”) and the copy of assignment attached thereto (the “Assignment”), and hereby agree to the terms of the Notice.
 
1.
In the event that the Assignor’s position in the BBC shall be transferred to the Assignee as prescribed in the Acknowledgement and Consent dated even date herewith executed by the Assignor in the Assignee’s favor, the position of the Assignor in the BBC Guarantee shall also be automatically transferred to the Assignee or its nominee.
 
2.
We hereby consent and agree to be bound by and to comply with the terms of the Notice.
 
3.
This Acknowledgment and Consent is governed by the laws of England, and disputes shall be referred to arbitration in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. Clause 29 of the BBC shall apply mutatis mutandis.
 
For and on behalf of
SEANERGY MARITIME HOLDINGS CORP.
Name:
Title:

73
SCHEDULE 6
 
AMORTIZATION COMPONENT
 
　
Date
Initial
Payment
Outstanding
　
2022/03/07
$21,300,000.00
$0.00
$21,300,000.00
1
2022/06/07
$21,300,000.00
$576,000.00
$20,724,000.00
2
2022/09/07
$20,724,000.00
$576,000.00
$20,148,000.00
3
2022/12/07
$20,148,000.00
$576,000.00
$19,572,000.00
4
2023/03/07
$19,572,000.00
$576,000.00
$18,996,000.00
5
2023/06/07
$18,996,000.00
$579,000.00
$18,417,000.00
6
2023/09/07
$18,417,000.00
$579,000.00
$17,838,000.00
7
2023/12/07
$17,838,000.00
$579,000.00
$17,259,000.00
8
2024/03/07
$17,259,000.00
$579,000.00
$16,680,000.00
9
2024/06/07
$16,680,000.00
$585,000.00
$16,095,000.00
10
2024/09/07
$16,095,000.00
$585,000.00
$15,510,000.00
11
2024/12/07
$15,510,000.00
$585,000.00
$14,925,000.00
12
2025/03/07
$14,925,000.00
$585,000.00
$14,340,000.00
13
2025/06/07
$14,340,000.00
$591,000.00
$13,749,000.00
14
2025/09/07
$13,749,000.00
$591,000.00
$13,158,000.00
15
2025/12/07
$13,158,000.00
$591,000.00
$12,567,000.00
16
2026/03/07
$12,567,000.00
$591,000.00
$11,976,000.00
17
2026/06/07
$11,976,000.00
$591,000.00
$11,385,000.00
18
2026/09/07
$11,385,000.00
$591,000.00
$10,794,000.00
19
2026/12/07
$10,794,000.00
$591,000.00
$10,203,000.00
20
2027/03/07
$10,203,000.00
$591,000.00
$9,612,000.00
21
2027/06/07
$9,612,000.00
$597,000.00
$9,015,000.00
22
2027/09/07
$9,015,000.00
$597,000.00
$8,418,000.00
23
2027/12/07
$8,418,000.00
$597,000.00
$7,821,000.00
24
2028/03/07
$7,821,000.00
$597,000.00
$7,224,000.00
25
2028/06/07
$7,224,000.00
$603,000.00
$6,621,000.00
26
2028/09/07
$6,621,000.00
$603,000.00
$6,018,000.00
27
2028/12/07
$6,018,000.00
$603,000.00
$5,415,000.00
28
2029/03/07
$5,415,000.00
$603,000.00
$4,812,000.00
29
2029/06/07
$4,812,000.00
$606,000.00
$4,206,000.00
30
2029/09/07
$4,206,000.00
$606,000.00
$3,600,000.00
31
2029/12/07
$3,600,000.00
$606,000.00
$2,994,000.00
32
2030/03/07
$2,994,000.00
$606,000.00
$2,388,000.00

74
Execution Page
 
Owner

ARTEMIS LEASE 01 LIMITED

/s/ Nobuto Yamaguchi

By:

Name: Nobuto Yamaguchi
Title: Director

Charterer
PARTNER MARINE CO.

/s/ Stavros Gyftakis

By:

Name: Stavros Gyftakis
Title: Director


75
Exhibit 4.64

Dated 25th February, 2022

SEANERGY MARITIME HOLDINGS CORP.

as Guarantor

in favor of

ARTEMIS LEASE 01 LIMITED

as Owner


PERFORMANCE GUARANTEE


in respect of

the Bareboat Charter of
 M.V. “Partnership” dated 25th February 2022

1
This GUARANTEE (the “Guarantee”) dated the 25 day of February, 2022, IS GIVEN BY:

1.        SEANERGY MARITIME HOLDINGS CORP., a corporation organized and existing under the laws of the Republic of the Marshall Islands, having its registered address  at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (hereinafter called the “Guarantor”)

IN FAVOUR OF:

2.        ARTEMIS LEASE 01 LIMITED, a corporation organized and existing under the laws of the Republic of the Marshall Islands, having its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro MH96960, Marshall Islands  (the “Owner”).

WHEREAS:

(1)
The Owner and Partner Marine Co., a Marshall Islands corporation having its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960 (the “Charterer”), have entered into a bareboat charter agreement dated 25th February, 2022 (as amended or supplemented from time to time) (the “Bareboat Charterparty”), pursuant to which the Owner as owner will bareboat charter to the Charterer the motor vessel named “Partnership” with IMO number - 9597848 (hereafter, the “Vessel”) for a period of eight (8) years from the Delivery Date (as defined in the Bareboat Charterparty) in accordance with the terms of the Bareboat Charterparty.

(2)
This Deed is the Guarantee referred to in the Bareboat Charterparty.

Now, the Guarantor hereby guarantees to, undertakes and agrees with, the Owner as follows (the capitalized terms herein shall have the same meaning given in the Bareboat Charterparty unless otherwise defined herein or the context otherwise requires):

3
Guarantee
In consideration of the Owner entering into the Bareboat Charterparty, receipt, adequacy and sufficiency of such consideration being hereby acknowledged by the Guarantor, the Guarantor hereby guarantees in favor of the Owner unconditionally and irrevocably, as a primary obligor and not merely as a surety, the complete and prompt performance by the Charterer of any and all of the obligations of the Charterer under the Bareboat Charterparty, including, without limitation to the generality of the foregoing, payment of any and all Charter Hire, overdue interest, all compensations for losses, damages, costs and expenses and any and all other moneys whatsoever payable by the Charterer to the Owner under the Bareboat Charterparty (collectively the “Guaranteed Obligations”).

4
Indemnity Obligation
If for any reason whatsoever the Charterer shall have failed to make any payment promptly and fully as and when required to be made by it under the Bareboat Charterparty, the Guarantor shall forthwith make such payment within ten (10) Banking Days following receipt of a written demand from the Owner that the Charterer is in default of such payment. The Guarantor shall further indemnify and hold harmless the Owner for any reasonable, direct damages, losses, costs and expenses including reasonable attorney fees incurred to the Owner arising from, or in connection with, the failure by the Charterer to punctually perform any obligation under the Bareboat Charterparty, and the enforcement of this Guarantee by the Owner.

2
5
Payment
All payments hereunder shall be made in United States Dollars in freely available funds directly to the below described bank account or such other bank account and in such place as the Owner may from time to time direct in writing:

Bank:
The Chugoku Bank, Ltd, Branch: SF Center Branch
Account Name:
ARTEMIS LEASE 01 LIMITED
Account Number:
1314612
Kind of Account:
U.S. Dollar Ordinary Account

6
Validity of Guarantee
The validity of this Guarantee and the obligations of the Guarantor hereunder shall not be terminated, affected or impaired by reason of any invalidity, irregularity, unenforceability or sufficiency of any other security or defect in any or all provisions of the Bareboat Charterparty or herein, any amendment, novation, supplement, extension, restatement or replacement of any document or security, the exercise by the Owner of, or by reason of any failure to enforce, any of the rights or remedies reserved to the Owner under the Bareboat Charterparty or otherwise, or any other circumstances affecting the Charterer or otherwise, which might constitute equitable discharge or defense of a guarantor.  In the event that the Owner waives any of its rights or claims against any other guarantor (if any) or security whatsoever or admits any immunity, in whole or in part, of the obligations of any other party who is liable to the Owner in connection with the Bareboat Charterparty, such waiver or admission of immunity given by the Owner shall not in any way affect, impair, or otherwise prejudice, any obligation or liability of the Guarantor to any extent.

7
Continuing Guarantee
This Guarantee shall be a continuing guarantee and remain in full force and effect as long as the Bareboat Charterparty continues and/or as long as any debt or duty is still owed to the Owner by the Charterer in connection with the Bareboat Charterparty. The Guarantee shall become null and void upon the  fulfilment of all obligations of the Charterer under the Bareboat Charterparty, and within two (2) months thereafter this Guarantee shall be returned to the Guarantor or abolished by the Owner (in the latter case, the Owner shall issue to the Guarantor a certificate of abolishment of this Guarantee).

8
First Demand Guarantee
The Owner shall not be obliged to first demand upon the Charterer or levy upon it or its property, or to take any steps for exercising its rights against the Charterer or any other security. The Guarantor hereby waives all or any of the Guarantor’s rights as surety which may at any time be inconsistent with any of the provisions of this Guarantee.
 
9
Absolute Guarantee
The Guarantor’s obligation to the Owner hereunder shall be absolute and unconditional and shall not be affected, terminated or impaired by reason of any circumstances, including, without limitation, any set off, counterclaim, recoupment, defense or other right which the Guarantor may have against the Owner or anyone else for any reason whatsoever, or any other circumstance, happening or event whatsoever, whether or not similar to the foregoing; provided, however, that notwithstanding anything to the contrary set out in this Guarantee, the Guarantor shall have the right to assert any defenses which may exist in favor of the Charterer pursuant to the Bareboat Charterparty and the obligations of the Guarantor under this Guarantee shall never exceed the obligations of the Charterer under the Bareboat Charterparty.

3
The liability of the Guarantor hereunder shall not be diminished, extinguished or released if any moneys received by the Owner hereunder are subsequently recovered from or surrendered or repaid by the Owner under or in contemplation of the provisions of any enactment relating to fraudulent preferences and no release or discharge given by the Owner to the Guarantor in consequence of such payment shall operate as a waiver of all or any of the rights of the Owner against the Guarantor hereunder.

This Guarantee shall be in addition to and shall not be in any way prejudiced or affected by any collateral or other security now or hereafter held by the Owner for the Guaranteed Obligation, nor shall such collateral or other security or any lien to which the Owner may be otherwise entitled or the liability of any person(s) not parties hereto for all or any part of the Guaranteed Obligations be in any way prejudiced or affected by this Guarantee.

No disposition, assurance, security or payment which may be avoided under any provisions of any written law or statute and no release, settlement or discharge which may have been given or made on the faith of any such disposition, assurance, security or payment shall prejudice or affect the Owner’s right to recover from the Guarantor monies to the full extent of this Guarantee, as if such disposition, assurance, security, payment, release, settlement or discharge (as the case may be) had never been granted, given or made.

All compositions and monies received by the Owner from the Charterer or from any other company, person or estate capable of being applied by the Owner in reduction of the indebtedness of the Charterer shall be regarded for all purposes as payments in gross and should the Charterer be wound-up or liquidated the Owner shall be entitled to prove in the winding-up or liquidation of the Charterer in respect of the whole of the Charterer’s indebtedness to the Owner and without any right of the Owner to be subrogated to the Guarantor in respect of any such proof until the Owner shall have received in the liquidation of the Charterer or from other sources one hundred (100) percent of the Guaranteed Obligations.

10
Change in Charterer
No change in the name, objects of business, capital stock or constitution of the Charterer shall in 　any way affect the liability of the Guarantor under this Guarantee, and full and complete payment of any and all sums payable by the Charterer pursuant to the terms of the Bareboat Charterparty shall be made by the Guarantor pursuant to the provisions hereof.

11
Covenants and Undertakings
The Guarantor hereby covenants and undertakes with the Owner that from the date of this Guarantee and so long as any moneys, obligations and liabilities are due, owing or incurred by the Charterer under the Bareboat Charterparty:

(1)
the Guarantor will promptly inform the Owner of the occurrence of any Event of Default;
 
(2)
the Guarantor shall submit to the Owner the audited individual (or consolidated in the case of the Guarantor) annual financial statements of the Charterers and the Guarantor (including profit and loss statement, balance sheet and accompanying notes) as soon as available and in no event later than 180 days after the end of each of their respective financial years,  and the unaudited semi-annual aforesaid statements of the Charterer and the Guarantor, within 90 days after the end of each semi-annual period during each of the Charterers’ and the Guarantor’s financial years;
 
4
(3)
the Guarantor will procure that at all times all governmental consents required by law for the validity, enforceability, legality and admissibility in evidence of this Guarantee and of all matters herein contemplated and of the performance thereof by the Guarantor remain in full force and effect;
 
(4)
Any indebtedness of the Charterer now or hereafter held by the Guarantor shall be subordinated to the indebtedness of the Charterer to the Owner and such indebtedness of the Charterer to the Guarantor if the Owner so requires shall be collected, enforced and received by the Guarantor as trustee for the Owner and shall be paid over to the Owner on account of the indebtedness of the Charterer to the Owner but without reducing or affecting in any manner the liability of the Guarantor under this Guarantee until the Guaranteed Obligations has been fully paid to the Owner;

(5)
This Guarantee shall continue to bind the Guarantor notwithstanding: -

(a)
any change in the constitution of the Charterer (whether by amalgamation, reconstruction or otherwise) by which the business of the Charterer may for the time being be carried on and shall be available to the Charterer carrying on the business of the Charterer for the time being;

(b)
any winding-up (whether voluntary or compulsory), judicial management, amalgamation, reconstruction of, bankruptcy, death, insanity or other disability or affecting the Charterer or any defect, informality or insufficiency of the Charterer’s borrowing powers; or

(c)
any winding-up (whether voluntary or compulsory), judicial management, amalgamation, reconstruction of, bankruptcy, death, insanity or any other disability of any other Guarantor (if any) or any other person.;

(6)
The Guarantor shall not be discharged or released from this Guarantee by any of the following: -

(a)
any partial payments or settlement of accounts or the existence of a credit balance of the Charterer at any time or by discharge of the Charterer by operation of law or for any other reason; or

(b)
any other guarantee or security obtained by the Owner either from the Charterer or the Guarantor or from any other person in respect of indebtedness covered by this Guarantee.

(7)
Any release, compromise or discharge of the obligations of the Guarantor under this Guarantee will be deemed to be made subject to the condition that it will be void if any payment or security which the Owner may receive or have received is set aside or proves invalid for whatsoever reason. Without limiting the generality of the foregoing, the Owner’s rights and the Guarantor’s obligations hereunder shall be deemed to remain in full force and effect notwithstanding that the obligations of the Guarantor under this Guarantee would have been fully released or discharged but for the provisions herein and shall so remain for such period as the Owner shall in its absolute discretion determine (after having regard to all applicable laws relating to bankruptcy, liquidation, insolvency or undue or fraudulent preference) from the date of such release or discharge.  For the avoidance of doubt, the obligations of the Guarantor under this Guarantee are and will remain in full force and effect by way of continuing security and the Owner may retain the Guarantee during the said period.

12
Representations and Warranties

12.1The Guarantor hereby represents and warrants to the Owner on the date of this Guarantee as follows:

(1)
the Guarantor is a corporation duly incorporated and validly existing under the laws of the Republic of the Marshall Islands, and has all requisite power, authority, corporate or otherwise, and legal right to conduct its business, to own its properties and to execute and deliver, and to perform all of its obligations under this Guarantee;

5
(2)
the Guarantor has taken all appropriate and necessary actions to authorize the issuance of this Guarantee, and this Guarantee constitutes the legal, valid and binding obligation of the Guarantor enforceable in accordance with the terms hereof; and

(3)
the Charterer and the Guarantor are not in insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceedings.

12.2 The Guarantor hereby acknowledges and agrees that certain of the Owner’s rights under this Guarantee will be assigned to the Lender, and agrees and covenants to sign an acknowledgement of a notice of assignment of this Guarantee on a form to be agreed between the Owner and the Guarantor as reasonably required by the Owner and the Lender.

13
Assignment of the Bareboat Charterparty
13.1 In case of the assignment of the Bareboat Charterparty by the Owner to the Mortgagee, this Guarantee shall remain valid and enforceable following such assignment; provided that the Guarantor shall not have greater liability or obligation hereunder towards such assignee than it had towards the Owner and the Guarantor shall have received written notice of such assignment.

13.2 All the covenants and agreements of the Guarantor contained in this Guarantee shall bind the Guarantor and its successors (provided that the Guarantor may not assign this Guarantee without prior written consent of the Owner) and shall inure to the benefit of the Owner or its respective successors and permitted assigns.  Every power, right, remedy and security granted to the Owner hereunder shall be in addition to and not be in limitation of any and every other power, right, remedy or security vested in the Owner by any other contract or agreement, at law or in equity.

14
Costs and Expenses (intentionally omitted)

15
Currency
Any payment hereunder shall be made in U.S. Dollar.

16
Guarantor’s Right
 
Until all indebtedness of the Charterer to the Owner payable pursuant to the Bareboat Charterparty or all indebtedness of the Guarantor to the Owner payable pursuant to this Guarantee shall have been paid in full, the Guarantor shall not exercise (i) any right of subrogation or recourse to or proceeding against the Charterer, or any other security, and the Guarantor hereby (with effect for the duration of this Guarantee only) waives any right to enforce any remedy at law or otherwise which the Guarantor may hereafter have against the Charterer or other securities, and waives the benefit of, and any right to participate in, any security now or hereafter held by the Owner, (ii) not prove, file (in the bankruptcy, winding up of the Charterer or otherwise) or otherwise exercise its claim or right against the Charterer in competition with the Owner, and (iii) not take any security from the Charterer (in the event of its taking such security it shall be held in trust for the Owner and forthwith be deposited with the Owner). The Guarantor hereby expressly agrees with the Owner to subordinate any and all debts, obligations and liabilities owing to the Guarantor by the Charterer under this Guarantee to all the rights of the Owner with respect to the Bareboat Charterparty. Without prejudice to the generality of the foregoing, the Guarantor hereby undertakes to the Owner that it will not demand or accept from the Charterer repayment or payment of any loans or other form of finance granted by the Guarantor to the Charterer or any part thereof and in the event of the Guarantor accepting such repayment or payment the moneys so received shall be deemed to be received in trust for the Owner and shall forthwith be paid over to the Owner.

6
17
Third Party’s Right
Any person who is not a party to this Guarantee shall have no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any of its terms, except that the Owner’s successors and permitted assigns shall have right to enforce any of its terms.
 
18
TRANSFER RISK
In the event that, in accordance with the laws or rules of the country wherein the principal office, branch or other office of the Charterer is seated or of the country wherein the debt is to be repaid, or in accordance with the order or regulations, etc. of the country wherein the principal office, branch or other office of the Charterer is seated or of the country wherein the debt is to be repaid, or of the state or other local government therein, the government, central or other government agency or other similar agency of such country (hereinafter, the “Debt Assuming Institution”) assumes any debt of the Charterer indemnifying the Charterer, or makes any so called rescheduling including but not limited to deferment of repayment or partial immunity with respect to any debt owed by the Charterer to the Owner, whether compulsory or not, the Guarantor shall deem that any such assumption of debt or rescheduling does not exist, and shall make repayment to the Owner under this Guarantee with respect to any and all debts otherwise owed by the Charterer to the Owner; provided, however, that the Guarantor shall be discharged from the obligations thereof owed to the Owner under this Guarantee to the extent the Debt Assuming Institution shall have made repayment to the Owner under such assumption of debt or rescheduling.

19
PERSONAL DATA

(1)
The Guarantor authorises the Owner and its officers or agents to disclose any information in connection with the Guarantor, when required (i) pursuant to any court order,  (ii) by any regulation or law, (iii) when required by the Owner’s auditors or other professional advisers to the Owner for this Guarantee.
 
(2)
Notwithstanding the foregoing, the Owner may at any time disclose information in connection with the Guarantor to any party, subject to the prior written consent by the Guarantor.

(3)
The Owner may collect, use, disclose and/or process personal data (as defined under the Personal Data Protection Act 2012) in connection with this Guarantee for one or more of the following purposes (to the extent applicable), which the Guarantor hereby acknowledges and agrees to:


(a)
processing the Guarantor’s application with the Owner for any products, facilities and/or services offered to the Guarantor pursuant to any agreements from time to time between the Guarantor and the Owner;


(b)
facilitating, processing, dealing with, administering, managing and/or maintaining the Guarantor’s relationship with the Owner, performance of this Guarantee or any other agreements from time to time between the Guarantor and the Owner and enforcing the Owner’s rights and obligations thereunder;


(c)
carrying out the Guarantor’s instructions or responding to any enquiry given by (or purported to be given by) the Guarantor or on behalf of the Guarantor;

7

 (d)
communicating with representatives of the Guarantor via phone/voice call, text message, fax message, email and/or postal mail for the purposes of administering and/or managing the relationship between the Guarantor and the Owner, such as but not limited to processing transactions or administering services or products;


(e)
performing verification of financial standing through credit reference checks;


(f)
managing the Owner’s infrastructure and business operations and/or to carry out or perform administrative, operational and technology tasks (including technology infrastructure maintenance and support, application maintenance and support, risk management, systems development and testing), and business continuity management as well as complying with policies and procedures including those related to auditing, finance and accounting, billing and collections;


(g)
detecting, preventing and investigating any fraud, bribery, corruption or any act or omission which constitutes violation of any law, carrying out due diligence or other screening activities as required by law or regulations or the Owner’s risk management procedures in order to meet the Owner’s compliance obligations;


(h)
complying with any applicable law, governmental or regulatory requirements including meeting the requirements of any guidelines by regulatory authorities (in Singapore or elsewhere), requests or order by any governmental authorities, public agencies, ministries, statutory bodies including but not limited to defending and/or enforcing the Owner’s rights and remedies under the law;


(i)
conducting research, analysis and development activities (including but not limited to data analytics, surveys and/or profiling) to improve the Owner’s products, services and facilities; and


(j)
storing, hosting, backing up (whether for disaster recovery or otherwise) personal data, whether within or outside Singapore,

(collectively, the “Purposes”).

(4)
The personal data may be collected from sources other than the Guarantor, and the Owner may thereafter use, disclose and/process such personal data for one or more of the above Purposes. The Owner may disclose the personal data to third parties for such third parties to process such personal data for one or more of the above Purposes. Without limiting the generality of the foregoing, such third parties may include: (i) the Owner’s parent company, head office, branches, subsidiaries, associated or affiliated organisations, or related corporations; any of the Owner’s agents, contractors or third party service providers that may/will collect and/or process the Guarantor’s personal data on the Owner’s behalf for one or more of the Purposes including but not limited to those who provide administrative or other services to the Owner such as mailing houses, telecommunication companies, information technology companies and data centres, disaster recovery service providers, storage providers and professional advisers; and to any parties pursuant to any law or regulation or court order and any law enforcement agencies or any other regulatory authorities.

8
(5)
By providing to the Owner any personal data related to a third party individual (e.g. information of the Guarantor’s guarantors, officers or beneficial owners) to the Owner, the Guarantor represents and warrants that the Guarantor is and will be validly acting on behalf of and has the authority of all such third party individuals in providing or to provide his/her personal data to the Owner for the Purposes and for the Owner to disclose the same to third parties as described above, and that the valid consent of that third party has been obtained for the Owner to collect, use and disclose his/her personal data for the Purposes listed above and for the Owner to disclose his/her personal data to third parties as described above.

(6)
If the Guarantor, at any time, has any queries on this policy or any other queries in relation to how the Owner may manage, protect and/or process such personal data, the Guarantor should contact the Owner’s Data Protection Officer at Personal_Data_Protection@sg.mufg.jp.

20
Notice
20.1 Except as otherwise provided for in this Guarantee, all notices or other communications under or in respect of this Guarantee to either party hereto shall be in writing and shall be made or given to such party at the address or facsimile number appearing below (or at such other address, telex number or facsimile number as such party may hereafter specify for such purposes to the other by notice in writing):

In the case of the Owner:
ARTEMIS LEASE 01 LIMITED
Att: Mr. Nobuto Yamaguchi
Telephone: +81-3-3589-3585
Email: yandn@gol.com

In the case of the Guarantor:
SEANERGY MARITIME HOLDINGS CORP.
c/o 154 Vouliagmenis Avenue, 16674,Glyfada, Athens, Greece
Att: Mr. Stavros Gyftakis
Tel: +30 2130181520
Email: finance@seanergy.gr   legal@seanergy.gr

20.2 If either partychanges the address, telephone number or email prescribed in the preceding paragraph, a written notice shall forthwith be sent to the other party.

21
Law and Jurisdiction
This Guarantee shall be governed and construed in accordance with English law and any dispute controversy, difference, claim, suit, action or proceeding which may arise out of or in connection with this Guarantee (including a dispute regarding the existence, validity, interpretation, performance, breach or termination of this Guarantee) or any non-contractual obligation 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.

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.

9
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 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.

In cases where neither the claim nor any counterclaim exceeds the sum of US$200,000 the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced.

10
IN WITNESS WHEREOF, the Guarantor hereto have executed this Guarantee as a Deed as of the day and year first above written.

SEANERGY MARITIME HOLDINGS CORP.

SIGNED as a deed and DELIVERED for
  
)
and on behalf of SEANERGY MARITIME HOLDINGS CORP.
  
)
as Guarantor in the presence of:
  
)

/s/ Stavros Gyftakis
  
   
Name: Stavros Gyftakis
  
Title: Attorney in Fact
  
   
/s/ Maria Kalothetou
  

 
Witness signature
  
Name: Maria Kalothetou
  


ARTEMIS LEASE 01 LIMITED
    
     
SIGNED as a deed and DELIVERED for
  
)
and on behalf of ARTEMIS LEASE 01 LIMITED
  
)
as Owner in the presence of:
  
)

/s/ Nobuto Yamaguchi
  

 
Name: Nobuto Yamaguchi
  
Title: Director
  
   
/s/ Daiki Yamashita
  
Witness signature
  
Name: Daiki Yamashita
  


11
Exhibit 8.1

SUBISDIARIES OF SEANERGY MARITIME HOLDINGS CORP.

Subsidiary
Jurisdiction of Incorporation
Seanergy Management Corp.
Republic of the Marshall Islands
Seanergy Shipmanagement Corp.
Republic of the Marshall Islands
Leader Shipping Co.
Republic of the Marshall Islands
Sea Glorius Shipping Co.
Republic of the Marshall Islands
Sea Genius Shipping Co.
Republic of the Marshall Islands
Traders Shipping Co.
Republic of the Marshall Islands
Gladiator Shipping Co.
Republic of the Marshall Islands
Premier Marine Co.
Republic of the Marshall Islands
Emperor Holding Ltd.
Republic of the Marshall Islands
Champion Marine Co.
Republic of the Marshall Islands
Fellow Shipping Co.
Republic of the Marshall Islands
Flag Marine Co.
Republic of the Marshall Islands
Patriot Shipping Co.
Republic of the Marshall Islands
World Shipping Co.
Republic of the Marshall Islands
Partner Marine Co.
Republic of the Marshall Islands
Duke Shipping Co.
Republic of the Marshall Islands
United Maritime Corporation
Republic of the Marshall Islands
Squire Ocean Navigation Co.
Republic of Liberia
Lord Ocean Navigation Co.
Republic of Liberia
Knight Ocean Navigation Co.
Republic of Liberia
Good Ocean Navigation Co.
Republic of Liberia
Hellas Ocean Navigation Co.
Republic of Liberia
Friend Ocean Navigation Co.
Republic of Liberia
Partner Shipping Co. Limited
Malta
Pembroke Chartering Services Limited
Malta
Martinique International Corp.
British Virgin Islands
Harbour Business International Corp.
British Virgin Islands
Maritime Grace Shipping Limited
British Virgin Islands
Maritime Glory Shipping Limited
British Virgin Islands
Maritime Capital Shipping Limited
Bermuda
Maritime Capital Shipping (HK) Limited
Hong Kong


Exhibit 12.1

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

I, Stamatios Tsantanis, certify that:

1.            I have reviewed this annual report on Form 20-F of Seanergy Maritime Holdings Corp.;

2.            Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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)        Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 (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: March 31, 2022

/s/ Stamatios Tsantanis
Stamatios Tsantanis
Chief Executive Officer (Principal Executive Officer)


Exhibit 12.2

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

I, Stavros Gyftakis, certify that:

1.            I have reviewed this annual report on Form 20-F of Seanergy Maritime Holdings Corp.;

2.            Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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)            Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(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: March 31, 2022

/s/ Stavros Gyftakis
Stavros Gyftakis
Chief Financial Officer (Principal Financial Officer)


Exhibit 13.1

PRINCIPAL EXECUTIVE OFFICER CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350

In connection with this Annual Report of Seanergy Maritime Holdings Corp. (the "Company") on Form 20-F for the year ended December 31, 2021, as filed with the Securities and Exchange Commission (the "SEC") on or about the date hereof (the "Report"), I, Stamatios Tsantanis, 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: March 31, 2022

/s/ Stamatios Tsantanis
Stamatios Tsantanis
Chief Executive Officer (Principal Executive Officer)


Exhibit 13.2

PRINCIPAL FINANCIAL OFFICER CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350

In connection with this Annual Report of Seanergy Maritime Holdings Corp. (the “Company”) on Form 20-F for the year ended December 31, 2021, as filed with the Securities and Exchange Commission (the “SEC”) on or about the date hereof (the “Report”), I, Stavros Gyftakis, 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: March 31, 2022

/s/ Stavros Gyftakis
Stavros Gyftakis
Chief Financial Officer (Principal Financial Officer)




Exhibit 15.1


Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements:

(1)
Registration Statement (Form F-3 No. 333-166697) of Seanergy Maritime Holdings Corp.,
(2)
Registration Statement (Form F-3 No. 333-169813) of Seanergy Maritime Holdings Corp.,
(3)
Registration Statement (Form F-3 No. 333-214967) of Seanergy Maritime Holdings Corp.,
(4)
Registration Statement (Form F-3 No. 333-221058) of Seanergy Maritime Holdings Corp.,
(5)
Registration Statement (Form F-3 No. 333-237500) of Seanergy Maritime Holdings Corp.,
(6)
Registration Statement (Form F-3 No. 333-238136) of Seanergy Maritime Holdings Corp.,
(7)
Registration Statement (Form F-3 No. 333-253332) of Seanergy Maritime Holdings Corp., and
(8)
Registration Statement (Form F-3 No. 333-257693) of Seanergy Maritime Holdings Corp.;


of our reports dated March 31, 2022, with respect to the consolidated financial statements of Seanergy Maritime Holdings Corp. and the effectiveness of internal control over financial reporting of Seanergy Maritime Holdings Corp. included in this Annual Report (Form 20-F) of Seanergy Maritime Holdings Corp. for the year ended December 31, 2021.

/s/ Ernst & Young (Hellas) Certified Auditors Accountants S.A.

Athens, Greece
March 31, 2022